Archive for June, 2007

The impending food fight

June 30, 2007

Victor Davis Hanson
June 30, 2007

While we worry about gas prices, the cost of milk, meat and fresh produce silently skyrockets. So like the end of cheap energy, is the era of cheap food also finally over?
Since the farm depression of the early 1980s — remember the first Farm Aid concert in 1985 — farmers have gone broke in droves from cheap commodity prices. The public shrugged, happy enough to get inexpensive food. Globalization saw increased world acreage planted and farmed under Western methods of efficient production. And that brought into the United States even more plentiful imported food.

Continued leaps in agricultural technology ensured more production per acre. The result was likewise predictable: the same old food surpluses and low prices. My late parents, who owned the farm I now live on in central California, used to sigh that the planet was reaching 6 billion mouths, and so things someday “would have to turn around for farmers.”

Now they apparently have. Food prices are climbing at rates approaching 10 percent per year. But why the sudden change?

A number of relatively recent radical changes in the United States and the world, taken together, provide the answer: Modern high-tech farming is energy intensive. So recent huge price increases in diesel fuel and petroleum-based fertilizers and chemicals have been passed on to the consumer.

The public furor over illegal immigration has, despite all the government inaction, still translated into some increased border security. And with more vigilance, fewer illegal aliens cross the border to work in labor-intensive crops like fresh fruits and vegetables.

The U.S. population still increases while suburbanization continues. The sprawl of housing tracts, edge cities and shopping centers insidiously gobbles up prime farmland at the rate of hundreds of thousands of acres per year. In turn, in the West periodic droughts and competition from growing suburbs have made water for farming scarcer, more expensive — and sometimes unavailable.
On the world scene, 2 billion Indians and Chinese are enjoying the greatest material.

On the world scene, 2 billion Indians and Chinese are enjoying the greatest material improvement in their nations’ histories — and their improved diets mean more food consumed than ever before.

The result is that global food supplies are also tightening, both at home and abroad. America has become a net food importer. We seem to have developed a new refined taste for foreign wines, cheeses and fresh winter fruits even as we consume more of our corn, wheat, soybeans and dairy products at home.

Now comes the biofuels movement. For various reasons, ranging from an attempt to become less dependent on foreign oil to a desire for cleaner fuels, millions of acres of farmland are being redirected to corn-based ethanol.

If hundreds of planned new ethanol refineries are built, the U.S. could very shortly be producing around 30 billion gallons of corn-based fuel per year, using 1 of every 4 acres planted to corn for fuel. This dilemma of food or fuel is also appearing elsewhere in the world as Europeans and South Americans begin redirecting food acreages to corn-, soy- or sugar-based biofuels.

Corn prices in America have spiked. And since corn is also a prime ingredient for animal feeds and sweeteners, prices likewise are rising for poultry, beef and everything from soft drinks to candy.

There is currently more corn acreage — about 90 million acres are predicted this year — than at any time in the nation’s last half-century. But today’s total farm acreage is either static or shrinking; land for biofuels is usually taken from wheat, soybeans or cotton, ensuring those supplies grow tight as well.

In the past, the genius of our farmers and the mind-boggling innovation of American agribusiness meant farm production periodically doubled. Indeed, today we produce far more food on far fewer acres than ever before. But we are nearing the limits of further efficiency — especially when such past amazing leaps in production relied on once-cheap petro-chemicals, fuels and fertilizers.

As in the case of oil, we’ve gone through these sudden farm price spikes before. My grandfather once told me that in some 70 years of boom-and-bust farming he only made money during World Wars I and II, and the late 1960s.

But this latest round of high food prices seems coupled to energy shortages, and so won’t go away anytime soon. That raises questions critical to the very security of this nation, which may have to import as many agricultural commodities as it does energy — and find a way to pay for both.

The American consumer lifestyle took off thanks to low-cost fuel and food. Once families could drive and eat cheaply, they had plenty of disposable income for housing and consumer goods.

But if they can’t do either anymore, how angry will they get as they buy less and pay more for the very staples of life?

Victor Davis Hanson is a nationally syndicated columnist, a classicist and historian at Stanford University’s Hoover Institution and author of “A War Like No Other: How the Athenians and Spartans Fought the Peloponnesian War.”


Hong Kong drug addicts head to China to pop pills

June 29, 2007

By Tan Ee Lyn

HONG KONG (Reuters) – The ease of travel to the China mainland since Hong Kong’s handover in 1997 has drawn the city’s young people to a cheap and convenient playground just across the border in Shenzhen city.
Every weekend, young people pour into Shenzhen in China’s southern Guangdong province to devour cheap food, entertainment — and illicit party drugs.

