Japan’s buying Diaoyu Islands provokes China to strike back

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China should strike back over sale: experts

Analysts Friday slammed Japan’s plan to nationalize the Diaoyu Islands in the East China Sea as provocations which would further trash Sino-Japanese relations, and called on the Chinese government to take corresponding measures to counter Japan’s scheme.

This video image, taken by the Japan Coast Guard on Aug 15, and released on Aug 27 shows a Chinese boat carrying Hong Kong activists after landing on the disputed island called Senkaku in Japanese and Diaoyu in Chinese in the East China Sea.

Japan’s Yomiuri Shimbun paper reported that Japan is scheduled to hold a cabinet meeting on Monday to officially “nationalize” the Diaoyu Islands on Tuesday.

The Japanese government will sign a deal with the so-called private owners on Tuesday to purchase the islands. And the Japanese government believes that putting the Diaoyu Islands under state ownership at an early date could minimize the backlash from China, said the report.

The paper also noted that the actions of Tokyo Governor Shintaro Ishihara, who had pushed strongly for the island purchase, had helped drive the state toward the purchase.

Qu Xing, director of the China Institute of International Studies, told the Global Times that by buying the islands, Japanese Prime Minister Yoshihiko Noda’s administration is attempting to reinforce Japan’s claim of sovereignty over the Diaoyu Islands.

“The repeated provocations have greatly undermined Sino-Japanese relations,” said the expert.

“We should resort to corresponding countermeasures to strike back against Japan’s unilateral move. Japan is making their assertion by legal means. Accordingly, China could also reinforce our claims of sovereignty over the islands through legal means,” said Qu.

According to the Kyodo News Agency, Japanese Foreign Minister Koichiro Gemba said that Noda is unlikely to hold summit talks with Chinese President Hu Jintao and South Korean President Lee Myung-bak on the sidelines of the ongoing Asia-Pacific Economic Cooperation (APEC) forum in Vladivostok, Russia, indicating that formal talks would not be appropriate given renewed territorial rows.

Gemba added that informal and “spontaneous” exchanges may take place, the report said.

Wang Ping, a researcher with the Institute of Japanese Studies under the Chinese Academy of Social Sciences, told the Global Times that Sino-Japanese relations are bound to be further undermined if Tokyo continues to inflame the situation.

“Japan’s national interests as well as its strategic interests in East Asia and the West Pacific will also be hurt. It should better recognize the consequences of its moves,” warned Wang.

The impact of the diplomatic rows between the two countries have already extended to the sphere of economic ties.

Reuters quoted Toshiyuki Shiga, a senior executive of Japanese auto maker Nissan, as saying that Japanese car manufacturers were having difficulty in holding big, outdoor promotion campaigns, which may have hurt August sales.

Foreign ministry spokesman Hong Lei said Thursday that in order to change the current situation, Japan must immediately stop encroaching upon China’s territorial sovereignty.

China is Japan’s largest trading partner, while Japan is the fourth largest trading partner of China.

Though Japan relies much more on its trade with China than China does Japan, economic friction is a double-edged sword, Qu said.

“The adverse political climate will definitely affect economic relations. But smashing Japanese cars and boycotting Japanese goods don’t help resolve the problems,” said Qu, calling for the public to remain rational.

Separately, Taiwan leader Ma Ying-jeou Friday inspected the Pengjia Islet, which is located 156 kilometers from the Diaoyu Islands. He made a speech in front of a monument on the islet and praised those who have helped to protect the Diaoyu Islands, reported the Xinhua News Agency.

Responding to a question about Ma’s visit, Hong Lei said Friday that all Chinese, including those from both sides of the Taiwan Straits, are responsible for safeguarding the sovereignty of the islands.

By Jin Jianyu and agencies contributed to this story

 Taiwan warns Japan against nationalising islands

Pengchia:  Taiwan’s president used a high-profile visit to a Taiwanese islet on Friday to warn Japan against making any attempts to nationalise islands that are part of a disputed chain in the East China Sea.

Escorted by warplanes and naval vessels, President Ma Ying-jeou flew by military helicopter to Taiwan’s Pengchia Islet, which lies off northern Taiwan, only about 140 kilometers (85 miles) west of the disputed chain.

The chain — known as Senkaku in Japan and Diaoyu in China — is controlled by Japan but also claimed by China and Taiwan, and has been a key part of simmering regional tensions over rival territorial claims. Japan’s government reportedly is planning to buy several of the islands from their private Japanese owners.

Analysts say Ma chose the Taiwanese islet to make his well-measured gesture to raise international attention without further aggravating tensions.
South China Sea. Agencies

Disputes have flared over island chains in the East China and South China seas, rich fishing grounds with potentially lucrative oil and gas reserves.

But diplomatically isolated Taiwan — which China claims a part of its own territory 63 years after the two sides split amid civil war — has been largely left out of the spotlight.

Ma called on the East China Sea chain’s three claimants — Taiwan, China and Japan — to put aside their disputes and hold dialogues to jointly develop the rich resources there. He suggested bilateral or trilateral talks “to resolve the issue in a peaceful way.”

Ma also asked commanders at two Taiwan-controlled islets in South China Sea’s Pratas and Spratly island chains to strengthen guards. Those chains are claimed by Taiwan, China, Vietnam, the Philippines, Brunei and Malaysia.

“Ma has tried to avoid provoking tension, but as Taiwan’s leader, he must make a gesture even though the impact may be limited,” said Lo Chih-cheng, a political scientist at Taipei’s Soochow University.

While Taiwanese media were generally skeptical about the visit’s impact, some say Ma’s trip may manage to rebut Beijing’s appeal for a united front with Taiwan over the disputes. Many Taiwanese fear Beijing may be using its warming economic ties with Taiwan in recent years to further its goal of unifying with the self-ruled democratic island.

“The mainland is trying to create the false scenario of cross-Strait cooperation in the East and South China” seas, Taiwan’s China Times said in an editorial. – AP

No let-up in protests over Diaoyu Islands

By CHOW HOW BAN hbchow@thestar.com.my/Asia News Network

There have been protests on many fronts after the move on Monday by Japanese government to buy the islands from their “owners”.

