Monday, December 31, 2007

Happy New Year!

'08 Outlook: More Biofueled Food Inflation

The era of cheap food is over, says, Peter Ford of The Christian Science Monitor, and people are going to have get used to it.

What is behind the increases in food prices, already evidenced by protests in Mexico over the cost of corn tortillas, and in Italy over the price of wheat?

"Certainly not bad harvests," Ford says. He identifies two major trends pushing prices up faster than they have risen for over three decades:

One is that increasingly prosperous consumers in India and China are not only eating more food but eating more meat. Animals have to be fed (grains, usually) before they are butchered. The other is that more and more crops--from corn to palm nuts--are being used to make biofuels instead of feeding people.

At the same time, the world is drawing down its stockpiles of cereal and dairy products, which makes markets nervous and prices volatile.

The result, says Joachim von Braun, who heads the International Food Policy Research Institute in Washington, is that "the world food system is in trouble. The situation has not been this much of a concern for 15 years."

How big a factor is the manipulated and mandated biofuels boom?

"It is significant enough for the FAO (UN Food and Agriculture Organization) to be warning about the dangers of turning too much food into fuel, and for the Chinese government, for example, to ban the construction of new refineries that use corn or other basic foods," Ford says. "In fact, earlier this month Beijing announced tax breaks and subsidies to encourage the use of cellulose, sweet sorghum, and cassava (nonfood crops in China) for biofuels."

He adds:

Some analysts estimate that as much as 30 percent of the US grain crop will go toward producing ethanol this year, a doubling from 2006. IFPRI forecasts that if the world sticks to current biofuel expansion plans, the price of corn will go up 26 percent by 2020, and the price of oilseeds (such as soybean, sunflower, rapeseed) by 18 percent. If governments double efforts to produce this alternative fuel source, corn prices are expected to go up 72 percent and oilseeds by 44 percent in 12 years' time.

As usual, it is the poorest people in the world who suffer most, because food takes up a bigger share of their daily shopping bill than it does for richer people. A family in Bangladesh, for example, living on $5 a day, typically spends $3 of that on food. The 50 percent rise in food prices the world has seen in recent years takes a $1.50 chunk--nearly 30 percent--out of the family budget.

Even farmers are not immune. On the whole, small-scale farmers in developing countries buy more food than they sell, so they, too, are net losers. Relatively few peasants have holdings large enough to benefit from price increases.

Chinese Coal Mine Explosion Claims 19

2007 ended on a cruel note in China.

The government said the death toll from an explosion in a northeastern coal mine has risen to 19, with the confirmation of 18 more deaths.

The official Xinhua news agency reported Monday that 18 miners missing since Saturday have been found dead.

Xinhua said the explosion occurred Saturday evening. One miner was found dead Sunday.

The news agency says an initial investigation found that the operators of the mine illegally resumed production after their license had been revoked.

China's mines are among the most dangerous in the world, with safety standards often ignored as mine operators push production amid soaring demand for coal.

A Modest Foreign Policy Proposal





In the spirit of Jonathan Swift's Modest Proposal, China Confidential offers the following foreign policy proposal: outsource US foreign policy to China. Beijing is a proven winner at increasing a great power's international influence and prestige, in contrast with Washington's record of gross incompetence and ineptitude in international relations.

The US could trade its technology for Chinese diplomacy, with incentives and bonuses based on performance--for example, every time a foreign government changes its stance from anti- to pro-American.

Successive US administrations have effectively outsourced the US economy to China; so, why not outsource foreign policy? It would be hard to imagine worse results than we've seen in recent years; and the US could always blame China for future failures and fiascos.

Under the present system, Americans have nobody to blame but themselves.

Sunday, December 30, 2007

North Korea Set to Miss Key Nuclear Deadline

As China Confidential predicted, North Korea seemed set Monday to miss a year-end deadline to disable a key nuclear reactor and declare all its nuclear programs under the terms of the six-nation nuclear disarmament accord.

The Stalinist/Kimist country promised to disable its main nuclear reactor at Yongbyon, north of Pyongyang, and give a full accounting of its nuclear programs by December 31 in return for energy aid and political concessions.

Washington is becoming increasingly concerned that North Korea is stalling on disabling the reactor, which has produced plutonium for its small arsenal of nuclear bombs.

Analysts say Pyongyang is unwilling to provide a satisfactory explanation of a suspected highly enriched uranium weapons program.

North Korea has also refused to come clean on its nuclear proliferation activities.

Fukuda Charms China

Japanese Prime Minister Yasuo Fukuda has wrapped up a four-day visit to China that helped soften historically tense relations between the countries. Reporting from Hong Kong, Kate Woodsome has more on the significance of the visit.

Prime Minister Yasuo Fukuda ended his trip to China with a visit to the birthplace of the Chinese philosopher Confucius. The ancient sage is revered in China and Japan, and aides say Fukuda's outing Sunday aimed to highlight the cultural similarities between the two powers--a key message of his visit.

Both sides are hailing the visit as a success--a significant step forward after China cut high-level talks with Japan under the premiership of Junichiro Koizumi from 2001 to 2006.

Koizumi angered China with his pilgrimages to a controversial shrine to World War Two veterans and war criminals. Fukuda has said that he will not visit the shrine while in office.

In talks with Chinese Premier Wen Jiabao and President Hu Jintao, Fukuda did not sign any major deals or solve a long-running dispute over a natural gas field in the East China Sea. However, he did lay the groundwork for Hu to visit Japan in 2008.

Played Catch with Wen

Fukuda made a big effort to warm relations with his Chinese counterparts. He chatted with school children, visited a Toyota factory, and even donned a baseball uniform to play catch with Premier Wen.

Fukuda described his visit as "very meaningful", and said the two countries can achieve more if they cooperate than if they confront each other.

The next round of diplomacy could come as soon as the spring, if President Hu follows through with an intended visit to Japan.

Economics Will Make Headlines in 2008

Food for thought from Liam Halligan, Economics Editor of Britain's Telegraph. He writes:

China now contributes more to world GDP growth than the US. And China, India and Russia between them now account for more than half of global growth.

The story of 2007 was the "de-coupling" of the world economy from the US locomotive. When the US sneezes, the rest of the world no longer catches a cold.

The story of 2008 will be the "re-coupling" of the world economy with the emerging giants of the East. Nations derided just a decade ago are now taking their place as the powerhouses of global growth. That's a truly seismic change--which means economics will keep making headline news.

Saturday, December 29, 2007

French Ban Smoking in Bars and Cafes

This is a story about the end of civilization as we know it.

The French cafe culture of long conversations over wine and coffee while relaxing in the ever-present haze of cigarette smoke is about to be transformed.

The smoky cafe will be only a memory when France bans smoking in bars, discotheques, restaurants, casinos and cafes on January 1, stubbing out the habit popularized by Jean- Paul Sartre, puffing Gauloises in brasseries.

Cafe and restaurant owners are concerned there will be little conversation with less wine, coffee and food purchased when customers are not allowed to smoke.

In November, thousands of cafe and restaurant owners marched in Paris to protest the upcoming ban, but the French government is moving ahead with implementing the new law.

Smoking restrictions began earlier this year in workplaces, schools, airports, hospitals and other public sites.

Officials say France has at least 65,000 smoke-related deaths each year.

Nepal Abolishes Monarchy

The Nepalese Parliament has voted to abolish the tiny Himalayan nation's centuries-old monarchy, turning the country into a republic. From New Delhi, Anjana Pasricha reports that the decision is expected to pave the way for holding elections and restoring democracy next year.

The decision to abolish the monarchy and declare Nepal a "federal, democratic, republican state" was made by an overwhelming majority in the interim parliament. 270 members in the 329-member house voted late on Friday in favor of ending the monarchy. Only three votes were cast against the motion. The rest abstained.

The vote in the Himalayan country came as no surprise. Days ago, the government had reached an agreement with former Maoist rebels to abolish the monarchy.

That agreement came three months after Maoist rebels had walked out of the government, demanding immediate abolition of the centuries old institution. The Maoists have waged a decade long civil war against the monarchy.

