The Asian financial crisis – 20 years later




East Asian Economies Remain Diverse

 

It is useful to reflect on whether lessons have been learnt and if the countries are vulnerable to new crises.

IT’S been 20 years since the Asian financial crisis struck in July 1997. Since then, there has been an even bigger global financial crisis, starting in 2008. Will there be another crisis?

The Asian crisis began when speculators brought down the Thai baht. Within months, the currencies of Indonesia, South Korea and Malaysia were also affected. The East Asian Miracle turned into an Asian Financial Nightmare.

Despite the affected countries receiving only praise before the crisis, weaknesses had built up, including current account deficits, low foreign reserves and high external debt.

In particular, the countries had recently liberalised their financial system in line with international advice. This enabled local private companies to freely borrow from abroad, mainly in US dollars. Companies and banks in Korea, Indonesia and Thailand had in each country rapidly accumulated over a hundred billion dollars of external loans. This was the Achilles heel that led their countries to crisis.

These weaknesses made the countries ripe for speculators to bet against their currencies. When the governments used up their reserves in a vain attempt to stem the currency fall, three of the countries ran out of foreign exchange.

They went to the International Monetary Fund (IMF) for bailout loans that carried draconian conditions that worsened their economic situation.

Malaysia was fortunate. It did not seek IMF loans. The foreign reserves had become dangerously low but were just about adequate. If the ringgit had fallen a bit further, the danger line would have been breached.

After a year of self-imposed austerity measures, Malaysia dramatically switched course and introduced a set of unorthodox policies.

These included pegging the ringgit to the dollar, selective capital controls to prevent short-term funds from exiting, lowering interest rates, increasing government spending and rescuing failing companies and banks.

This was the opposite of orthodoxy and the IMF policies. The global establishment predicted the sure collapse of the Malaysian economy.

But surprisingly, the economy recovered even faster and with fewer losses than the other countries. Today, the Malaysian measures are often cited as a successful anti-crisis strategy.

The IMF itself has changed a little. It now includes some capital controls as part of legitimate policy measures.

The Asian countries, vowing never to go to the IMF again, built up strong current account surpluses and foreign reserves to protect against bad years and keep off speculators. The economies recovered, but never back to the spectacular 7% to 10% pre-crisis growth rates.

Then in 2008, the global financial crisis erupted with the United States as its epicentre. The tip of the iceberg was the collapse of Lehman Brothers and the massive loans given out to non-credit-worthy house-buyers.

The underlying cause was the deregulation of US finance and the freedom with which financial institutions could devise all kinds of manipulative schemes and “financial products” to draw in unsuspecting customers. They made billions of dollars but the house of cards came tumbling down.

To fight the crisis, the US, under President Barack Obama, embarked first on expanding government spending and then on financial policies of near-zero interest rates and “quantitative easing”, with the Federal Reserve pumping trillions of dollars into the US banks.

It was hoped the cheap credit would get consumers and businesses to spend and lift the economy. But instead, a significant portion of the trillions went via investors into speculative activities, including abroad to emerging economies.

Europe, on the verge of recession, followed the US with near zero interest rates and large quantitative easing, with limited results.

The US-Europe financial crisis affected Asian countries in a limited way through declines in export growth and commodity prices. The large foreign reserves built up after the Asian crisis, plus the current account surplus situation, acted as buffers against external debt problems and kept speculators at bay.

Just as important, hundreds of billions of funds from the US and Europe poured into Asia yearly in search of higher yields. These massive capital inflows helped to boost Asian countries’ growth, but could cause their own problems.

First, they led to asset bubbles or rapid price increases of houses and the stock markets, and the bubbles may burst when they are over-ripe.

Second, many of the portfolio investors are short-term funds looking for quick profit, and they can be expected to leave when conditions change.

Third, the countries receiving capital inflows become vulnerable to financial volatility and economic instability.

If and when investors pull some or a lot of their money out, there may be price declines, inadequate replenishment of bonds, and a fall in the levels of currency and foreign reserves.

A few countries may face a new financial crisis.

A new vulnerability in many emerging economies is the rapid build-up of external debt in the form of bonds denominated in the local currency.

The Asian crisis two decades ago taught that over-borrowing in foreign currency can create difficulties in debt repayment should the local currency level fall.

To avoid this, many countries sold bonds denominated in the local currency to foreign investors.