CHINESE actress Li Bingbing became the latest ordinary citizen to publicly show her outrage against Japan over its claim of the disputed Diaoyu Islands (known in Japan as Senkaku Islands).

The Golden Horse Best Actress award winner turned down an invitation to attend the premiere of her latest film, Resident Evil: Retribution, in Tokyo on Monday in protest of the move by the Japanese government to buy the islands from their “owners”.

“The premiere in Tokyo was an important event for this film because it was the first premiere around the world. During the shoot, it was already decided that all the production crew should go for the Tokyo premiere,” she said.

“I do not like to break an appointment but after what had happened to the Diaoyu Islands, I did not feel like going. It is something I cannot stand and I thank the film company for their understanding,” Li was quoted by the Chinese media as saying on Thursday.

Two weeks ago, two Chinese men, aged 23 and 25, were detained for stopping the car of the Japanese Ambassador to China, Uichiro Niwa in downtown Beijing.

The duo allegedly emerged from their car and pulled the Japanese flag off Niwa’s car when the ambassador was on his way back to the Japanese embassy.

Another man was issued a warning for blocking Niwa’s car.

Earlier last month, hundreds of Chinese protesters took to the streets in Shenzhen and Hangzhou and called on the Chinese government to protect the islands, following an incident where 10 Japanese nationalists swam to the islands in East China Sea in response of a similar landing by seven Chinese activists.

Some Chinese protesters also surrounded the embassy in Beijing and the Japanese consulate office in Shenyang, Liaoning province.

Two senior citizens who threw eggs at the embassy were persuaded to leave, while another demonstrator was stopped by the police when he attempted to enter the premises.

Other demonstrators held a 7m-long banner expressing their indignation over Japan’s detention of the Chinese activists who landed on the islands.

Last Monday, Kyodo News Agency reported that Tokyo was in the final stages of reaching a deal to buy the islands by the end of this month.

Japanese television images showed that a team of surveyors dispatched by Tokyo Governor Shintaro Ishihara was surveying the shoreline and waters around the uninhabited isles.

The surveyors then released the outcome of their investigation, detailing the geographic composition of the islands.

Apparently, Ishihara called on the Japanese government to build a harbour in the area.

It was reported that the administration of Prime Minister Yoshihiko Noda had agreed to pay two billion yen (RM79mil) for the islands.

The controversial islands are counter claimed by China and Taiwan.

China and Taiwan claim that the islands have been a part of Chinese territory since at least 1534 until Japan took brief control of it during the first Sino-Japanese war (1894-1895), while Japan has rejected claims that the islands were under China’s control prior to 1895.

In its editorial, China Daily warned that Japan was dicing with danger of leading the Sino-Japanese relations to their worse path.

“Japan is escalating tensions between itself and China. Our protests, be it official or civil, have fallen on deaf ears with the Japanese government.

“The deal for the islands was signed just five days after a letter from Japanese Prime Minister Noda to Chinese President Hu Jintao was delivered in Beijing on Aug 31. Noda was then said to have talked about lowering tensions between the two countries.

“The Noda administration now lacks credibility. They said they wanted to maintain and manage the islands in a peaceful manner but the islets are not part of Japan’s territory,” it said.

The newspaper said while China had kept its word to seek common ground on the islands and to maintain peace in the area, Japan had no longer shared the same goal.

China had failed to understand Japan’s diplomatic strategy, after all, and should re-look into its stand on the issue, it added.

Xinhua news agency slammed the islets purchase deal, saying that it would put to test Japan’s credibility over an historical commitment made in 1978 friendship treaty between Japan and China to resolve the issue.

Renmin University’s Centre for East Asia Studies director Huang Dahui said the pressure from the Japanese elections and fears of China’s economic development were reasons for the move.

“Japan is playing a two-faced game with China. What Ishihara and Noda are trying to do share the same purpose, which is to nationalise the Diaoyu Islands. China should strongly protest,” he told Global Times

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Financial Times hails Malaysia’s economic boom

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KUALA LUMPUR: It is not always that emerging economies get favourable remarks from hard-boiled foreign media practitioners but Malaysia is getting more laudatory remarks from foreign journalists these days.

Take Jeremy Grant’s article on Kuala Lumpur’s soon-to-be-developed new financial centre, the Tun Razak Exchange, and the state of the Malaysian economy in the Financial Times Friday, for example.

He wrote: “With much of the world economy experiencing anaemic growth at best, it is hard to believe that any country would contemplate a project on this scale.

“Yet Malaysia’s economy is enjoying a gravity-defying boom that is confounding sceptics. Second-quarter gross domestic product figures out this week showed the economy grew by 5.4%, way above consensus expectations of 4.6%, and the 4.9% recorded – after an upward revision – for the previous quarter.”

Grant attributed this development to big-ticket government spending, lending to business by well-capitalised banks, and robust consumer demand, fuelled by pay rises for civil servants and cash handouts that have even seen taxi drivers receive vouchers for free replacement tyres.

“Malaysia’s stock market has been among the best performers in the world, buoyed by big flotations including Felda, a state-controlled palm oil producer, which was the second-largest initial public offering after Facebook when it raised over USD2bil last month. Bankers are cashing in with a parade of further IPOs expected within months,” he added.

“Much of the impetus behind the growth comes from the “economic transformation programme” initiated by Prime Minister Datuk Seri Najib Tun Razak when he came to power in 2009.

This involves dozens of government-backed projects designed to boost per capita income to USD15,500 by 2020, from USD9,600 last year and lift Malaysia out of its “middle-income trap”, Grant wrote.

Over spending: Analysts say one nagging concern for Malaysia is the rising household debt caused by the rapid growth in credit card usage.

The Financial Times also quoted Christian de Guzman, an analyst at Moody’s, a rating agency, who admitted he was sceptical about the programme’s ability to spur private sector development when it was launched. De Guzman is more convinced now, adding that “The proof of the pudding is in the eating but so far they are on track. In aggregate there are just so many things going on [in the economy].”