Confirming Compromise

Friday's vote confirms the earlier agreement and represents a compromise between the rebels and political parties. It will be implemented after elections are held--probably in mid-April.

The king has traditionally been considered a reincarnation of a Hindu God, Vishnu. King Gyanendra heads a dynasty that dates back to the 18th century. He became King when much of his family was killed in a palace massacre in 2001.

But King Gyanendra fell from favor when he dismissed the government and grabbed absolute power in 2005. He only handed back power to political parties following weeks of bloody protests in April 2006.

The king's power-grab helped pave the way for Maoist rebels and political parties to join forces to end his rule, and enter a peace deal.

The elections are expected to end restore democracy and end a tumultuous period in the country's history.

Activists March for Democracy in Hong Kong

Hundreds of pro-democracy activists marched in Hong Kong Saturday to protest China's decision to put off full democracy for more than 10 years.

China says it will allow Hong Kong to directly elect its leader by 2017 and all of its lawmakers by 2020. Hong Kong's pro-democracy parties have been pushing for universal suffrage in 2012.

British Foreign Secretary David Miliband issued a statement in which he called the delay beyond 2012 a "disappointment."

The Standing Committee of the National People's Congress (China's parliament) released its decision Saturday, after Hong Kong chief executive Donald Tsang submitted a report on reform.

Under the current system, only half of Hong Kong's 60-seat legislature is elected, and the territory's chief executive is chosen by an 800-strong committee full of Beijing loyalists.

Universal suffrage was guaranteed in the Basic Law that was established when Britain handed the territory back to China in 1997, but no timetable was set.

US Reaching Out to Pakistan's Nawaz Sharif

Foreign confidential....

The United States is desperately seeking a solution to the Pakistan problem. Having failed to engineer a power-sharing arrangement between the military-run regime of President Pervez Musharraf and Pakistan's principal opposition leader, Benazir Bhutto, Washington is reaching out and attempting to engage the main beneficiary of her assassination--Bhutto's bitter rival, the Islamist-leaning Nawaz Sharif.

His opposition party is called the Pakistan Muslim League-N (Nawaz) Group.

As prime minister during the 1990s, Sharif supported the Taliban, authorized nuclear bomb tests against US wishes, and tried to introduce Islamic law.

Bhutto's death has made mincemeat of US policy toward Pakistan, which, under Musharraf, has been an imperfect but important ally against the Taliban and Al Qaeda. The terrorist group is strengthening its position in Pakistan's lawless tribal areas as well as in Karachi and other cities.

An Islamist takeover in Pakistan is the civilized world's ultimate nightmare, given the country's nuclear arsenal.

The US, which spent some $100 million over the last six years on improving the security of Pakistan's nuclear program, insisted yesterday that the arsenal was safe in spite of the upheaval in the aftermath of the assassination of Bhutto.

Pakistan claims to have about 80 to 120 warheads. The weapons are supposedly stored in bunkers in about half-a-dozen military bases and, to provide a degree of safety, the components are kept separately.

Following Bhutto's assassination, Sharif announced that he will boycott the January 8 Pakistani presidential elections and called for Musharraf to resign due to the lack of security around Bhutto. Sharif rushed to the hospital where Bhutto was taken, comforted her supporters, and sat next to her body. He called Bhutto his sister and vowed to avenge her death.

Shortly after the murder, Xinhua News Agency reported that four of Sharif's party workers had been shot dead at Karal Chowk in an attack on a procession to meet him. Although the gunmen were described as "unidentified", Sharif accused Musharraf supporters.

Friday, December 28, 2007

China and Japan Agree to Fight Climate Change

Accord Reflects Warming Trend

Reflecting warming ties between their two countries, Japanese Prime Minister Yasuo Fukuda and Chinese Premier Wen Jiabao signed an agreement Friday to combat climate change caused by global warming.

The agreement aims to promote scientific and technological cooperation, and calls for Japan to invite 50 young Chinese researchers every year for the next four years to be trained to combat global warming.

Fukuda, who is on a four-day visit to China, had placed climate change at the top of his agenda for the meeting. Japan is eager to help China fight pollution that is increasingly felt across the sea in Japan.

But the talks between Fukuda and Wen yielded no major breakthroughs on a key energy issue dogging bilateral relations--a festering dispute over how to develop natural gas resources in a contested part of the East China Sea.

Both men said their talks had made "certain progress" on the gas issue; and a Japanese diplomat said there was consensus to resolve the issue before Chinese President Hu Jintao visits Japan next spring.

The Christian Case Against Ethanol

Norman Jameson, editor of the Biblical Recorder, one of America's oldest and most respected Christian publications, has published a moving polemic against corn-based ethanol. An abridged version of his essay, titled "Burning Food Charcoals Witness," follows.

There are many reasons to abandon ethanol as a fuel source before that bad idea becomes a curse that even volume cannot redeem.

Just three of the reasons are: ethanol is bad energy policy, bad economics and bad witness.

Ethanol is an additive blended with gasoline, that theoretically "saves oil." Most ethanol in the US comes from corn.

Why should you care? American demand for corn--20 percent of our crop now goes to produce ethanol--is driving up corn prices worldwide, nearly doubling in recent months. If the raw product doubles in price, everyone who eats corn based foods pays more.

Bad Witness

Corn is a food staple for many millions of people. Americans absorb a price increase fairly easily but what of those for whom a tortilla is a barely attainable food staple at 20 cents? What happens to them when it is 40 cents?

With America's international good will at its lowest point in my lifetime, what opinion can we expect of the world's population about our habit of pouring liquid food into our fuel tanks?

I try to separate culture from religion. The two form a volatile and barren union. It is not always possible, however, for "American" missionaries in other lands.

They carry with them the baggage of this culture among people who know us only as selfish, arrogant and callous in our disproportionate use of resources.

Think of Lottie Moon whose name means missions for Baptists. In 1912 she fed her starving Chinese friends from her own scarce resource until she had no strength to live. Money and transportation issues kept her from receiving food supplies, but what if she had been forced to say "there is no food because we must feed our cars?"

What is the missionary's answer to a starving mother who wonders why Americans grind corn for their cars when her baby and 36,000 others daily die for want of a kernel?

Bad Policy

Researchers David Pimentel from Cornell and Tad Patzek from the University of California at Berkeley say ethanol production in the United States does not benefit our energy security, agriculture, economy or the environment.

Ethanol is a distraction keeping us from pursuing more legitimate sources like solar, wind and hydrogen energy and costs $3 billion in state and federal subsidies each year.

Iowa State University economist Bruce Babcock says the country could actually face a shortage of corn as ethanol demand outstrips supply.

Americans somehow equate one gallon of ethanol to one less gallon of foreign oil. We don't consider the residual effects like a 7,900-square-mile patch in the Gulf of Mexico devoid of life because the nitrogen based fertilizers running off mid-west farms, into the Mississippi River, and down into the Gulf, are suffocating the fish, crabs and shrimp.

Bad Economics

The cost of everything that includes corn goes up because of the demand by ethanol producers - from corn flakes, to sweetener to chicken feed.

But the overwhelming rationale to run from ethanol as fuel is simply the fact that the ethanol process requires 29 percent more fossil energy to convert corn into fuel than the fuel the corn eventually produces, according to the research of Pimentel and Patzek.

That process includes the energy required to plant, cultivate, fertilize, harvest, dry, store and process corn into ethanol.

But because we do not count all the costs, ethanol seems to be an easy supplement. And "easy" is the word Americans relate to better than any other, with the possible exception of "free."

About 3.6 billion gallons of ethanol were produced last year in the United States, according to the Renewable Fuels Association, an ethanol trade group.

According to the research, we were able to produce those 3.6 billion gallons with just 4.6 billion gallons of fossil fuel. Sounds like the hat store owner dealing in volume.

I grew up in Wisconsin. Summer drives home through miles of tall corn in Indiana and Illinois renew me with peace and confidence that God is on his thrown and America's breadbasket is feeding the world.

Christians rightly advocate for very personal, intimate moral standards. But sometimes on issues that have the potential to negatively affect the entire species, we're not sure of the science, so we remain curiously silent. Maybe it's my agricultural background that elevates corn and energy to a higher profile.