Street drugs of all types — cocaine, ecstasy, heroin, ketamine and methamphetamine — are more easily available and cheaper in discotheques in southern China than in Hong Kong.

“At first I didn’t like Shenzhen because it seemed foreign and dangerous, but after a while it was very nice, a new place with new faces and we didn’t get raided there,” said Siu Bak, a former addict of nine years who kicked the habit in 2005.

“It’s far easier to get drugs in China. Any staff can get it for you. The security guards will just turn a blind eye or they will tell you to take them in the toilet,” said Siu Bak, 24.

Ketamine is one of the most popular party drugs now in Hong Kong and it is proving to be a disastrous health hazard.

In a report published last week, a group of Hong Kong doctors detailed cases of bladder and kidney dysfunction in 10 ketamine addicts. Their mean age was 25, with the youngest only 18.

Among the symptoms, the addicts’ bladders were able to hold the equivalent of only two tablespoons of urine and they needed to urinate every 15 minutes.

Ketamine, an anesthetic for animals, has never been linked to such disorders. But street ketamine — in the form of a white powder — is diluted with cheap substances to fatten suppliers’ profits.

Street ketamine can include washing powder, paint flakes, talcum powder, flour, painkillers and barbiturates, said scientists who have examined the drug.

“Some suppliers put in glass powder to give it a shine, which is a mark of high grade ketamine. They give you a nosebleed, but all ketamine does that after a while because all that snorting damages your nasal membranes,” said Siu Bak, who used to use more than 30 packets of ketamine a day at the height of her addiction.

A packet of ketamine, containing about half a teaspoon of powder, cost HK$100 (US$12.80) a few years ago but can be obtained for as little as HK$20 now.

“These people are consuming all sorts of street ketamine, from different suppliers and we don’t know what kind of contaminants they have been snorting,” said Lau Fei-lung, director of the Hong Kong Poisons Information Centre, .

“We don’t know if these disorders are due to ketamine or the cutting agents,” he said. “Ketamine is normally not consumed this way. It’s an anesthetic agent and there have been no studies on its effect if it is taken daily, or twice a day, for years. The effect will be different, it will be totally unpredictable.”


But these concerns hardly figure in Shenzhen’s packed discos where revelers vigorously toss heads to the beat of fast music.

Many people can go on for hours — expending a store of energy so huge that party-goers readily admit it can only come with help from illicit drugs.

A powerful hallucinogen containing LSD has even been named after this jerky head dance – “fing tau yun” in Cantonese, or “vigorous head-tossing pill.”

“These people from Hong Kong come to our massage parlor … after tossing their heads all night,” said a masseur in Shenzhen. “Their necks are so stiff we need to use all our strength for them to feel even a little effect. Some interrupt the massage session and snort drugs right in front of us.”

Peggy Chu, a urologist and member of the team of doctors who revealed the disorders linked to ketamine, said there were now 30 young addicts being treated for bladder damage from the drug.

“We used traditional drugs to relax their bladders but they are not working and we are trying new drugs. But treating them is very difficult and complicated because none of them have given up ketamine. They say they have stopped but when I check their urine, I still detect ketamine,” Chu said.

“One of them who had an operation to enlarge the bladder has even shifted to cocaine. In the worst case, they may end up with renal failure and require dialysis and even a kidney transplant.”

“Excessive” Video Gaming is Dangerous

June 27, 2007

By Lindsey Tanner, AP Medical Writer

CHICAGO – The American Medical Association on Wednesday backed off calling excessive video-game playing a formal psychiatric addiction, saying instead that more research is needed.

A report prepared for the AMA’s annual policy meeting had sought to strongly encourage that video-game addiction be included in a widely used diagnostic manual of psychiatric illnesses.

AMA delegates instead adopted a watered-down measure declaring that while overuse of video games and online games can be a problem for children and adults, calling it a formal addiction would be premature.

“There’s no science to support it,” said Dr. Stuart Gitlow, an addiction medicine specialist.

Despite a lack of scientific proof, Jacob Schulist, 14, of Hales Corners, Wis., says he’s certain he was addicted to video games — and that the AMA’s vote was misguided.

Until about two months ago, when he discovered a support group called On-Line Gamers Anonymous, Jacob said he played online fantasy video games for 10 hours straight some days.

He said his habit got so severe that he quit spending time with family and friends.

“My grades were horrible, I failed the entire first semester” this past school year because of excessive video-game playing, he said, adding, “It’s like they’re your life.”

But delegates voted to have the AMA encourage more research on the issue, including seeking studies on what amount of video-game playing and other “screen time” is appropriate for children.

