China e Índia prometem superar disputas territoriais

Em Nova Déli, o primeiro-ministro chinês diz que os dois países mais populosos do mundo precisam evitar tais desgastes para se tornarem motores da economia global. Acordos econômicos vão expandir comércio bilateral em 50%. Os governos da Índia e da China concordaram em buscar uma solução pacífica para resolver uma questão que se arrasta há cinco décadas: a disputa por território em suas fronteiras. A declaração foi dada nesta segunda-feira durante a visita do primeiro-ministro chinês, Keqiang, à Índia. Segundo os dois países, enviados especiais de ambas as partes continuarão negociações iniciadas agora “na busca por acordo baseado em uma divisão justa, razoável, mutuamente aceitável”, afirmou primeiro-ministro indiano, Manmohan Singh, após encontro com o colega chinês em Nova Déli. O chefe do governo chinês destacou ainda que os 2 países alcançaram “consenso estratégico, aprofundaram confiança estratégica”. “Ambos lados concordam que precisamos melhorar vários mecanismos relacionados às fronteiras e torná-los eficientes”. A visita de Li à Índia a primeira viagem internacional do líder chinês desde que tomou posse, em março passado, ocorre 2 semanas após 20 dias de tensão vividos entre soldados chineses e indianos em Ladakh, região de fronteira no extremo norte da Índia. Os indianos acusaram tropas chinesas de terem avançado 19 quilômetros no seu território. A disputa pelos limites territoriais que envolvem grandes áreas em torno dos 4 mil quilômetros de fronteiras é legado sangrenta guerra 1962 entre os países vizinhos. A Índia questiona o controle de Pequim sobre área de 43 mil quilômetros de terra improdutiva na Caxemira. China disputa 90 mil quilômetros quadrados no estado de Arunachal Pradesh, nordeste da Índia, que afirma ser parte do sul do Tibet. Li Keqiang e Manmohan Singh ainda assinaram oito acordos para ampliar os laços econômicos e cooperação entre seus dois países. A meta acertada visa alcançar 100 bilhões de dólares em negócios bilaterais até 2015, mais de 50% que os atuais 66 bilhões de dólares. Eles também concordaram em reverter um déficit comercial para a Índia de 29 bilhões de dólares especialmente nas áreas de tecnologia de informação, farmacêutica e agricultura. A China está entre os principais parceiros econômicos da Índia. Segundo o primeiro-ministro chinês, a decisão pela Índia como primeiro país a visitar após sua posse indica “a grande importância que Pequim atribui às relações entre os 2 países”. Li disse ainda que os 2 países mais populosos do mundo, juntos abrigam 40% população mundial, podem se tornar novo motor para a economia global se evitarem tais desgastes. Além de influência regional, China e Índia disputam também fontes de energia para promover suas economias em crescimento. Durante sua visita de três dias à Índia, Li vai se encontrar ainda com a presidente partido no comando do Parlamento, Sonia Gandhi, e com o líder do Partido do Povo Indiano (Bharatiya Janata), oposição. Ele ainda vai Mumbai, onde terá reuniões com empresários e discutirá acordos comerciais. De lá, na quarta-feira, primeiro-ministro chinês irá ao Paquistão e, em seguida, à Suíça. No próximo domingo ele vai a Berlim, onde será recebido pela chanceler Angela Merkel. (Correio do Brasil – 21/05/2013)