However, if the bonds held by foreigners are large in value, the country will still be vulnerable to the effects of a withdrawal.

As an example, almost half of Malaysian government securities, denominated in ringgit, are held by foreigners.

Though the country does not face the risk of having to pay more in ringgit if there is a fall in the local currency, it may have other difficulties if foreigners withdraw their bonds.

What is the state of the world economy, what are the chances of a new financial crisis, and how would the Asian countries like Malaysia fare?

These are big and relevant questions to ponder 20 years after the start of the Asian crisis and nine years after the global crisis.

But we will have to consider them in another article.

By Martin Khor Global Trend

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.
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Korean web of intrigue: Malaysia hunting for Kim Jong-nam murder


Two women suspects in Kim Jong-nam assassination remanded for seven days

KUALA LUMPUR: Two women arrested in connected with the assassination of Kim Jong-nam, the half-brother of North Korean leader Kim Jong-un, have been remanded for seven days.

Selangor police chief Comm Datuk Seri Abdul Samah Mat said the two women have been remanded until Feb 21 to assist in the investigations.

One of the women has a Vietnam passport bearing the name Doan Thi Huong while the other has an Indonesian passport bearing the name Siti Aishah.

“They have been remanded. So far, there is no press conference as a press statement have been issued. We will update if there is anymore development,” Abdul Samah told The Star Online.

At 11.05am, Magistrate Sharifah Muhaymin Abd Khalib was at the Sepang police headquarters to grant the police’s application to remand the woman with the Vietnam passport.

Jong-nam, 45, was killed by two women who splashed his face with a chemical at the KLIA2 departure hall at about 9am on Monday. He was about to leave for Macau.

The women later got into a taxi and fled.

One of the women, who has the Vietnam passport, was arrested at the airport on Wednesday when she tried to board a flight out.

The woman with the Indonesian passport was arrested at 2am on Thursday.

Police are looking for four men who were in the company of the two women at the airport when Jong-nam was killed.

By Farik Zolkepli and Joash Ee De Silva The Star/|ANN

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South Korea can’t tackle new Trump Order alone, be prepared new Trump order !


Trump-tanic by Stephff | China Daily

South Korea, in particular, could take a leaf from Japan’s playbook on preparing for a face-off and making the right structural reforms.

It’s official. A new world order, aka, the Trump Order, has been set in motion.

Most of us should have been ready for it, since the man had been more than clear about backtracking on America’s global trade policies. And now, in one flamboyant gesture, he has overturned his predecessor Barack Obama’s decision to join the TPP.

As one of the key members, Japan is up in arms. Prime Minister Shinzo Abe has vowed he would continue to try and persuade President Donald Trump.

At the same time, Tokyo appears to be quite ready to face the new threat.

Japan is a country that downplays the number of naval destroyers it has in order to keep its frenemies in check, and to assure them it still has a long way to go in terms of military defense. In reality, Tokyo is armed with seemingly worn-down subs that can actually be made battle-ready at a moment’s notice.

The Abe Shinzo administration has been ready to face off with Trump for a while now, and internal government sources say the foundations have already been laid. Prime Minister Shinzo Abe has already put in motion the necessary structural reforms to wean Japan off of the US or make Japanese firms more competitive in the face of high tariffs. Abe is also preparing to enlist the support of high-profile companies such as Softbank, which has been pledging more investment in America.

Further, Japan is looking to cut loose from China, which has made it clear it won’t play into US hands.

In contrast to Japan and China, South Korea has a smaller say. But that does not mean it has less on the line.

The country stands as the world’s 11th-largest economy in terms of GDP, but it also depends on exports for more than two-thirds of it. So any policy decisions by its chief trade partners are bound to have a profound impact — even more so now that its internal economic affairs are in a mess due to the ongoing impeachment. South Korea truly cannot afford to have its global partnerships jeopardized.

During his presidential campaign, Trump has already called the US-Korea FTA a failed partnership that has robbed the US of 100,000 jobs. 

The Seoul government should have long been brainstorming a strategy to keep the deal on track, and must readily communicate its plans with the public before the concerns mushroom into something bigger.

The alliance with the US goes far beyond military issues, and the significance should not be downplayed or tainted in any way if Korea is to continue pursuing its national interests.

