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Tuesday, May 31, 2005

China-Japan Boundary Talks End

Chinese and Japanese officials have reached no agreement following two days of talks on a boundary dispute in the East China Sea. The negotiations wrapped up in Beijing on Tuesday.

The dispute centers on China's plans to continue exploring for natural gas in a part of the East China Sea that Japan also claims. Japanese authorities angered Beijing recently by allowing companies to submit applications for oil drilling.

The head of the Japanese delegation, Kenichiro Sasae, left the Beijing talks saying both sides failed to reach agreement on key issues, including China's refusal to comply with Japanese requests for it to disclose documents detailing its drilling plans.

"We could not achieve consensus with China on the issues we placed importance on, such as China providing us with data gained from ongoing exploration and the suspension of exploration," he said.

Chinese officials said a new round of talks will take place in Tokyo, but neither side specified a date. Both sides agreed to set up a working group to look into the demarcation issue.

The dispute has been going on for decades, but has only recently gained wider attention - due in part to China's growing energy needs.

Thomas Schoenbaum, an international law professor from the George Washington University in the United States who is currently doing research in Tokyo, says national pride is playing a big part in the quarrel.

"Both sides are fighting over resources," he said. "There may be substantial oil and gas resources, very valuable resources. Neither Japan nor China, being both great powers, wants to back down."

Many analysts had predicted the talks would end inconclusively, saying the timing for negotiations could not be worse. China and Japan have been locked in a wider diplomatic dispute recently, stemming from Chinese resentment over Japan's record of wartime atrocities in China during the first half of the 20th century.

Thousands took to the streets of several Chinese cities in April to protest - in some cases violently - some Japanese textbooks that China believes whitewash Japan's past record of aggression in China.

Tensions flared again last week, when China's vice prime minister spurned Japan's prime minister and cut short a trip to Tokyo. The Chinese official's action came after the Japanese leader defended his visits to a controversial war shrine, where convicted war criminals are among those honored.

China Says Reporter Confessed Spy

China continues to crack down on the media.

The Chinese government says a Hong Kong reporter jailed for more than a month in Beijing has confessed to spying. But free press and human rights advocates question the government's charges.

Foreign Ministry spokesman Kong Quan said on Tuesday that Ching Cheong, a veteran reporter with the Singapore newspaper The Straits Times, admitted to the charges while in detention over the past several weeks.

"He already admitted that in recent years he engaged in intelligence-gathering activities on the mainland on instructions from foreign intelligence agencies, and accepted large amounts of fees. Of course we have full evidence," said Kong Quan. "He himself admitted this."

The Chinese official gave no answer when asked for what foreign country or agency Ching, who holds a British passport, is accused of spying [for].

The press freedom advocacy group Reporters Without Borders in Paris has called on foreign governments to pressure China to release Ching. Vincent Brossel, head of the group's Asia-Pacific desk, says there is no evidence to date that Ching might have been tortured. However, he says the group questions the means by which the government might have obtained a confession.

"When you detain someone for a month and you put pressure on his family, you put a lot of pressure on him, it's obvious you can get some confession," said Brossel. "I don't know exactly what is the content of his confession. We just hope that the lawyer will get access to him, and also that his trial will be fair."

Singapore Press Holdings, the owner of The Straits Times, said in a statement that unless it sees evidence otherwise, it believes Ching "always acted in the best interests of The Straits Times."

British consular officials in Beijing on Tuesday indicated they had not yet been allowed to communicate with the journalist and had no information on his condition.

Chinese agents arrested Ching on April 22 in the southern Chinese city of Guangzhou. People close to Ching say he had traveled to mainland China to collect documents related to Zhao Ziyang, a purged Communist Party leader who died in January.

Advocacy groups say China continues to be the nation with the world's highest number of journalists in prison. China's spying laws are quite strict and much information that is public knowledge in many countries, such as social welfare statistics, is considered secret in China.

Ching Cheong is the second employee of a foreign paper who has been arrested in the country over the past few months.

Zhao Yan, a New York Times research assistant has been jailed since September. Authorities arrested him on charges of divulging state secrets and later accused him of fraud. His imprisonment has prompted inquiries from US Secretary of State Condoleezza Rice and her predecessor, Colin Powell, who called for his release.

A Chinese national, Zhao has yet to go on trial.

Monday, May 30, 2005

China Jails Hong Kong Journalist

A Hong Kong-based reporter for Singapore's largest English language daily has been detained in China for allegedly obtaining state secrets.

Ching Cheong, the China correspondent for Singapore's Straits Times newspaper, is said to have been arrested on April 22 in the southern city of Guangzhou.

Ching's wife, Mary Lau, told Hong Kong journalists that her husband had traveled to Guangzhou to obtain transcripts of secret interviews with former Chinese Prime Minister Zhao Ziyang.

Zhao was purged from the Communist Party, and placed under house arrest until his death in January for opposing the bloody Tiananmen crackdown in 1989.

Irene Ngoo, a vice president of Singapore Press Holdings, which publishes the Straits Times, says the Chinese Embassy in Singapore said Ching is assisting security authorities in an investigation into a matter "not related" to the newspaper.

"We have no cause to doubt that, throughout his stint of reporting and commenting on China, he has conducted himself with utmost professionalism," said Ngoo. "We are in close contact with his wife in Hong Kong, and are providing her with every support and assistance."

Ching previously worked for a pro-Beijing newspaper, Wen Wei Poin, in Hong Kong, but left shortly after China crushed pro-democracy student demonstrations in Beijing's Tiananmen Square in June 1989. Hundreds are thought to have died during the incident.

Earlier this month, a Chinese reporter in Hunan province Shi Tao was sentenced to 10 years in prison for providing state secrets to foreigners. A New York Times researcher has been detained in China since October for allegedly revealing state secrets.

The Committee to Protect Journalists in New York ranks China as the world's top jailer of journalists, with at least 42 reporters jailed last year.

China-Japan Maritime Talks Start

China and Japan have opened two days of closed-door negotiations in Beijing aimed at resolving a long-running dispute over natural gas drilling rights in a disputed area of the East China Sea.

Japan has demanded that China stop exploration in the area and disclose plans for its drilling projects. China refuses, claiming the area where it plans to drill is within its exclusive economic zone.

Beijing last week protested Japanese plans to start awarding exploration rights to Japanese companies - bids that had been on hold for decades.

Both countries say the disputed area is within their exclusive economic development zones. Japan has proposed that a maritime boundary be set at a midpoint between the countries, but China says the line of separation is farther east.

Monday's negotiations come at a time when the two nations are locked in a wider dispute over Japan's militaristic past, making analysts pessimistic about the outcome.

Thousands of Chinese demonstrated against Japan in April as Beijing complained that some Japanese history textbooks glossed over atrocities committed by Japanese troops in China in the first half of the 20th century.

Relations suffered further last week, when the Chinese vice prime minister abruptly called off a meeting in Tokyo with the Japanese prime minister after he defended his controversial visits to a Tokyo shrine where convicted war criminals are among those venerated

China Revoking New Textile Tariffs

China says it will revoke the textile export tariffs it announced on May 20 in what was then a bid to ease trade tensions caused by rising exports to the United States and the European Union.

Chinese Commerce Minister Bo Xilai told reporters on Monday that the action is a response to moves by the United States and Europe to impose restrictions on China's textile exports. He said Beijing could not continue to tax products already penalized by the US and EU governments.

Bo said China cannot allow its textile products to be put under a "second layer of pressure."

He said China will cancel tariffs on 81 categories of textile products that the United States and the European Union have moved to restrict; and he challenged Washington and Brussels to prove that rising Chinese imports resulted in market disruption under World Trade Organization rules.

The Chinese action comes ahead of a visit this week by new US Commerce Secretary Carlos Gutierrez, who is expected to focus on the rising US trade deficit with China.

US Embassy officials had no immediate comment following the Chinese government's announcement Monday.

Some US politicians and labor groups have voiced strong concerns about Chinese clothing imports, which have risen dramatically since world textile quotas were eliminated on January 1. With these concerns in mind, Washington imposed quotas on Chinese-made trousers, shirts, underwear and other items in mid-May. On Friday, EU officials requested talks with China to discuss the rising flow of textiles.

China had sought to ease concerns by imposing modest export tariffs in January, and then announcing more tariffs on May 20. However, many analysts say the tariffs were too small to significantly curb shipments.

Sunday, May 29, 2005

China Lashes Out at EU

China has criticized the European Union for requesting formal trade talks with Beijing to settle an ongoing dispute over a glut of Chinese textile imports to Europe.

A statement by China's commerce ministry Sunday says the EU's decision sends a protectionist signal to European businesses, and harms the free trade rights of Chinese enterprises.

On Friday, the EU registered its dispute with China to the World Trade Organization to demand emergency talks. WTO regulations give China 15 days to limit the growth of textile exports to Europe, or face EU-imposed quotas. Europe says Chinese efforts to slow textile exports have so far not been sufficient.

The United States has already imposed import quotas on some Chinese textiles.

The export of Chinese textiles has skyrocketed since a global quota system ended in January.

Friday, May 27, 2005

Wider Bird Flu Outbreak Confirmed

The director of the Chinese Agriculture Ministry's veterinary bureau, Jia Youling, told reporters in Beijing Friday that the number of wild birds found dead of avian influenza in the western province of Qinghai is much higher than the more than 150 reported a few days ago.

"Qinghai province … is already putting in place emergency measures, a tight blockade on the epidemic area, and (carrying out) disinfections to prevent domestic poultry, people and wild birds from exposure," Jia said.

The government has also sent three million bird flu vaccines, to prevent a spread of the H5N1 virus. The strain is the same one that killed at least 54 people in Vietnam, Thailand and Cambodia in the past two years.

The detection of bird flu in China comes as the government deals with questions of whether it has been open in its handling of an outbreak of foot and mouth disease among cattle in several regions.

For the first time ever, officials earlier this month announced small outbreaks of the disease in the eastern provinces of Shandong and Jiangsu, and on Friday said the situation is fully under control.

Jia did not confirm the presence of the disease in other regions, as reported by foreign media that quote farmers as saying foot and mouth has been detected on cattle farms 80 kilometers from the capital. His reply suggested the government is concerned that publicity about the reports might hurt the country's meat exports.