Food and shelter are the two most basic human needs. When Christians ignore potential calamity on either of those we marginalize our witness. What hungry person wants to hear about Jesus from someone who pours food into his gas tank?

I encourage you not to help create a market for ethanol. If no market develops, the push for this grievous fuel supplement will die.

And we can concentrate on finding a way to get corn into people's bellies rather than our fuel tanks.

US Says NK Unlikely to Meet Nuclear Deadline

Amid mounting international concern that Pakistan's formidable nuclear arsenal could fall into the hands of the country's pro-Al Qaeda Islamist factions--or Al Qaeda itself--an American State Department spokesman has acknowledged that nuclear-armed North Korea may not meet its deadline to submit a full declaration of its atomic activities.

Tom Casey on Friday encouraged Pyongyang to turn in the declaration by the end of the month. But Casey said it is more important that the document be full and accurate than completed on deadline.

His comments echoed remarks made the day before by South Korean Foreign Minister Soong Min-soon.

Casey also said a State Department official monitoring North Korea's nuclear disablement process has met with officials in Pyongyang to discuss the situation.

A Matter of Aid?

A North Korean official said earlier this week that Pyongyang had not received promised aid in a timely manner, and was left with no choice but to slow the disablement of its Yongbyon nuclear reactor complex.

Casey said he was unaware of any delays in shipments of oil and related aid to North Korea.

The United States and South Korea pledged to give the North the equivalent of one million tons of heavy fuel oil in exchange for disabling its nuclear weapons facilities and for disclosing its nuclear programs.

US officials are demanding that Pyongyang account for evidence of a secret uranium enrichment program that it has never publicly admitted.

US Dairy Farmer: Biofuels are a Green Scam

Biofuels are, at best, a scam or a bondoggle, at worst, a monstrous menace masked in green, according to more and more scientists, environmentalists, and opinion leaders across the political spectrum. Yesterday's China Confidential featured excerpts from an anti-biofuels opinion article that appeared in America's politically conservative Human Events. Today's contribution on the topic, excerpted from an essay published by the left-of-center Counterpunch, comes from Jim Goodman, an American dairy farmer in Wonewoc, Wisconsin.

The nation's dairy farmers have been hard hit by the rising cost of animal feed caused by the government mandated and subsidized corn-based ethanol boom.

Goodman writes:

Will we be able to produce significant levels of energy crops without impacting world food supplies and prices? Perhaps not. Biofuel production could push food prices up as much as 20-40% according to The International Food Policy Research Institute in Washington....

Biofuels are a greenwash scam, a feel good solution for the end of cheap oil. When one considers the industrial agricultural system that is necessary for their production, biofuels are anything but sustainable. Costly inputs of fuel, fertilizer and biotech seed will challenge the profitability of Northern farmers while peasant farmers will continue to be evicted to make room for monocultures of corn, soy, sugarcane and oil palms. Food prices will climb, hunger and poverty will increase and we will be no closer to energy independence or truly renewable fuels.

Now that the President and Congress have, through the Farm and Energy Bills, locked us into large scale production of energy crops and the belief we can continue to live our lives as usual with no pain, what do we do? We need energy solutions that will work; tough vehicle fuel standards, new public transportation systems, real renewable fuels like solar and wind and mandated commitments to conservation and recycling, now, not a 2030 "pie in the sky".

So, when we drive to the supermarket and complain about the high prices, then proceed to load up our flex-fuel SUV, will we think about the 50% of the worlds population that lives on less than $2 a day? Will we even consider that when we bought into the biofuel scam we also took away their food sovereignty and may have handed them a death sentence?

Taiwan Court Says Ma Not Guilty of Corruption

Taiwan's High Court has cleared the opposition's presidential candidate, Ma Ying-jeou, of charges of corruption and breach of trust. As Kate Woodsome reports from Hong Kong, the ruling clears the way for Ma to run for the country's top post in next year's elections.

The court in Taipei found the Nationalist Party's Ma Ying-jeou not guilty Friday of diverting $344,000 in public funds to his personal account while serving as Taipei mayor between 1998 and 2006.

The court also found him not guilty of breach of trust. The judgment upholds a lower court's finding from August.

Triumphant Ma supporters cheered and waved flags outside the courthouse in response to the ruling. If convicted, Ma would have been barred from the upcoming presidential election. Instead, he is on track to face Frank Hsieh of the ruling Democratic Progressive Party in the March 22 election.

Dachi Liao, a political science professor at Taiwan's National Sun Yat-Sen University, told this reporter that, despite Ma's courtroom victory, the DPP likely will still try to use the case against him.

Moral Issue

"Currently they already accuse Ma is morally incorrect, not really legally incorrect," Liao said. Maybe legally OK, but morally, he committed a certain problem. So, Ma still has to be very careful dealing with this kind of issue."

The corruption charges come from a decades-old system that allots special funds to higher-ranking government officials. Analysts say the rules governing the funds are vague.

Ma has always denied wrongdoing, saying Taiwan law recognized the fund as an official subsidy of his salary.

Prosecutors Can Appeal

Prosecutors have one last chance to appeal Ma's acquittal. If it happens, the appeals trial would be at about the same time as the presidential election.

Liao said that in the court of public opinion, Ma does not have to worry too much.

"For [the] majority of people in Taiwan just don't believe Ma Ying-jeou has really committed a certain crime," she explained.

Ahead of DPP Rival

Ma is running on a platform that promises to improve Taiwan's economy with strengthened trade ties with mainland China.

Public opinion polls show him well ahead of his DPP rival, who favors complete independence from China.

Taiwan broke from China in 1949 during a civil war. Taiwan is self-governing and democratic. But Beijing considers the island a part of its territory and says it will go to war with Taiwan if it formally declares independence.

Thursday, December 27, 2007

Pakistan's Darkest Hour

As if to highlight China's close ties to Pakistan, on the same day that Pakistan's former Prime Ministter, Benazir Bhutto, was assassinated, Xinhua reported that the two countries deepened their business relationship.

The Pak-China Investment Company, the first joint venture between Pakistan and China in financial sector, was launched Thursday in eastern Pakistan's Lahore city.

The 50/50 joint venture will perform investment banking business on commercial basis in the financial, infrastructure, services, mining, industrial manufacturing and non-manufacturing sectors in Pakistan with registered capital of $200 million.

Regarding the assassination, Xinhua said Foreign ministry spokesman Qin Gang said China “is shocked at the killing of Pakistan’s opposition leader Benazir Bhutto and strongly condemns the terrorist attack."

“We also extend condolences to the families of Bhutto and other victims,” Qin said.

China is one of Pakistan’s closest allies. It maintained strong relations with Bhutto when she was in power, and has continued its close ties with the government of current President Pervez Musharraf.

So much for official announcements. China could consider more meaningful action--specifically, using the awful event as an opportunity to reflect on China's dangerous and disturbing alliance with radical Islam, including Islamist Iran. After 9/11, the murder provides yet more proof that the clerical fascist creed is a menace that can't be appeased or accommodated--or cynically exploited--and instead must be defeated.

Reacting to the assassination, the Hindustan Times published a powerful editorial, an excerpt of which follows.

Make no mistake. Pakistan has plunged into one of its gravest crises ever. The aftermath of Benazir's assassination in Rawalpindi is about survival of the state, not point-scoring.

There is an organic link between the bomb blasts that have become a part of daily life in Rawalpindi, Karachi, Kabul or Kandahar.

Al Qaeda, the Taliban, Jaish-e-Muhammad, Lashkar-e-Tayyeba are all one. Their faces differ, but they act as one.

Ask President Pervez Musharraf. He narrowly escaped the jihadis, many of them from within the Pakistani Air Force, who twice attacked his convoy in December 2003. He survived by the skin of his teeth. Benazir didn't.

Musharraf was the army chief, Benazir wasn't. She was the leader of a political party that had been out of power since 1997 and was making a desperate bid to ensure that the Pakistan People's Party would once again rule from Islamabad.

All the signs of her killing were there. On October 19, 139 people were killed in Karachi as a victory procession went through the streets of Sindh's capital to welcome Benazir.

