China rejects sign it may soon be No. 1 economy

China has rejected a World Bank report that suggests it might pass the United States this year to become the biggest economy measured by its currency’s purchasing power.

China is on track to become the No. 1 economy by sheer size by the early 2020s and possibly sooner. But its leaders downplay such comparisons, possibly to avert pressure to take on financial obligations or make concessions on trade or climate change.

The estimate by the World Bank’s International Comparison Program says that based on 2011 prices, the purchasing power of China’s currency, the yuan, was much stronger than was reflected by exchange rates.

By that measure, China’s economy was 87 percent the size of the United States’ in 2011, or 15 percent bigger than the previous estimate, according to a calculation by RBS economist Louis Kuijs. Faster-growing China would pass the United States in purchasing power terms this year, though it still would be about 60 percent the size of the U.S. economy at market exchange rates.

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New military pact reflects cozier US-Philippine alliance amid jitters over China’s rise

A new defense pact that will allow thousands of U.S. troops to be temporarily based in Philippines for the first time in more than 20 years signals closer cooperation in the allies’ hot-and-cold relationship that has been shaped over the decades by war, terrorism and now, jitters over China’s rise.

The 10-year agreement, signed Monday as President Barack Obama arrived in Manila, was considered the centerpiece of his four-nation Asian trip, which Obama used to reassure allies like Japan and the Philippines of American military backing as they wrangle with China in increasingly tense territorial disputes.

Obama said the Enhanced Defense Cooperation Agreement showed that Manila and Washington have emerged from a rough period in their alliance.

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China Objects to U.S. Sanctions Against Companies

China objected Wednesday to Washington’s imposing new sanctions against eight companies it said a Chinese businessman used in the alleged sale of ballistic missile parts to Iran.

Chinese foreign ministry spokesman Qin Gang said that instead of unilaterally levying sanctions, the U.S. should deal with its concerns according to Chinese law. He didn’t name the companies and the businessman, Li Fangwei, nor mention the $5 million reward Washington offered to secure his arrest, but said that the U.S. actions, announced Tuesday, would hinder efforts to reduce proliferation.

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Microsoft to introduce Xbox One to China

Here’s an Xbox One achievement: Microsoft plans to sell the video game system in China.

The Xbox One will be the first video game system to be introduced into China in more than a decade. A ban has kept Western console systems from being sold in the country. Microsoft plans to begin offering the system in China in September.

“Launching Xbox One in China is a significant milestone for us and for the industry, and it’s a step forward in our vision to deliver the best games and entertainment experiences to more fans around the world,” said Yusuf Mehdi, the corporate vice president of marketing and strategy for Microsoft’s devices and studios, in a post on news.xbox.com.

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China says premier’s Africa visit about more than just oil deals

Chinese Premier Li Keqiang is to visit four African countries, including oil-rich Angola and Nigeria, but will not be going simply for energy deals as China increasingly aims to boost African living standards, officials said on Wednesday.

Trips by Chinese leaders to Africa are often marked by big natural resource deals, triggering criticism from some that China is only interested in the continent’s mineral and energy wealth.

Africans broadly see China as a healthy counterbalance to Western influence but, as ties mature, there are growing calls from policymakers and economists for more balanced trade relations.

China is also keen not to be perceived as an imperial master.

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US Can’t Change the Ownership of Diaoyu Islands

On April 23rd, US President Barack Obama arrived in Japan for a bilateral visit. On the eve of the trip, he said that the Diaoyu Islands (what he referred to as “the Senkaku Islands”) fall within the scope of the US-Japan Treaty of Mutual Cooperation and Security. The media immediately jumped on this latest and highest-level US official statement on this contentious issue between China and Japan. How will Obama’s comment affect the dispute over the islands and East Asia in general?