The New Prize: Asia’s “Fire Ice” Gas Revolution

Every few decades a new energy source comes online and promises to revolutionize the way world fuels its economies. This was true of shift from coal and whale oil to conventional oil in 19th and early 20th century. Then, in the 1960s and 70s came nuclear power revolution soon followed by renewable energies, hydro, solar, wind power. Most recent, much talked about promise, comes from shale gas, which threatens to drastically change global geopolitics. But that’s old news. Tomorrow’s energy revolution, many believe, will be “fire ice,” otherwise known as methane hydrates. In March of this year, Japan Oil, Gas, Metals National Corporation (JOGMEC) successfully extracted methane hydrates from offshore reservoirs. This new potential source of energy, a natural gas, could free up traditionally energy-poor countries such as Japan and South Korea, has potential to further sink established petro-powers, which are already threatened by cheaper LNG prices through the entry of shale gas on the market. Under the JOGMEC’s program, Japan has set an ambitious target of commercial production of methane hydrates by 2018. Methane hydrates are gas molecules trapped in ice. They occur in permafrost, on the slopes of continental plates and in the seabed usually at a depth greater than 1,600 feet (500 meters). As a result, the Arctic and the coastlines of every continent are dotted with gas reservoirs. The U.S. Geological Survey (USGS) estimates that there could be up to 100.000 trillion cubic feet of gas hydrates globally. While only a portion of that impressive figure is currently considered to be concentrated enough to allow for commercially viable quantities, it is a figure dwarfs estimates of conventional gas. A few problems have stemmed the hype. Similar to the development of other unconventional energies, the technology has not yet allowed for commercial viability of extraction, production is currently too expensive and uncompetitive. Further, converting the methane hydrate from its naturally-occurring solid form, trapped in ice, into an easily extracted gas is technically difficult. Yet technology is slowly catching up and deep seabed mining programs are quickly becoming a new frontier for extraction of minerals+unconventional hydrocarbons. As technology progresses, deep seabed mining could provide many Asian states with the much prized energy and resource security they have long sought. Such technological advances are crucial as an estimated 99% of the world’s gas hydrates occur in marine sediment in seabed. In a world first, JOGMEC cracked one part of the problem wide open in March. The corporation successfully extracted methane hydrates from the seabed off Japanese coast. The extraction, which took place 50 miles (80 km) from Atsumi Peninsula and at a depth of 1,000 feet (300 meters), decreased the pressure of methane hydrate allowing for the separation of the ice and methane, leaving a gas could then be extracted. But, while Japan is the first to successfully extract methane hydrates, it isn’t only country studying them. China, Norway, Russia, New Zealand, Germany, Brazil, Chile, South Korea, Canada, India and U.S. have all started their own research programs. Collaboration has been the order of the day and has been spearheaded by agreements between the U.S., Canada, Japan, and South Korea (…..)

Link: http://thediplomat.com/2013/05/11/the-new-prize-asias-fire-ice-gas-revolution/

Abe’s master plan

(…) The reason for thinking this time might be different is China. Economic decline took on a new reality in Japan when China elbowed Japan aside in 2010 to become the world’s second-largest economy. As China has gained confidence, it has begun to throw its weight around in its coastal waters and with Japan directly over the disputed Senkaku/Diaoyu islands. Earlier this month China’s official People’s Daily even questioned the Japanese sovereignty over Okinawa. Abe believes meeting China’s challenge means shaking off the apathy and passivity that have held Japan in thrall for so long. To explain the sheer ambition of his design, his people invoke the Meiji slogan fukoku kyohei: “enrich the country, strengthen the army”. Only a wealthy Japan can afford to defend itself. Only if it can defend itself will it be able to stand up to China and, equally, avoid becoming a vassal of its chief ally, United States. Abenomics, with its fiscal stimulus and monetary easing, sounds as if it is “an economic doctrine”; in reality it is at least as much about national security. Perhaps that is why Abe has governed with such urgency. Within his first weeks he had announced extra government spending worth ¥10.3 trillion (about $100 billion). He has appointed a new governor of Bank of Japan who has vowed to pump ever more money into the financial system. In so far as this leads to a weaker yen, it will boost exports. If it banishes the spectre of deflation, it may also boost consumption. But printing money can achieve only so much and, with a gross debt of 240% of GDP, there is a limit to how much new government spending Japan can afford. To change economy’s long-run potential, therefore, Mr Abe must carry through the third, structural, part of his plan. So far, he has set up 5 committees charged with instigating deep supply-side reforms. In February he surprised even his supporters by signing Japan up to the Trans-Pacific Partnership (TPP), a regional trade agreement that promises to force open protected industries like farming. Nobody could object to more prosperous Japan that would be a source of global demand. A patriotic Japan that had converted its “self-defence forces” into a standing army just like any other country’s would add to the security of North-East Asia. And yet those who remember Mr Abe’s first disastrous term in office are left with two worries. The danger with the economy is that he goes soft, as he did before. Already there are whispers that, if second-quarter growth is poor, he will postpone the first of two consumption-tax increases due in 2014-15 for fear of strangling the recovery. Yet a delay would leave Japan without a medium-term plan for limiting its debt and signal Mr Abe’s unwillingness to face up to tough choices. Fear is that he will bow to lobbies that resist reform. Agriculture, pharmaceuticals and electricity are only some of the industries that need to be exposed to competition. Mr Abe must not shrink from confronting them, even though that means taking on parts of his own party. The danger abroad is that he takes too hard a line, confusing national pride with destructive and backward-looking nationalism. He belongs to a minority that has come to see Japan’s post-war tutelage under America as a humiliation (…..)