But she continued to campaign, showing political courage where a lesser leader would have chosen to stay indoors.

Far from turning Pakistan away from the politics of Islamist extremism, General Musharraf's policies of "enlightened moderation", a case of one step forward two steps back, have firmly entrenched the jihadis in the country's politics.

Yes, Musharraf arrested many Al Qaeda men at the behest of the US after 9/11. But his men didn't have their hearts in the job. They didn't believe in it.

Today is not the day to play the blame game. Pakistan's establishment knows what it did in the past: whom it enticed into planting bombs and hurling rhetoric. The cancer of extremism is now in its malignant phase.

No Jimmy Carter, no George W. Bush can bail Pakistan out of this one. It's not about money or handouts. It's a battle for the country itself, of the safety and security of the ordinary people of Pakistan, their near and dear ones and, yes, of the rich and famous: the politicians and the generals.

Benazir was more dangerous to the jihadis than Musharraf. She was a political leader who could fight the battle of ideas, who could tell people why the jihadis were not their friends. That's why she had to be killed.

US Conservative Blasts 'Biofuels Balderdash'

Energy Tribune Editor Argues US Mandates Benefit Agribusiness and Rising China

Another politically conservative American voice has been raised against the mandated madness of corn-based ethanol and other biofuels. Michael J. Economides who is the editor of Energy Tribune, has written an opinion piece titled "Biofuels Balderdash" for Human Events. He argues that China will benefit from America's push for biofuels at the expense of oil and gas development. Excerpts appear below.

Let’s just consider the new “mandates” on biofuels, a bad idea of such magnitude it could only come from Congress....

First, Congress mandated that by 2022, biofuels will provide a total of 36 billion gallons per year. None of these fuels can ever make any market-based sense without government subsidies. Of the total, 15 billion will come from “conventional” biofuels--read corn-based ethanol--with all the often-reported impact on food prices, ground water and contamination of surface waters....

By amazing coincidence, as the energy bill was signed, China’s CNPC think tank released their forecast for that country’s demand in all things energy (only until 2015, but enough for our purpose) and from there I gleaned their transportation fuel demand. Extrapolating to 2022 here is how it looks like:

China’s transportation fuel demand will grow from about 60 billion today to at least, 130 billion by 2022, a 70 billion gallon increase, almost twice the US increase.

Paying all that money to produce more corn-based ethanol and even more money to chase the elusive cellulosic biofuels is not just a subsidy to special agribusiness interests in the United States. It amounts to a subsidy for China, because it will allow that emerging superpower to seek oil resources unhindered and with diminished competition from the current reigning superpower.

Oil and energy resources in general have defined national power for more than a century with both World Wars and many regional conflicts having a direct link to them. The United States is poised to relinquish a large swath of power by giving China a by in the world of superpower competition. Such a voluntary giveaway is unprecedented in modern history.

Energy Tribune is also featuring a report on the gasoline supply shortage in China, which has led to long lines and rationing--and civil unrest--in some Chinese cities.

US Ethanol's Iron Heel: Researchers of Presently Available Grass Energy Must Bow to Futuristic Fuel

Carbon Confidential....

The agribusiness industry's grip on the government of the United States is so powerful that US researchers investigating the energy potential of the nation's prairie grass--which can be burned to produce heat and generate electricity using presently available technologies--must swear allegiance to a nonexistent agrofuel in order to secure federal grants to support their research.

The academicians are advised to affirm--in writing--that their research projects will advance the cause of cellulosic ethanol, the ethanol industry's holy grail, which many experts believe will never be fully commercialized. Mere mention of the combustible value of switchgrass and other perennially growing, warm season grasses can condemn a proposal and result in the effective blacklisting of the individual grant applicant.

Most prairie grass in the United States was long ago plowed under for the wheat and corn monocultures. But the grass can be reintroduced, grown and harvested in a sustainable way, and converted into pellets or burned as round bales.

The northeastern region is the current capital of prairie grass. Cornell University's fascinating grass bioenergy website states:

New York State has about 1.5 million acres of unused or underutilized agricultural land, most of which is already growing grass. Grass biofuel production does not need to divert any of the current agricultural productivity into the energy market; this biomass industry can be completely independent from, but complimentary to, the production of food or animal feed. It is also a very “farmer-friendly” way to get producers exposed to biofuel production.

Wednesday, December 26, 2007

Japan Buying Hungary's Hot Air

Carbon Confidential....

Japan has rejected proposals for a carbon tax on fossil fuels and a wider emissions trading scheme on industry, according to Agence France-Presse. Instead, the government has opted to push for further voluntary measures. These involve energy efficiency measures by householders and business owners and more use of solar and biomass-generated energy by power companies.

At the same time, AFP reports, Japan has struck an in-principle agreement with Hungary to buy some of its excess AAU emission allowances granted under the Kyoto Protocol. These hot air credits are in abundance in Eastern European nations that have seen their carbon emissions fall well below Kyoto’s 1990 benchmark as Soviet-era industry shut down, delivering them a windfall in tradable credits.

Japan’s emissions are 6 per cent above 1990 levels against a target for a 6 per cent reduction. This means in the absence of other reduction measures, the government will have to buy heavily in international carbon market for offsets and allowances if its to meet its target during the 2008-12 Kyoto commitment period. Japan and Hungary won’t agree quantities or prices for any carbon credit deals until next year.

China Pledges Fair-Play Pursuit of Energy

China said Wednesday that it does not pose a threat to world energy security because it has depended mainly on domestic resources to fuel its economic ascent.

Beijing also pledged that its global pursuit of oil and gas will be carried out in a spirit of fair play and international cooperation so as not to disrupt sensitive international markets.

The government gave those assurances in its first white paper on energy, released by the State Council Information Office.

"China did not, does not and will not pose any threat to the world's energy security," the report declared.

The government also repeated its argument that China should not be forced to put a limit on greenhouse gas emissions at this stage of its economic development, as urged by environmental activists and some Western governments.

"China is a developing country in the primary stage of industrialization, and with low accumulative emissions," the report added, referring to its long-term average

At the same time, China pledged to develop renewable energy as a long-term solution to its greenhouse gas emissions and domestic pollution. The government plans to continue its emphasis on hydroelectric dams, it said, but also will push for more extensive use of solar energy, wind power and nuclear plants to generate electricity without burning coal.

"China gives top priority to developing renewable energy," the report promised.

The white paper says renewable energy would account for 10 percent of the total consumption in 2010, and the figure would rise to 15 percent in 2020.

Diplomats Expect North Korea to Miss Deadline

North Korea is likely to delay disabling its key nuclear facilities and declaring all its nuclear programs because heavy fuel oil it has been promised as a reward is late.

So say diplomats involved in the six-nation nuclear negotiations.

But China says its vassal will have completed by year's end the majority of work to disable and declare all of its nuclear programs.

At a meeting in Seoul with his Chinese and South Korean counterparts Wednesday, a North Korean Foreign Ministry official, Hyon Hak Pong, said the speed of the disablement process is being slowed. The North Korean cited a delay in receiving promised economic aid from the United States and other parties to the agreement.

Under the six-nation agreement, North Korea promised to dismantle its nuclear facilities and to declare all of its nuclear programs by the end of this month. In return, Pyongyang was promised energy assistance and political concessions.

China's Super-Rich Buying Yachts

For boat manufacturers, the yachting market of the future is China, where luxury sailing yachts and motorboats are becoming the ultimate accessory of the super-rich. New marinas are being developed, and the government is promoting sailing ahead of next year's Olympics. Claudia Blume reports from Hong Kong.

China's market for pleasure boats is still in the infancy stage. Just 400 private boats are registered nationwide, and almost all of them are motorboats.

But Adrien Magnan of Marine Dragon Consulting in Shanghai, which specializes in the Chinese yachting industry, says the amount spent on luxury boats has been leaping upwards by tens-of-millions of dollars in the past few years.

"If you look at the increase, it's about 100 percent every year," he explains. So 2005 was about $30 million. 2006 was about $50 million. Now we are exceeding $100 million in imports of yachts. And so, if next year it will be $200 or $400 million, in a few years it will catch up with countries like Italy or France in Europe. I wouldn't be surprised to see China in the top five markets in less than five years."