First, Obama’s Asia tour is largely intended to reinforce existing alliances. The relative decline of US power has implications for the region. Because of its economic woes at home, the US is finding it hard to meet various demands of its alliances. To maintain its dominance in East Asia, it has to rely on its alliances. And to get its allies to do their part, the US has to act as their advocate in regional hotspots and potential crises. The islands dispute between China and Japan provides a good opportunity to demonstrate US commitment and obligations, which it badly needs to do to shore up its reputation and leadership in the region. By fuelling territorial disputes in East Asia and compelling China to respond, the US can point to signs of a more aggressive China and encourage its allies to watch China’s every move. The US will not let slip such a golden opportunity to tighten its alliances with some of China’s neighbours.

Second, the US sees the evolving situation in East Asia as at a crucial juncture and a moment of great sensitivity. It has to do something to advance its strategic interests. The US is ditching “strategic ambiguity” in favour of greater “strategic clarity,” because, in its view, China is crossing a line in the sand. In its strategic wrestling with China, any softening of US position would hand Beijing a win and tip the balance against Washington. So the first instinct is to stake a clear position on sensitive regional issues. By speaking out on a dispute between China and Japan, the US can demonstrate its deep interest in the region.

Third, apart from rebuilding alliances, another goal of Obama’s trip is to advance the negotiation of a Trans-Pacific Partnership (TPP) trade agreement. The US hopes that by giving Japan security assurances, Tokyo would reciprocate by offering cooperation on substantive economic issues, such as that of agricultural products in TPP negotiations. This will help to achieve two US goals at the same time: demonstrating its commitment to an ally and obtaining economic benefits from it.

This is the context of the Obama comment. But when all is said and done, the US position will do nothing to change the status quo of the islands or bring a big bonus to Japan.

First, Obama’s statement offers nothing new. Senior US officials, including the Secretary of State and Pentagon officials from the previous administration, have made similar statements before. Besides, the scope of an alliance only has security implications; it cannot affect the ownership of the islands in question. In the past, the US has said its security treaty with Japan covers incidents in the region, including Taiwan. Yet such indications did not have a substantive impact on sovereignty. Put more clearly, the scope of an alliance may, in some cases such as this particular one, extend to a non-sovereign, administered territory, but that’s what it is: a territory whose sovereignty is still in dispute.

Second, despite the verbal statement, the US has not said it will fight for the islands – this much President Obama has made clear. The fact remains that when fulfilling its alliance obligations, the US has to defer to domestic legislation and authorisation from Congress. In any case, Article V of the US-Japan treaty is not clear on the extent of US response in a given scenario: it only says the US “declares that it would act”. This commitment still leaves the US enormous room for manoeuvre. It is hard to believe that the US would stake its strategic interests on a few islets in the East China Sea.

The recent, clearer statement from Obama still maintains considerable ambiguity. The implication of his statement is rhetorical rather than substantive. It must be balanced against repeated affirmations of official US position that the US takes no position in territorial disputes such as that over the Diaoyu Islands. A change of position would cost US credibility with China and other East Asian countries, a prospect that the US will not want to invite.

So the bottom line is: the Obama statement has not changed US position on the Sino-Japanese dispute. When parsing his comment, we need to keep this in mind.

There is another point we need to bear in mind: The US will not be drawn into a direct military conflict with another power over the islands, and Japan will not be able to occupy them with or without US military support.

Then, what has motivated the US to make the comment? Washington’s calculation is to get Tokyo to make a substantial economic concession in exchange for its elusive rhetorical commitment. That is what this is all about: just a game of words.

At a deeper level, it reflects the difficulty of managing an alliance in which the credibility of one party is questioned by the other. This reinforces the need for the US to reaffirm its authority and previous assurances. Yet the US-Japan alliance – and, for that matter, any alliance the US maintains – has had a chequered history. Washington has wooed Tokyo at times and pressured it at other times: they have grown accustomed to using each other to further their own interests. And when their interests diverge, the alliance may unravel.

What worries Washington the most is that Tokyo might use its verbal commitment to involve itself in a developing crisis. Chances are that the verbal assurance it has given will become a strategic liability, prompting the US to keep a close eye on Japan.