The strategy should be laid out in such a way to prevent Koreans from harboring unnecessary ill sentiment toward the US, and vice versa. For this, both governments will have to cooperate seamlessly. Trump must realize the contribution that Koreans and the Korean economy are making in the US.

That while it may not be comparable in size to other nations such as Japan and China, there is no going around the fact that in the end, cliche has it may sound, it is indeed a global economy.

Korean firms should take a cue from Softbank and find ways they can offer more support for the Korean economy as it faces the aftershocks of Trump’s latest policy move.

As for the US, it must remember that Korean companies like Hyundai, Samsung and LG have been seeking cheaper entry into the US for years via countries like Mexico and Vietnam.

The change of a regime must not pull the plug on these efforts for the sake of global partnership. And needless to say, the products and services brought into the US also help create livelihoods there, and give Americans what they need.

All of this should not be forgotten or put on a back burner. As already witnessed in the Lehman Brothers meltdown, the intricate web of global trade and finance ensures that the demise of a single company can affect so many more.

But, in a weird and twisted way, I do envy the American people. Sure, there could have been someone better than Trump, who psychologists have branded as narcissistic and delusional.

But for many Americans, Trump is doing what they have only dreamed of doing and saying. To say out loud, that they think America is the best, that they are scared of anyone appearing to infringe upon its beliefs and interests, even at the expense of other nations and peoples. To say that the US won’t play the peace-brokering leader who is constantly mindful of others, including rivals. To say, the US will start acting only for its benefit-regardless of how short-sighted this may be.

To have a president, as strange as he may be, who for now, appears so committed in his campaign, does draw an odd contrast with our embattled President Park Geun-hye who now seems anxious only to cover her own tail.

In some ways, they are similar in that they seem to prioritize themselves. But at least for now, Trump is giving many Americans the promise they need, as twisted or unorthodox his methods may be.

In a similar fashion, but based on a strategic and acceptable approach, Korea should be ready to protect its interests and its people amid the fast-changing global order. And all other players in the economy must be ready to lend a helping hand.

By Kim Ji-hyun

Kim Ji-hyun is The Korea Herald’s Tokyo  Correspondent. The views expressed here are entirely the writer’s own.
 

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US-S.Korea must take blame for North’s nuclear move; provocation heightens insecurity, sabotages stability


North Korea’s Atomic Energy Institute on Wednesday claimed that it has reprocessed spent nuclear fuel rods removed from a graphite-moderated reactor in a written interview with Japan’s Kyodo News. It also disclosed that its Yongbyon nuclear facilities have produced uranium needed for nuclear armaments. At a time when Beijing and Seoul are in a tug of war on the deployment of the Terminal High Altitude Area Defense (THAAD) anti-missile system, Pyongyang has thrown a bombshell.

North Korea mothballed the Yongbyon reactor in 2007 under the Six-Party Talks accord, but began renovating it amid the confrontation with the US and South Korea in 2013. Kyodo’s report suggested that North Korea has resumed its reprocessing facilities and its nuclear reactor is in full swing.

This is a dilemma facing China, the US and South Korea. The choice of the latter two is simple. The more nuclear activities North Korea will carry out, the greater pressure they will impose on it. But their tactics are of no help in solving the problem.

Given the increasing risks of a military strike by the US and South Korea and subversion of the regime, Pyongyang seemingly has no other choice but to intensify its efforts in developing nuclear power. China seems to have the most options, but that has put the country in a predicament. Beijing has cooled down its relations with Pyongyang and imposed the toughest ever sanctions against it over the past several years.

Complaints from South Korea that China hasn’t pressured Pyongyang enough have often been heard. Seoul hopes Beijing and Pyongyang will openly turn against each other. It is even better for Seoul to see the North targets its nuclear weapons at China. Meanwhile, Pyongyang blames Beijing for taking the wrong side.

China should stay unwavering to pursue denuclearization in the Korean Peninsula. Meanwhile, it should hold firm to opposing any strategic military deployment by the US that will cause threats to China’s security under the excuse of dealing with the Peninsula situation. North Korea’s resumption of uranium production further complicates the Korean Peninsula situation. But currently, China should pay more attention to THAAD.