Grant wrote that “Not only has Malaysia experienced strong domestic demand offsetting its vulnerability to weakening demand for its exports – much of them electronics destined for Europe; it has also benefited from deeper ties with economies in Asia.

Moody’s says that in 2006 the United States was Malaysia’s largest trading partner, absorbing 18.8 per cent of its exports, while Asia Pacific accounted for 60 per cent. By last year the US share had dwindled to 8.3 per cent while Asia Pacific jumped to 69 per cent.

Malaysia’s healthy economy – and the resulting “feel good” factor – stands in contrast to growing anxiety among Malaysia’s neighbours in south-east Asia as the global downturn has tarnished their economies.

Analysts point out one nagging concern for Malaysia: rising household debt, caused by rapid growth in credit card usage.

As the transformation programme’s projects take root, Grant wrote that Bank Negara Malaysia is forecasting full-year growth at the upper end of its 4-5 per cent.

Amidst this scenario, the Financial Times also quoted Rahul Bajoria, an anaylst at Barclays, as saying that: “We expect momentum to remain underpinned as the project-based nature of these investments means that it is unlikely to be halted abruptly.” – Bernama

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Malaysia’s Days in the Sun – WSJ

Malaysia’s growth forecasts raised after the actual 5.4% in Q2, 2012

US poverty on track to rise to highest since 1960s

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This photo shows new parents Garrett Goudeseune, 25, Laura Fritz, 27, left, with their daughter Adalade Goudeseune, as they pose for a photo at the Jefferson Action Center, an assistance center in the Denver suburb of Lakewood. Both Fritz and Goudeseune grew up in the Denver suburbs in families that were solidly middle class. But the couple has struggled to find work and are now relying on government assistance to cover food and $650 rent for their family. The ranks of America‘s poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net. Census figures for 2011 will be released this fall in the critical weeks ahead of the November elections. (AP Photo/Kristen Wyatt)

The ranks of America’s poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net.

Census figures for 2011 will be released this fall in the critical weeks ahead of the November elections.

The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: The official poverty rate will rise from 15.1 per cent in 2010, climbing as high as 15.7 per cent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965.

Poverty is spreading at record levels across many groups, from underemployed workers and suburban families to the poorest poor. More discouraged workers are giving up on the job market, leaving them vulnerable as unemployment aid begins to run out. Suburbs are seeing increases in poverty, including in such political battlegrounds as Colorado, Florida and Nevada, where voters are coping with a new norm of living hand to mouth.

“I grew up going to Hawaii every summer. Now I’m here, applying for assistance because it’s hard to make ends meet. It’s very hard to adjust,” said Laura Fritz, 27, of Wheat Ridge, Colo., describing her slide from rich to poor as she filled out aid forms at a county centre. Since 2000, large swaths of Jefferson County just outside Denver have seen poverty nearly double.Fritz says she grew up wealthy in the Denver suburb of Highlands Ranch, but fortunes turned after her parents lost a significant amount of money in the housing bust. Stuck in a half-million dollar house, her parents began living off food stamps and Fritz’s college money evaporated. She tried joining the Army but was injured during basic training.

Now she’s living on disability, with an infant daughter and a boyfriend, Garrett Goudeseune, 25, who can’t find work as a landscaper. They are struggling to pay their $650 rent on his unemployment checks and don’t know how they would get by without the extra help as they hope for the job market to improve.

In an election year dominated by discussion of the middle class, Fritz’s case highlights a dim reality for the growing group in poverty. Millions could fall through the cracks as government aid from unemployment insurance, Medicaid, welfare and food stamps diminishes.

“The issues aren’t just with public benefits. We have some deep problems in the economy,” said Peter Edelman, director of the Georgetown Centre on Poverty, Inequality and Public Policy.

He pointed to the recent recession but also longer-term changes in the economy such as globalisation, automation, outsourcing, immigration, and less unionisation that have pushed median household income lower. Even after strong economic growth in the 1990s, poverty never fell below a 1973 low of 11.1 per cent. That low point came after President Lyndon Johnson‘s war on poverty, launched in 1964, that created Medicaid, Medicare and other social welfare programs.

“I’m reluctant to say that we’ve gone back to where we were in the 1960s. The programs we enacted make a big difference. The problem is that the tidal wave of low-wage jobs is dragging us down and the wage problem is not going to go away anytime soon,” Edelman said.

Stacey Mazer of the National Association of State Budget Officers said states will be watching for poverty increases when figures are released in September as they make decisions about the Medicaid expansion. Most states generally assume poverty levels will hold mostly steady and they will hesitate if the findings show otherwise. “It’s a constant tension in the budget,” she said.

The predictions for 2011 are based on separate AP interviews, supplemented with research on suburban poverty from Alan Berube of the Brookings Institution and an analysis of federal spending by the Congressional Research Service and Elise Gould of the Economic Policy Institute.

The analysts’ estimates suggest that some 47 million people in the U.S., or 1 in 6, were poor last year. An increase of one-tenth of a percentage point to 15.2 per cent would tie the 1983 rate, the highest since 1965. The highest level on record was 22.4 per cent in 1959, when the government began calculating poverty figures.

Poverty is closely tied to joblessness. While the unemployment rate improved from 9.6 per cent in 2010 to 8.9 per cent in 2011, the employment-population ratio remained largely unchanged, meaning many discouraged workers simply stopped looking for work. Food stamp rolls, another indicator of poverty, also grew.

Demographers also say:

—Poverty will remain above the pre-recession level of 12.5 per cent for many more years. Several predicted that peak poverty levels — 15 per cent to 16 per cent — will last at least until 2014, due to expiring unemployment benefits, a jobless rate persistently above 6 per cent and weak wage growth.

—Suburban poverty, already at a record level of 11.8 per cent, will increase again in 2011.

—Part-time or underemployed workers, who saw a record 15 per cent poverty in 2010, will rise to a new high.