And surely, deep down, Tokyo knows Washington is just honouring the alliance with lip service.

Wang Fan is Assistant President of China Foreign Affairs University.

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Obama reassures allies, but doubts over ‘pivot’ to Asia persist

From the elaborate details of a Japanese state visit to the more mundane question of how much face-time to give each of his Asian hosts, President Barack Obama’s aides spent months meticulously scripting his four-country tour of the region.

But as the week-long trip wrapped up on Tuesday it was clear that, while Obama scored points with skeptical allies simply by showing up, not everything followed the White House plan.

The U.S. president’s clear aim was to demonstrate that his long-promised strategic shift towards Asia and the Pacific, widely seen as aimed at countering China’s rising influence, was real. Early reviews from the region were mixed.

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China Extends Tax Breaks to Boost Employment

China on Tuesday said it would extend existing tax breaks for companies and expand the scope of such measures to increase jobs.

Tax breaks given to employers who create new jobs and individuals who start their own businesses, measures that expired at the end of last year, will be extended for another three years, the Ministry of Finance said in a statement on its website.

Some employers will receive a tax-and-fee waiver of up to 5,200 yuan ($831) annually per job if they sign a contract with employees for more than a year and pay their social insurance in accordance with the law. The old measures gave a total waiver of up to 4,800 yuan.

Individuals who are unemployed and start their own business can receive a tax-and-fee waiver of up to 9,600 yuan a year, Tuesday’s statement said. The figure was 8,000 yuan previously.

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U.S. offers $5 million for Chinese businessman accused of Iran dealings

The United States offered a reward of up to $5 million on Tuesday for a Chinese businessman accused of supplying missile parts to Iran, and targeted companies from China and Dubai for allegedly helping Iran evade weapons and oil sanctions.

In a signal Washington will keep pressure on Iran over its nuclear program, the U.S. Treasury Department said it was sanctioning eight of Chinese businessman Li Fangwei’s Chinese companies for allegedly procuring missile parts for Iran.

The U.S. State Department said it was offering a reward of up to $5 million for information leading to the arrest and/or conviction of Li, who is also known as Karl Lee.

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Former China Official Sent for Prosecution, Communist Party Says

The ruling Communist Party’s powerful watchdog agency expelled a former senior official and handed him over for prosecution on corruption charges, in a sign that a wide-ranging antigraft campaign championed by President Xi Jinping is moving forward.

The announcement by the Central Commission for Discipline Inspection on its website late Tuesday said that Li Chuncheng is suspected of bribery and abuse of power and was being transferred to judicial authorities after his expulsion from the party.

“Li Chuncheng took advantage of his position to seek benefits for others and accepted huge amounts of bribes,” read the statement.

The statement also implicated Mr. Li’s wife, daughter and younger brother. It accused the wife and daughter of accepting what it called huge amounts of property from others. Mr. Li couldn’t be reached for comment. He hasn’t been seen in public since late 2012 when the party announced that he was under investigation, and it wasn’t known whether he had a lawyer. His family similarly couldn’t be reached.

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China’s Provinces Fail to Meet Lower 2014 Growth Goals

Almost all Chinese provinces failed to meet their growth targets in the first quarter even after scaling back their ambitions as the government instructs officials to focus on reining in debt and curbing pollution.

Thirty of 31 provinces and municipalities reported missing their goals, with the biggest shortfall in northeastern Heilongjiang, where an expansion of 4.1 percent compared with an 8.5 percent target for the year. Most localities’ targets are lower than in 2013. The latest data were released by government websites and newspapers.

Premier Li Keqiang risks the nation sliding into a deeper slowdown as the government cracks down on overcapacity in the steel industry, wrestles with shadow banking risks and rolls out economic restructuring measures. While the government has supported expansion with steps such as reserve-ratio cuts for rural banks, it has so far avoided broader stimulus as Li chases a national growth target of about 7.5 percent.