Pyongyang has paid the price for developing nuclear weapons, so should the US and South Korea for deploying THAAD. Any resolution by the UN Security Council to denounce North Korea and adopt new sanctions should be associated with the THAAD issue. The US and South Korea should take the blame if THAAD impairs the effectiveness of sanctions against the North. Nonetheless, Pyongyang shouldn’t feel relieved. It would rather be totally isolated from the international community before it gives up its nuclear ambition.

China objects to North Korea’s nuclear tests and war on the Peninsula. But once large-scale military conflicts break out, the North and South Korea will take the brunt. China doesn’t need to feel more anxious than them. Global Times

S. Korea-US provocation heightens DPRK’s insecurity, sabotages regional stability

https://www.youtube-nocookie.com/embed/vBCGw8iNpJc

Under the pressure of South Korea-US military drill and the widely disputed THAAD deployment, the Democratic People’s Republic of Korea (DPRK) reportedly fired a ballistic missile early Wednesday, sending a strong signal that Washington and its allies are risking turning the region into a powder keg.

If confirmed, the missile launch would be a new violation of UN resolutions. However, the fact that it came two days after the South Korea-US drill simulating an all-out attack by the DPRK merits a closer look at its motivation.

Denounced as aggression and provocation by the DPRK, the two-week Ulchi Freedom Guardian exercises will surely not make Seoul safer. Rather, it might compel Pyongyang to take even more reckless actions for the sake of its own security.

In fact, the United States and South Korea have been warned in advance by the north. Calling the South Korea-US exercises the “most undisguised physical measure and provocative action,” the DPRK has vowed to “foil all hostile acts and threat of aggression and provocation with the Korean-style nuclear deterrence.”

Within that context, the launch could be regarded as a tit-for-tat move of Pyongyang.

Washington and Seoul are playing a dangerous game. They are holding a wolf by the ears in the hope that their sabre-rattling would deter the DPRK. However, their plan dooms to be a wishful thinking, as muscle-flexing leads to nowhere but a more anxious, more agitating and thus more unpredictable Pyongyang.

Meanwhile, the launch, already the fourth missile fired by the DPRK after the announcement of THAAD’s deployment on July 8, could be interpreted as a protest against the planned installation of the system.

It also serves a reminder to policymakers in Seoul that by allowing the THAAD deployment, South Korea is putting the cart before the horse in their pursuit of national security, as the key to security lies in good neighborly and friendly relations with its neighbors, rather than a bunch of US-made missiles.

The increasingly complicated and stinging situation in East Asia needs to be cooled down before it is too late, and at this moment, what the region needs is cool heads instead of miscalculations. The ongoing trilateral meeting among Chinese, Japanese and South Korean foreign ministers offers a golden opportunity. – Xinhua

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The DPRK on Wednesday test-fired a ballistic missile from a submarine off
its east coast into the sea at a time of heightened tensions on the Korean Peninsula following the start of annual South Korea-U.S. war games, Seoul’s military said.

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Beware of meddling via soft power !

 Aug 12, 2016 MEDDLING by foreign powers is an established phenomenon for as long as one
can remember. They are not limited only to the Muslim …

Beware of meddling via soft power !


MEDDLING by foreign powers is an established phenomenon for as long as one can remember. They are not limited only to the Muslim countries and communities. For example, last year at the Seventh Summit of the Americas in Panama City, President Barack Obama indirectly admitted this when he publicly stated that the days of US interference in the affairs of Latin America were coming to an end. Reportedly, he said, “the days in which our agenda in this hemisphere presumed that the United States could meddle with impunity, those days are past”. Some traced this to as far back as the conquest of the Americas by the Europeans in the fifteenth and sixteenth centuries especially after its so-called “discovery” by Columbus. Perhaps, the major difference is that there are many more Latin American leaders and populace who are more “resolute” than their Muslim counterparts in resisting any attempt to meddle.

More generally “colonialism” is one form of meddling that many parts of the world have experienced, and are still suffering from it. Malaysia is no exception, no denying that there are some benefits to be learnt from the process. But where it hits the “mind” is where it is more toxic to the extent that it can debilitate. Even long after achieving independence the “colonised” mindsets are still clearly felt whether at the level of the leadership or the population at large. The post-Merdeka generations are more vulnerable when they are shut out from the larger discourse affecting the future of the nation, ironically due to yet another form of “meddling” that left them disenfranchised. In the days of social media, the impact of this can be phenomenal, what with other contending parties that are more than eager to attract their attention, as we have seen recently.