"The Chinese government has no intention to hide the problem of the epidemic," Jia said. "Although the food-and-mouth disease cannot infect humans, it is a kind of international trade disease. That is to say, it influences international trade."

Outside governments suspected the presence of foot-and-mouth disease in China long before the government quietly confirmed the outbreaks earlier this month.

Russia banned Chinese beef imports in September, after Beijing refused to launch an investigation of reported outbreaks. There have also been concerns in Hong Kong, where officials found the disease in beef brought in from mainland China.

Officials on Friday repeated their denial of a possible outbreak among pigs, following foreign news reports quoting Chinese pork industry officials as saying the disease has been present in central China since February.

Thursday, May 26, 2005

Beijing Backing Uzbek Leader

China is pledging its support for the embattled government of Uzbekistan's President Islam Karimov. The Uzbek leader signed a number of trade deals on Thursday, the second day of his visit to China.

Among the 14 agreements signed is a $600 million oil and gas deal that analysts say highlights China's desire to use diplomacy to feed its rapidly growing energy needs.

Chinese Foreign Ministry spokesman Kong Quan repeated Beijing's support for Uzbekistan president Islam Karimov and his government.

"They are facing the challenges of the three forces: separatism; extremism; and terrorism," the spokesman said. "China and Uzbekistan share many common interests. We hope, through joint efforts, to strengthen our bilateral ties to, on one hand, to make our cooperation more fruitful and on the other to [strengthen] our common drive to safeguard peace and stability in the region."

Karimov's government is under international scrutiny after troops in northeastern Uzbekistan opened fire two weeks ago on thousands of unarmed demonstrators. Officials say 169 people were killed, but witnesses and human rights groups say more than 700 died.

Beijing has not joined calls by the United States, the United Nations, and others for an independent investigation into the killings. Regional political analysts say this may be because of China's efforts to secure oil and get regional cooperation for its own battles against dissent.

The violence in Uzbekistan happened in Andijan, not far from the border with China's Xinjiang region where Beijing is fighting separatists from the largely Muslim Uighur ethnic group.

The Uzbek leader's three-day visit to China began with a warm welcome Wednesday, which included a 21-gun salute and a private meeting with President Hu Jintao.

US Warns China to Reform Currency

US Treasury Secretary John Snow Thursday gave his strongest warning yet that China needs to revalue its currency to better reflect the strength of its fast growing economy.

Testifying in the US Congress, Snow met with hostility from frustrated lawmakers who are convinced that China is keeping its currency weak in order to boost sales in the US market.

Democratic Senator Deborah Stabenow from the industrial state of Michigan said China's unfair trade policies are hurting the US economy by causing millions of job losses. Stabenow says China's manipulation of its exchange rate is in violation of International Monetary Fund (IMF) and World Trade Organization (WTO) rules.

"China's exchange rate policy frustrates the intent of the WTO and can be viewed legitimately as providing an illegal subsidy to exports and imposing an illegal tariff on imports," she said.

In its report, the Treasury Department stopped short of saying China is manipulating its exchange rate to gain a trade advantage. But Snow made clear that China must quickly adjust its fixed peg link to the US dollar to better reflect economic fundamentals.

"We have clearly indicated in this report [to China] that while you are now ready [to adjust your exchange rate], you've taken the positive steps to put yourself in a position to do it, failure to do it will weigh very heavily on us when we do our next report," Snow said.

Snow, who submitted his report on China to Congress, said he is disappointed Beijing has not already moved to revalue the yuan. Both houses of Congress are considering measures that would punish China for incurring steadily rising trade surpluses with the United States. In demanding retaliatory action by the Bush administration, Democratic Senator Charles Schumer from New York accused China of wanting the advantages of free trade, but not the responsibilities.

Snow did not say by how much he wants China to revalue, but cautioned a modest, cosmetic revaluation would not be adequate. Exchange rates and global economic imbalances will be considered by leading world finance ministers when they meet in early June in London.

Beijing Launches War on Drugs

China has launched what it says is a people's war on drugs that includes offering cash rewards to citizens who inform on drug offenders.

The deputy director of China's National Narcotics Control Commission, Yang Fengrui, announced the campaign to urge people to report drug-related activities in return for rewards as high as $36,000.

Calling the country's drug problem "grave", Yang said the so-called "people's war" will also step up efforts to regulate the manufacture, transport and sale of chemicals used to make narcotics such as cocaine, heroin, and crystal methamphetamine - also known as "ice."

"At present, the legal office of China's cabinet is formulating a regulation on the control of precursor chemicals, and that law is expected to come out soon," he said.

American drug enforcement officials have long regarded China as a major source of precursor chemicals and a transit point for Southeast Asian heroin.

Much of the trafficking is in southern China, near the so-called "Golden Triangle" opium-producing region where Burma, Thailand, and Laos meet, as well as in the west, near Afghanistan.

China has one million registered drug addicts, although experts say the real number of users might be seven times as many. The drug of choice for many Chinese addicts is heroin.

Political Science Professor Dali Yang at the University of Chicago has written extensively on the rising use of drugs in China. He points to the emergence of a more prosperous and open society as one factor.

"With the changing society, the problem has been the increasing use of heroin, particularly by artists and certain other groups," he said. "Also, this actually reflects some concerns about the moral vacuum. Some of the new rich have also gotten into drugs."

The government says it has made strides in combating drugs, pointing to the 67,000 drug arrests last year and tons of narcotics seized. But officials admit the problem of drug abuse "has never been resolved."

Labor camps remain the primary means of dealing with drug offenders, but the Chinese government says it is exploring other ways to rehabilitate addicts.

China Announces Bird Flu Vaccines

China's state news agency says scientists have developed two vaccines to prevent the spread of the deadly H5N1 strain of bird flu.

Xinhua quoted the director of the China National Bird Flu Reference Laboratory, Chen Hualan as saying experiments show the new vaccines are 100 percent effective in preventing the spread of the virus.

Last week, China enacted emergency measures after confirming that the virus killed scores of migratory birds in the western Qinghai province. No human cases were reported.

The World Health Organization recently said a study suggests the virus is mutating in ways that could pose a greater threat to humans. Experts have warned that such a mutation could kill millions.

The virus has killed more than 50 people in Vietnam, Thailand and Cambodia.

Wednesday, May 25, 2005

Hong Kong Head Resigns to Run

Hong Kong's interim leader has resigned in order to campaign for the territory's top job in July elections.

Donald Tsang has been acting chief executive since Tung Chee-hwa resigned in March. Hong Kong law requires government officials to resign if they wish to run for chief executive.

Tsang's resignation followed the Hong Kong legislature's approval of a bill clearing the way for the July 10th vote by an 800-member committee controlled by Beijing. The bill says the winner of this election will only serve out the remainder of Tung's term, and not a new five-year term.

Tung stepped down, citing ill health.

China Welcomes Uzbek President

China has welcomed embattled Uzbek President Islam Karimov.

Karimov arrived in Beijing Wednesday, a day after China voiced support for his regime's bloody crackdown on anti-government protesters.

The Chinese and Uzbek governments say Karimov's visit was planned long before the May 13 uprising in Uzbekistan's eastern city of Andijan.

Karimov is facing harsh international criticism over the incident, which he blames on Muslim extremists. But he has found support in China, which fears Islamic militancy in the region could spread to its own territory.

The number of people who died in Andijan is in dispute. The Uzbek government says 169 were killed but rights groups say many more people died.

China World's Largest Source of Counterfeit and Pirated Products

Trade experts say China is the largest source of counterfeit and pirated products in the world--and the problem is growing.

The Motion Picture Association of America estimates about 95 percent of all DVDs sold in China are pirated, costing the industry $280 million last year. The industry group representing the major Hollywood studios says it has warned Beijing of an increasingly restless US Congress and possible trade consequences if China does not do more to fight piracy.

Pirated DVDs often appear on the streets just days after a movie's theatrical release, with disks costing around $1 each.

The problem of intellectual property theft goes well beyond pirated DVDs. The list of products being counterfeited in China ranges from clothing to golf clubs to toilets to motorcycles. Electronics components may be the hardest knock-offs to identify because of their small size.

The Office of the Unite States Trade Representative says Beijing is failing to uphold its WTO obligations to combat the piracy of intellectual property, costing the US economy billions of dollars every year.

Acting Assistant US Trade Representative Victoria Espinel says the agency is "frustrated" with China's approach to intellectual property theft, nearly four years after the country joined the World Trade Organization.

She says Chinese authorities are not enforcing intellectual property laws, and have done little to crack down on counterfeiters. So, she says the US trade office is examining all of its options including international litigation.

"We are committed to ensuring that China is compliant with its obligations, and we will take WTO action if we determine this is the most effective way to fix the problem that we are resolved to fix," she recently told a reporter.

A WTO case against China could result in tariff sanctions.

Trade experts testifying before the Congressional panel added that American companies who buy cheaper Chinese products, often made with counterfeit parts, are fueling the problem.

Tuesday, May 24, 2005

China, Japan Trade Angry Words

China and Japan are trading angry words after Chinese Vice Prime Minister Wu Yi abruptly canceled a meeting Monday with Japan's prime minister, Junichiro Koizumi, in Tokyo.

Chinese foreign ministry spokesman Kong Quan indicated China had decided to cancel Vice Prime Minister Wu Yi's meeting with the Japanese leader over remarks Koizumi has made about visiting a controversial war shrine.

At a regular briefing in Beijing, Kong said China is extremely dissatisfied over the Japanese leader's plans to pay yet another visit to the shrine to Japan's war dead, where a number of convicted Japanese war criminals who committed atrocities in China are among those honored.

"During Wu Yi's visit to Japan, the Japanese leader repeatedly made remarks about (visiting) the shrine, which is not conducive to strengthening Sino-Japanese relations," he said. "We are not happy with that."

Some Japanese officials called China's action Monday undiplomatic. Japan's foreign minister, Nobutaka Machimura, expressed dismay that Chinese officials offered no apology for Vice Prime Minster's Wu's cancellation.

"If she had urgent matters to take care of, we would of course understand. But just one word of apology would have been needed," he said.

The Japanese foreign minister compared China's behavior toward Koizumi to recent protests in which Chinese demonstrators attacked Japanese facilities in several cities across China.