Under the new policy, the AMA also will send the revised video-game measure to the American Psychiatric Association, asking it to consider the full report in its diagnostic manual; the next edition is to be completed in 2012.

Dr. Louis Kraus, a psychiatric association spokesman, said the report will be a helpful resource.

The AMA’s report says up to 90 percent of American youngsters play video games and that up to 15 percent of them — more than 5 million kids — might be addicted.

The report, prepared by the AMA’s Council on Science and Public Health, also says “dependence-like behaviors are more likely in children who start playing video games at younger ages.”

Internet role-playing games involving multiple players, which can suck kids into an online fantasy world, are the most problematic, the report says. That’s the kind of game Jacob Schulist says hooked him.

Kraus, chief of child and adolescent psychiatry at Chicago’s Rush Medical Center, said behavior that looks like addiction in video-game players may be a symptom of social anxiety, depression or another psychiatric problem.

He praised the AMA report for recommending more research.

“They’re trying very hard not to make a premature diagnosis,” Kraus said.

Actually, in America, people are addicted to sex, booze, drugs, video games, peanuts, Oreos, you name it. What is it all about?

Sexy female body with dollars in panties Stock Photo - 6550408

Caves found in search for Marine’s body

June 27, 2007

By ERIC TALMADGE, Associated Press

IWO JIMA, Japan – Avoiding unexploded grenades and hacking their way through cactus under a blazing sun, an American search team has located two caves where they believe a Marine who filmed the iconic flag-raising on Iwo Jima may have been killed 62 years ago in one of World War II’s most symbolic battles.

The team, which wrapped up its 10-day expedition Wednesday, was the first U.S.-led search on this remote volcanic island since 1948.

Army Maj. Sean Stinchon, who led the effort, told The Associated Press the team conducted an extensive search on the southwestern side of Hill 362A, where Sgt. William H. Genaust was believed killed by enemy gunfire on March 4, 1945.

Stinchon said the seven-member team located two previously unmapped sites, but was unable to search them because of the possibility of a collapse and because of obstacles blocking the way. He said the team will recommend a larger search party be sent in with heavy equipment to excavate.

He said an explosives expert was on the team — Iwo Jima continues to be riddled with unexploded ordnance — and checked before the team did any “poking around.” At the site, shrapnel from the battle, a turning point of the war, still littered the ground.

The condition of the two caves also underscored the difficulty of the mission.

One was blocked by craggy debris, and searchers had to dig through five feet of dirt to get to the opening of the second cave. Bullet holes riddled the entrances to several caves and tunnels nearby — one of which stretched the width of the hill itself.

“It’s not a best-case scenario,” Stinchon said.

Still, he said the mission was “very successful” and has created hope that the bodies of Genaust — and possibly others — may be found.

“This is an initial investigation,” he said. “We are definitely hopeful.”

Iwo Jima was the site of some of the fiercest fighting of World War II, and the photograph taken by AP photographer Joe Rosenthal of the flag-raising atop Iwo Jima’s Mount Suribachi on Feb. 23, 1945, came to symbolize the Pacific War and the valor of the Marines.

Genaust helped escort Rosenthal up the mountain, then filmed the flag-raising — the second that day — from just feet away from Rosenthal, who won the Pulitzer Prize for his still photograph.

“We did everything we could with our hands and with shovels,” Stinchon told the AP, the only civilian media with the team on site.

Though they did not turn up any remains or material evidence, Stinchon said the mission may bring searchers closer to finding Genaust.

The team, sent by the Joint POW/MIA Accounting Command, headquartered at Hickam Air Base in Hawaii, used machetes to hack through the dense foliage and cactus, which now covers much of the interior of this island.

“We really didn’t know what to expect,” he said.

Inhabited only by a small contingent of Japanese troops, Iwo Jima is an open grave.

The U.S. officially took the island on March 26, 1945, after a 31-day battle that pitted about 100,000 U.S. troops against 21,200 Japanese. Some 6,821 Americans were killed; only 1,033 Japanese survived.

Some 280 U.S. troops, not including pilots and those lost at sea, are still missing from the campaign. Many of them died in caves or were buried by explosions.

Japan’s government and military are helping with the search on Iwo Jima, which this month was officially renamed Iwo To — the island’s name before the war.

Japan sent its first search parties to the island in 1952 and others have followed every year since Iwo Jima was returned to Japanese control in 1968. They have recovered 8,595 sets of remains — but, to date, no Americans.

“Probably the majority of the remains they are getting are the easy ones,” said Hugh Tuller, a forensic anthropologist with the U.S. team. “The chances of Americans being mixed in with them are rather slim. They have been looking more at the surface and open caves.”

Genaust was 38 when he was killed.