Social media is an excellent platform for yet another form of meddling – soft power. Coined a few years ago, soft power describes “the ability to attract and co-opt using persuasion (mind-twisting) rather than by coercion, notably by bullying and arm-twisting (hard power). To the disenfranchised, soft power is said to be very appealing especially when “credibility is the scarcest resource”, as explained by Joseph Nye, who introduces the concept. In fact more recently, the term has expanded to include “changing and influencing social and public opinion through relatively less transparent channels and lobbying through powerful political and non-political organisations.”

Of the six factors that are often associated with enhancing soft power, education and culture seem to be pivotal. In other words, meddling can be carried out discreetly using these two dimensions. Indeed, Nye did suggest how higher education leaders might enhance American soft power by increasing international student and cultural exchange programmes. Viewed this way, soft power is a very subtle extension of the colonial process without even realising it. A case in point is when in 2007 the Rand Corporation in the US developed a “road map” for the construction of moderate Muslim networks and institutions “that the US government and its allies need, but thus far have failed, to develop clear criteria for partnerships with authentic moderates”. It therefore proposes “the building of moderate Muslim networks an explicit goal of US government programmes”.

More explicitly, it listed who the “moderates” are to be targeted according to priority, namely: liberal and secular Muslim academics and intellectuals, young moderate religious scholars, community activists, women’s groups engaged in gender equality campaigns, and finally moderate journalists and writers. It argued that “the US should ensure visibility and platforms for these individuals.” For example, to ensure that individuals from these groups are “included in congressional visits, making them better known to policymakers and helping to maintain US support and resources for the public diplomacy effort.” If these sound like “meddling”, it is because it is one – effectively disguised as “soft power”. It is without doubt, yet another attempt among many to continuously interfere and manipulate the situation from the perspective of the authors and the sponsoring institution. Despite this it is very sad if Muslims are oblivious to the sleight of hand, and succumb to the form of endless meddling. Only to realise that it causes more confusion and divisiveness among the community.

In the days ahead before Aug 31, it is incumbent upon us to deeply ponder what Merdeka means beyond the routine parade and march-past, flag-raising ceremony and singing the national anthem.

By Dzulkifli Abdul Razak, theSundaily

With some four decades of experience in education, the writer believes that “another world is possible”. Comments: letters@thesundaily.com

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Tokyo’s provocations lead to tit-for-tat responses

It is Tokyo’s intransigence that is to blame for much of the tension that has arisen with China in recent years over islands in the East China Sea.

Tokyo should not try to lead Manila astray

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THAAD will not protect ROK but cripples UN unity on NK nukes; Sino-US ties should surmount saber-rattling


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Public opinion in the Republic of Korea is divided over whether the deployment of the United States’ Terminal High-Altitude Area Defense anti-missile system is in the national interest.

Many of those in their 20s, 30s or 40s disagree with the decision. And anti-THAAD lawmakers have demanded an open debate in the National Assembly to discuss whether the THAAD is really in the ROK’s interests militarily, diplomatically and economically.

THAAD is incapable of defending against the potential missile threat from the Democratic People’s Republic of Korea, as the DPRK’s missiles travel at a lower altitude than those THAAD is designed to intercept. Even if that was not the case, one THAAD battery would not be able to provide protection against all the DPRK missiles. The capital Seoul and its adjacent metropolitan area, the country’s most populous regions, are even outside the protection range of THAAD.

However, the system’s X-band radar has a range of at least 2,000 km, which is the real reason the United States wants it deployed in the ROK as it will be able to snoop deep into Chinese and Russian territories.

Seoul claims that it will adopt the radar with a detectable range of 600-800 km, but the mode change can be made at any time in accordance with the needs of the US military that will operate the THAAD battery in the ROK.

If THAAD is deployed, it will sour the ROK’s relations with China and Russia, trigger an arms race and damage trade. It will make it difficult for the country to seek cooperation from China and Russia in denuclearizing the peninsula.

Seoul should heed the voices saying the only way to denuclearize the peninsula is through peace talks and changing the armistice treaty after the 1950-53 Korean War into a peace treaty. – China Daily

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 THAAD cripples UN unity on NK nukes

The UN Security Council failed to agree on a US-drafted statement that condemns North Korea’s latest ballistic missile launch on Tuesday, because China demanded the statement oppose any provocative moves that take advantage of North Korea’s nuclear threat and missile project to enable a deployment of anti-missile systems in Northeast Asia.