The protests last month centered on Chinese accusations that Japanese history books glossed over the atrocities committed by Japan during its occupation of China in the first half of the 20th century.

Chinese officials on Monday were quoted as saying Wu had to return to China due to an urgent matter. On Tuesday, they said only that she had been previously scheduled to travel to Mongolia.

Beijing Reports Bird Flu Outbreak

The World Health Organization is expressing concern after Chinese officials reported finding wild geese that died from the same flu strain of bird flu that has killed a number of people in other parts of Asia.

Chinese officials, speaking through the state media on Monday, said they had rushed three million doses of bird flu vaccine to Qinghai province in China's far west.

Officials said scientists determined more than 150 migratory geese found dead had contracted the H5N1 flu virus, the same strain that has killed 54 people in Vietnam, Thailand and Cambodia over the past two years.

Spokeswoman Maria Cheng of the World Health Organization's Beijing office says at this time, the virus seems to have affected only animals and there are no human infections reported. However, she says the organization is monitoring the situation.

"It heightens our concern about avian influenza," says Cheng. "China hasn't had any reports of avian influenza since last July, so the fact that it's been detected now obviously raises our concern and indicates to us that it's still circulating in the region."

Parts of China are in the midst of the flu season, and Cheng says that means the elements for a major outbreak are present.

"You have a circulating avian influenza and human influenza, so if these two were somehow to re-combine in a form that is more transmissible among humans, that would set off a pandemic and that's ultimately what we're most concerned about," she adds.

So far, almost all human victims of H5N1 contracted the virus from infected poultry. The most recent human death from the disease was announced Monday in Vietnam, where a 46-year-old man became the country's 18th fatality since December.

The government says it has closed off nature reserves and ordered farmers in Qinghai to vaccinate their birds.

Officials are concerned that if the virus spreads from wild birds to farm-raised chickens and ducks, the economic consequences could be devastating. China has the world's second largest poultry industry after that of the United States. When the virus first re-appeared in Southeast Asia in 2003, tens of millions of domestic chickens, ducks and geese had to be killed to halt its spread.

Monday, May 23, 2005

China-Australia Trade Talks Start

The first round of historic trade negotiations between Australia and China is under way in Sydney.

A free trade agreement between the two countries would boost China's effort to be accepted as a full market economy and would provide Australia with access to the world's largest marketplace.

The chairman of China's National People's Congress told trade forum members Monday that relations between the two countries have never been better.

China is Australia's third-largest trading partner. China supplies consumer goods and clothing while key Australian exports include iron ore, wheat, petroleum and coal.

Australia already has negotiated free trade agreements with the United States, Thailand, Singapore and New Zealand. China is mired in increasingly bitter trade disputes with the United States and the European Union.

Diplomatic Slap? Chinese Vice PM Cancels Meeting with Japanese PM

A last-minute cancellation of a meeting between China's vice prime minister Wu Yi and Japanese Prime Minister Junichiro Koizumi--which Beijing had requested--is being seen in Tokyo as a diplomatic slap in the face to the Japanese government.

Japanese officials say they were told that "sudden duty" in China compelled Wu to quickly leave for Beijing on a chartered flight from Tokyo.

Prime Minister Koizumi told reporters that although he has no idea why China canceled the discussion, he remains willing to meet with Chinese officials at any time.

Reporters asked Chief Cabinet Secretary Hiroyuki Hosoda if Koizumi's plans to again visit a Shinto shrine, seen as a symbol of Japan's past militarism, caused Wu to change her schedule. Hosoda said the issue of the visits to Yasukuni Shrine is not the reason for the cancellation of the meeting.

Japanese Foreign Ministry officials also say the Chinese diplomats made it clear that the change of plans had nothing to do with the controversial shrine.

In Beijing on Sunday, Chinese President Hu Jintao complained during a meeting with visiting leading Japanese lawmakers about Koizumi's plans to visit Yasukuni. Hu said that a visit would damage bilateral ties "in an instant."

China strongly opposes Japanese leaders paying their respects at Yasukuni, because it honors convicted World War II criminals, along with all of Japan's war dead.

Wu arrived in Japan six days ago, primarily to visit the China pavilion at an international exposition near Nagoya. She had been scheduled to return home on Tuesday, after meeting with Prime Minister Koizumi.

In a speech earlier in the day in Tokyo, the Chinese vice prime minister gave no indication she would not meet with Koizumi. In her remarks, Wu said it was necessary to change the status of the current relationship, which she called "not satisfactory, or benign," as quickly as possible.

Wu said that, at a summit in Jakarta last month, the Chinese president proposed ways to improve and develop ties with Japan. She says this demonstrated the strong will of the Chinese leaders to promote cooperation between China and Japan, and that Japan responded positively to the proposal.

Sino-Japanese relations have ebbed to their lowest point in three decades. Government orchestrated anti-Japanese protests in several Chinese cities last month often turned violent. Demonstrators said they were angered by new Japanese history textbooks, which downplay early 20th century imperial Japanese atrocities in China and Korea. The demonstrators also said they opposed Japan's bid for a permanent seat on the United Nations Security Council.

Looser Rules for Hong Kong Dollar

Hong Kong's monetary authorities have loosened trading restrictions on the Hong Kong dollar, in a bid to prevent speculators from using the currency to bet on a Chinese yuan revaluation.

Since a financial crisis in 1997, the Hong Kong dollar had not been allowed to fall below 7.80 to the U.S. dollar. Under the new rules, the Hong Kong dollar will be allowed to move between 7.75 to 7.85. Monetary authorities say they would intervene in the market to keep the currency within the trading band.

Following the announcement, some Hong Kong banks raised interest rates. But HSBC chairman David Eldon downplayed concerns about the increase, saying rates will not go up sharply. "We're still seeing interest rates at very low rates," he said. "So, even if there is an upward movement, I don't think we're yet at a stage, or even near to a stage, where it's going to have a significant impact upon, let's say, the mortgage market."

Sunday, May 22, 2005

China Announces Bird Flu Alert

China has announced an alert against bird flu.

The Agriculture Ministry ordered emergency measures on Saturday to prevent an outbreak of avian flu after laboratory tests confirmed that migratory geese found dead in West China's Qinghai province had been infected with the virus, which has killed at least 53 people in South East Asia since late 2003.

The province is situated on the northeastern part of the Tibet-Qinghai Plateau.

Officials say the migratory birds may have brought a more virulent flu strain into China from South East Asia.

China has had confirmed outbreaks of the virus--H5N1--in birds before, but no-one has yet died from avian flu on the mainland.

In Hong Kong, six people died after being infected when the strain spread from wildfowl to chickens to humans in 1997.

Bird flu has claimed the lives of more than 50 people in Asian countries since early last year. The majority of recent cases have been in Vietnam -- 49 since December 2004.

Seventeen were fatal, and some have occurred in clusters, raising fear of a change in the transmission pattern.

Millions of chickens, ducks and geese have been killed in Vietnam, Cambodia and Thailand in an effort to stem the virus's spread.

The World Health Organization is concerned the virus might mutate into a form that can be passed from one person to another and create a global pandemic.

WHO spokesman Peter Cordingley says so far there is no conclusive proof of human-to-human transmission. "We have found a couple of cases that were very suspicious, but we couldn't actually hammer that nail home," he explains.

But human-to-human transmission may not be too far off. On May 14, Indonesia identified the bird flu virus in pigs on the densely populated island of Java. Pigs are genetically similar to humans and can carry both human and animal viruses. The fear is the bird flu virus in an infected pig could mutate and create a new strain that could spread from human to human.

Attackers Maim Chinese Reporter

Unknown attackers chopped off two fingers from the right hand of a journalist who writes for one of China's most outspoken and progressive newspapers, as apparent retaliation for his articles detailing organized crime activities in the southern part of the country.

Thirty-year-old Wen Chong, a reporter for the Guangdong-based Nanfang Dushi Bao (Southern Metropolitan News), was attacked inside his home late Thursday. Officials say his index and middle fingers were cut off to prevent him from holding a pen properly, perhaps as an intentional warning from his assailants.

Journalism advocacy groups say attacks and government pressure on journalists who report about crime and corruption in China have become increasingly more common.

The former chief editor of the Nanfang Dushi Bao was terminated and imprisoned for five months after controversial articles detailed the SARS virus and the beating of a migrant worker two years ago.

60 Coal Miners Confirmed Dead

Twenty miners are now confirmed dead from Friday's gas explosion at a coal mine in northern China. And rescuers have now retrieved 40 bodies from a separate coal mine accident a day earlier.

Officials are investigating the cause of Friday's blast at Hougou Coal Mine, a government-owned operation in Shanxi province. The explosion triggered a second blast at the nearby Shapingzi Coal Mine.

Thursday, at least 40 miners died in a coal mine explosion in Chengde city, north of Beijing. Ten miners are still missing at the Nuan'erhe mine, which used to be state-owned but was privatized two years ago.

China's mines are the deadliest in the world despite a recent nationwide emphasis on enhanced safety procedures.

Saturday, May 21, 2005

Human Rights Group Blasts Beijing

A human rights group has blasted China for a 10-year prison sentence handed down to a journalist charged with releasing so-called state secrets related to the 1989 Tiananmen Square massacre.

A statement Thursday by New York-based Human Rights in China says the conviction of freelance journalist Shi Tao has raised widespread concern about Beijing's suppression of free speech.

The group said the dissident writer, in an appeal to his conviction last month, contends his sentence was based on illegally obtained evidence. Shi also says his Internet posting was related to public sentiment, so it could not be considered a state secret. The posting dealt with last June's 15th anniversary of the Tiananmen Square massacre in Beijing.

The human rights group called on the international community to pressure China to release Shi Tao and all dissidents imprisoned for the peaceful expression of their views.

Friday, May 20, 2005

China Raising Textile Tariffs

China announced it will raise tariffs on some textile exports in a bid to ease tensions with the United States, the European Union and other trading partners, worried by a surge in Chinese exports.

China's Customs Tariff Commission said Friday taxes will rise as much as 400 percent on 74 textile products, including knitted garments.

The move takes effect June 1, and is apparently aimed at deflecting a trade dispute with the European Union and the United States.