On March 4, 1945, Marines were securing a cave on Hill 362A — named after its height above sea-level — when they asked Genaust to borrow his movie camera to light their way. He volunteered to shine the light in the cave himself, and was killed by enemy fire.

The cave was secured after a gunfight, and its entrance sealed, possibly by an explosion.

Genaust and another Marine protected the AP photographer as they climbed 546-foot Mount Suribachi. Under heavy attack, the Japanese did not fire on the three men. Genaust’s footage helped prove the flag-raising was not staged, as some later claimed.

In 1995, a bronze plaque was put atop Suribachi to honor Genaust, who before Iwo Jima was wounded on the Pacific island of Saipan. An actor portraying him appears in the Clint Eastwood movie “Flags of Our Fathers,” and an annual award has been established to honor the best videotape of a Marine Corps-related news event.

The search was prompted in large part by information provided by Bob Bolus, a Scranton, Pa., businessman who became intrigued by Genaust after reading a Parade magazine story about him two years ago. Bolus put together a team of experts that was able to pinpoint where Genaust’s remains were likely to be found.

Iraq and Vietnam?

June 26, 2007

WASHINGTON, June 26 (UPI) — Substituting the word “Iraq” for “Vietnam” in the text of a declassified 1967 CIA memo shows “eerie parallels” between the two conflicts.

Former U.S. Secretary of State Henry Kissinger gives a speech at a ceremony marking the 20th anniversary of the Center for Chinese and American Studies by Nanjing University and Johns Hopkins University in Nanjing, east China’s Jiangsu province June 23, 2007. China-US relations are important to world peace, Kissinger said in Nanjing on Saturday, Xinhua News Agency reported. Picture taken June 23, 2007. REUTERS/China Daily (CHINA)
*********************Former senior U.S. national security official Kurt Campbell and an associate at the centrist Washington think tank where he now works, the Center for a New American Security, have penned a piece for the new issue of Foreign Policy magazine.The Sept. 11, 1967, memo — titled “Implications of an Unfavorable Outcome in Vietnam” — was requested by CIA Director Richard Helms and “detailed a lengthy list of potential dark outcomes and worrisome prospects” of U.S. failure in Vietnam, says the article.The authors list several ways in which the 1967 memo foreshadows current fears about U.S. failure in Iraq.

— A geopolitical rival would exploit perceived American weakness as a result of failure (then: Russia; now: Iran).

— Other groups in the global insurgency facing U.S. forces, emboldened by success, would rise up elsewhere (then: communists; now: Islamic extremists).

— Regional allies would lose faith in U.S. ability to support and protect them (then: Southeast Asia; now: the Middle East).

— The United States would be seen as unable to militarily crush a guerrilla force that was sufficiently large, dedicated, competent, and well-supported (then: Viet Cong; now: Iraqi insurgents).

“In considering the Iraq war’s endgame,” the authors conclude, “the U.S. government would be wise to review its own notes.”


Communists Leadership in Vietnam Tone Deaf

June 26, 2007

By John E Carey
For Asia Times
(Our Thanks To Shawn Crispin)

WASHINGTON – Despite landing new agreements on trade and investment, Vietnamese President Nguyen Minh Triet’s landmark official visit to the United States, the first by a Vietnamese head of state since the end of the Vietnam War in 1975, ended on a sour note and raises new questions about the direction of the relationship.

US President George W Bush, who visited Vietnam last year when Hanoi hosted an Asia-Pacific Economic Cooperation

meeting, last Friday met privately with Triet at the White House. The two leaders later spoke to the international media sitting side by side in an informal discussion at the Oval Office.

Bush told reporters they discussed the tremendous economic opportunities closer bilateral cooperation has and would continue to bring to the two nations. Annual trade and cooperation between the US and Vietnam is now estimated at about US$1 billion, and big US corporations have recently made major investments in the Southeast Asian country’s manufacturing sector.

But Bush also significantly broke from the conciliatory script and publicly upbraided Triet over his government’s rights record.

“I also made it very clear that, in order for relations to grow deeper, that it’s important for our friends to have a strong commitment to human rights and freedom and democracy,” Bush said, with Triet directly at his side. “I explained my strong belief that societies are enriched when people are allowed to express themselves freely or worship freely.”

During his week-long visit, Triet also met with congressional leaders from both political parties on Capitol Hill. Lawmakers in the meeting said he was repeatedly taken to task over recent claims by rights groups that Triet’s government has increased repression of pro-democracy activists and religious leaders, some of whom have been sentenced to long prison terms on assorted anti-state charges.

Commenting on the talks afterward to reporters, Republican Congressman Ed Royce, who had attended the meeting, said human rights had been “overwhelmingly the dominant issue” of the session.