Link: http://www.economist.com/news/leaders/21578044-shinzo-abe-has-vision-prosperous-and-patriotic-japan-economics-looks-better

Sueños de nuestros hijos

Nuevo sueño viene a competir con los que conocíamos. Es el sueño chino, que asoma la cabeza por el Oriente, cuando declina el sueño europeo y se mantiene, mal que bien, el sueño americano. El nuevo sueño chino ha sido formulado por Xi Jinping, timonel de la quinta y última generación, encargado de emprender largo bordo para colocar a su país en primera posición de la regata. Los sueños son dobles: ordenan los deseos, pero proyectan nuestra imagen hacia fuera, con frecuencia en la forma de lenguaje mitológico y propagandístico. Pueden ser mentira, pero cumplen con su propósito de hacernos soñar y de hacer soñar a los otros. Son la mejor síntesis del “soft power”, poder blando y persuasivo que consigue mejores y más estrechas adhesiones al convertir el modelo de sociedad que se propone en objeto de deseo para millones de terrícolas. El sueño americano ha sido un potente motor acción internacional durante la guerra fría, en la que venció al sueño del igualitarismo totalitario soviético, y que mantiene todavía hoy su fuerte magnetismo. El sueño europeo tomó forma con la unificación del continente, cuando fue máquina de paz, estabilidad y prosperidad, un modelo de integración supranacional admirado más allá de sus fronteras, hasta saltar hecho pedazos con la actual crisis. Y ahora aparece este nuevo sueño, balbuceante en boca del nuevo líder chino, que anuncia el “gran resurgimiento de la nación china”. De puertas adentro, el sueño chino significará seguir creciendo y sacando a la gente de la pobreza, generando las clases medias y construyendo ciudades punteras en urbanismo e infraestructuras, un Estado de bienestar sostenible, menos desigualdades y sin la corrupción, en el que sus ciudadanos puedan sentirse orgullosos de su país y quienes los gobiernan. Si suscita mucho escepticismo, dentro y fuera, sobre todo por estructura autoritaria del poder y el camino tan accidentado de su crecimiento, cifras que colocan a China en cabeza, en comercio y en reservas extranjeras, y en el segundo lugar en PIB, no dejan margen a la duda. De puertas afuera, el sueño chino es salto estratégico. Hasta ahora era una superpotencia agazapada y discreta, concentrada en el comercio e inversiones al proyectarse internacionalmente, mientras contemplaba silenciosa el desgaste de su rival estratégico en guerras optativas que le cargaron de endeudamiento y de enemistades, además de crear inestabilidad. No será así con Xi Jinping. En el sueño chino hay un momento, en la época inminente de nuestros hijos y nietos, en que sustituye al americano. Esta semana hemos tenido un gesto de anticipo, cuando Pekín ha tenido pretensiones de Washington respecto a israelíes y palestinos, al recibir a dirigentes de uno y otro bando y darse la oportunidad de exhibir vocación de árbitros equidistantes. Habrá más gestos así, muchos más, y pronto. (Fuente: Lluís Bassets – El País.com – 12/05/2013)