China’s proposition is aimed at the Terminal High Altitude Area Defense (THAAD) missile system that will be stationed by the US in South Korea. Since the US and South Korea announced the plan, the UN Security Council has failed twice to reach agreement over North Korean missile launches because of the major split between China and the US.

The planned deployment is adding a new challenge to the vulnerable geopolitical landscape of Northeast Asia. The international collaboration against North Korea’s nuclear project has been crippled. A degenerative aura of the Cold War is emanating from the US-Japan-South Korea alliance.

China does not have a motive to encourage North Korea to develop nuclear weapons or ballistic missiles, because at the cost of its ties with the North, it has been a backer of the UN Security Council’s sanctions against it. However, the US and South Korea went too far and made use of North Korea’s nuclear threat to deploy THAAD, which will cause great harm to China’s national security. Given China’s cooperation in sanctioning North Korea, it is nothing but a stab in the back.

North Korea’s nuclear ambition was primarily triggered by long-standing military pressures imposed by South Korea and the US. The escalating pressures have met bolder nuclear projects. China being a well-intentioned and responsible mediator has been paid back by a threatening advanced military system.

The US and South Korea are strongly convinced that they are absolutely right in this case, and any disagreement is totally wrong. The narrow-mindedness renders all proposals fruitless and futile.

The Korean Peninsula is intertwined with too many complications and concerns. The deployment of THAAD is a selfish and reckless move that will break the fragile balance with terrible outcomes: There will be a huge setback in the Sino-South Korean relationship; the susceptible Sino-US collaboration over Northeast Asia will collapse – all will result in a reconfiguration of each stakeholder’s policy on the region.

Although unwilling to go to war, all players in the big game should reflect on their policies as growing tensions have turned them more defensive rather than open.

The major-power rivalry between China and the US is behind many disputes in East Asia. Beijing and Washington seem to have a tacit understanding that their rivalry won’t explode into a physical conflict. However, some countries cannot look at the big picture, and are eager to pick sides, but they will only find that they are cannon fodder.

China and the US are exchanging blows over THAAD, but they won’t get into a real fight. However, if South Korea leaps headlong into this round of games and becomes a US agent, it will put itself in the middle of a new crisis.

South Korea is a confused player in the big game. It might eventually find out that THAAD will not bring about what it really expects.- Global Times

Sino-US ties should surmount saber-rattling

US naval ship visits Qingdao after disputed South China Sea ruling

https://www.youtube-nocookie.com/embed/wkOwZwuDOyg

US naval ship visits Qingdao after disputed South China Sea ruling

  A US Navy guided missile destroyer has arrived in the northern Chinese port of Qingdao. This is in the first visit by an American warship to China, after China refused to accept an arbitration ruling on the South China Sea dispute.US Navy guided missile destroyer the USS Benfold arrived in the northern Chinese port of Qingdao on Monday, marking the first visit by a US military ship to China since the South China Sea arbitration. This visit is believed to be a signal and an opportunity for both countries to ease tensions between them.

Before the arbitration award was announced, Washington deployed two aircraft carriers in and around the South China Sea, an obvious move to flex their muscles, pile pressure on China and encourage its allies. China responded in kind with a large military drill in the region and a routine combat patrol. Both countries have engaged with each other in a fierce tug of war.

This is not the whole picture of Sino-US relations, not even their military relationship. Not long ago, the US kept its invitation for China to participate in its Rim of the Pacific military exercise, which is mainly attended by its allies.

The Chinese shouldn’t always push the USS Larson’s provocations in the South China Sea into the limelight, nor can they easily turn over a new leaf with the US as the USS Benfold came in peace. We shouldn’t be tricked by a single gesture from Washington. Both China and the US must admit that the undefined Sino-US ties will continue being shaped in the future.

China and the US are exercising more precautions against each other, and they should get used to the new developments, such as a limited arms race, and not having to take the other’s defensive actions as unacceptable.

Throughout the history of human civilization, China and the US have engaged in the most peaceful rivalry between an emerging power and an established power. The Chinese should know as a dominant powerhouse, the US is relatively rational, and has not opted for harsh gambits. Washington also admits that China is a rational and careful emerging power, and pays enough respect to US national interests.