“We’ve got to see a stop to this conduct if this relationship is going to improve,” he said, adding that Triet answered questions but was “very evasive” during the meeting.

Earlier, the US had predicated trade concessions, including support for Vietnam’s membership bid to the World Trade Organization, which Hanoi achieved this January, on a demonstrable improvement on its abysmal rights record. Members of Congress had called on Bush to push Triet to end what they perceive to be widespread state-sponsored human-rights abuses, and that seems to be what finally happened on Friday.

Predictably, Triet defended his government’s position to reporters before and after the White House meeting. He said he had a “direct and open exchange” on human rights with Bush, but offered no indication that he might change his government’s policies or practices as a result of the discussion.

“It’s not a question of improving or not,” Triet said in an interview with the Associated Press, hours after meeting with Bush. “Vietnam has its own legal framework, and those who violate the law will be dealt with. The Vietnamese laws could not be 100% the same as US laws, due to the different historical backgrounds and conditions. There is a different understanding on this issue,” he said through an interpreter.

The US media that covered his trip saw it differently, however. A quantitative news analysis of media coverage of Triet’s visit showed that fully 70% of news outlets highlighted the human-rights issue. In Vietnamese media, however, the topic was almost entirely overlooked and the new trade and investment pact led the headlines.

Triet insisted that differences on the rights issue would not adversely affect the two countries’ “larger interests”. But it’s no doubt significant that Bush made his public comments on such a high-profile occasion. The Washington Times in its news coverage reported that Bush “chided” Triet for Vietnam’s human-rights record, religious repression and lack of democracy.

On Monday, the same publication ran an extraordinary commentary written by Triet in what could be interpreted as a mild official rebuke of Bush’s earlier comments to reporters. Notably, the essay did not once mention human rights.

“Known as a new rising star in Asia, Vietnam offers an attractive business and investment environment, driven by a youthful and friendly population who are exceedingly optimistic about the future,” Triet wrote. “In the international arena, Vietnam is showing itself more and more to be a responsive and reliable partner. And I know that a stable and prosperous Vietnam is also the wish of the American government and people.”

In its entirety, the article reads more like a lecture to schoolchildren than a proper op-ed piece and underscores clearly his hope that bilateral trade and investment issues will, as before, continue to trump Washington’s concerns about his government’s poor democratic and human-rights records.

Triet wrote that “bilateral ties are built on the two countries’ common interests and concerns: commerce, culture, science and technology, education, regional peace and stability, the fight against terrorism, preventing the proliferation of weapons of mass destruction, humanitarian assistance to combat HIV/AIDS, avian influenza, and the lingering wounds of war”. He added: “For Vietnam, the United States is always a key partner, and Vietnam’s commitment to multifaceted cooperation with the United States is sincere and steadfast.”

Only time will tell what really happened behind closed doors in Washington last week, but Bush’s and Triet’s mild spat in the media indicates the bilateral relationship could be in for rocky time ahead, particularly if Bush was serious about prioritizing democracy and human rights on par with economic matters in his government’s official dealings with Vietnam’s communist rulers.

John E Carey is the former president of International Defense Consultants, Inc. He writes frequently on international issues from Washington, DC. His daily weblog is Peace and Freedom.

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Above: Communist Vietnam’s proven method of silencing a prisoner.  Father Nguyen Van Ly just before he was removed
from court.  He had no representation at his own trial in Vietnam.

China’s double standard

June 26, 2007

Frank J. Gaffney Jr.
June 26, 2007

Communist China has done it again. Desperate for new sources of energy, the Chinese are moving into an oil-rich nation eschewed by others.

In this case, however, the country in question is not a state-sponsor of terror or other pariah state. Rather, it is Iraq, a country the United States has gone to great lengths to make a member in good standing of the Free World — free, among other things, of the influence of those like China that had close ties to Saddam Hussein.
Flag of the People's Republic of China

Yet now, according to the Financial Times, the Iraqi government last Friday “revived a contract signed by the Saddam Hussein administration allowing a state-owned Chinese oil company to develop an Iraqi oil field.”

The deal to develop the al-Ahdab field in Iraq was signed with China National Petroleum Corporation (CNPC) in 1997 and was valued at the time at $1.2 billion. What is more, the FT reported Iraqi Oil Minister Hussein al-Shahristani announced “Baghdad welcomed Chinese oil company bids for any other contract in the country through a ‘fair and transparent bidding process’ to be laid out in the new oil law under discussion in Iraq’s parliament.”