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Obama hails security pact with Philippines, says no threat to China

President Barack Obama said a new military pact signed with the Philippines on Monday granting a larger presence for U.S. forces would bolster the Southeast Asian country’s maritime security, but was not aimed at countering China’s growing military might.

The agreement, which will have an initial 10-year term, was touted as the highlight of Obama’s first visit to the Philippines, the United States’ oldest ally in the region.

It sets the framework for a beefed-up rotation of U.S. troops, ships and warplanes through the Philippines, part of a rebalancing of U.S. resources towards fast-growing Asia and the Pacific.

But China interprets the move as an attempt to contain its increasing military capability and embolden Manila in a decades-long territorial dispute with Beijing.

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China Forces Four U.S. TV Shows Off Web

Four popular U.S. television shows that air on Chinese video websites have been taken down because of government regulations, according to China’s state-run media, raising the prospect of intensified government control over videos posted online.

The four shows—”The Big Bang Theory,” “The Good Wife,” “NCIS” and “The Practice”—have accumulated followings in China through online video companies such as Sohu. SOHU -7.88% com Inc., Youku Tudou Inc. YOKU -7.83% and Tencent Holdings Ltd. 0700.HK -2.87% The Chinese companies pay for the rights to the shows so they can stream them free of charge and earn money off advertisements.

China has strict policies governing the release of foreign movies in China’s theaters and has tight censorship rules regarding what can be broadcast on television. China’s video websites, by contrast, have had comparatively more freedom.

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Iron Ore Drops in China Amid Reports of Financing Curbs

Iron ore futures in China, the biggest buyer of the steel-making commodity, fell the most in more than a month after a report that banks will raise the cost of financing for purchasing the raw material.

The contract for September delivery on Dalian Commodity Exchange retreated 4.4 percent to 760 yuan ($122) per metric ton, the largest loss since March 10 and lowest close since March 27. Steel reinforcement-bar and hot-rolled coil futures also declined.

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In China, Risking a Chain Reaction of Default

A network of loan guarantees set up to improve companies’ access to credit in one of China’s richest districts is creating new risks of default as some debts sour.

The pattern suggests ways that privately owned operations are bearing the brunt of an economic slowdown.

Chinese media have reported on a credit crunch developing among steel and textile manufacturers in Hangzhou, south of Shanghai in Zhejiang Province, as the failure of some to repay loans pushes their burden onto healthier companies.

Hangzhou is part of the Yangtze River Delta, an engine of growth during China’s boom years but now the source of a third of nonperforming loans in the country.

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Bill Gates, in Communist newspaper, urges more in China to help poor

Microsoft founder Bill Gates on Monday took to the pages of the People’s Daily, the mouthpiece newspaper of China’s ruling Communist Party, to encourage people in China to do more for the poor.

“China has many successful entrepreneurs and business people. I hope that more people of insight will put their talents to work to improve the lives of poor people in China and around the world, and seek solutions for them,” Gates wrote in an editorial.

“Investing for the poor requires participation from the entire community.”

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Easier visas aim to attract more Chinese

As China is expected to surpass the United States as the world’s largest travel and tourism economy in 2027, experts and industry insiders expect visa barriers targeting Chinese tourists to be eased in the near future.

One of the major inhibitors of the tourism industry is the fact that 70 percent of tourists still need to go to an embassy to visit a foreign destination, said David Scowsill, president and chief executive of the World Travel and Tourism Council.

Yang Jinsong, a professor at the China Tourism Academy who focuses on international tourism, said that visas are still the major hindrance to Chinese outbound tourism, the growth of which would be inestimable without the visa barriers.

“However, thanks to the tremendous growth of China’s outbound tourism in recent years, an increasing number of countries are extending an olive branch, by reducing the visa application process for Chinese applicants or waiving the visa requirement in an attempt to attract more Chinese tourists,” Yang said. “No one wants to be left behind as China’s economic pie is being carved up.”

Despite all the concerns, including overstays, terrorism, illegal immigration, considering the potential economic contribution, it is an inescapable trend that visas to most countries will be waived in the future, he said.