There are about half-a-million US-dollar millionaires in China today. Sales of luxury items there are skyrocketing, and yachts are becoming the ultimate accessory of the ultra-rich.

Mike Simpson, owner of Hong Kong-based yacht dealer Simpson Marine, started selling boats in China three years ago. He says his wealthy Chinese customers are seeking a Western lifestyle.

"As soon as they have money, they are all reading these lifestyle magazines. It's almost like step-by-step," he says. "It's the fast cars, it's the Bentley or whatever it is, and then the very smart house, which will probably be French Renaissance--and they get European architects to design it for them--then, of course, the European fashion and, now, it comes to the yacht. The yacht is part of that whole thing."

Shanghai's International Boat Show has already become one of Asia's largest. Smaller marine fairs are held in Qingdao and Dalian in Northeastern China and in Shenzhen and Zhuhai in the South.

Pleasure sailing, virtually unheard of in China until a few years ago, is becoming increasing popular. Last month, around 60 teams sailed across the border from Hong Kong to Shenzhen in the China Cup Regatta, the country's first major boat race. This summer, a Chinese team joined the America's Cup, the world's most famous sailing competition, for the first time.

Adrien Magnan says that despite China's long coastline and many lakes, there are fewer than 10 marinas on the whole mainland, with a total of about 1,000 moorings. But he says more are being developed, for example in Xiamen on the East Coast or on Hainan Island in the Southeast, as local governments realize the positive economic impact of marinas.

"Definitely. I mean, they are trying to open the coastline to the rest of the world," he said. It creates business, it creates real local economy. A marina is more than a place where you park yachts. It's a real profit-maker for the whole city in terms of brand image, in terms of attractiveness of a city, and it generates, of course, revenues and employment for the city."

Both Magnan and Simpson say a lack of infrastructure, expertise and repair facilities are some of the challenges for the development of China's yachting industry. But they say the biggest obstacle is a lack of uniform regulations.

The status of pleasure motor yachts has not yet been clarified, and there is no national system for licensing sailors. If a skipper wants to sail a yacht from one province to another, for example from Shanghai up the coast to Qingdao, he has to get cruising permits from the authorities in each location.

Tuesday, December 25, 2007

China-India Joint Military Exercises

India and China have wrapped up five days of joint military exercises, the first such drill involving the the world's two largest armies.

Troops from both countries participated in a mock scenario Tuesday, during which they targeted a training camp set up by terrorists along the Indo-China border.

The exercise wrapped up the joint training mission named "Hand-in-Hand, 2007," during which 100 troops from India and China gathered in southern China's Yunnan province.

Indian officials have volunteered to host another joint military exercise next year.

Both governments are trying to counter domestic separatist movements.

In China, the government has waged a campaign against Uighur Muslims seeking independence in the oil-rich northwestern region of Xinjian. India has long battled Islamic militants in Kashmir and communist insurgents in poor, rural communities.

India and China have tried to expand trade and diplomatic ties in recent years although they still have several territorial disputes. The two countries fought a brief war in 1962 over their disputed Himalayan border.

Sunday, December 23, 2007

China Raises 800-Year-Old Ship

Talk about a Christmas present!

Rising China's archeologists have raised a merchant ship from the bottom of the China Sea that sank 800 years ago during the Song Dynasty.

Named the "Nanhai No. 1" or "South China Sea No. 1," the ancient ship was filled with treasures, including more than 4,000 containers made of gold, silver and porcelain. Archeologists also discovered 6,000 copper coins aboard the vessel.

A new museum built to house the resurrected ship will open next year, where visitors can watch the excavation of the ship from silt encrusted on it.

"Nanhai 1 was discovered in 1987 off the coast near Yangjiang city. It has been recognized as one of the oldest and largest merchant vessels sunk in the sea.

China's Xinhua news agency says archaeologists began in May building a steel basket as tall as a three-story building to raise the vessel. It quotes the head of the archeological project as saying an estimated 60,000 to 80,000 items still remain onboard the ship.

Green Groups Slam Biofuels

“The Earth will not give us the extra biomass needed to keep on existing as we do. For a while we might continue to rob this biomass from the poor tropics, but the results are already disastrous for all humanity.”

-Professor Tad Patzek, University of California Berkley

Today, biofuels provide about 1% of global transport fuel. Already, they are causing serious harm to the climate, to communities, food sovereignty and food security and to biodiversity.

Most biofuels are agrofuels--made from crops and trees grown specifically for that purpose, such as sugar cane, palm oil, soya, jatropha or maize.

Agrofuel expansion means more intensive agriculture and thus more agro-chemicals (including synthetic fertilisers). It also means more destruction of natural ecosystems which play a vital role in regulating the climate, and the displacement of millions of small farmers, pastoralists and indigenous peoples.

Figures for ‘life-cycle greenhouse gas reductions’ from biofuels tend to be based on non-systemic micro-studies, which look at individual fields or plantations but do not consider the wider impacts. On a small scale, locally produced and used, biofuels can play a role in meeting the needs of low-energy communities--using, for example, intercropping, or biogas from manure or sewage. If we try to replace a significant proportion of our fossil fuel use with agrofuels the impacts which are already severe, will become irreversible.

Five reasons why agrofuel expansion will make global worming worse:

(1) Deforestation and peat destruction. The demand for biofuels is pushing up commodity prices worldwide. This is driving monoculture expansion, including palm oil, soya and sugar cane, crops already linked to the destruction of tropical forests and other vital ecosystems.

(2) Deforestation causes at least 18% of global greenhouse gas emissions. According to the Intergovernmental Panel on Climate Change, the destruction of peatlands causes even more emissions than deforestation.

(3) Climate system impact. Ecosystem destruction worsens climate change not just because it releases vast quantities of carbon: A recent Australian study found that, in southern Queensland, land clearance accounts for half of the regional warming and loss of rainfall in the worst affected areas. A similar warming and drying effect could soon lead to a failure in the rainfall cycle on which the Amazon forest depends. If this was to happen, then up to 120 billion tonnes of carbon could be released over a few years or decades, and rainfall systems on which much of Latin America and the southern United States depend for farming could collapse, too.

(4) Biodiversity is essential for supporting the Earth’s carbon cycle, nitrogen cycle, water cycle and soil fertility, on which we depend for our survival. Agrofuels mean a shift from biodiverse ecosystems and farming systems to more industrial monocultures. GM crops and trees used for agrofuels pose further unpredictable risks to biodiversity.

(5) Industrial agriculture is responsible for some 14% of global greenhouse gas emissions, and for most nitrous oxide emissions--a greenhouse gas nearly 300 times as powerful as carbon dioxide. More agrofuels means more nitrate fertiliser and thus more nitrous oxide.

Second-Generation Agrofuels

If second-generation agrofuels become commercially available, this will greatly increase pressures on the world’s forests. Eucalyptus, poplars and other trees will probably become prime feedstocks. Industrial tree plantations are displacing ecosystems and communities, depleting freshwater supplies, increasing the use of agro-chemicals with serious health impacts on people, and wiping out biodiversity. Plantation growth could increase exponentially if it was to become a source of transport fuels--and much of this could be GE trees.

Five reasons why agrofuels undermine climate justice:

(1) The South fuels the North. Most agrofuel expansion is planned in the global South, but most of the demand comes from the global North. Tens and perhaps hundreds of millions of hectares in Asia, Latin America and Africa are to be converted to monocultures, largely to grow fuel for car drivers in the North.

(2) Harming food security and food sovereignty. The UN Special Rapporteur for the Right to Food has called biofuel production a ‘crime against humanity’ because it displaces food production, drives up food prices and threatens the food security of large numbers of poor people.

(3) Land grab and refugees. The Chair of the UN Permanent Forum on Indigenous Issues has warned that up to 60 million indigenous peoples are at risk of becoming ‘biofuel refugees’.

(4) Policies imposed by Northern governments. The agrofuel market is being driven by government targets and obligations in the US, Europe and elsewhere, which have been imposed without taking account of the views of communities in the global South, including indigenous peoples, who are being directly affected by those decisions. Now, ‘standards’ and ‘certification’ are being discussed in a similar undemocratic and unrepresentative way.