Part of the impetus behind the free Iraqi government embracing CNPC — China’s largest state-owned oil company and an instrument for its partnerships with the world’s most odious regimes — is a harsh reality: China is one of all too few investors who appreciate the strategic opportunities inherent in securing a foothold in Iraq today and are able to accept and mitigate the risks associated with doing business there.

Another consideration has to do with the matter of Iraqi sovereign debt to Communist China dating from Saddam Hussein’s time and estimated to be worth as much as $10 billion. China has insisted the successor government in Baghdad is responsible for its predecessor’s liabilities.

The Financial Times noted Friday a seeming breakthrough occurred during a visit to China last month by Iraq’s president, Jalal Talabani. Beijing announced “a ‘large margin’ of Iraqi debt would be canceled, although no specific figures were released.” As communists are fond of saying, this is hardly a coincidence, comrade.
China President Hu Jintao (R) and his Iraqi counterpart Jalal Talabani are seen in Beijing in this 21 June 2007 file photo. China is committed to economic and political reforms, but change should “adhere to a correct political direction”, Hu said in a keynote speech published on Tuesday ahead of a Communist Party meeting. REUTERS/Teh Eng Koon/Pool 

 China used the leverage of a promise to forgive what is, as a practical matter, uncollectible Iraqi debt to secure renewed access to Iraqi oil.

There is a special irony to China’s adamancy on the subject that successor governments are responsible for their predecessors’ sovereign debts. After all, American and other investors are estimated to hold Chinese sovereign bonds issued by pre-communist regimes worth roughly $260 billion — bonds the People’s Republic of China has, to date, refused to honor. While British holders of such Chinese bonds were given a discriminatory settlement back in 1987, their American counterparts have been left holding the bag.

Now, though, U.S. legislators are considering a resolution that could induce China to be more forthcoming. House Concurrent Resolution 160, introduced last month by Rep. Lincoln Davis, Tennessee Democrat, and others on both sides of the aisle, would deny the PRC access to the U.S. capital markets until such time as, among other things, Communist China “fully honors repayment of its outstanding defaulted public debts owed to United States citizens.” 

Such a penalty for China’s effective default would be a first. Until now, there have been no material costs to China for reneging on these debts. Its bond ratings were unaffected. Neither has there been any impediment to the PRC’s ability to bring to American and other international exchanges various “bad actors” — often state-owned companies, like CNPC, Petrochina and Sinopec, engaged in activities inimical to vital U.S. security, economic and/or human rights interests.

In the absence of any serious, let alone sustained, effort by the executive branch and the Congress to resolve this corrosive bilateral problem, is it any wonder that there has been no satisfactory resolution to other financial abuses by China? These include: Beijing’s manipulation of its currency; its underwriting of the genocidal regime in Sudan; and China’s worrisome financial (and other) ties with Iran, Hugo Chavez’s Venezuela and North Korea, etc

The adoption by both houses of Congress of legislation like H. Con. Res. 160 should be but the first of several steps taken to induce the PRC to clean up its sovereign debt. For example, as legislative and other measures are developed to counter China’s currency manipulation, provisions should be included requiring Beijing to make good on its defaulted sovereign bonds.

The Securities and Exchange Commission and other credit-rating agencies should be required to take into account China’s defaulted bonds in their ratings and disclosure requirements. And targeted financial sanctions against the PRC should be promulgated in the event China continues to ignore its longstanding financial commitments.

Last, but not least, American and other vendors should be encouraged to settle accounts with China by using the legal tender of Chinese sovereign bonds. In this fashion, Beijing can be held accountable for its debts, with minimal impact on trade and other relations.

If China can use sovereign debt owed it — even debt incurred by previous governments as despicable as that of Saddam Hussein — to euchre freedom-aspiring Iraqis into making strategically momentous concessions, the least the United States can do is ensure the Communist Chinese are held to no lesser standard. Sauce for the goose, after all, must be sauce for the Beijing duck.

Frank J. Gaffney Jr. is president of the Center for Security Policy and a columnist for The Washington Times.

In China, Cash Carries the Weight

June 26, 2007

 By Ariana Eunjung Cha
The Washington Post Foreign Service
Tuesday, June 26, 2007; Page D01

BEIJING — When Wang Xiaoyu set out to buy some sleek Lincoln automobiles for the small company he owns, the problem was how to pay. No dealer in China takes personal checks. Credit card limits are too low. Car loans barely exist.

So he brought cash, more than $200,000 worth of it, in three rolling suitcases.
Because credit cards in China have low limits and few stores take them, they are more popular as fashion statements than financial tools.

Because credit cards in China have low limits and few stores take them, they are more popular as fashion statements than financial tools. (By Ng Han Guan — Associated Press)

“Everything else is a lot of trouble — just easier to use cash,” said Wang, 29, who runs a consulting company that helps Chinese businesses find foreign partners.