“As much of the growth of the tourism and travel industry is coming out of Asia, especially China, more countries will come up with easier visa policies, including e-visas instead of interviews, and reciprocity among nations, to further eliminate visa barriers and make travel easier.”

There were more than 98 million outbound visits by Chinese in 2013, and the country’s tourism market will exceed more than $2 trillion five years later, Chinese Vice-Premier Wang Yang said on Thursday at the opening ceremony of the 2014 World Travel & Tourism Council Global Summit in Sanya, Hainan province.

The boom in Chinese outbound travel is changing the global tourism landscape. Chinese travelers have emerged as the largest spenders in worldwide outbound tourism, said Richard Solomons, global chief executive of the InterContinental Hotels Group, a multinational lodging company headquartered in the United Kingdom.

Many countries, including the UK, the United States, France, New Zealand, Malaysia and Thailand, have eased their visa procedures for Chinese travelers, either through waivers or reducing the red tape involved.

“As the whole world is competing to welcome Chinese tourists, governments are being more progressive in trying to come up with loosened visa application procedures,” said Arne Sorenson, president and chief executive officer of Marriot International Inc, a leading global hospitality company.

“The United States, as well as the European Union, has been trying hard to make it easier for Chinese to get a visa, which shows that the world is more than ever focusing on Chinese tourists,” said Sorenson.

Sorenson, who is also a member of the President’s Export Council, which is the principal advisory committee to the US president, said the US has been looking to introduce a more progressive visa policy and easier access for Chinese tourists and to grant longer stays – and even a visa waiver the second time a Chinese visits the US in the future.

He said he has talked to President Barack Obama about the US’ visa policy a dozen times, and it is crystal clear that the president wants to encourage more tourists to visit the US.

Michael Robbins, a partner at the Tourism Company, a Canada-based management consultancy specializing in tourism, said the Canadian government has been investing heavily to attract Chinese tourists, and there has been a sharp growth in the number in recent years “but the visa has been a hurdle that prevents tourism development”.

“Countries are left with no choice but to make it easier for Chinese to get a visa, because people will opt for another country if they have to wait for months for a visa,” said Desiree Bollier, chief executive of Value Retail management, the creator and operator of Chic Outlet Shopping.

Bollier said the group has been talking with the UK’s Ministry of Tourism to push for easier visa applications targeting the Chinese, one of the major customer sources of the outlet, which is one of Europe’s largest discount outlet chains.

“All these are not one way straight. In both sides we are trying to be progressive to make the visa easier for Chinese coming to US and US citizens coming to China.”

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China to finish analysis of air pollutant around Beijing

An analysis of the sources of air pollution in Beijing, Tianjin and Shijiazhuang will be finished by the end of June, an official with China’s environmental authority said on Sunday.

The environmental authorities are working with the Chinese Academy of Sciences and the Chinese Academy of Engineering to conduct the research and will jointly release reports on the results in the research, said Zhao Yingmin, director of the pollution control and management department of the Ministry of Environmental Protection.

Zhao made the remarks when giving a report on air pollution in China to the Environment and Resources Protection Committee of the National People’s Congress, China’s top legislature.

The analysis of the sources of air pollution in Beijing has already been finished and published earlier this month and the result revealed that about 64 percent to 72 percent of the air pollutants in Beijing are locally generated, Zhao said.

The official said the yearly average density of fine particular matter, or PM2.5, in Beijing last year was 89.5 micrograms per cubic meter, far beyond the pollution control cap target of 60.

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China yuan strengthens amid down trend

The yuan fell to 6.2560 against the US dollar during trading hours on April 25, a 16-month new low, and closing at 6.2536 by day’s end.

So far the yuan has depreciated more than three percent since it first began to fall this year in late February.