(5) Ecological devastation. Large-scale agrofuels mean faster global warming, more deforestation, freshwater depletion, biodiversity losses and soil degradation. They also mean more poisoning from agro-chemicals. Communities in the global South and indigenous peoples are the first to bear the brunt of climate change and environmental destruction.

We need real and just solutions to climate change--deep cuts in fossil fuel burning and in the consumption of energy, forest products and agricultural commodities in the global North. Economies based on economic growth are unsustainable. We also need large-scale transfer of funding from unsustainable energy sources like fossil fuels and agrofuels to truly sustainable ones such as solar and wind power.

World Rainforest Movement
Watch Indonesia

Saturday, December 22, 2007

Sweden's OMX Acquiring Norwegian Energy Trading Firm, Aims to Build Big Carbon Market

Carbon financial news....

Stockholm-based OMX, the Nordic stock exchange operator and technology group that is being acquired by Nasdaq, is buying the energy derivatives business of Nord Pool of Norway for about $412 million. The deal is expected to be completed by mid-2008.

OMX manages stock exchanges in all the Nordic countries apart from Norway. The company wants to turn Nord Pool into the global centre for trading in energy derivatives and carbon dioxide products. It plans to expand the exchange's geographical reach and is considering introducing new products such as gas, oil and freight derivatives

OMX said that it aims to “build a leading European market for CO2 products.”

Nord Pool’s “experience and knowledge of the financial commodity market, complemented by OMX’s technology and its customer base, offer great opportunities for creating a strong partnership, one which will be well-positioned to benefit from the development of a global market for carbon dioxide emissions allowances in the wake of the Kyoto protocol,” said Magnus Bocker, chief executive of OMX, which is in the process of being acquired by America's Nasdaq Stock Market.

OMX provides technology to more than 60 exchanges and clearinghouses in more than 50 countries, which Bocker said “gives us a unique opportunity to broaden Nord Pool into the world.” Nord Pool, which is a joint venture of Norwegian power company Statnett and Swedish Svenska Krafnat, has been using OMX’s Click XT trading platform for 11 years.

The new OMX unit that will be created from the Nord Pool consulting and derivatives businesses. Nord Pool’s clearing unit will be integrated into OMX’s clearing operation, which the companies say will result in economies of scale that will lower transaction costs for customers.

Nord Pool Spot, which operates the spot market for daily physical electricity prices in the Nordic market, is not included in this transaction.

Carbon trading has been the focus of several recent initiatives by major exchange and financial institutions. Joining established markets such as the London-based European Climate Exchange and EEX will be the consortium-owned Green Exchange, which was introduced earlier this month and expects to begin trading in early 2008. NYSE Euronext is developing an international carbon market, set to roll out early next year, with French bank Caisse des Depots et Consignations. The Australian Securities Exchange has said it may begin trading carbon emission futures in 2009; and interdealer broker Icap has announced plans to launch an exchange for emissions, energy and transport products.

Friday, December 21, 2007

Vietnam Backs Biogas Over Biofuels

Viet Nam is backing biogas--production of methane from manure and agricultural waste--and banning biofuels.

Hanoi rejects "biofuel fever" as a crime against humanity.

The Communist government says biofuels will aggravate the situation of hungry people around the world and possibly lead to an environmental catastrophe.

Merrill Lynch Seeking Foreign Investor

The Thundering Herd is for sale.

America's almost century-old Merrill Lynch & Co. is aggressively seeking foreign investment to help cushion an anticipated big fourth-quarter writedown in January.

Wall Street analysts predict a Chinese or Middle Eastern company or fund will buy 5-10% of Merrill Lynch.

Rice Calls Taiwan's UN Bid Provocative

Foreign confidential.... The United States is losing patience with Taiwan, as shown by Friday's news conference with US Secretary of State Condoleezza Rice.

Rice criticized plans by Taiwanese President Chen Shui-bian to hold a referendum on United Nations membership for the island under the name Taiwan. Rice called the planned vote in March provocative.

She used an opening statement at her year-end meeting with the media to deliver the strongest US criticism to date of the referendum plans by Chen.

The Taiwanese leader intends to hold the referendum in March alongside presidential elections, ignoring repeated criticism by the US and warnings from China.

Rice said the US remains committed to peace and security in the Taiwan Strait and opposes any threats of the use force or unilateral moves by either side to change the status quo.

She said the US has a one-China policy and does not support Taiwan independence:

"As we have stated in recent months, we think that Taiwan's referendum to apply to the United Nations under the name Taiwan is a provocative policy," Rice said. "It unnecessarily raises tensions in the Taiwan strait, and it promises no real benefits for the people of Taiwan on the international stage. That is why we oppose this referendum."

Deputy Secretary of State John Negroponte said in August the referendum plan was a cause of great concern for the US because it is seen by Washington as a step towards an independence declaration for Taiwan and an alteration of the status-quo.

Anticipating the new statement by Rice, Taiwanese foreign minister James Huang said this week it was regrettable that the planned vote was being demonized as an independence step. Huang said the US should trust in the wisdom of the Taiwanese people in holding the referendum.

Several key conservatives in the US Congress have expressed support for the referendum.

The US switched diplomatic recognition from Taiwan to the communist mainland in 1979, but maintains unofficial relations with Taiwan through nominally-private institutes in Washington and Taipei.

In his August remarks, to the Hong Kong-based Phoenix TV, Negroponte said Washington is committed to the defense of Taiwan under the 1979 Taiwan Relations Act of Congress, which provides for sales of defensive weapons to the island.

China claims sovereignty over Taiwan, which it considers a breakaway province. China has also adopted a law that authorizes the use of force to take back Taiwan should the island move toward formal independence, or should efforts to peacefully reunite fail.

Beijing has amassed a large arsenal of ballistic missiles opposite Taiwan; and the Chinese military's modernization is partly aimed at deterring the US from intervening in a cross-Strait conflict.

Saying US Has No Permanent Enemies, Rice Raises Hopes for Better Relations with NK, Iran, Syria

In a year-end news conference Friday, US Secretary of State Condoleezza Rice left open the prospect of better relations with adversaries North Korea, Iran and Syria before the end of the Bush administration.

"We don't have permanent enemies, the United States doesn't," Rice said. "What we have is a policy that is open to ending conflict and confrontation with any country that is willing to meet us on those terms. And we've given very clear paths, with our allies, it's not a unilateral US policy."

Rice reiterated an offer of open-ended dialogue with her Iranian counterpart at any time or venue, provided the Tehran government met international demands to stop uranium enrichment.

At the same time, Rice rejected recent suggestions that the US engage with Iran without conditions.

Rice said the demand that Tehran halt enrichment is enshrined in multiple resolutions by the United Nations Security Council and the International Atomic Energy Agency and reflects broad skepticism about Iran's professions of peaceful nuclear intentions.

Rice said the six-party accord, under which North Korea is to scrap its nuclear program in exchange for energy aid and diplomatic benefits, provides a clear pathway toward better political relation between Pyongyang and Washington.

She said she expects North Korea to honor the pledge it made in the Chinese-sponsored talks to make a complete and accurate declaration of all its nuclear programs, as required by year's end.

Rice's remarks follow an interview with the French Press Agency that was published on Thursday, in which she said efforts to disable Pyongyang's nuclear weapons programs have been "pretty smooth."

Rice said "the real beginnings of political engagement" will take place once that step is achieved.

Also on Thursday, The Washington Post reported that US scientists have discovered traces of enriched uranium on aluminum tubing provided by Pyongyang. North Korea has denied enriching uranium to use in nuclear weapons.

The top US expert on North Korea, Sung Kim, is on a visit to the communist country, where a US team is dismantling a reactor at the Yongbyon nuclear facility.

Turning to Syria, Rice told reporters that despite strains in the relationship, the US invited Damascus to the Annapolis Middle East peace conference last month, where Syria was allowed to make its case for a comprehensive regional accord that would return the Israeli-occupied Golan Heights to Syria.