China’s state-owned banks rank among the highest-valued in the world, with stock market capitalizations in the billions of dollars, but they are widely considered the weakest part of the country’s booming economy.

Although China has made strides in reforming its banking system over the past five years — cracking down on corruption, buying out many troubled loans and allowing foreign banks into the market — retail banking remains stuck in an earlier era. The problem isn’t new, but the number of people in China who have enough money to need modern banking services is soaring. The system hasn’t kept up.

Many employees’ salaries are still distributed in fat envelopes of cash rather than by check or direct deposit. It’s not unusual for life’s major purchases, such as cars or even houses, to be paid for in cash.

It isn’t just the banks stuck in the past; there’s consumer resistance in China to financial tools that are routine in other countries. Credit cards are gradually spreading, for instance, but many people embrace them chiefly as a fashion statement. There are floral-scented ones, cards bearing Hello Kitty logos, pink cards aimed at women. But because they are only accepted at some stores, such as designer boutiques and larger chains, their utility is limited.

“The reason I got that in the first place was because it was cute and cool, and has value as a collectible,” Zhu Jing, a 24-year-old bank clerk said as she flashed one of her cards. She has seven, including one with an MSN Messenger logo and another with an Olympics theme.

Chen Jing, a 28-year-old teacher from the eastern coastal city of Ningbo, however, came to the conclusion that the novelty wasn’t worth the $25 annual fee. “I had a credit card but just canceled it recently because I don’t need it and I never used it,” Chen said.

The underdeveloped financial system has frustrated many Chinese consumers and foreigners trying to do business in the country. But China’s banking regulators say the slow pace of change is in the national interest.

China’s financial leaders say they are cautious about moving too quickly because they see the problems that has caused in other countries. They cite the United States as an example of what can happen to a country that hands out credit too loosely, pointing to high levels of indebtedness among young Americans and the recent problems in the mortgage industry that have caused families to lose their homes.

Wang Huaqing, assistant chairman of the China Banking Regulatory Commission, said in an interview that in recent months, the country has been alarmed to see novel financial schemes crop up. People have been caught taking out cash from credit cards and loans to gamble the money away in the stock markets or on speculative real estate. Gangs have been investigated for stealing people’s identities to open accounts. And criminals have been put away for laundering money.
“We have been paying great attention to credit card risk and loan risk,” Wang said.

As a result, Wang said, the country is trying to avoid allowing citizens to get their hands on credit too easily. He said restrictions on retail banking — such as a $50,000 a year cap on how much a Chinese citizen can convert from yuan to foreign currencies and low credit limits on cards — are meant to prevent these problems from spiraling out of control.
The slow development of consumer banking in China is rooted in the role banks historically played in the Communist state.

Until a few years ago, China’s banks essentially were agents of government social policy, keeping state-owned enterprises afloat. Retail banking existed on a limited basis. Chinese citizens who wanted to invest had no choice but to put their money in state-owned banks because foreign banks were not allowed to operate in the country and because stock markets didn’t exist.

Furthermore, the banks had little financial incentive to introduce fee-based retail banking. They were already markedly profitable from a large spread between lending and deposit rates, both controlled by the central government.

Now, retail banking is still a secondary reason for banks’ existence. China’s banks mostly supply credit to enterprises, said Arthur Kroeber, managing editor of the China Economic Quarterly in Beijing. He said the banks are not like those in the United States, which, he said, “provide credit to the creditworthy.” They are “more like the idea of banks in Japan in the ’70s or South Korea in the ’80s and ’90s.”

“In a broad sense, the main purpose of the state-owned banks in China today is not profit maximization for shareholders,” he said. “It’s financing industrial development.”

For instance, at the Industrial and Commercial Bank of China, one of the largest state-owned banks, bad loans represented 21 percent of its portfolio in 2005.

It wasn’t uncommon for clerks at its remotest branches to use abacuses to make calculations. If a local branch was in trouble because of bad loans, the central government would send trucks with cash to bail it out and prevent a run on the bank.

But after a series of overhauls, the ICBC in October 2006 pulled off the biggest-ever initial public offering, raising $21.9 billion to make it the world’s No. 5 bank by market value of its shares, just behind J.P. Morgan Chase. Its value climbed late in the year and it has since been the No. 2 or No. 3 bank in the world, depending on the closing price of various banks’ shares. Only Citigroup of New York consistently outranks it now.

China’s banks are so large that near-monthly announcements of embezzlement and bribery valued in the millions of dollars are mostly shrugged off by investors. For example, in 2005, shares in China Construction Bank, whose chairman resigned after allegations that he was taking bribes, soared during its initial public offering, which occurred after the scandal was announced.