The Chinese currency renminbi, or yuan, strengthened 11 basis points to 6.1565 against the US dollar on Monday, April 28, according to the China Foreign Exchange Trading System.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

In China’s foreign exchange spot market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

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Obama wraps up Japan visit with security pledge but no trade deal

U.S. President Barack Obama wrapped up a state visit to Japan on Friday during which he assured America’s ally that Washington would come to its defense, but failed to clinch a trade deal key to both his “pivot” to Asia and Prime Minister Shinzo Abe’s economic reforms.

Obama and Abe had been seeking to show that the alliance was strong in the face of a rising China. But their success in putting recent strains behind them was partly marred by a failure to reach a deal seen as crucial to a broader regional trade pact.

That failure delayed a joint statement on security and economic ties until shortly before the U.S. leader left for Seoul, the next stop on his week-long, four-nation Asian tour.

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Currency’s Drop in China Complicates Trade Markets

As President Obama visits four countries on China’s periphery in a bid to shore up American alliances, he faces an emerging challenge from China itself: a gradual but unrelenting decline in the heavily managed value of the country’s currency against the dollar over the last 10 days.

The fall of the renminbi, which hit its lowest point since late 2012 on Friday, is making Chinese exports more competitive in the United States and other markets. The renminbi’s weakness is also making it harder for foreign companies to compete in China and in other markets around the world where Chinese exporters actively compete.

The renminbi’s decline helps create jobs and limit unemployment in China — two top goals enunciated by the Chinese leadership for this year. But the fall of the currency, down 3.2 percent since the start of this year, also risks hurting employment in other countries and fanning trade tensions.

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Adidas shifts orders after massive strike at Chinese shoe factory

Workers have walked off the job at one of the world’s largest shoe factories, leading apparel maker Adidas to temporarily shift its production.

As many as 50,000 employees are on strike at Yue Yuen Industrial, a major Adidas and Nike supplier in the southern Chinese city of Dongguan. Activists say it’s one of China’s largest worker strikes ever.

“This is a result of the long-term exploitation of this big enterprise,” said Suki Chung, the executive director of Hong Kong nonprofit Labor Action China. “Workers’ demands are very clear.”

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Alibaba works magic for China’s Taobao ‘treasure hunters’

With strong stitches and well-worn hands, Wei Haiying added another finished cushion to the ceiling-high piles already crowding her east China home. For centuries, the women of Wantou village have woven its abundant willow straw into useful products, but for little profit.

Then Jack Ma and Alibaba came along, to spread some money-making magic. Resting from her labors, Wei, 39, checked a computer Wednesday for the latest online orders. “Now we run our own business, we have more freedom, more income, and it’s better than working for others,” said Wei, whose monthly income has doubled in the past year to $1,600, far above the local average.

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China vs. the U.S.: It’s Just as Cheap to Make Goods in the U.S.A.

An entire generation of Americans has come of age laboring under the assumption that the U.S. can’t compete in the manufacturing arena with low-cost competitors such as China and Brazil. That may have been true a decade ago, but it’s no longer true today.

I recently completed a review of manufacturing costs in the top 25 export economies with my colleagues Justin Rose and Michael Zinser. Our research shows that when the most important economic factors are considered—total labor costs, energy expenses, productivity growth, and currency exchange rates—Brazil is one of the highest-cost manufacturing nations in the world, Mexico is cheaper than China, China is virtually even with the U.S. (as are most of the traditionally “low-cost” countries of eastern Europe), and the low-cost leader in western Europe is none other than the country that launched the Industrial Revolution: the United Kingdom.

So throw away the old playbook. Welcome to the new era.

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Obama calls for peaceful end to China-Japan island dispute

President Obama said Thursday that he wants to see a dispute between China and Japan over islands in the East China Sea resolved peacefully, while affirming that America’s mutual security treaty with Japan applies to the islands.

“Historically they have been administered by Japan and we do not believe that they should be subject to change unilaterally,” Obama said at a news conference with Prime Minister Shinzo Abe. “What is a consistent part of the alliance is that the treaty covers all territories administered by Japan.”