—Poverty among people 65 and older will remain at historically low levels, buoyed by Social Security cash payments.

—Child poverty will increase from its 22 per cent level in 2010.

Analysts also believe that the poorest poor, defined as those at 50 per cent or less of the poverty level, will remain near its peak level of 6.7 per cent.

“I’ve always been the guy who could find a job. Now I’m not,” said Dale Szymanski, 56, a Teamsters Union forklift operator and convention hand who lives outside Las Vegas in Clark County. In a state where unemployment ranks highest in the nation, the Las Vegas suburbs have seen a particularly rapid increase in poverty from 9.7 per cent in 2007 to 14.7 per cent.

Szymanski, who moved from Wisconsin in 2000, said he used to make a decent living of more than $40,000 a year but now doesn’t work enough hours to qualify for union health care. He changed apartments several months ago and sold his aging 2001 Chrysler Sebring in April to pay expenses.

“You keep thinking it’s going to turn around. But I’m stuck,” he said.

The 2010 poverty level was $22,314 for a family of four, and $11,139 for an individual, based on an official government calculation that includes only cash income, before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership, as well as non-cash aid such as food stamps and tax credits, which were expanded substantially under President Barack Obama’s stimulus package.

An additional 9 million people in 2010 would have been counted above the poverty line if food stamps and tax credits were taken into account.

Robert Rector, a senior research fellow at the conservative Heritage Foundation, believes the social safety net has worked and it is now time to cut back. He worries that advocates may use a rising poverty rate to justify additional spending on the poor, when in fact, he says, many live in decent-size homes, drive cars and own wide-screen TVs.

A new census measure accounts for non-cash aid, but that supplemental poverty figure isn’t expected to be released until after the November election. Since that measure is relatively new, the official rate remains the best gauge of year-to-year changes in poverty dating back to 1959.

Few people advocate cuts in anti-poverty programs. Roughly 79 per cent of Americans think the gap between rich and poor has grown in the past two decades, according to a Public Religion Research Institute/RNS Religion News survey from November 2011. The same poll found that about 67 per cent oppose “cutting federal funding for social programs that help the poor” to help reduce the budget deficit.

Outside of Medicaid, federal spending on major low-income assistance programs such as food stamps, disability aid and tax credits have been mostly flat at roughly 1.5 per cent of the gross domestic product from 1975 to the 1990s. Spending spiked higher to 2.3 per cent of GDP after Obama’s stimulus program in 2009 temporarily expanded unemployment insurance and tax credits for the poor.

The U.S. safety net may soon offer little comfort to people such as Jose Gorrin, 52, who lives in the western Miami suburb of Hialeah Gardens. Arriving from Cuba in 1980, he was able to earn a decent living as a plumber for years, providing for his children and ex-wife. But things turned sour in 2007 and in the past two years he has barely worked, surviving on the occasional odd job.

His unemployment aid has run out, and he’s too young to draw Social Security.

Holding a paper bag of still-warm bread he’d just bought for lunch, Gorrin said he hasn’t decided whom he’ll vote for in November, expressing little confidence the presidential candidates can solve the nation’s economic problems. “They all promise to help when they’re candidates,” Gorrin said, adding, “I hope things turn around. I already left Cuba. I don’t know where else I can go.”

By Hope Yen Associated Press

Malaysia’s Days in the Sun – WSJ

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New York, Hong Kong, London…Kuala Lumpur? Malaysia is going gangbusters. Now, it must sustain the momentum.

The Southeast Asian nation is home to the world’s second and third largest initial public offerings this year—the $3.3 billion listing of Felda Global Ventures 5222.KU 0.00% and IHH Healthcare’s $2 billion IPO. Meanwhile, the benchmark KLCI hit a record Wednesday after rising almost 7% this year.

State backing for Malaysian equities is a factor. Felda’s IPO was largely bought by government-backed investors such as individual Malaysian states. Mandatory retirement savings boosts domestic pension funds that typically invest a lot in the local market too.

The economy is also performing well. Unemployment is low. Inflation is benign at about 2%. Gross domestic product growth is around 5%. That is important because the Malaysian stock market is mainly comprised of domestically focused companies.

Diverse exports are also relatively robust. Commodities like palm oil, petroleum and gas make up about a quarter of exports, while electronics and manufactured goods make up the rest. HSBC notes that Malaysia’s exports are down just 2% since last August, compared to a 13% aggregate decline for shipments from Singapore, Thailand, Indonesia and the Philippines.

The country’s banks look healthy too. Asset quality is strong and deleveraging by European banks isn’t a big threat, says Moody’s. “Their claims on the Malaysian economy amount to a mere 5% of GDP,” notes the rating company.

Still, there are risks that warrant caution. A prolonged slump in global trade would hurt. Net exports are equal to about 16% of GDP—much higher than the ratio for neighbors such as Indonesia and the Philippines.

Politics is a wildcard too. Prime Minister Najib Razak wants to improve infrastructure and boost investment in sectors including oil and gas and tourism. Investors must hope that agenda stays on track regardless of the outcome of an election expected by early 2013.

Much of the good news may be priced in. Malaysia’s benchmark stock index trades at about 15 times current earnings. Some analysts say that is rich. Malaysia has momentum. But much now depends on domestic politics and the depth of the weakness in global trade.

Write to Cynthia Koons at cynthia.koons@wsj.com

Singapore millionaires who don’t feel rich

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Singapore, the third richest country in the world on a per capita basis, may be good at accumulating wealth but it fares less well when it comes to distributing it.

WHEN I read last week that one in six households in Singapore is a millionaire in investable wealth, it stirred mixed emotions of pride and worry.

Bloomberg had earlier reported that the city state had become the third richest country in the world on a per capita basis.

Many Singaporeans probably share these mixed feelings, if they could take time away from work to think about it. (More on that later.)

The pride, of course, stems from our transformation from a squatter colony to this present level of affluence in only 47 years, and the concern comes from the high cost of living that such wealth brings.