Washington this week limited some Chinese textiles to counter the sharp rise in imports that has resulted from the lifting of world textile quotas on January 1.

The European Union is considering similar action.

China says such unilateral action is unfair, and has accused both Washington and Brussels of being protectionist.

Friday's announcement of the tax increases drew praise from members of the US business community in China. American Chamber of Commerce President Charles Martin says Beijing has taken a constructive approach, despite internal pressures to boost exports and protect jobs.

"At the same time, they looked at the trade tensions that were being generated, not only in the United States but also in other developing countries," Martin said. "I think those considerations were all balanced against one another, and at the end of the day, they decided to take this step, which is a very significant one."

US Embassy officials in Beijing did not have any immediate comment on the announcement of the new tariffs.

In response to concerns by the United States and the European Union after the lifting of world textile quotas in January, China announced a modest tax on exports.

However, critics said this was not large enough to stop the influx that some countries complain is devastating their own textile industries.

Chinese officials have not released many details on the latest tariffs, so analysts say it is too early to tell how far the new measures will go to ease tensions.

However, some analysts say Beijing's new strategy is an indication that China might be willing to work with the United States and other trading partners to resolve a range of issues, such as intellectual property rights and a revaluation of China's currency.

RAND Study Says China Defense Spending Doubled Over Six Years

A new American study of China's military expenditures says Beijing spends far more money on its armed forces than it admits.

But the study published Friday also says that many outside analysts' estimates of Chinese military spending - including those of the US military - are too high.

The nearly 300-page report was prepared by the RAND Corporation, a research group that studies many issues for the Pentagon. A team of economists - who studied a variety of Chinese information sources - concluded that China's military spending is 40 percent to 70 percent higher than figures made public by the People's Liberation Army.

The lead author of the US study, Keith Crane, says China's defense spending has more than doubled during the past six years and is currently nearly as high as that of Japan and Britain.

The American researchers say that during 2003 China spent between $31 billion and $38 billion on its military. Beijing said it spent $25 billion on defense, while the US Defense Department estimated China spent up to $71 billion.

The RAND study says China's military spending consumes between 2.3 percent and 2.8 percent of its gross domestic product, compared to U.S. defense spending at a rate of 3.9 percent of GDP.

Thursday, May 19, 2005

China Mine Blast Traps 50

Chinese officials say a gas explosion has trapped at least 50 coal miners deep underground.

Officials say the blast occurred before dawn Thursday at a mine in northern Hebei province.

The condition of the miners is not immediately known.

The latest accident in China's notoriously dangerous mines comes one week after an accidental explosion killed 21 miners in Sichuan province in southwestern China.

Sunday, May 15, 2005

Foreigners Note Interest in Zhou

In conversations with Chinese intellectuals, foreign journalists and academicians have noticed renewed respect for and interest in the career of Zhou Enlai, one of Communist China’s legendary, most popular—and pragmatic--founders, who died in 1976.

A hero of both the Chinese civil war and the war against Japan, Zhou, who served as China’s first premier and foreign minister, is increasingly seen as the father of the dramatic economic reforms initiated by China’s leaders in the late 1970s—and a victim of the Cultural Revolution. Though he did not suffer like so many others from Mao’s massive uprising of zealous students and workers against Communist Party bureaucrats—aimed at eliminating internal opposition and securing Maoism as the state’s dominant ideology—Zhou lost power and prestige during the Cultural Revolution. At its late stages, he promoted a modernizing program of economic self-reliance and foreign trade, known as the Four Modernizations, which effectively paved the way for the much admired liberalizations of Deng Xiaoping (who delivered the official eulogy at Zhou’s funeral).

In addition to his other talents, Zhou was a brilliant statesman, able to effectively deal with both the West and the developing world. In 1955, he represented China at the Bandung Conference of newly independent African and Asian nations, which established China’s role in postwar world affairs and led to the formation of the nonaligned movement some years later. While professing neutrality in the cold war, the nonaligned movement nevertheless had a distinctly anti-Western—and anti-American—edge (nonaligned on the Soviet side, in the eyes of the United States). This did not prevent Zhou from spearheading improved relations with the West and welcoming U.S. President Richard Nixon to China in 1972. It was Zhou who signed the historic Shanghai Communique, which announced the normalization of relations between China and the U.S.

In heralding Zhou, contemporary Chinese intellectuals may be reflecting the line of those in power who want to manage Beijing’s economic and political ascent without worsening relations with the West and triggering a new cold war with Washington.

Japan Plans Plants to Dismantle WWII Chem Arms Left in China

A Japanese newspaper reported that Japan plans to build 12 new facilities in China to dismantle chemical weapons left behind by the Imperial Army at the end of World War II.

The Yomiuri newspaper said Sunday that the two countries agreed last month to build the facilities near 12 locations including Beijing, Harbin and Nanjing, where abandoned Japanese chemical weapons are stored.

The paper said Japan initially planned to dismantle all the weapons at a major plant in Haerbaling, near the border with North Korea. But when China raised concerns about the dangers of transporting the weapons over long distances, Tokyo decided to build the smaller facilities spread throughout the country.

The report did not include details about the cost or timetable of the construction.

Saturday, May 14, 2005

Taiwan Ruling Party Wins Vote

Taiwan President Chen Shu-bian's Democratic Progressive Party won elections Saturday for a special assembly charged with amending the island's constitution.

The election was seen as a test of support between the island's independence-minded leaders and the opposition, which supports closer relations with mainland China.

China, which has been courting opposition leaders in an effort to undermine Chen, is certain to view his victory as a setback for its diplomatic offensive.

With 98 percent of the ballots counted, the Central Election Commission said the DPP won 42.52 percent of votes, compared to 38.92 percent for the main opposition Nationalists.

The election was called to select a 300-member National Assembly to ratify constitutional amendments approved by parliament last year.

Among other things, the amendments will reduce the number of seats in the legislature by half, from 225 to 113 seats, change the electoral system and introduce referendums for approving future constitutional changes.

China Reacts to US Textile Quotas

Beijing lashed out at the United States Saturday, and threatened to retaliate against new restrictions on Chinese clothing imports, saying the U.S. move violates World Trade Organization agreements.

Less than 24 hours earlier, Washington said it would reimpose quotas on three categories of clothing from China: cotton trousers, cotton knit shirts and underwear.

The U.S. action answered American producers' pleas that a surge in imports from China over the past four months is threatening thousands of jobs in this country.

In a statement, Chinese Trade Ministry spokesman Chong Quan urged Washington to reconsider and said China reserves the right to take further, unspecified measures within the WTO framework.

U.S. Commerce Secretary Carlos Gutierrez said the United States will consult with China to find a solution, adding that the Bush administration is committed to reaching a "level playing field" - equal conditions - for U.S. industries.

US Reimposing Textile Quotas

The United States announced it is reimposing quotas on three categories of clothing imports from China, saying a surge in shipments from China was disrupting the U.S. apparel market and threatening thousands of jobs.

The decision was made by the Committee for the Implementation of Textile Agreements (CITA), an interagency group led by the U.S. Commerce Department.

The CITA action will impose limits on the amount of cotton trousers, cotton knit shirts and underwear that China can ship to the U.S.

The action was in part a response to complaints from U.S. textile manufacturers about the dramatic increase in imports since global quotas ended on 1 January.

The quotas could remain until the end of the year unless the U.S. and China reach a "satisfactory" agreement, according to the CITA announcement.

The CITA action will mean that shipments in the three categories will be permitted to increase this year by just 7.5 percent, compared with shipments over a 12-month base period.

Under the rules of the World Trade organization, countries have the right to act if it is determined that serious market disruption has taken place. U.S. Commerce Secretary Carlos Guitierrez said a government investigation had established that such a disruption had occurred.

The European Union has also urged China to curb its textile exports. Trade Commissioner Peter Mandelson said on Thursday that China should impose its own limits to avoid EU legal action.

Friday, May 13, 2005

Taipei Rejects Beijing's Offer

Taipei has rejected Beijing's offer of talks, saying Taiwan cannot accept China's condition that it first recognize the principle of "one China." The offer came after visits by Taiwanese political opposition leaders to the mainland.

In a statement Friday, Taiwan's government accused China of trying to manipulate relations between the two through negotiations with Taiwan's opposition. The statement said such issues can only be discussed through official channels, and not between individual political personalities.

China has deepened contacts with Taiwan's opposition leaders in the last two weeks. On Thursday, James Soong, head of the Taiwan People First Party, met in Beijing with Chinese President Hu Jintao. In a joint communiqué, they agreed to a new "two sides, one China" formula as the basis for talks about such issues as trade and direct flights across the Taiwan Strait.

Taiwan has been self-governed since 1949 and claims to be a sovereign state, but President Chen Shui-bian has stopped short of declaring formal independence. China claims the island as part of its territory and says the two sides must be reunited, by force if necessary. The United States has warned both sides against making any unilateral change in the status quo.

In an interview with Taiwanese television late Thursday, Chen scoffed at Beijing's conditions for talks.

"We need to accept the one-China policy, we need to accept the 1992 consensus and oppose Taiwan's independence, [and] only then we are allowed for talks," he said. "Seriously, why would we want to go?"

David Huang, vice-chairman of Taiwan's Mainland Affairs Council, says developments in recent months such as direct flights during the Chinese New Year show that the two sides can cooperate even if Taiwan continues to maintain that it is a sovereign state.

"We don't see why we cannot negotiate on any of the substantive issues with China, even though we consistently reject the 'one China' principle," he said.

At the end of Soong's visit on Friday, China said it would ease employment restrictions on Taiwanese residents on the mainland, simplify travel procedures and reduce tuition for Taiwanese students wishing to study there. Earlier this month, China also offered economic concessions and a pair of giant pandas to Taiwan following the visit of Nationalist Party chief Lien Chan.

The landmark visits by the Taiwan opposition have drawn mixed reactions back home. On Saturday, the island will have the first chance to see how they have affected Chen's political agenda.

Taiwan voters will elect delegates to a special National Assembly, which will consider a package of proposed amendments to the island's constitution.

These include halving the number of seats in parliament, extending the terms of lawmakers, changing the way lawmakers are elected and using referendums to deal with future constitutional changes.