Rice said the gesture has not yet been reciprocated by better Syrian behavior, especially in what the US sees as Syrian efforts to prolong the political impasse in Lebanon over electing a new president.

"There are those who had hoped that Syria would show a more constructive attitude toward the region as a whole, having started down this path," she noted. "That has not yet happened and it is extremely important that Lebanon, the Lebanese, be able to go to their parliament and elect a president. By all accounts they have a consensus candidate that they believe they can elect. And one has to ask why can't they get to the parliament and elect this president?"

Thursday, December 20, 2007

Chinese Biodiesel Company Lists on NYSE

Gushan Environmental Energy Limited listed on the New York Stock Exchange Wednesday. The company is the first Chinese biodiesel producer to list on the NYSE.

Gushan is China's largest producer of biodiesel, measured in terms of annual production capacity in 2006.

The company mainly manufactures biodiesel from waste vegetable oil.

Sensitive to the food versus fuel issue, energy-starved China is relying on waste vegetable oil (recycled grease) and oil extracted from inedible jatropha-- a poisonous weed that can grow on marginal land--for use as biodiesel feedstocks. [Jatropha's use has not been proven on a large commercial scale, however; and many experts warn the invasive plant could have a devastating impact on the environment, and also eat into available farmland as commercial cultivation appears to require irrigation and better soil.]

The biodiesel producer began trading on the NYSE Wednesday under the ticker symbol "GU" after its successful IPO in which it raised $172.8 million.

The NYSE now has 51 companies listed from Greater China, including 39 from Mainland China, 7 from Hong Kong, and 5 from the Taiwan region.

Chinese Official Meets EU Envoy for Burma

Chinese state media have reported a meeting between a Chinese Communist Party official and the European Union special envoy for Burma.

China's Xinhua news agency says the party's International Department head Wang Jiarui and Piero Fassino met Wednesday in Beijing.

The report quoted Wang as saying China is willing to make constructive efforts for stability, democracy and reconciliation in Burma.

Fassino was quoted as saying the EU appreciates China's contribution to stability in Burma, which is one of the world's most repressive countries.

There was no immediate confirmation from the EU of the report.

Before his arrival, Fassino said China is an emerging world power and has an opportunity to play a role in improving the situation in Burma.

The EU envoy is on the first leg of an Asian tour that will take him next to India, Indonesia, Thailand, Malaysia and Vietnam.

EU Sanctions

Shortly after his appointment in November, Fassino began calling on Asian leaders to put stronger pressure on Burma.

The EU tightened sanctions against Burma's military government in response to a crackdown on anti-government protests.

China, a permanent member of the United Nations Security Council, has opposed imposing new sanctions on Burma, calling them counterproductive.

As Burma's biggest neighbour, China has close ties with Burma and key strategic interests in the country.

China's main interest: Burma's oil and gas fields. The scramble for energy is on in Burma, and China does not want to lose out to Russia or India.

Tuesday, December 18, 2007

Rising China's Year in Review

China continued its remarkable rise in 2007. But the country faced many concerns and criticisms, including inflation, social stability, environmental degradation, and global complaints about the safety of Chinese-made goods. With only eight months to go before the start of the 2008 Beijing Summer Olympic Games, Claudia Blume at VOA's Asia News Center reviews the year that was.

China's economy surged ahead in 2007, growing by more than 11 percent for most of the year.

The growth was led by exports and investments in fixed assets, such as factories and roads.

To keep its economic engine running, China continued its global shopping spree for oil, gas and commodities such as metals, driving up world prices.

China's stock market also rose, with the benchmark Shanghai Composite Index gaining about 18 percent. The initial public offering of China's largest oil and gas producer PetroChina, raised almost $9 billion in October, making it the country's largest domestic share offering to date (and also making PetroChina the world's largest company in terms of stock market valuation, surpassing Exxon Mobil).

But some savvy market experts think the boom is a bubble. David Webb, an independent market analyst based in Hong Kong, says he is worried about a lack of economic fundamentals behind the gains in stock values.

"When people eventually realize that the emperor is not wearing any clothes then the markets tend to crash or at least to correct, whether it happens suddenly or over a period of time varies," Webb says.

Hot Money

Chinese officials also worry that the growing inflow of foreign cash could lead to economic overheating and inflation. The president of China's National Economic Research Institute, Fan Gang, said in November that so-called hot money from China's huge trade surpluses and foreign investment adds pressure to the economy.

Fan said that in a developing country, these rapid inflows of money can easily produce all kinds of bubbles, crises and imbalances. He warned that the domestic economy can become unstable and suffer inflation.

The latest economic figures underscore those fears. China's inflation reached an 11-year high in November, with consumer prices rising nearly seven percent from a year earlier. The trade surplus in the first 11 months reached a record $238 billion, leading to friction with trade partners, such as the United States and the European Union.

Health Hazards

The gains mean exports were little affected by a global outcry about health hazards posed by a number of Chinese products including tainted toothpaste, medicines and pet food, and faulty toys.

Manufacturers, however, say foreign consumers are part of the problem, as they expect to pay low prices for Chinese products, forcing factories to take short cuts.

Paul Yin, a vice president of the Chinese Manufacturer's Association of Hong Kong, says the financial pressures for manufacturers are mounting, making quality control difficult.

"When the costs are higher and our selling price cannot be increased, what is our choice? It's a fact that many factories sub-contract their work outside because of the cost factor, want to keep costs as low as possible, and many sub-contractors could use sub-standard material, making products below the required standard," Yin explains.

Product safety. After initially denying the accusations, Beijing started to address the problem. More than 700 toy factories in southern Guangdong province alone have been closed because of shoddy practices, for example. In July, the head of China's State, Food and Drug Administration, Zheng Xiaoyu, was executed after he was found guilty of taking bribes to approve fake and substandard drugs.

Headache for Hu

Beijing also has become increasingly concerned about social problems that have arisen from two decades of rapid economic growth, as the legitimacy of the country's one-party rule is based largely on stability and development.

When the Communist Party held its congress in October, the country's leaders, including President Hu Jintao, talked about reducing the income gap between rural and urban residents and halting rampant corruption and environmental degradation. Poverty, corruption and pollution have contributed to thousands of protests and demonstrations across the country.

In China's capital Beijing, the severe pollution is particularly noticeable--an international headache for the country's leaders. The government committed more than $12 billion to reduce pollution in Beijing for the coming Olympic games. Although Beijing has built subways, shut factories and planted trees, a United Nations report says the bad air will not significantly improve before the games. The International Olympic Committee warns air pollution could force the delay of some outdoor events.

Human Rights

This is not the only criticism China's leaders face ahead of the Olympic Games. Many international rights groups have criticized Beijing for failing to honor promises to improve human rights and media freedom before the games.

This year brought increasing calls for a boycott of the Olympics to push Beijing to use its leverage on Sudan's government to help end violence in the Darfur region. China is the largest buyer of Sudan's oil and a veto-wielding member of the UN Security Council, and therefore in a unique position to put pressure on Khartoum to halt the civil war in Darfur.

Beijing insists that politics has no place in the Olympics.

But the international pressure seems to have had some effect. In May, Beijing appointed a special Africa envoy whose first task was to focus on the conflict in Darfur.

Monday, December 17, 2007

India's Maoist Rebels Stage Mass Jailbreak

A mass jailbreak in central India led by Maoist rebels has demonstrated the growing strength of a Communist insurgency in the region. Anjana Pasricha reports from New Delhi on how nearly 300 prisoners managed to escape from a prison in Chattisgarh.

The nearly 300 prisoners made their dramatic escape from Dantewada prison. The jailbreak took place while the inmates were being served food Sunday evening.

Authorities say a group of prisoners overpowered prison guards, grabbed their rifles, and opened fire. They broke open the gates, allowing most of the prisoners to flee. Three prison guards and two prisoners were injured in the shooting.

Many of those who escaped were Maoist rebels, and the authorities believe they were the ones who planned the jailbreak. According to local media reports, the prison was not adequately guarded at the time of the escape, with only four guards on duty.

Maoist Stronghold

A counterinsurgency expert with New Delhi's Institute of Conflict Management, Ajay Sahni, said the incident highlights the poor security in Chattisgarh, which is a stronghold of Maoist rebellion.