Singapore is the 10th most expensive city in the world. The two factors – wealth and high cost – are related; if cost of living is taken into account Singapore’s wealth ranking drops to 11th in the world.

Inflation clouds everyone’s lives, unless he is among the 188,000 millionaire households, to which it probably matters much less..

A school-teacher commented: “Being told that I am living in one of the world’s richest cities doesn’t profit my life and the resultant high cost is a blow.”

Last year, the number of millionaires (in US dollars) increased by 14%, one of the world’s fastest growth rates. In the previous year – from 2009 to 2010 – it went up by a record one-third.

Their wealth does not include the value of their properties or other fixed assets. If it does, Singaporeans would be even richer.

The question is: how many of the new rich are foreigners who took up permanent residency here? If the number is high, it could distort the picture a little.

Over the past five years, the number of rich mainland Chinese, Indians and Indonesians who took up PR here has risen, pushing up the price of properties.

Two of Facebook billionaire co-founders, Mark Zuckerberg and Eduardo Saverin, have made Singapore their home.

I also noticed that the pro-government media has been playing up stories of rising wealth and the capacity of Singaporeans to spend it. It is understandable because it paints a rosy picture.

Recent tales included the following:

> Singapore’s (resale) public flats are worth more than some expensive villas and islands in Portugal, Greece and Spain, as well as luxurious properties in the United States, reported Business Times.

> Rising property prices – nearly 7,000 “shoe box” condos of 300 sq ft to 500 sq ft have been built. A 463 sq ft condo was sold for S$702,000 (RM1.7mil).

> For sale: a bottle of special edition whisky in Singapore for S$250,000 (RM620,165).

> Singapore girl from a promi­­-nent family splurging S$200,000 (RM496,252) on a photo shoot.

> Launch of the Singapore’s most expensive car, priced at S$3.6mil (RM9mil).

> A 23,920 sq ft bungalow at the prestigious Nassim Road was sold for a record S$47.8mil (RM118.6mil).

Such stories will likely continue to happen but so will tales relating to the new poor.

Singapore may be good at accumulating wealth but it fares less well when it comes to distributing it.

In fact, what is rubbing off some of the “wealth” shine is the widening inequality between the rich and the poor, an imbalance that ranks a notorious second in the world next to Hong Kong.

According to the Manpower Ministry, the earnings of the poorest 20% had stagnated in the past 10 years, with real income rising only S$200 (RM496) to S$1,400 (RM3,471), or 0.3%.

Robert Kiyosaki, author of Rich Dad, Poor Dad wrote: “Singapore is rich and happy at the moment, and that’s not good. America was like that at one point in time.”

I know what he means.

A blogger recalled this was what former Prime Minister Lee Kuan Yew said years ago. He said he feared affluence was making Singaporeans complacent.

He said the young generation compared badly with the poorer, hard-striving migrants from China and needed “spurs on its side” to drive it on.

Are wealthy Singaporeans happy? Happiness is subjective, but a Twitter reported that only one quarter of the people are happy.

A newspaper for Indians in Singapore, Tabla, wrote: “They are among the world’s wealthiest, ranking sixth highest in net wealth with a mean value of US$284,692 (RM908,737) per adult. But Singaporeans aren’t necessarily a happy lot.”

Most attribute it to the pressure cooker living, the high cost of living and the education system. Despite what Lee said, Singaporeans work the longest hours in a worldwide comparison, beating the Japanese.

But the country has the second lowest job satisfaction in the world, according to an Accenture survey, with some 76% saying they are dissatisfied with their jobs.

Long-time visitor Brian Nelsen wrote last month: “Where are the friendly Singaporeans I used to know?”

He expressed shock and dismay at the abrupt change in the attitude of Singaporeans towards tourists in the last few years. They appear unfriendly and rude nowadays.

“Nobody smiles or returns a greeting any more. Many are now a surly lot,” he said. He probably had not met our richer folks.

Joyce Hooi of The Business Times wrote: “If Singapore had been a person, it would have stood above the unwashed tableau of Occupy Wall Street, watching from its penthouse and laughing into its Cognac.”

The really wealthy are busy buying up luxuries.

Every single day, she added, 25 people had bought a Mercedes-Benz or a BMW, and a Ferrari every four days over the past 11 months.

INSIGHT DOWN SOUTH BY SEAH CHIANG NEE  cnseah@thestar.com.my

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Eurozone unemployment hits record 10.9% as manufacturing slumps to recession!

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Eurozone unemployment hit a record in March, with Spain’s 24.1% rate setting the pace.

NEW YORK (CNNMoney) — Unemployment in the eurozone rose to 10.9% in March, another sign of the broad economic weakness and possible recession across the continent.

The unemployment rate across the broader 27-nation European Union remained at 10.2% in March, according to a organization report Wednesday.

10 largest economies

But the 17-nation eurozone unemployment edged up from 10.8% in February. The EU and eurozone rates are the highest since the creation of the common euro currency in 1999.

There are now 13 nations in Europe struggling with double-digit percentage unemployment, led by a 24.1% rate in Spain, which was a record high, and 21.7% in Greece.

The rising jobless rates are primarily blamed on the ongoing European sovereign debt crisis, which has forced governments to take tough austerity measures to cut spending.

Europe’s next recession risk: Germany

There are 12 countries in Europe that have had two or more consecutive quarters in which their gross domestic product has dropped — a condition many economists say define a recession. Nine of the countries are in the eurozone, and three use their own currency.

The United Kingdom, which had an 8.2% unemployment rate in its most recent reading, is the largest economy now in recession.

The entire EU and and eurozone are widely believed to be in recession as well, a fact likely to be confirmed when their combined GDPs are reported on May 15.

Even some of the healthier countries in Europe are likely to meet that criteria, including Germany, the EU’s largest economy and one in which unemployment is 5.6%, the fourth-lowest rate on the continent.

German GDP declined 0.2% in the fourth quarter and many economists are forecasting another drop in the first quarter, suggesting Germany could be in recession soon.