China fears Chen will use such referendums to push forward his pro-independence agenda.

Thursday, May 12, 2005

Hu Offers Taiwan Talks Contingent on Agreeing Island is Part of China

President Hu Jintao has renewed China's offer to negotiate with rival Taiwan. But Hu said his offer to open dialogue is contingent on the Taiwanese government accepting Beijing's position that Taiwan is part of China--an unacceptable condition for Taiwan's pro-independence President Chen Shui-bian.

The Chinese leader made the offer in a meeting with with the visiting head of a Taiwanese opposition party, James Soong. He is the second Taiwanese opposition leader to meet with Hu in a month.

The Communist leadership on the mainland has stepped up contacts with the Taiwanese opposition in an effort apparently aimed at undermining Taiwan's President.

Soong, whose People First Party favors keeping the status quo and expanding economic ties with the mainland, told reporters after meeting with Hu that the two agreed to work to end hostility between the Communist mainland and the democratic island, adding that peace depends on the actions of his government.

"As long as Taiwan authorities do not pursue Taiwan independence, a military conflict across the Taiwan Strait can be effectively avoided," Soong said.

Although Taiwan's President has taken conciliatory measures in the face of pressure by those on the island who do not want to confront China, he has refused to accept China's conditions.

Tensions rose in March when China passed an anti-secession law authorizing the use of force if the island - self-ruled since 1949 - moves toward formal independence.

The United States has called for both sides to avoid unilateral actions that would change the status quo and raise tensions in the Taiwan Strait.

China Central Bank Vows to Resist Foreign Pressure to Revalue Yuan

China's central bank says it will not buckle under foreign pressure to reform its foreign exchange rate. China is trying to douse market speculation of an imminent currency revaluation.

A senior official from the People's Bank of China says China will not be pressured to change the pace of its currency reforms.

The comments by vice governor Wu Xiaoling were made to a Japanese newspaper in late April, but were just posted on the bank's website on Thursday.

The remarks appear to be aimed at speculators and the United States. On Wednesday, erroneous reports of an imminent yuan revaluation caused a brief sell-off of U.S. dollars.

The Chinese yuan is pegged at around 8.2 to the dollar. The U.S. and other Western countries say that makes Chinese products unfairly cheap, causing huge trade deficits with China. The U.S. Congress has threatened to impose hefty tariffs on Chinese goods if Beijing does not move to a more flexible exchange system within months. Beijing has repeatedly said it would institute reforms but has given no timetable.

Thio Chin Loo, currency strategist at BNP Paribas bank in Singapore, says recent events are not likely to change Beijing's position.

"I think China has shown that it does not want to bow down to external pressures in wanting to change its currency regime," she says. "It said that it would consider moving on the exchange rate based on its domestic considerations."

Many financial analysts say China's reluctance is caused by fears that a strong yuan would cut exports and lead to unemployment, as well as hurt its already weak banking system.

Speculation about a yuan revaluation has been rife over the past few weeks. But, on Wednesday it reached a frenzy, triggered by a poorly translated news story in China's state media that indicated a revaluation might come soon.

Late last week, David Eldon, chairman of the international bank HSBC, said revaluing the yuan at this time would not be in China's interest.

"There are a lot of speculators who are sitting on the wings waiting for there to be a revaluation," he said. "If you revalue the currency, who's going to gain from this? It's going to be the speculators. I don't think that that is something that necessarily people want to see."

Beijing has been trying to slow its rapidly growing economy by modestly raising interest rates and controlling the inflow of foreign investments.

Wednesday, May 11, 2005

EU Officials Link Human Rights Progress to Ending Arms Ban

European Union (EU) officials visiting Beijing have urged China to improve its human rights record to create a "positive climate" for ending a ban on European arms sales to the country.

EU commissioner for external affairs Benita Ferrero-Waldner said on Wednesday that Beijing should free protesters detained in the 1989 Tiananmen Square crackdown and ratify a United Nations pact on civil and political rights (Covenant on Civil and Political Rights). The commissioner said taking such action would allow the European Union to lift the ban on arms sales imposed after the 1989 Tiananmen crackdown.

China's foreign minister, Liu Jianchao, later told reporters that EU efforts to link rights to arms sales were "unhelpful."

The two sides also discussed European concerns about the recent surge in Chinese textile exports following the end of a global quota system. European officials said they hope to work out a solution with the Chinese.

Visiting Taiwan Politician Urges Beijing to End Menacing Moves

Taiwanese opposition party leader James Soong, on a visit to China, has urged the Beijing government to change its approach to Taiwan, and stop taking measures that deepen the divide between the two rivals.

Soong, who heads Taiwan's People First Party, told students at Beijing's Tsinghua University that peace is the aspiration of people both in Taiwan and on mainland China.

He said peace is the only rational choice, if the two economies are going to grow and prosper together. Cross-strait trade has been rising sharply, reaching $70 billion last year.

But Soong suggested growth is being threatened by rising tensions over China's threats to attack the island, if its government formally declares independence.

Soong said the key to resolving the Taiwan issue is not through weapons or slogans, but by deepening ties. He made a reference to ancient emperors, who failed to contain flood waters when they built walls around rivers, instead of dredging deeper channels.

"Today's reality is that we exist," Soong said. "I believe China would make a wise choice between containment and dredging."

Tensions rose in March, when Beijing enacted an anti-secession law giving itself license to use force against Taiwan, if it moves toward independence. China also keeps hundreds of missiles pointed at the island it claims as part of its territory.

Soong is the second Taiwanese opposition leader to visit China recently, as Beijing seeks to strengthen ties with opponents of Taiwan's pro-independence president, Chen Shui-bian. The government last month hosted Lien Chan, head of Taiwan's Nationalist party, the Kuomintang, whose leaders fled to Taiwan in 1949 after losing a civil war with the Communists.

Critics in Taiwan see the Soong and Lien visits as attempts by Beijing to undermine Chen, whose pro-independence convictions have angered mainland authorities.

Crisis Looms for Chinese Banks

China's leaders are trapped between a rock and a hard place over the issue of full membership in the World Trade Organization, which is scheduled to begin in December 2006, after five years of phased acceptance.

Beijing will have to open its vulnerable banking sector to foreign competition in order to qualify for full membership. However, the regime rightly fears that foreign banks will attract the bulk of private savings that now flow into the state-owned banks.

The possibility of real competition presents the leadership with a real problem because the state-owned banks--which are all insolvent--are the source of the cheap loans on which the unprofitable state-owned enterprises, or SOEs, depend for their continued survival.

Considering that the bloated SOEs employ more than half the country's urban residents, it would be an understatement to say that the stakes are high. Massive unemployment brought on by a collapse of the SOEs could lead to terrible social unrest--possibly on a scale that could threaten the regime's very existence.

So much for the rock. The hard place--sacrificing full WTO membership in order to protect the viability of Chinese banks--and the SOEs--is hardly an attractive alternative. Denying foreign banks potential access to hundreds of millions of Chinese savings accounts would probably trigger not capital flight, but banking flight; and foreign investors would most likely join the exodus.

The next 19 months should be interesting.

Tuesday, May 10, 2005

Delayed Death Notice

Chinese officials are reporting the death of Zhang Chunqiao, a member of China's purged ultra-leftist political clique known as the "Gang of Four."

Chinese authorities say Zhang Chunqiao died of cancer on April 21 at the age of 88. The delay in announcing his death led some analysts to speculate that the government is perhaps still uneasy about how to portray his role in history.

Zhang was one of the leading figures behind the Cultural Revolution, a movement from 1966 to 1976 in which ultra-leftists sought to destroy any trace of traditional Chinese culture and values, along with any opposition to the leadership of the Communist Party. His role was that of a propaganda specialist and theoretician who pushed for China's transformation from socialism to hard-line communism.

Along with other Gang of Four members, Zhang Chunqiao was arrested a month after party leader Mao Zedong's death in 1976. He was sentenced to death for his role in the movement, which led to thousands of deaths and the persecution of millions. His sentence was later commuted to life in prison.

Zhang's final years were spent in obscurity, and there had been reports he died perhaps as far back as 1991.

Other members of the clique included Mao Zedong's widow, Jiang Qing, who committed suicide in 1991.

Changing Party Line

Foreign journalists visiting and stationed in Beijing have recently detected some subtle--and not-so-subtle--changes in the party line on the topic of China's meteoric ascent.

One subtle change: Peacefully Rising China is out; Peaceful China is in. Officials prefer the latter, simpler image because it's regarded as less threatening to overseas audiences naturally concerned by China's increasing economic clout, military buildup, and diplomatic offensive. Foreign journalists are now encouraged to avoid trading in catchy phrases like "China's rise" or "China's Century"--title of Newsweek's current cover story. Hype once viewed as helpful is now thought to be harmful. China as the next superpower? No way, say the bureaucrats, explaining that China has too many internal problems--or "challenges"-- to contend with before it can even begin to think in terms of challenging the United States for superpower status. At most, say officials, China could evolve into a "reluctant superpower."

A not-so-subtle change: Mere mention of a China threat--simply suggesting that rising China poses a potential threat to its neighbors and America--is itself an aggressive act. Foreign editors and reporters are being told that writing and talking (perhaps even thinking) about a China threat could make it a "self-fulfilling prophecy," leading to a new cold war. Which China--the reluctant superpower--would be forced to fight.

It will be interesting to see how the giant Western media conglomerates--eager for access to the vast China market via joint ventures and co-production deals--deal with the changes in emphasis and tone.

Monday, May 09, 2005

China Calls for Restart of Talks to Resolve N. Korean Nuclear Crisis

China and South Korea have again called on North Korea to return to stalled nuclear talks, saying they will renew efforts to restart the negotiations. Concerns are mounting that the North might be planning a nuclear test soon.

The Chinese state-run news agency Xinhua quoted Chinese President Hu Jintao and South Korean President Roh Moo-hyun as saying all sides in the talks should continue work to resolve the North Korean nuclear crisis through peaceful dialogue.

The two leaders were in Moscow for commemorations marking the end of World War II in Europe. The South Korean leader said his country expects China to take an active role in getting Pyongyang to rejoin negotiations.

As North Korea's chief supplier of food and fuel, Beijing is seen as having the most influence over the reclusive communist state. But Chinese officials have consistently said their ability to sway North Korea is limited.