“In any other country, this kind of scale of scandal would be a big event. But in China, the scandal cases did not really have a material impact on the operations of the banks,” said May Yan, a bank analyst at Moody’s Investors Service in Hong Kong.

Taking ICBC public was supposed to be part of China’s transition to a free-market economy. But analysts say investors are throwing money at Chinese banks for an opposite reason: support of the Communist government, with investors calculating that the government won’t let the country’s flagship banks fail. “It’s a bet on China,” May said.

Kroeber backed that up. “There is an implicit message: If things get really bad, the government would come in,” he said.
Moody’s estimates that China has poured $432 billion into bailing out state-owned banks. Recapitalizing the Agricultural Bank and the China Everbright Bank may cost $150 billion more.

Wang acknowledges that excessive dependence on the government is not a sustainable strategy, because it means the banks won’t innovate. “They don’t have any motive to create new financial products,” Wang said. “This is a big difference between China’s banks and multinationals.”

As the Chinese government opens its banking sector to more foreign competition, there’s a recognition that China’s citizens will turn elsewhere for banking. This year, China’s government for the first time allowed foreign banks to take local currency deposits and offer yuan-denominated credit cards.

Wang said that in the future, China would inevitably have to cut the banks loose to fend for themselves.

Staff researcher Crissie Ding contributed to this report.

Pic on WWII horror stirs debate in China

June 25, 2007

By MIN LEE, AP Entertainment Writer

HONG KONG – An American movie about Japan’s mass slaughter of Chinese citizens in the World War II era will be released in China next week amid renewed friction between the country’s over the atrocity’s actual death toll.
File:Nanking movie poster1.jpg
“Nanking” will premiere in Beijing July 3 and be released across in China on July 7, the film’s publicists said Monday.

The movie examines the Japanese killings by mixing archival footage and actors’ readings of witness accounts from Westerners who protected Chinese refugees. Among the actors are Woody Harrelson and Mariel Hemingway.

Historians generally agree the Japanese army slaughtered at least 150,000 civilians and raped tens of thousands of women in the rampage in Nanjing in 1937 that became known as “The Rape of Nanking,” using the name by which the city was known in the West at that time.

About 100 Japanese ruling party lawmakers drew criticism from China after saying last week that documents from their government’s archives indicated only about 20,000 people were killed in the 1937 attack.

The head of the group accused China of inflating the number of victims for propaganda purposes.

In response, a Chinese Foreign Ministry spokesman said 300,000 people died in the massacre and accused the lawmakers of ignorance.

Anti-Japanese feeling over the Nanjing atrocities among the Chinese public remains strong. Demonstrators vandalized Japanese shops and smashed windows at Japanese diplomatic offices in Shanghai and Beijing in April 2005 to protest alleged whitewashing of atrocities in Japanese textbooks.

Many Japanese conservatives are disgruntled over what they claim are exaggerated stories of Japanese brutality during World War II.

The film, directed by Bill Guttentag and Dan Sturman, was partly shot in Nanjing.

“Nanking” apparently has the blessing of the Chinese government, which carefully controls foreign productions either shot or released in the country.

Guttentag said in a recent interview with The Associated Press that while the directors submitted an outline of the movie to the Chinese government, local authorities did not interfere with its editorial direction.

American News Media Becoming More Like NBC’s TODAY Show?

June 25, 2007

By John E. Carey
June 25, 2007

Today in the world we have these intriguing stories: War in Iraq, Discussions of Genocide in Darfur Being held in Paris, Iran Trying to Slip Away From U.N. Sanctions, North Korea Preparing to Shut Down its Nuclear Reactor, “Chemical Ali” Sentenced to Death in Iraq, Tony Blair Maybe to Become Catholic and other goodies.

NBCs Today Show started with a California Brush Fire, A Bus Crash, A Murder in Ohio, and Problems with Aspirin. Before the first half hour was completed we had Pretty Blonde Woman (Princess Di and Paris Hilton) and a story on Beaches.

By eight a.m. I’d expect a story on Bar-B-Q, Good Make-Up and Expensive Women’s Shoes.

What is America thinking? Watch the NBC Today Show or anything else in the morning line-up and you’ll know.

The ceaseless, mindless prattle of the “networks” (NBC, ABC, and CBS) created the audience for the “Cable News” phenomena of CNN, Fox News Channel, and MSNBC.

The “Main Stream Media” (The New York Times, The Washington Post, and etc.) created the “Blogger” phenomena.

The bottom line: there is enough news to go around for everyone.

“Now Public” is as important to its readers and participants as The Washington Times is to a certain political crowd in America!