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By contrast to Europe, the U.S. unemployment rate has been steadily falling, reaching 8.2% in March. The jobless rate here reached a 26-year high of 10.0% in October 2009, but it has declined in six of the last seven months, shaving almost a full percentage point off the 9.1% rate of last August.

Economists surveyed by CNNMoney forecast that the rate will stay unchanged in the April jobs report this Friday, while hiring is expected to pick up to a gain of 160,000 jobs

By Chris Isidore @CNNMoney ,  Newscribe : get free news in real time

Eurozone manufacturing heads towards recession

(BRUSSELS) – Gloom over eurozone manufacturing deepened in April, highlighting the impact of policies to control budgets and signalling recessionary pressures, a Markit survey showed on Wednesday.

A key index of activity based on a survey by Markit fell to almost the lowest level for three years.

Markit publishes closely watched leading indicators of economic activity and in its latest survey for its purchasing managers’ index the firm said: “The eurozone manufacturing downturn took a further turn for the worse in April.”

The adjusted manufacturing PMI figure, closely watched as an indicator of economic trends, fell to 45.9 from 47.7 in March.

A figure of below 50 points to contraction and Markit noted that “the headline PMI has signalled contraction in each of the past nine months.”

The chief economist at Markit, Chris Williamson, said: “Manufacturing in the eurozone took a further lurch into a new recession in April, with the PMI suggesting that output fell at (a) worryingly steep quarterly rate of over 2.0 percent.”

He said that “austerity in deficit-fighting countries is having an increasing impact on demand across the region” and that “even German manufacturing output showed a renewed decline.”

Williamson commented that the latest forecast from the European Central Bank “of merely a slight contraction of GDP (gross domestic product) this year is therefore already looking optimistic.”

He added: “However, with the survey also showing inflationary pressures to have waned, the door may be opening for further stimulus.”

His remarks highlight controversy over policies in many countries to correct budget deficits and heavy debt to install confidence on debt markets where governments borrow.

There are increasing warnings that the eurozone must raise economic growth, but opinions differ on the best route, with some saying that budget austerity opens the way to structural reform and competitiveness and others saying that extra stimulus is essential.

Markit said that “the April PMIs also indicated that manufacturing weakness was no longer confined to the region’s geographic periphery.”

In Germany, which has the biggest economy in the eurozone and has shown broad resilience to downturn elsewhere, Markit also noted a setback.

“The German PMI fell to a 33-month low, conditions deteriorated sharply again in France and the Netherlands also contracted at a faster rate,” it said.

Markit said: “There was no respite for the non-core nations either, with steep and accelerating downturns seen in Italy, Spain and Greece. Only the PMIs for Austria and Ireland held above the 50.0 no-change mark.”

Markit said that manufacturers reported weak demand from clients inside and outside the zone and this had hit even German companies.

The worsening outlook for eurozone manufacturing was also affecting the job market, Markit said, just as eurozone data put the unemployment rate at a record high level.

In manufacturing “job losses were reported for the third straight month in April, with the rate of decline the sharpest in over two years,” Markit said on the basis of its survey. – AFP.

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French head to polls in presidential election

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First round voting begins in overseas territories as incumbent Nicholas Sarkozy appears set to face a stern test.

More than 44 million French voters are to go to the polls for the first round of a presidential election that represents a serious threat to incumbent Nicholas Sarkozy‘s tenure in the post.

While predictions of a high abstention rate and a strong protest vote have left the outcome uncertain, opinion polls point towards Francois Hollande, Sarkozy’s main Socialist challenger, replacing his conservative rival.

The two 57-year-old political leaders are on course to finish in the top two in Sunday’s polling, thus setting them up to square off in a second round vote on May 6.

The result of that vote will decide who is France’s president for the next five years.

Voting began on Saturday in France’s overseas territories, which are mainly islands dotted around the Indian, Pacific and Atlantic oceans.

On Sunday, voting will continue in 85,000 polling stations across the country’s European mainland. Voting will begin at 8am local time (06:00 GMT) and continue until 8pm (18:00 GMT).

Voting estimates will then be immediately published, giving what has been a traditionally accurate assessment of how the polls will stand once results are finalised.

In all, 10 candidates are in the race, with Hollande and Sarkozy trailed by far-right leader Marine Le Pen, hard-left leader Jean-Luc Melenchon and veteran centrist Francois Bayrou. A handful of outsiders round out the field.

Once the first round is over, the top two candidates will face each other in the final poll, with the run-up to that including a televised debate.

Spotlight coverage of April 22 presidential election

Hollande says that Sarkozy has trapped France in a spiral of austerity and job losses, and has called for the European response to the debt crisis to be more pro-growth.

Sarkozy, meanwhile, says that his rival is weak-willed and would spark panic in financial markets by adopting an approach that involves increased government spending.

Al Jazeera’s Tim Friend, reporting from Paris, said that Sarkozy faces a stiff challenge due to his “extraordinary” unpopularity.

“A lot of the people voting will be putting their ballot paper into the ballot box more against Sarkozy than perhaps for the candidate they eventually vote for,” he said.

Since Saturday, there has been no sign of any of the rhetoric that has characterised an increasingly heated contest, as French law prohibits campaigning and opinion polls on the eve of voting.

Voters went about their business without being accosted by pamphleteers, the campaigns’ websites, Facebook pages and Twitter feeds were left without updates and broadcasters had to find other subjects to interview.

Source: Al Jazeera and agencies

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Unemployment Fuels Debt Crisis

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Job-seekers wait outside a job center before opening in Madrid, Spain. Spain’s jobless rate has more than doubled since 2008 after the collapse of a real estate market that fueled a decade of economic growth. Photographer: Angel Navarrete/Bloomberg

Surging unemployment rates from Spain to Italy and Greece are threatening efforts to quell the region’s debt crisis and keeping bond yields close to record premiums relative to benchmark German bunds.