China’s Evolving “Core Interests”

Whenever China wants to identify the issues considered important enough to go to war over, it uses the term “core interests”. The phrase was once restricted to Taiwan, the island nation China has threatened to forcibly unify with mainland. About 5 years ago, Chinese leaders expanded the term to include Tibet and Xinjiang, two provinces with indigenous autonomy movements that Beijing has worked feverishly to control. Since then, the Chinese officials have spoken more broadly about economic growth, a territorial integrity and preserving Communist system. But recently they narrowed their sights again, extending the term explicitly to the East China Sea, where Beijing and Tokyo are dangerously squabbling over some uninhabited islands. Top Chinese military officials first delivered the message to Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, when he visited Beijing last month. The next day, the Foreign Ministry spokeswoman, Hua Chunying, told reporters that “the Diaoyu Islands are about sovereignty+territorial integrity. Of course it’s China’s core interest.” This wording, with its threatening implications, is raising new tensions in a region already on edge over North Korea and several other maritime disputes, and it will make it harder to peacefully resolve the dispute over islands, called Diaoyu in China, and Senkaku in Japan. While Japan has held the islands for more than a century, China also claims title and has sent armed ships and planes from civilian maritime agencies to assert a presence around them. The waters adjacent to the islands are believed to hold oil and gas deposits. To some extent, China is simply throwing its weight around, challenging United States and its regional allies. On Wednesday and Thursday, Chinese state-run newspapers carried commentaries questioning Japan’s sovereignty over island of Okinawa, where about 25.000 American troops are based. Japan, whose wartime aggression against China and other countries still engenders animosity, has not helped. Last September, the government of the Prime Minister Yoshihiko Noda provocatively bought three of the islands from their private owner. The right-wing nationalists who took power in December may be equally unwilling to put Japan’s past behind it, although the government of new prime minister, Shinzo Abe, took a positive step on Tuesday when it said it would abide by official apologies that the country made two decades ago to victims of World War II. China and Japan have strong economic ties and are critical to regional stability. Both will lose if they stumble into war or otherwise cannot resolve this escalating dispute. Though efforts are under way to find a mutually face-saving solution, using loaded phrases like “core interests” to describe the islands only adds to political and emotional sensitivities and will not advance that goal. (source: THE EDITORIAL BOARD – NYTimes – 12/05/2013)