However, both China and the US still feel their own national security is being challenged by each other. Frankly speaking, China feels more insecure than the US. The US doesn’t have to overreact as for a long time to come, China won’t be powerful enough to launch a showdown against the US.

China should speed up its military modernization and narrow the gap with the US in military strength. The priority should be an increase in strategic military deterrence. The US shouldn’t see this as a hostile move. It must know that it cannot sustain an overwhelming military advantage over other countries forever. A strategic balance is essential to world peace in the nuclear age.

China has no plan to dominate Asia with its military prowess. What is happening in the East and South China Seas are simply territorial disputes, not a prelude for China to overturn the current world order.

China and the US should nurture a strong awareness of risk control and strategic trust to ensure the incessant frictions won’t become a real conflict.

Saber-rattling remarks do not mean both sides are ready for a war. Both sides must strive to avoid a military showdown. Whether they like it or not, they should respect the other’s core national interests. – Global Times

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South Koreans protest US Terminal High Altitude Area Defense (THAAD) missile deployment


https://www.youtube-nocookie.com/embed/knkmDTsGTYA

  • South Koreans protest US missile deployment
  • People from Seongju county hold the national flags of South Korea and banners to protest against the deployment of the Terminal High Altitude Area Defense (THAAD), during a rally in Seoul, capital of South Korea, on July 21, 2016. More than 2,000 people from Seongju county, where one THAAD battery will be deployed, gathered at a square in Seoul for a rally on Thursday, to protest against the deployment of THAAD. (Xinhua/Yao Qilin)


    South Koreans protest US missile deployment

  • South Koreans protest US missile deployment. Thousands of South Koreans from Seongju county gathered in Seoul to protest against the government’s decision to deploy a U.S.-built THAAD missile defense unit in their home town. People from Seongju county hold the national flags of South Korea and banners…

“Stop the deployment! NO THAAD! NO THAAD! NO THAAD!” Protesters said.

“The way that the government made the decision completely on their own, without talking to residents first, is completely wrong. We are here to express the people’s anger living in Seongju,” Protest organiser Seok Hyeon-Cheol said.

“The missile deployment site is right in the middle of a city that has around 20,000 people. I can see it when I open the door of my house, the door of my house! And I can see it from my living room. That is why we strongly oppose the THAAD deployment. We oppose it for our children, and their children — for the future of our county, for our health, and our right to live,” Protester form Seongju County Kim An-Su said.

The protest follows a raucous standoff last week between residents and the country’s prime minister, Hwang Kyo-ahn, who was pelted with eggs and plastic bottles and trapped inside a bus for several hours when he visited the county to explain his decision to deploy the missile system there.

South Korea’s President Park Geun Hye has called for people to support the government’s plans. She said the move was “inevitable” because of a growing threat from the DPRK. South Korea’s defense ministry says the country’s THAAD missile system will become operational before the end of 2017.

A senior official of Seongju county (2nd L, front) attends a rally to protest against the deployment of the Terminal High Altitude Area Defense (THAAD) in Seoul, capital of South Korea, on July 21, 2016. More than 2,000 people from Seongju county, where one THAAD battery will be deployed, gathered at a square in Seoul for a rally on Thursday, to protest against the deployment of THAAD. (Xinhua/Yao Qilin)

People from Seongju county hold the national flags of South Korea and banners to protest against the deployment of the Terminal High Altitude Area Defense (THAAD), during a rally in Seoul, capital of South Korea, on July 21, 2016.

People from Seongju county hold the national flags of South Korea and banners to protest against the deployment of the Terminal High Altitude Area Defense (THAAD), during a rally in Seoul, capital of South Korea, on July 21, 2016. (Xinhua/Yao Qilin)

People from Seongju county hold banners to protest against the deployment of the Terminal High Altitude Area Defense (THAAD), during a rally in Seoul, capital of South Korea, on July 21, 2016. More than 2,000 people from Seongju county, where one THAAD battery will be deployed, gathered at a square in Seoul for a rally on Thursday, to protest against the deployment of THAAD. (Xinhua/Yao Qilin)

HAAD poses real threat to security of China

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A Terminal High Altitude Area Defense (THAAD) interceptor is launched during a successful intercept test, in this undated handout photo provided by the US Department of Defense, Missile Defense Agency. [Photo/Agencies]

What has historically been ours is ours. Even if others say it is not. That is why, annoying as it is, the Philippines-initiated South China Sea arbitration is actually not worth the limelight it is being given.