"Almost every department in the security structure of Chattisgarh state is currently undermanned, under-equipped, and exceedingly primitive in terms of the equipment and technology available to them," Sahni said. "The Maoists are better trained and better equipped."

This is not the first time the rebels have managed to get the upper hand on the security forces in Chattisgarh. In July, at least 24 officers were killed when rebels attacked a police search party. In March, 55 policemen were killed in an attack by the rebels on a security post.

Officials Suspended

After Sunday's jailbreak, authorities say they will improve security in the state's prisons. They have already suspended five officials.

Maoist groups are active in the less-developed and poorer states of central and eastern India, like Chattisgarh. They say they are fighting for land and jobs for the poor.

Counterinsurgency experts say the rebels have been able to entrench themselves easily in rural areas that have been left out of India's economic boom.

Japan Successfully Tests US Anti-Missile System

Japan has successfully tested a US-built system off the coast of Hawaii that is designed to track and destroy missiles.

Japanese and US military officials said late Monday that the navy destroyer Kongo successfully shot down a medium-range missile in space over the Pacific Ocean.

The target missile was fired from a US missile range on the island of Kauai.

Experts said the missile resembled those in the arsenal of North Korea.

Japan is the first US ally to fire an interceptor.

$50 Million

Japan paid about $50 million for the test, which comes just days after a Japanese navy lieutenant commander was arrested for leaking classified information about the system.

Kongo is the first of four Japanese Maritime Self Defense Forces destroyers due to be outfitted with the missile interceptors.

Japan also has a ground-based system using US-made Patriot missiles.

Missile defense cooperation between the United States and Japan expanded after North Korea's 1998 launch of a long-range missile over Japanese territory.

IMF and FAO Blame Biofuels for Food Inflation

Alarming news about biofuels--the menace masked in green--keeps on coming, even as American and European politicians press for still more mandates for the unsustainable, unclean energy alternatives.

The International Monetary Fund is finishing a report that blames biofuels production in industrialized nations for much of the current escalation in food prices.

The investigation drafted by the IMF’s chief economist, Simon Johnson, indicates that food products suffered a major inflationary shock during the last year.

The report states that at times the benefits of biofuels are exaggerated, and that while corn-based ethanol does not generate much net energy, it has led to an increase in the price of corn. Ethanol has also spurred food inflation because European countries and the United States have earmarked part of the land previously used to grow wheat for planting corn, according to the IMF.

The IMF says that in many poor countries and other emerging markets, food equals 30 percent of the consumer expenditures; in the poorest countries, food can be 50 percent or more. Therefore, the IMF says, an increase in food products immediately translates into greater inflation.

In a related development, the United Nations Food and Agriculture Organization said Monday that it is urging governments and the international community to implement immediate measures in support of poor countries hit hard by dramatic food price increases.

Currently 37 countries worldwide are facing food crises due to conflict and disasters. In addition, food security is being adversely affected by unprecedented price hikes for basic food, driven by historically low food stocks, droughts and floods linked to climate change, high oil prices and growing demand for biofuels, the FAO said.

The soaring cost of food is threatening millions of people in poor countries, the organization warned, adding that high international cereal prices have already sparked food riots in several countries, according to the FAO. It said food prices have risen an unprecedented 40% in the last year and many nations may be unable to cope.

The FAO is calling for help for farmers in poor countries to buy seeds and fertiliser, and for a review of the impact of biofuels on food production.

"Without support for poor farmers and their families in the hardest-hit countries, they will not be able to cope," said FAO Director-General Jacques Diouf.

The impact of the growth of biofuels would be assessed in depth at a high-level conference in June, Diouf said, adding that the use of land to grow plants that can be used to make alternative fuels--and the use of food crops themselves for fuel--has reduced food supplies and helped push up prices.

The FAO also cited changing diet in rapidly developing China and other emerging nations as a factor, with more land needed to raise livestock to meet increasing demand for meat.

Oxfam: EU Biofuel Mandates Menace the Poor

The food versus fuel issue is heating up. Nadya Anscombe, a contributing editor to environmentalresearchweb, says the international aid agency Oxfam is warning that European Union plans to increase the use of biofuels could spell disaster for some of the world’s poorest people. Excerpts from her report follow:

EU proposals will make it mandatory by 2020 for 10% of all member states' transport fuels to come from biofuels. To meet the substantial increase in demand, the EU will have to import biofuels made from crops like sugar cane and palm oil from developing countries. But Oxfam fears that the rush by big companies and governments in countries such as Indonesia, Colombia, Brazil, Tanzania and Malaysia to win a slice of the "EU biofuel pie" threatens to force poor people from their land, destroy their livelihoods, lead to the exploitation of workers and hurt the availability and affordability of food....

Biofuels may offer the potential to reduce poverty by increasing jobs and markets for small farmers, and by providing cheap renewable energy for local use, but the huge plantations emerging to supply the EU pose more threats than opportunities for poor people. Oxfam believes the problem will only get worse as the scramble to supply intensifies; unless the EU introduces safeguards to protect land rights, livelihoods, workers’ rights and food security.

EU member states agreed that the 10% target must be reached in a sustainable manner, but Oxfam warns that the current proposals contain no standards on the social or human impact....

Published reports show that as much as 5.6 million km2 of land – an area more than 10 times the size of France – could be in production of biofuels within 20 years in India, Brazil, southern Africa and Indonesia alone. The UN estimates that, worldwide, 60 million people face clearance from their land to make way for biofuel plantations.

In Indonesia, almost a third of palm oil is produced by smallholders – most of whom lost their land to advancing plantations and were "rewarded" with a two-hectare plot. These smallholders are bonded to the palm oil companies, which provide them with credit, and are required to sell to them – which means they do not get the best price for their oil.

Asia Business News from Voice of America

China has announced plans to triple the amount of money foreign institutions can place in the country's local stock markets, and the world's biggest exporter of dairy products is raising payments to its farmers. Naomi Martig has more on these and other Asian business stories from VOA's Asia News Center in Hong Kong.

China has confirmed it will triple the amount of money that foreign financial institutions can collectively place in the Chinese stock markets.

The State Administration of Foreign Exchange said the total allowable value of such share purchases would rise to $30 billion, from the current $10 billion.

Fewer than 50 foreign institutions have been allowed to invest in the Chinese stock market since 2002, and the total amount of their purchases has been limited to $10 billion.

Analysts say the allowed increase in purchase value will not likely have a major impact on Chinese stock prices.

Stephen Green, an economist with Standard Charter in Shanghai, explains: "China's stock market is enormous, and really, $30 billion is a drop in the ocean when it comes to the amount of money that is being traded every day, and the amount of shares that are out there."

The announcement was confirmation of a pledge made by Chinese officials to US officials in May. It is not clear when the new purchase limits will take effect.

New Zealand Raises Dairy Subsidies

New Zealand's Fonterra Cooperative, which accounts for 40 percent of the international trade in dairy products, says payments to its dairy farmers will rise 55 percent.

This amounts to an increase of around $2.4 billion in total revenue to New Zealand farmers this season. The increase is due to higher dairy prices and a surge in dairy production.

There is increasing demand for dairy products by Asia's growing middle-class population. This, along with strong demand for grains for the production of biofuels, is putting pressure on farming costs and driving up global food prices.

Loans to Vietnam

The Asian Development Bank has announced it will provide $1.1 billion in loans to Vietnam for the construction of a 244-kilometer highway from Hanoi to Vietnam's border with China. It is the largest amount of financing for a single project in the ADB's history.

A quarterly survey by the Bank of Japan shows that business sentiment among large manufacturers is at its lowest point since September 2005. The pessimism is mainly due to anxiety about a possible slowdown in the U.S. economy and recent market turmoil.

And in Thailand, a court has ruled that energy giant PTT, the second-largest company on the Thai stock exchange, legally listed its shares and can remain on the exchange.

Consumer groups had asked the court to revoke laws that allowed the company to float its shares in December 2001. That would have resulted in a de-listing of PTT, which represents more than 15 percent of Thailand's total market value.