Putin Strives to Become Russia’s Über-Patriot

(…..) And yet the man who appeared in Rostov-on-Don was no longer the Putin who entered the Kremlin for the third time on May 7, 2012. Rather, Putin this year has radically changed course and changed his leadership style. To find out who this new Putin is, and what he wants, it helps to meet 3 men: Gennady Gudkov, the sidelined former KGB man who joined the opposition, Dmitry Badovski, Kremlin ideologue and Alexander Prokhanov, a Stalinist whom Putin brought back to the political stage. “Putin has finally seen the signs of the times,” says Prokhanov, 75. “For years, he talked about need for giving the country a jolt, but nothing happened. Now, that is apparently changing and I will use my modest powers to help him achieve this.” Prokhanov is a prolific author of considerable renown and he has been compared to Dostoyevsky. Over period of 40 years, he has written some 50 books: novels, short stories, works of non-fiction and volumes of poems. He worked as a correspondent in Afghanistan and Nicaragua, resisted Gorbachev and his perestroika, later on, antagonized former Russian President Boris Yeltsin’s oligarchs and the nouveau riche elite. Prokhanov describes himself as a left-wing patriot, an “orthodox socialist,” someone who is fighting for the reestablishment of old Russian state. He says that the Russian people are by nature Stalinist: “They will always place greater importance on the state than on the small happiness of the individual,” he argues. For a long time, Prokhanov and his ideas were banished to the political wilderness, but more recently he has been invited every few days to take part in talk shows on the quasi-state-owned television networks. But why does someone like Putin need the support of a Stalinist who talks about a new Russian empire he says is currently emerging? Someone who never tires of warning of “geopolitical disaster” is encroaching upon Russia’s borders, and whose newspaper Zavtra is notoriously anti-Semitic? Prokhanov receives his visitors in the shabby offices of his small newspaper in Moscow. But one shouldn’t gauge his political influence by these surroundings. The rooms are located on the premises of the general staff of the armed forces and he maintains close friends among the generals. He recently received two North Korean embassy staff members and the photo showing Prokhanov next to Syria’s dictator Bashar al-Assad is only a few weeks old. Putin is a “very dynamic” politician, says Prokhanov: “He began his career in the entourage of the oligarch Boris Berezovsky, who tried to use him as a puppet after Yeltsin left office,” he contends. “But Putin was not the man people thought he was.” He says Putin got rid of Berezovsky, seized control of his media empire, stopped former Soviet republics from seceding from the Russian Federation and enticed Europe to become dependent on Gazprom. It was “powerful geopolitical operation,” says Prokhanov, who adds that in 2008 Putin regrettably strictly adhered to constitution, which forbids presidents from serving more than two consecutive terms. Instead of continuing in the office, he chose Dmitry Medvedev to serve as a nominal head of state. “That was a huge mistake,” Prokhanov notes, “because he wasted four valuable years and weakened himself in the process” (…..)

Link: http://www.spiegel.de/international/world/putin-uses-patriotism-to-strengthen-hold-on-russia-a-898170.html

Three Thoughts on Cyber and the Defense Department’s Report on the Chinese Military

Defense Department released annual report to Congress on the Military and Security Developments Involving the People’s Republic of China 2013. Besides being delivered relatively early compared to the past editions and being almost twice as long as 2012 version, this year’s version has at least three interesting points about Chinese cyber activities. First, as many have noted, the sharpest break from the past is that the report directly ascribes blame for cyberattacks to Chinese government and military, saying, “numerous computer systems around world, including those owned by the U.S. government, continued to be targeted for intrusions, some of which appear to be attributable directly to Chinese government and military.” 2012 report, by contrast, speaks of attacks “which originated within China” and active and persistent “Chinese actors.” 2011 report describes cyber intrusions, “some of which appear to have originated within the People’s Republic of China (PRC).” 2010 report seemed to split the difference, stating it was “unclear if these intrusions were conducted by, or with the endorsement of, the People’s Liberation Army (PLA) or other elements of the PRC government.” Second, as David Sanger notes in the New York Times, the report tries to describe Chinese thinking about offensive cyber operations by citing 2 works of military doctrine, “Science of Strategy” and “Science of Campaigns.” This is not new, the 2011 report mentions them by name, a 2010 report uses same phrase “authoritative PLA military writings.” Sanger uses the report’s claim neither Chinese document “identifies specific criteria for employing computer network attack against an adversary” to turn the mirror back on its authors, and note that Defense Department has also been opaque about the conditions under which it would employ offensive capabilities. This lack of transparency is extremely destabilizing; the military doctrine of both countries emphasizes the importance of early attacks to gain information dominance, creating intense pressure to “use it or lose it,” but there is little knowledge of the other sides’ red lines and how they might escalate. Third, despite the announcement of a U.S.-China working group on cybersecurity during Secretary of State John Kerry’s visit to China, and General Fang Fenghui’s declaration that China was willing to set up a cyberserurity “mechanism” during a meeting with chairman of the Joint Chiefs of Staff, General Martin E. Dempsey, the report does not give much reason for optimism that the two sides will find a common ground on the rules of the road. For the first time, report calls China out for playing a “disruptive role in multilateral efforts to establish transparency and confidence building measures in international fora such as the Organization for Security and Cooperation in Europe, the Association of Southeast Asian Nations Regional Forum, and the United Nations Group of the Governmental Experts.” Mistrust between the 2 sides was always going to make cooperation hard. The week before General Dempsey’s visit, PLA Daily ran a piece with headline, “U.S. Cybersecurity Strategy is Fake Cooperation and a Real Confrontation.” Playing a spoiler in international meetings, however, suggests how broad and deep the divide really is. (source: Adam Segal – CFR – 07/05/2013)