It is time for Beijing to get down to real, serious business. It has bigger issues to attend to, the most imperative of which is the anti-missile system being deployed on its doorsteps. Because, while it was coping with the worthless arbitral award from The Hague, Washington and Seoul finalized their plan for the deployment of the US’ Terminal High Altitude Area Defense missile system in the Republic of Korea.

The arbitral ruling, which is null and non-executable, will have little effect on China’s interests and security in the South China Sea. But not THAAD, which is a clear, present, substantive threat to China’s security interests.

The installment of the US system in the ROK should be of far greater concern to Beijing, and warrants a far stronger reaction. Or should we say retaliation?

The ROK has legitimate security concerns, especially with Pyongyang constantly threatening nuclear bombing. With that in mind, Beijing has been adamant about de-nuclearization of the Korean Peninsula, and worked closely with Seoul and Washington in implementing and upgrading United Nations sanctions, and appealed tirelessly for restarting the Six-Party Talks.

But Seoul has brushed aside Beijing’s security interests while pursuing those of its own.

Washington and Seoul did claim that THAAD would be focused “solely” on nuclear/missile threats from the Democratic People’s Republic of Korea, and would not be directed toward any third-party nation. But THAAD far exceeds such a need. Besides the far more credible threat from Pyongyang’s artillery, short-range and lower-altitude missiles is simply beyond the system’s reach.

While it will deliver a limited security guarantee to the ROK, THAAD’s X-band radar will substantially compromise the security interests of China and Russia, no matter how the United States shrouds its purpose.

Yet having made such a beggar-thy-neighbor choice, Seoul has in effect turned its back on China. By hosting THAAD, it has presented itself as Washington’s cat’s-paw in the latter’s strategic containment of China. All rhetoric about friendship is meaningless lip service with the deployment of THAAD.

Beijing must review and readjust its Korean Peninsula strategies in accordance with the latest threat from the peninsula, including its ROK policies.

That does not mean forsaking its commitment to de-nuclearization, or UN resolutions. But Beijing must concentrate more on safeguarding its own interests, both immediate and long-term.

Source: China Daily Updated: 2016-07-15

China can counter THAAD deployment

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The US and South Korea on Friday announced their decision to deploy the Terminal High Altitude Area Defense (THAAD) missile system on the Korean Peninsula.

Apart from monitoring missiles from North Korea, THAAD could expand South Korea’s surveillance range to China and Russia and pose serious threat to the two countries.

Though South Korea claims it can reduce the surveillance range, the country cannot make the call as the system will be controlled by US forces in South Korea, and such cheap promises mean nothing in international politics.

We recommend China to take the following countermeasures.

China should cut off economic ties with companies involved with the system and ban their products from entering the Chinese market.

It could also implement sanctions on politicians who advocated the deployment, ban their entry into China as well as their family business.

In addition, the Chinese military could come up with a solution that minimizes the threat posed by the system, such as technical disturbances and targeting missiles toward the THAAD system.

Meanwhile, China should also re-evaluate the long-term impact in Northeast Asia of the sanctions on North Korea, concerning the link between the sanctions and the imbalance after the THAAD system is deployed.

China can also consider the possibility of joint actions with Russia with countermeasures.

The deployment of THAAD will surely have a long-term and significant influence. South Korea will be further tied by its alliance with the US and lose more independence in national strategy.

North Korea’s nuclear issue has further complicated the situation on the Korean Peninsula, but the country’s possession of nuclear weapons also results from outside factors.

The biggest problem of the peninsula’s messy situation lies in US’ Cold-War strategy in Northeast Asia, and its mind-set of balancing China in the region. Neither Pyongyang nor Seoul could make their own decisions independently, as the region’s stability and development are highly related to China and the US.

The whole picture of the situation on the Korean Peninsula could not been seen merely from the view of Pyongyang and Seoul. China’s relationship with North Korea has already been affected, and ties with South Korea are unlikely to remain untouched.

China is experiencing the pains of growing up. We have to accept the status quo of “being caught in the middle.”

China should neither be too harsh on itself, nor be self-indulgent. Being true to itself, China will fear no challenges

Source: Global Times Published: 2016-7-9

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