Joblessness is soaring as European nations reduce spending, igniting strikes and protests from Athens to Madrid. Unemployment in Spain surged to almost 24 percent, pushing the euro-region level to 10.8 percent in February, the highest in more than 14 years. Italy’s rate is at 9.3 percent, the most since 2001, hampering efforts to spur economic growth.

Deepening recessions in Italy and Spain contributed to a five-week slide in Italian and Spanish bonds as the shrinking tax base helped lead to both countries raising their deficit targets. The yield premium investors demand to hold Spanish 10- year debt over German bunds reached a four-and-a-half-month high this week.

“The higher the jobless rate, the more that has to be spent on benefits, creating the potential for a negative spiral,” said Christian Schulz, an economist at Berenberg Bank in London and a former ECB official.

Berenberg Bank predicts euro-region unemployment will peak at 11.5 percent in September, he said.

The extra yield investors demand to hold Spanish 10-year bonds rather than similar-maturity German securities was 411 basis points yesterday, compared with an average 130 during the past five years. The rate has risen more than 80 basis points this year. The spread was 376 basis points for Italy and 1,072 basis points for Portugal.

Youth Joblessness

Spain’s jobless rate has more than doubled since 2008 after the collapse of a real estate market that fueled a decade of economic growth. The country is now home to more than one third of the euro-region’s jobless and more than half of young people are out of work.

Hundreds of thousands of Spaniards protested on March 29 in a general strike against Prime Minister Mariano Rajoy’s overhaul of labor market rules and the deepest budget cuts in at least three decades that are pushing the economy deeper into its second recession since 2009.

“Spain faces formidable challenges, especially concerning youth unemployment,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told lawmakers at the European Parliament in Strasbourg Wednesday.

Italy’s jobless rate rose to the highest in more than a decade in February and the International Monetary Fund forecast on April 17 that unemployment will reach 9.9 percent this year. Italian bonds reversed morning gains yesterday after the government cut its growth forecasts and abandoned a goal to balance the budget next year.

Estimate Revisions

Italy’s gross domestic product will contract 1.2 percent this year, more than twice the previous forecast, and the deficit will end next year at 0.5 percent, more than the 0.1 percent previously forecast. The Italian announcement came six weeks after Rajoy abandoned Spain’s deficit goal for next year.

Joblessness in both countries may worsen as the recession deepens and rigid labor market laws are overhauled. Rajoy passed in February a plan to make it cheaper for employers to let workers go, while Italy gave companies more leeway to fire workers without fear of court-ordered reinstatements.

“High unemployment means a very dissatisfied electorate and makes it difficult to get stuff done,” said Padhraic Garvey, head of developed market debt at ING Groep NV in Amsterdam. “It makes it significantly more difficult to pass austerity measures and exacerbates a difficult situation.”

Rajoy’s Challenges

Rajoy probably will face further unrest if he’s forced to implement more budget cuts to meet ambitious deficit goals. His government has now pledged to reduce the shortfall to 5.3 percent of GDP in 2012 from 8.5 percent in 2011 and by more than 2 percentage points next year to get within the EU’s 3 percent limit. Despite a raft of austerity last year, the country achieved a deficit reduction of less than 1 percentage point.

Falling joblessness in Germany underscores the widening gap between the resilience of the euro-region’s largest economy and the so-called periphery. The nation’s adjusted jobless rate slipped in March to a two-decade low of 6.7 percent, according to the statistics office. While the 17-member euro-region economy will shrink 0.4 percent in 2012, Germany’s economy probably will grow 0.7 percent, according to economists’ forecasts compiled by Bloomberg.

“The divergence between Germany and the other economies is here to stay,” said Christoph Rieger, head of interest-rate strategy at Commerzbank AG in Frankfurt. “It provides a structural reason for spreads to stay wider, regardless of what other progress is made on containing the crisis.”

Greek Elections

In Greece, where official data showed unemployment climbed to 21 percent in January, elections scheduled for May 6 may produce a hung parliament, raising questions about the nation’s ability to implement its austerity measures. The nation’s 2 percent bond due in February 2023 trades at about 25 cents on the euro.

In Portugal, where the government forecasts the unemployment rate will average 13.4 percent this year, up from 12.7 percent in 2011, Soares da Costa SGPS SA, Portugal’s third- biggest publicly traded construction company, said it’s expanding abroad and eliminating jobs at home, where it faces a slump in government infrastructure spending.

“High and rising unemployment is likely to impact at a political level and may make the reforms more difficult to undertake,” said Eric Wand, a fixed-income strategist at Lloyds Banking Group Plc in London. “If the political desire to reform comes in to doubt, then the market wouldn’t like that. There’s good scope for the crisis to get worse in the near term, the economies are still on pretty shaky ground and there’s a lot of political risk.”Daniel Tilles at dtilles@bloomberg.net.

India’s ‘Look East Policy’

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India put forward the “Look East Policy” in the beginning of the1990s and it was considered as an important foreign strategy of India. At that time, led by Treasury Secretary Manmohan Singh, the government of Rao began promoting economic reform, changed Indian development patterns and actively developed the economic relations with foreign countries. Due to the collapse of the Soviet Union, Russia and eastern European countries were beset with a crisis and the cooperation between India and these countries sagged seriously.

In addition, its relations with the neighboring countries were not developing very smoothly; as a result, it was difficult for India to establish international economic cooperation in the South Asia. Under that circumstance, the Southeast Asiancountries that flourished in economic development became India’s first choice to develop its foreign economic cooperation because they have deep historical and geopolitics relations with India.

Overall, the focal point of the “Look East Policy” of

The Association of Southeast Asian Nations (ASEAN) (Photo credit: Wikipedia)

India at that time was put in economic cooperation. Due to various reasons, India did not positively promote the “Look East Policy” at that time and the Southeast Asian countries had paid their attention to East Asia and underestimated India. Subsequently, the “Look East Policy” did not exert obvious effects.

Since the acceleration of globalization and change of Asian pattern in the 21st century, the “Look East Policy” of India has shown new vitality and rising trend.