Many experts doubt China's sincerity.

"I think China is willing to accept a nuclear North Korea, as long as it has stability," said Stephen Noerper, an authority on North Asia security issues at the Nautilus Institute in California. "For North Korea, it is all about regime stability. For China, it is just about stability in northeast Asia."

Speaking in Beijing, Noerper said that while China has called for a nuclear-free Korean peninsula, it perhaps lacks sufficient incentive to push Pyongyang harder. He said Beijing dreads a collapse of the North's government, led by Kim Jong Il.

Many regional political analysts say Beijing fears that a collapse of the government could lead to instability in the North and push hundreds of thousands of refugees into China from its impoverished neighbor.

Concern has risen after recent reports out of Washington that North Korea might be preparing for a nuclear test. Pyongyang says it has manufactured nuclear weapons and will make more. The head of the International Atomic Energy Agency says North Korea may have five or six bombs.

Six-nation talks on the nuclear issue, involving the Koreas, China, Japan, Russia, and the United States, have been stalled since last June. At that session, the United States proposed offering Pyongyang security guarantees and other benefits if it gave up its nuclear programs in a verifiable manner.

North Korea never responded to the proposal and has given various reasons for not returning to the negotiations. Among other things, it has said the United States must first drop what Pyongyang says is a hostile attitude toward North Korea.

The North in the past also demanded bilateral negotiations with the United States, a condition Washington dismisses. On Sunday, North Korean officials appeared to reverse that position, with the state news agency saying Pyongyang has never requested talks independent of the six-party negotiations.

The United States has urged North Korea to return to negotiations without conditions, saying the six-party talks remain the best option that North Korea has to resolve the nuclear issue peacefully.

Sunday, May 08, 2005

Seeing Wal-Mart Plain

Wal-Mart and China. Could there be a better and more ironic fit than the world’s largest retailer and the world’s most populous country?

With annual sales topping $245 billion, Wal-Mart--which ironically once trumpeted a claim to “Buy American”—has basically become a joint venture partner of the Communist Party of China (CPC), which sees the awesome American company as a giant and incredibly efficient pipeline, or outlet, for its low-cost merchandise.

Last year, Wal-Mart imported a whopping $18 billion worth of goods from China—nearly 10 percent of all Chinese exports to the United States. Of the company’s 6,000 suppliers, more than 80 percent are in China.

If Wal-Mart were a separate nation, it would rank as China’s fifth largest export market, ahead of Germany and Britain.

The two partners share antipathies toward organized labor—Wal-Mart’s anti-union attitude is notorious, and China threatens those who would consider organizing an authentic labor movement with harsh punishment--and the media--like China, Wal-Mart has historically viewed journalists with suspicion—which have served them well in their dramatic rise to the top.

Wal-Mart and the CPC also share an arrogant disdain for facts.

In a slap in the face to the hundreds of thousands of U.S. workers whose living depends on their jobs in America’s textile industry, a Wal-Mart executive has gone on the record to assert that Chinese exports are not jeopardizing American textile jobs—because they’ve already gone overseas.

“The only apparel that’s left in the U.S. is sweatshops in Chinatown,” Wal-Mart’s procurement chief, Andrew Tsuei, said in an interview last year with the Los Angeles Times that was virtually ignored by the rest of the media. Tsuei heads global procurement for Wal-Mart.

Thousands of U.S. textile workers have lost their jobs in recent years. The number of domestic garment and textile jobs dropped from some 850,000 in 2000 to 593,000 last year, according to the U.S. Department of Labor’s Bureau of Labor Statistics.

“Wal-Mart is as ignorant as it is evil,” says Bruce Raynor, general president of UNITE HERE, which represents textile workers. “Mr. Tsuei’s statement is an insult to the United States and to the thousands of our members who make everything from military uniforms to men’s tailored clothing to women’s apparel. There are, unfortunately, sweatshops in the U.S. and the main reason is the Wal-Mart business model that is driving down wages and living standards.”

Last year, the U. S. ran a record $162 billion trade deficit with China, the largest-ever with any country, eclipsing the record $124 billion deficit with China in 2003. Such a huge trade deficit undercuts domestic manufacturing and destroys good U.S. jobs because the nation is importing, on a large scale, products that had been produced domestically.

Between 1989 and 2003, the ever-increasing U.S. trade deficit with China led to about 1.5 million jobs overall that either moved overseas or never were created in the U. S. as production shifted to China, according to a report released Jan. 11, 2005, by the U.S.–China Economic and Security Review Commission (USCC), a congressionally appointed panel. The pace of job losses has picked up since China joined the World Trade Organization in 2001, with about one-third of the total, or 500,000, occurring in the past three years.

Friday, May 06, 2005

China's Military Buildup Belies Peacefully Rising Propaganda

China’s political and business leaders, academicians, and propagandists have gone to great lengths to portray their country as a peacefully rising power. But Beijing’s military buildup belies the carefully constructed image.

A recent report prepared for the U.S. Defense Department says China is proceeding with a substantial military buildup, leading some experts to worry that 25 years after starting its economic reforms, China may soon have the means to project military power in new and, from an American point of view, potentially dangerous ways.

According to the report issued by the U. S. Defense Department in November and made public in January, China has built a series of facilities and strategic relationships stretching to the south and west from its own coastal waters. The facilities and relationships involve Thailand, Cambodia, Burma, Bangladesh and Pakistan.

The report, prepared by a consulting firm for the office of Secretary of Defense Donald Rumsfeld, says the primary goals of China's strategy are to protect the sea-lanes through which much of its oil travels and to build its capability for a possible confrontation with Taiwan. The report says China is working to make its navy capable of operating farther from Chinese shores, putting long-range cruise missiles on its new warships, building up its submarine fleet and developing modern undersea mine systems to help it take control of strategic areas of open water.
The Pentagon report also says China is building its air force with new long-range targeting systems and unmanned aircraft.

In addition, the New York Times reported in March that recent intelligence reports indicate China has conducted an ambitious ship-building program, including 23 new amphibious assault ships that could land troops and heavy equipment on Taiwan, and 13 new attack submarines that could limit the United States' ability to come to the island's aid in any conflict.

In recent testimony to a congressional committee, the new director of the CIA, Porter Goss, acknowledged that China's military buildup could "tilt the balance of power in the Taiwan Strait."

"Beijing's military modernization and military buildup, which I know have not gone unnoticed by this committee, are posing new questions for us," he said. "Improved Chinese capabilities seemingly threaten U.S. forces in the region. China's recent legislation on anti-secession speaks for itself."

The head of the Defense Department's intelligence agency, Vice Admiral Lowell Jacoby, agreed that China's continuing missile buildup would threaten not only Taiwan but also other military facilities in Asia, including those of the United States. The admiral also said China's ability to launch nuclear warheads against U.S. territory will increase 700 percent in the next 10 years.

"Many nations are modernizing and expanding their ballistic missile systems, and they are a key part of China's military modernization program," he said. "China continues to modernize its forces across a broad range of conventional and missile capabilities. And also those kinds of capabilities that allow them to coordinate the efforts of their military in a more sophisticated way than previously existed are a concern also."

China says its military buildup is not directed at any other nation. But it has toughened its rhetoric on Taiwan in recent months, and has passed a law threatening to use force to bring the island under its control.

All this leads some China experts, like Peter Brooks of the Heritage Foundation, to conclude that China's efforts to build its military have profound implications for the balance of power in the region.

"China seeks to develop a military that can deter, delay or deny American intervention in the Pacific, especially over the issue of Taiwan," he said.

Brooks told the Senate Foreign Relations Committee that China is seeking all types of weaponry, and especially high-technology communications gear that can make its existing forces more effective.

"Chinese military modernization priorities center around power projection capabilities - submarines, surface combatants [ships], tactical air power and air defense, ballistic and cruise missiles, overhead satellites and space programs, information warfare, psychological operations, as well as doctrinal improvements for fostering joint operations, military operations, based on their observation of such things as Operation Iraqi Freedom," he added.

The Defense Department and the U.S. Pacific Command declined to comment on the record on China's military buildup. But senior department officials, who requested anonymity, agreed that China has been involved in a substantial upgrade of its capabilities, particularly in the last five years. The officials say during that time China has more than doubled its official annual military budget to $30 billion. And the officials indicated China's real military spending is even higher.

China's two-and-a-half million member military has long been thought of as out of date in its equipment, strategies and tactics, and relatively ineffective as a result. But the U.S. defense officials who spoke in March say China is working hard to change that, and is closely watching the U.S. military campaigns in Iraq, Afghanistan and elsewhere to gain a better understanding of how modern militaries are organized and how modern wars are fought.

The officials say that is one reason the United States supports a continuation of the European Union arms embargo against China. Lifting the embargo, in their view, would speed China's military modernization and potentially endanger China's neighbors and U.S. forces in the Pacific.

China Not Bending on Currency

Leading Chinese financial officials say the country's currency exchange system will be reformed, but only once conditions are right. The status of the Chinese currency has been high on the agenda of the Asian Development Bank's annual meeting in Istanbul.

Vice Finance Minister Li Yong told reporters on Friday that there is no set time frame for allowing China's yuan to float. He said reforms in the country's financial sector and the creation of market mechanisms are prerequisites for allowing market forces to set the currency's levels.

There has been intense international speculation on a possible change to the yuan's fixed exchange rate, but Li urged people to be patient. China's finance minister, Jin Renqing, earlier this week said Beijing is determined to reform its foreign exchange system, but that intense speculation makes doing so difficult now.


The United States, Japan and the European Union are pressuring China to change its exchange system. The yuan, also known as the renminbi, has been fixed at about 8.2 to the dollar for a decade. Other governments and many Western manufacturers say the rate is too low, making Chinese exports unfairly cheap in the world's markets.

The massive Chinese economy has a strong effect throughout the larger Asian economy. China buys vast amounts of Asian goods, and exports its products throughout the region.

Thursday, May 05, 2005

Japan Urges China to Revalue Yuan

Japan is pressing China to reform its yuan currency, but says flexible Asian exchange rates will not fix all the imbalances threatening the world economy, including massive U.S. deficits. The development came at the second day of the annual meeting of the Asian Development Bank in Istanbul.