Australia Strives to Balance China and the United States

Official Chinese news media responded in a low-key, if apparently approving, fashion to a shift by Australian government toward a much more conciliatory strategic approach to China, judging by some reactions over the weekend. Judging by at least some online reactions from ordinary Chinese, suspicions linger that Australia may largely be doing United States’ bidding in region, despite the shift in Canberra. Australian government “no longer considers China a potential strategic threat, but considers China important partner,” People’s Daily wrote from Canberra in a matter-of-fact article, citing content of Australia’s new defense White Paper, which softens that country’s policy on China laid out 4 years ago. “The white paper points out that ‘the government will not make China out to be an adversary. The goal of this policy is to encourage China’s peaceful rise and to prevent strategic competition in the region from slipping into conflict,’” the reporter Li Jingwei wrote in the newspaper, a Communist Party mouthpiece. “In issues of development assistance in the Asia-Pacific región white paper no longer criticizes China but recognizes China’s influence in the region,” Mr. Li wrote. The white paper, presented in Canberra on Friday by Prime Minister Julia Gillard and Defense Minister Stephen Smith, “stresses importance of Australia’s relations with both China and U.S., but says U.S. will remain Australia’s most important ally,” newspaper The Australian wrote in a story titled, “Defence white paper pivots over China threat.” “We welcome China’s rise,” The Australian quoted Gillard saying. “We seek to have comprehensive and constructive engagement with China.” “We also recognize that China’s rise and its subsequent military modernization is changing the strategic order of our region, that the U.S.-China relationship is pivotal to our region of the world,” it quoted Ms. Gillard as saying. As China modernizes its military, Australia will “continue to call for transparency on that military modernization”. Australia’s geographic position in Asia-Pacific region makes relations with China a pressing strategic issue for the country. Australia is economically increasingly reliant on China but also longtime U.S. ally, complicating its relations with Asian giant. The new white paper recalibrates Australia’s response to China, James Brown of the Lowy Institute for International Policy wrote, comparing it with the previous paper, issued in 2009, which was tougher and annoyed China. “The strategic assessment of White Paper is much more sophisticated than that of the 2009 version. The rise of China is no longer a threat to wax histrionic about, but instead a nuanced issue on which there are many aspects and many possible outcomes,” Mr. Brown wrote on The Interpreter, the institute’s blog (…..)

Link: http://rendezvous.blogs.nytimes.com/2013/05/05/in-asia-australia-strives-to-balance-china-and-the-united-states/

Flee Sweatshops or Stay and Change Them ??

Address the Real Challenges. Some have praised Disney’s decision to pull out of Bangladesh as a step forward for workers’ rights. It’s not. A senior Disney executive justifies the company’s action by asserting that pulling up stakes in Bangladesh is “the most responsible way to manage the challenges associated with our supply chain”. But Disney’s departure does nothing to address real challenges, which require a commitment by the big global brands to stay in places like Bangladesh and be part of a collective effort to protect the well-being of factory workers. Ask the workers in those factories, mostly young women, what they want. They will tell you two things. First, they want to keep their jobs, desperately. Bangladesh is one of the poorest countries in the world, and the rapid expansion of the garment sector in recent years has put food on the table for many, lifting families out of extreme poverty. Second, they want to be treated with DIGNITY, which begins with going to work in a quite safe and secure environment. To address these reasonable aspirations, global brands like Disney need to do 3 things: Make a long-term commitment to provide jobs in places like Bangladesh and accept the responsibility for addressing the workplace issues in factories producing their products; Commit to working with other global brands to develop shared strategies and accepted best practices. This is not the place to compete, it’s the place where companies need to work together; Disney, in cooperation with megabrands, needs to work with governments (including our own), civil society groups, academics, others, to explore alternatives to the current outsourcing model. Driven by the hunt for the cheapest production costs, this model creates intense downward pressures on local factory owners, governments, and limits rather than encourages needed reforms.