India began adopting specific action, transforming to all-round cooperation from exclusive economic exchanges and enlarging its foreign policies from the Southeast Asia to East Asia and Australia.

India strengthened its association with the Southeast Asian countries, joined the treaties of the Association of Southeast Asian Nations, established free trade zone with the Southeast Asian countries and participated in the East Asian cooperative mechanisms and the security forum of the Association of Southeast Asian Nations. The cooperative contents also expend to the military and cultural fields from exclusive economic cooperation.

The “Look East Policy” has become an important part of India’s diplomatic strategy.

Is the “Look East Policy” related with the eastward transfer of American strategic focus?

The facts above show India is much earlier in promoting the “Look East Policy” than the eastward transfer of American strategic focus. In order to realize the strategy of eastward transfer, the United States positively encouraged India to participate in the East Asian affairs.

As the strategy of eastward transfer catered to the psychology of India’s misgivings and precautions against China, India also manifested its enthusiasm. India lately held a trilateral dialogue with the United States and Japan, and it has also close contacts with Vietnam, Burma and some other Southeast Asian countries.

However, it cannot be deemed as the collaboration of the United States and India. India has been pursuing the independent foreign policy and mainly considers its own interests. It is hard to imagine that India will completely follow the foreign policies of the United States. India has an all-round diplomatic policy and it both maintain relations with the United States and takes much count to the relations with other countries. India always keeps a close contact with Russia, Japan and the European Union countries and its relation with China is also positive.

In the state leaders meeting of the BRICS just closed in New Delhi, India proposed a series of positive proposals, hoping deepening the relations of the BRICS, strengthening cooperative mechanism of these countries and enlarging the role of the international economy and political life of these countries, which again embodies India’s all-round diplomatic policy. Therefore, it is groundless to think its “Look East Policy” and the American strategy of eastward transfer are converging.

By Pei Yuanying (Jiefang Daily)

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China’s Dueling Economic Theories

China’s NPC (Parliament) Photograph: Lintao Zhang/Getty Images

Delegates attend the closing ceremony of the closing session of the National Peoples Congress (NPC) at The Great Hall Of The People on March 14, 2012 in Beijing, China. The National People’s Congress (NPC), China’s parliament, adopted the revision to the Criminal Procedure Law at the closing session of its annual session today.

Should China push for radical reform or return to a more government-directed economy? It’s a familiar question made more urgent by the downfall of Bo Xilai, seen by many as a leader of the Communist Party’s conservative faction. A recent People’s Daily editorial that strongly supported more reform, plus a call by the World Bank and a research arm of China’s Cabinet for a smaller state role in financing and industry, have highlighted the issues. “The debate will be messy,” wrote Standard Chartered (STAN:LN) China economist Stephen Green in a March 1 report. However, he added, “something good is stirring in Beijing.”

The back-and-forth focuses on two models. The Chongqing model calls for a top-down push for social equality, with a stronger role for government in the economy; its name evokes the giant southwestern city where Bo Xilai ran the show until early March. The other model plays down the role of state companies, encourages the growth of more capital-intensive, value-added industries, and favors grassroots political reform. This is the Guangdong approach, named for the coastal province that was first to grow rich on exports and now is a center for experiments in governance. “I am strongly supportive of the Guangdong model and wary of the Chongqing model,” wrote Tsinghua University sociologist Sun Liping on March 16 in the Beijing-based business weekly Economic Observer. “In the long term, it is more important that the masses have the right to struggle for their own interests.”

Despite Bo Xilai’s fall from power, the Chongqing model still has its adherents. A website whose name translates as Utopia in English supports the state-heavy approach, and was blocked after Bo’s dismissal in an unfolding scandal that may implicate him in corruption. The site, back in business, has posted hundreds of articles supporting Bo, says David Kelly, research director at the Beijing-based consulting firm China Policy.

To reverse growing social inequality in its region, Chongqing has encouraged farmers to become urban residents and qualify for better benefits, and started to build 800,000 units of public housing. Bo also created several large conglomerates by merging more than a dozen smaller state companies. Despite Chongqing’s success in attracting such investors as Ford Motor (F) and Foxconn Technology Group, foreign businessmen have worried that government-backed businesses could squeeze them out. A crackdown by city officials last fall on Wal-Mart Stores (WMT) over mislabeled pork forced the world’s biggest retailer to shutter 13 stores temporarily, spooking investors. “If the Chongqing model is one that favors a greater role for the government, with state enterprises managing the economy, that is a negative for foreign businesses,” says Christian Murck, president of the American Chamber of Commerce in China. Also disturbing was Bo’s handling of a cleanup of the mob in Chongqing: He jailed not only the alleged mobsters but also a top Beijing lawyer who was defending one of the accused.

Guangdong party secretary Wang Yang has been upgrading the province’s economy from labor- and energy-intensive, polluting export industries such as toys, textiles, and plastics to newer and cleaner ones including software, new energy, and biotech. Wang has opted to rely mainly on private businesses, encouraging their growth with tax breaks and squeezing lower-margin industries with tighter labor and environmental regulations. Shenzhen, for example, has seen many of its dying industries depart in what Wang has dubbed “emptying the cage and changing the bird.”

What excites Chinese liberals more is Wang’s encouragement of grassroots policy making. That includes giving workers more of a voice within the official union, as well as a soft-handed approach to last year’s Wukan village uprising over land grabs and the death of a protester. Wukan, on Guangdong’s coast, just held what appear to be unrestricted elections for a new village chief.

Which of these two models will gain the upper hand is unclear. Clarity is unlikely at least until the fall Party Congress, when China will replace most of its top leaders, and both camps may vie for supremacy for years. “In 2001, we had a road map and that was the World Trade Organization accession agreement. Today we don’t have a sense of what comes next for China,” says the Chamber’s Murck. “There is more uncertainty than we’ve seen in years.”

The bottom line: As social inequality deepens and growth slows, China’s leaders must choose between more market reforms or a stronger state.

By Roberts is Bloomberg Businessweek‘s Asia News Editor and China bureau chief.

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