Japan's Finance Minister, Sadakuzu Tanigaki, raised the issue during a news conference at the Asian Development Bank meeting.

"So, accordingly, it would be natural that larger interest has been indicated on the currency of China, because China is a greatly influencing country in the world. So in that context I would say that it would be desirable to see a more flexible exchange rate regime," Tanigaki said.

Tanigaki acknowledged that China faces challenges in reforming its fragile domestic financial system and addressing regional economic differences. The yuan has been trading around eight per dollar. The low yuan makes Chinese exports cheaper and U.S. manufacturers say this gives Chinese goods an unfair advantage.

The United States has also been pushing China to revalue the yuan and end its de facto peg to the dollar.

The topic of when China might move to revalue the yuan has been the focus of heavy attention at the three-day A.D.B. meeting. But China's Finance Minister, Jin Renqing, said speculation is too intense for Beijing to take action now. At the same time, he said China is determined to reform its currency.

Meanwhile, his Japanese counterpart said flexible exchange rates alone will not settle global-trade imbalances. Tanigaki repeated a call by the Group of Seven leading industrial nations for the United States to deal with its massive budget and trade deficits, and for Europe to take steps as well.

"The U.S. needs to tackle their twin deficit issues and Europe needs to work further on their structural reform efforts, Japan also needs to proceed further with its structural reform," he said.

The non-profit Asian Development Bank, which is based in Manila, lends to dozens of countries, from the Fiji in the South Pacific to Sri Lanka in the Indian Ocean. Its 63 members also include such nations such as the United States, Germany, and Australia.

Second Taiwan Opposition Leader Lands in China, Backs Beijing Line

Taiwanese politician James Soong arrived in mainland China, saying he wanted to bridge differences between Beijing and Taipei. Soong is the second Taiwan opposition leader to travel to the mainland in recent days.

The head of Taiwan's opposition People First Party, Soong arrived in the western city of Xian, where he received a warm welcome from Communist Party officials. Speaking on the tarmac, Soong wasted no time in telling his Communist hosts that his party is committed to opposing independence for Taiwan.

Soong said his party is the only one on Taiwan that has always opposed independence and the existence of two Chinas, or one China and one Taiwan.

His words pleased the Chinese Communist leadership, which has been working to set up ties with those in Taiwan who oppose pro-independence President Chen-Shui-bian.

Beijing is seeking to undermine Chen at a time when the island remains deeply divided between those who do not rule out eventual reunification and those who want independence.

China claims Taiwan, but the island has been ruled separately since the end of the Chinese civil war in 1949 when the defeated Nationalists fled there to escape Communist rule.

Tensions rose following Beijing's recent passage of an anti-secession law that authorizes the mainland to resort to "non-peaceful means" in order to regain control of the island.

Soong's supporters - who include many business leaders - have been pushing for improved relations with Beijing, fearing that tensions could hurt the booming trade between the island and the mainland.

Soong's nine-day visit comes days after the leader of the opposition Nationalist party, Lien Chan, came to China and met with President Hu Jintao. The two men announced a series of symbolic agreements to improve relations.

Washington praised the exchanges between the Chinese government and the Taiwanese opposition, saying dialogue is the only way to resolve the cross-strait issue. But officials also expressed hope that Beijing will continue to find ways to reach out to Chen and his government, saying any long-term solution can only be found if Beijing negotiates with the elected leadership of Taiwan.

Wednesday, May 04, 2005

China Trade Minister Predicts Moderation of Textile Exports

China's trade minister says his country is taking steps to slow the flood of textile exports to France and other nations.

Bo Xilai spoke Tuesday in Paris, after a meeting with his French counterpart. Bo said he expects growth in clothing exports to moderate over the next few months.

Quotas that once limited Chinese exports expired at the end of last year, and inexpensive clothing has since flooded European and other markets.

EU officials are worried that clothing exported from China is so cheap that buyers will ignore offerings from European factories, putting them out of business. That could cost thousands of jobs. The EU has started administrative and legal processes that could eventually lead to renewed limits on imports from China.

Finance Ministers of China, Japan, South Korea Agree on Asian Plan

The finance ministers of China, Japan and South Korea have agreed to strengthen Asia's defenses against attacks on regional currencies through the so-called Chiang Mai Initiative. The initiative involves a $39 billion network through which Asian nations can borrow currency from others in the group to cover short-term needs during market turmoil.

China, Japan, and South Korea are the world's largest holders of foreign exchange reserves. The three also agreed to push for greater representation in international financial institutions, such as the International Monetary Fund.

Tuesday, May 03, 2005

Chinese Journalist Gets 10-Year Sentence for Providing 'Secrets'

The Committee to Protect Journalists has denounced the unfair trial and harsh sentencing of journalist Shi Tao, who was convicted of "illegally providing state secrets to foreigners" in a closed trial in the Intermediate People's Court of Changsha in central China's Hunan Province. Shi was sentenced last Saturday to 10 years in prison.

"Our colleague Shi Tao was tried under laws that preclude the full participation of legal counsel and do not meet the standards of international law," Committee Executive Director Ann Cooper said. "We are appalled by his 10-year sentence, and call for his immediate and unconditional release."

Shi is a former reporter at Dangdai Shang Bao (Contemporary Trade News), a magazine based in Changsha. Officials from the Changsha security bureau detained Shi near his home in Taiyuan, Shanxi Province, on November 24, 2004. Authorities confiscated his computer and other documents and warned his family to stay quiet about the matter.

On December 14, authorities issued a formal arrest order charging Shi with "leaking state secrets."

Defense lawyer Tong Wenzhong was never granted access to the contents of the "state secrets" that Shi was accused of leaking, said Shi Hua, the journalist's brother. Tong was told only the title of the material, and its government designation as "secret." Nevertheless, Tong entered a guilty plea on Shi's behalf on March 11 trial.

The government-run Xinhua News Agency reported that Shi had been found guilty of posting online his notes regarding a government document read to the Dangdai Shang Bao editorial board in April 2004. Xinhua reported that prosecutors told the court that the contents were classified, and that Shi's notes had been picked up by several overseas Web sites.

The Committee says sources told the group that the document was a Central Propaganda Department directive issued to editors on April 20, 2004, the contents of which are widely available in Chinese-language news Web sites based outside of China. The document's summary lists particular areas of concern to the government. It warns of the return of overseas dissidents to China to mark the 15th anniversary of the military crackdown on the Tiananmen Square pro-democracy demonstrations on June 4, 1989.

Chinese journalists are not free to report independently on the events of the spring of 1989. Coverage of this and other politically sensitive issues is circumscribed by routine directives issued by the Central Propaganda Department, which are made available only to news editors.

Shortly before Shi's trial, Guo Guoting, who was originally set to act as Shi's defense lawyer, received notice that his license to practice law had been suspended. Guo told the Committee at the time that he believed the punitive action was related to the lawyer's defense of controversial freedom of expression cases like Shi's. He had intended to argue that while Shi has admitted to posting the material from the April 2004 editorial meeting online, he was not guilty because the material should not have been classified as a state secret.

Chinese laws regarding state secrets are vague and broadly worded, and have been used in the past to silence reporting on sensitive issues.

Committee representatives say that as of the end of last December, 42 journalists were in prison in China, making it the leading jailer of journalists for the sixth consecutive year.

China Listed as One of World's Most Dangerous Countries for Journalists

For journalists, China is one of the world's most dangerous countries.

Reporters Without Borders, a media advocacy group, says that of the 107 journalists currently imprisoned around the world, 27 are held in China, where authorities see a free press as threatening stability.

The Paris-based, not-for-profit group included China in a report to mark International Press Freedom Day.

Another media advocacy group, the Committee to Protect Journalists, said that with 42 journalists in prison on December 31, China was the leading jailer of journalists for the sixth consecutive year in 2004.

The Committee, which is based in New York, issued its own report on the world's most dangerous places to work as a journalist. Along with China, the Philippines and Bangladesh were among the most dangerous countries.

The media advocacy groups say scores of reporters have been murdered or imprisoned by oppressive governments, rebel groups and criminals in the past year, all in an effort to prevent them from reporting the news.

The Committee says that of the 190 journalists killed across the world since 2000, just a handful died when caught in crossfire or while on a dangerous assignment. The vast majority of 121 journalists were hunted down and murdered in retaliation for their reporting.

Next to Iraq, the world's most dangerous place to be a journalist is Asia, where 16 of the 53 reporters killed in 2004 were slain. Eight of those murders took place in the Philippines, giving it the dubious distinction as the region's most murderous nation for reporters.

The media advocacy groups say those targeting journalists include corrupt officials, rebel organizations, and criminal syndicates, who are often at risk of being exposed by the press.

When murder is not the issue, oppression often is, as in the case of China. The country's anti-press attitude has been shared for years by the governments of North Korea and Burma, and more recently by Nepal - where authorities recently cracked down on press freedoms.

Earlier this year, Nepal's King Gyanendra dissolved the government, and arrested scores of political rivals, activists, and journalists - many of whom remain in jail.

"These are a group of people who are perhaps particularly well-informed, who have traveled around the country, who have close links with many political workers and also with the state administration," said Rhoderic Chalmers, an analyst with the South Asia office of the International Crisis Group. "They are in a better position than many other professional groups to use that information and their experience to cause trouble and to make a noise about the situation."

China Rejects Taiwan Invitation

China has rejected Taiwan's offer to visit the island and engage in direct talks.

The president of Taiwan invited China's leaders to visit after Beijing offered economic concessions and a pair of giant pandas as goodwill gestures to its rival.

Taiwan President Chen Shui-bian said a visit by Chinese President Hu Jintao would help clear up misunderstandings between the two rivals. Chen said he hopes President Hu will come to see for himself and gauge the sentiment of the Taiwan people.

But China was cool to the idea. Wang Zaixi, vice chairman of China's Taiwan Affairs Office, said China can't hold talks with Chen unless his party drops its pro-independence stance.

China considers Taiwan part of its territory and has threatened to use force if it moves in the direction of formal independence.

Chen's conciliatory moves toward China came as Beijing said it would allow Chinese tourists to visit Taiwan and increase fruit imports from the island.