Room For Debate: http://www.nytimes.com/roomfordebate/2013/05/02/when-does-corporate-responsibility-mean-abandoning-ship

After Cyprus: China watches for its money in the euro zone

“I want my money back” was the late Margaret Thatcher’s motto in internal EU negotiations during her time as prime minister. And the EU’s current external debt holders could soon be demanding the same thing. Russia, main external stakeholder affected by the recent Cyprus banking debacle, has already spoken harshly of EU bailout as expropriation. Cyprus solution has forced Chinese investors to keep an even more watchful eye on the euro crisis, particularly in light of loss suffered by external debt holders. Speaking on the bailout, China’s ambassador to EU expressed his hope ‘that such kind of practice will not be employed in the future scenarios’. In late 2012, China’s second-largest insurance company, Ping An, filed a claim against Belgium in an international arbitration court claiming losses from its investment in Fortis, a bank, when it was dismantled and nationalised by Belgium in 2008. A victory for Ping An, even if many years in the making, could spell out a broader indictment of the way Europe handles its external debt holders. China’s money didn’t appear to be at stake during the Cypriot bailout, though China has in the course of the euro crisis also been courted, seemingly unsuccessfully, by Cyprus for contributions: in June last year, just before Cyprus took over rotating presidency of the EU, one of the largest Cypriot banks joined Cyprus’ Minister of Commerce, Industry and Tourism in a visit to China. Yet beyond Cyprus China still has a significant stake in Europe’s public debt. China did not become Europe’s ‘red knight’ by massively purchasing sovereign debt as some Europeans hoped back in the hey-days of crisis in 2011, but it did continue to express confidence in the single currency. At G20 summit in June 2012, China announced that it would contribute $US43 million through the IMF, which could be triggered for European debt needs (China’s preferred option). Chinese companies and state institutions (such as China Investment Corporation, who uses recycled currency reserves) have continued to find opportunities to buy up in European companies such as Thames Water, the largest water utility in UK, and Heathrow airport. Chinese investments in Europe in 2012 had another high score year reaching $US10 billion. Informed guesstimates normally put China’s euro denominated holdings at around 25% of Chinese currency reserves. That would put value of holdings at well above $US800 billion, with foreign exchange reserves hovering around $US3.4 trillion. This is a considerable sum, particularly because the alternative to the euro is the US treasury bonds that also seem less secure with continued quantitative easing. Yu Yongding has aptly dubbed this situation to be China’s “asset crisis”: China is simultaneously caught in a dollar and a (somewhat smaller) euro trap. Yet in reality, an equally big Chinese concern might lie outside euro crisis. Chinese ambassador to the EU merely mentioned that he was ‘watching [the banking crisis] closely’, but he was ‘very worried’ about trade frictions ‘and barriers to hold back Chinese products from European markets’. The EU Commission is currently ramping up its trade defensive measures, taking punitive measures against Chinese goods. Largest case ever against Chinese solar panel producers is still looming. Another case against Chinese telegiants, Huawei and ZTE, is in the works. Although euro crisis has already dented Chinese exports to Europe, China still needs to maintain exports to the EU to cushion its growth as much as possible. China is itself in the midst of a difficult transformation process where internal consumption isn’t ready to replace public investments and exports as drivers of growth. From the perspective of EU, China needs to demonstrate free trade is a “two-way Street”. China cannot receive full access to EU’s internal market while sections of its own economy remain closed. (Jonas Parello-Plesner – ECFR – 01/05/2013)