Beijing's offer to give two giant pandas to Taiwan was reminiscent of China's gift to the United States after former President Richard Nixon's 1972 trip, which led to the normalization of ties between the two countries.

The gestures follow a visit to China by Lien Chan, head of Taiwan's Nationalist party, who met with Hu during his historic eight-day trip. It was the first meeting between leaders of the Nationalist Party and the Chinese Communist Party since the Nationalists fled to Taiwan and established a separate government there at the end of the Chinese civil war in 1949.

Beijing's warm welcome to Lien was clearly aimed at undermining support for Taiwan's president and his pro-independence party. The visit has received mixed reactions in Taiwan. While some welcome the signs of improvement in cross-Strait relations that came with the visit, others protested his trip.

Another opposition leader, James Soong of the People's First Party, will travel to China later this week. He is expected to carry a message to the Chinese leadership from President Chen.

China Tries Panda Diplomacy

China has offered a pair of giant pandas and economic concessions to Taiwan at the end of a landmark visit by Taiwan's main opposition leader. China's goodwill gestures include lifting a ban on Chinese tourists visiting Taiwan and increasing fruit imports from the island.

Beijing made the offers Tuesday, as Taiwan opposition leader Lien Chan ended a historic trip to China - the first by a Nationalist party, or Kuomintang, chief since the Nationalists fled to Taiwan at the end of the Chinese civil war in 1949.

Lien was warmly received by Beijing, a move analysts say is aimed at isolating pro-independence Taiwan President Chen Shui-bian. China is demanding reunification with Taiwan, by force if necessary.

Professor Lee Si-kuen, at the National Taiwan University, says goodwill gestures will not bridge differences. "After the news event, people in Taiwan will soon realize the reality is still there - the reality of hostility between the two sides," he said.

Chen has said Taiwan is open to a dialogue with China at any time, adding that a peace pact must be based on concepts of "democracy and parity."

China has threatened to use force to prevent Taiwan from taking formal steps toward independence. Beijing has hundreds of missiles pointed at the island, located just 100 miles off the mainland's coast, and is modernizing its navy in ways that seem menacing to many Taiwanese.

Monday, May 02, 2005

Taiwan President Says Peace Must be Based on Democracy and Parity

As Taiwan's leading opposition figure wraps up his historic tour of China, Taiwan's President Chen Shui-bian is taking a conciliatory line toward Beijing.

President Chen Shui-bian says Taiwan is open for dialogue with Beijing at "any time." But he emphasized it must be on the basis of "democracy, peace and parity."

Chen's comments came as Taiwan opposition leader Lien Chan wrapped up a landmark eight-day visit to China, where he met with senior Chinese officials.

In Shanghai, Lien said peace between the two sides is within reach and Taipei should seize the opportunity, as Beijing now appears open to dialogue.

Analysts say the warming relations between Taiwan's largest opposition party and the Chinese leadership are aimed at isolating President Chen and his pro-independence party.

Last month, Beijing passed an anti-secession law authorizing its military to invade the island if it resists peaceful reunification and moves toward independence. China has hundreds of missiles arrayed against Taiwan. Beijing has also been modernizing its navy in ways that could allow for completing a coordinated strike and invasion before the US could react.

Chen, on a visit to the Marshall Islands in the Pacific, called for a military consultation system between the two rivals as a way of easing tensions.

Lien also told Taiwanese businessmen in Shanghai that the Nationalist Party would push for greater economic cooperation with the mainland--Taiwan's largest trading partner.

He said his party would act to improve trade without waiting for the leaders of Taiwan and China to make the move.

Last Friday, Lien became the first Nationalist Party head to meet with a Chinese communist president since the Nationalists fled to Taiwan in 1949 after losing the Chinese civil war. The meeting formally ended the long and bitter conflict between the Nationalist Party, or Kuomintang (KMT) and the Communist Party of China (CPC), dating back to the late 1920s, when the KMT, which had united with the CPC in fighting for control of China against the country's warlords, turned viciously against its Red allies. Starting in Shanghai in 1927, KMT death squads hunted and killed CPC members and suspected sympathizers. Full-scale civil war broke out in 1946, after the defeat of Japan.

Another Taiwan opposition leader, James Soong, is scheduled to visit China this week.

Japan Urges EU to Maintain Embargo on Arms Sales to China

Japan is urging the European Union to maintain its arms embargo on China. During a summit meeting in Luxembourg, Japan and other nations have expressed concern over how the security balance in East Asia might be changed if the arms ban is ended.

Japanese Prime Minister Junichiro Koizumi told reporters that EU officials acknowledged Japanese concerns on the issue, and indicated they would work out a solution.

"The response was that Japan's concern is very well understood on this question of the arms embargo," he said. "The European Union' while fully understanding the concerns of Japan should like to deal with the matter so that it will not lead to a problem."

Luxembourg Prime Minister Jean Claude Juncker, whose country holds the rotating EU presidency, said no quick EU action is expected on the arms ban.

"It is not at all our intention to take any immediate practical steps in respect to this embargo," Juncker said.

Juncker also said that if the ban were eventually lifted, the European Union would do so in a way not to endanger security. The European Union has discussed a code of conduct and other measures that would monitor arms sales to China if the ban was ended.

Japan's request comes amid increasing tensions between Tokyo and Beijing. There were major, stage-managed demonstrations last month across China against Japanese interests to protest Japanese aggression against China before and during World War II. The protests turned violent at times; but experts disagree as to the exact nature and extent of government control and manipulation.

Japan, the United States, and Britain have long expressed concerns that lifting the ban would give China access to advanced technology that could be used in weapons. This, in turn, could alter the military balance of power in Asia.

The European Union imposed the ban following China's bloody 1989 crackdown on democracy demonstrators in Tiananmen square. China says the embargo is outdated. France and Germany want it lifted as a gesture of goodwill to Beijing, which is the largest EU trading partner.

But other European opinion is building against lifting the embargo. A non-binding resolution passed by the European Parliament last month called for the weapons ban to remain in place.

Meanwhile, as reported last month, another, related issue is looming. According to some western defense experts, China could gain valuable military knowledge in the targeting of missiles and smart weapons through an EU satellite project that will be completed in a few years.

At issue is the European Union's $4 billion-plus Galileo network, which is set to enter service in 2008. With 30 satellites and ground stations, Galileo is intended to establish an extremely accurate navigation and positioning system that will have civilian and military uses.

China agreed in 2003 to invest more than $250 million in the network. Contracts for the first development projects are soon to be signed.

Analysis: Civil War and Betrayal

When Chinese President Hu Jintao met last Friday in Beijing with Taiwan’s main opposition party leader, Lien Chan, most observers hailed the encounter as a formal end to nearly 60 years of civil war between China’s Red and White factions. Hu heads the Communist Party of China (CPC); Lien, the Nationalist Party, or Kuomintang (KMT). Full-scale civil war between the parties broke out in 1946, after the defeat of the occupying Japanese. In 1949, the Communists were ultimately victorious; and the Nationalists, who came to power in the late 1920s after battling warlords for control of China--and once allied themselves with the CPC--fled to Taiwan, taking with them two million refugees and a hoard of treasure.

But the fighting that followed World War II was really a resumption of a civil war that began in 1927 with the KMT’s bloody suppression of the Communists in Shanghai. Led by Chiang Kai-shek, who had studied in Moscow and was backed by Soviet advisers, the KMT launched a White Terror that spread through many Chinese cities. Death squads, including members of the criminal underworld, patrolled the streets, shooting labor leaders, intellectuals, anyone suspected of sympathizing with the Communists. (Stalin’s betrayal of the CPC—Moscow’s support for Chiang essentially set the Communists up for slaughter—was at the root of the Sino-Soviet split that divided postwar international communism.)

In 1934, the Communists were forced to retreat from their bases in southern and central China. Fighting continued even in the face of foreign invasion, as the KMT notoriously continued to attack the Communists throughout the 1937-’45 Sino-Japanese war.

A second White Terror—perpetrated by the KMT against the people of Taiwan—took place in 1947. Nationalist troops massacred some 30,000 native Taiwanese in an uprising that became known as the 228 incident. In the decades that followed, thousands of locals were imprisoned or executed by the autocratic (Leninist modeled) KMT, which did not begin its democratic—and Taiwanizing—transformation until the 1980s. The KMT finally lost control of Taiwan’s government in 2000.

Opponents of the KMT include supporters of Taiwan independence, which the KMT has been against because it conflicts with its historic claim to represent all Chinese. In this regard, the KMT's one-China ideology is ironically now serving Beijing—which regards Taiwan as an inseparable part of China, has hundreds of missiles pointed at the island, and has threatened to use force to prevent it from formally declaring its independence. Taiwan is located just 100 miles off the coast of the mainland.

Lien’s foremost critic is Taiwan’s President, Chen Shui-bian. He defeated the KMT leader at the polls five years ago and again in a rematch last spring. Chen has been put on the diplomatic defensive by his rival’s visit to China and the surprising popularity of his meeting with Hu. Local opinion surveys just released indicate more than half the people surveyed think Lien’s visit is conducive to peace. Only a quarter disagreed.

The Associated Press reported Monday that Chen invited rival China to talks under the principles of "peace, democracy and parity."

"The door for dialogue and negotiation is still open between the two sides," the AP reported Chen said in a speech during a visit to the Marshall Islands.

"Under the principles of democracy, peace and parity, the two sides can at any time begin to have contact, dialogue and negotiations," he reportedly said.

Chen's remarks followed his statement in Taipei on Sunday that he is ready for dialogue with China.

"Regardless which political party or leader China wants to meet, eventually it must talk with Taiwan's popularly elected leader and the Taiwan government, and this will be the normal dialogue to start normalization of relations," Chen said.

Chen said he will send a message with James Soong, another opposition leader, who heads to China on Thursday. He did not say what the message would contain.

Lien is scheduled to return to Taiwan on Tuesday. Visiting Shanghai on Monday, he called for a peace agreement between China and Taiwan.

The issue of normalizing relations with Beijing is obviously emotionally charged. Said one passionate independence advocate, a writer who counts family members among victims of the KMT's Taiwan White Terror: “Betrayal is the life-blood of the KMT. Lien’s embrace of the Chinese regime is a new, dramatic chapter in an epic tale of KMT betrayal and deceit.”