China and Japan have conflicting claims to the remote islands, called Senkaku by Japan and Diaoyu by China. The dispute has badly strained relations between the two Asian powers.

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China Sets Heavier Punishments for Polluters

China’s parliament amended the country’s environmental-protection law for the first time in a quarter century, giving nongovernmental activist groups more leeway and requiring harsher punishments for heavy polluters.

Passage Thursday closes what has been an unusually vigorous debate among policymakers, academics and activists. Participants said the amendments enshrined in law promises made last year during a high-profile gathering of top Communist Party brass. They set the stage for additional regulations expected to require greater protection of air, water and soil.

The amended law will take effect Jan. 1, according to the official Xinhua news agency.

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Russia, China block Central African Republic blacklist at U.N.

Russia and China have blocked a proposal by the United States and France to impose U.N. sanctions on Central African Republic’s former President Francois Bozize and two other people linked to the conflict there, diplomats told Reuters on Wednesday.

The proposal to sanction Bozize, in particular, was due to his “engaging in or providing support for acts that undermine the peace, stability or security of CAR,” according to an eight-page letter to the U.N. Security Council’s sanctions committee on Central African Republic, which was obtained by Reuters.

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No longer just a factory, China is a mobile leader

With over 700 million active smartphone users, China’s mobile market is insane in scale. But sheer numbers aside, what makes it really impressive?

China has long been a mere manufacturer. Products, usually designed elsewhere, get assembled here. And when China’s mobile industry creates, it’s often churning out low-end handsets and that occasional shameless copycat app.

But one former Silicon Valley insider says China is no longer a factory hub lacking imagination. It has become a hotbed of crazy innovation.

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Japan’s Mitsui pays China to release seized ship-court

Japan’s Mitsui O.S.K. Lines Ltd paid about $29 million for the release of a ship seized by China over a dispute that dates back to the 1930s war between the countries, China’s Supreme Court said on Thursday.

The Chinese government has described the case as a simple business dispute unrelated to wartime compensation claims, but it has become a cause célèbre for activists in China seeking redress from Japan.

Mitsui paid about 2.92 billion yen ($28.5 million) in leasing fees, including interest and damages, China’s Supreme Court said, in a statement on its official microblog. Mitsui also paid 2.4 million yuan ($385,000) in legal fees, the court said.

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Japan ship firm pays $39m to China after seizure

Japanese shipping firm Mitsui O.S.K. Lines Ltd has paid about $39 million to a Chinese court towards securing the release of one of its ships which was seized over an alleged payments dispute dating back to World War II, Japanese media reported Thursday.

The Yomiuri newspaper and public broadcaster NHK, quoting unnamed people they said were familiar with the matter, said Mitsui had paid about 4 billion yen in compensation and interest to the Chinese court. Its ship, the “Baosteel Emotion” 226,434 deadweight-ton ore carrier, was seized on Saturday.

Mitsui O.S.K. spokesman Atsushi Seki said he could not immediately confirm the reports. He said the company was still working to release the vessel, which the Chinese court seized over Mitsui’s alleged failure to pay compensation stemming from a wartime contractual obligation.

A number of court cases demanding compensation for forced wartime labour have arisen in China and South Korea. In February, two Japanese firms were sued in what media said at the time was the first instance where a Chinese court had accepted such a case.

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Infrastructure projects set to boost growth

Private investment to play bigger role in rail, harbor, energy sectors

China announced 80 major public infrastructure projects on Wednesday to arrest the economy’s slowdown while experimenting with wider access for private and overseas investors.

The decision was made at a State Council executive meeting with Premier Li Keqiang presiding, the second meeting in a month to focus on infrastructure investment.

The projects will cover railway and harbor construction, new infrastructure needed by information technology, major clean energy projects such as hydropower, wind power and photovoltaic power, as well as modernization projects in oil and gas and chemical industries.

The projects and their total value are still to be specified.

Economists say overseas investors are likely to benefit from the new infrastructure investment program along with domestic private-sector investors.

The State Council said private investment will be encouraged to enter fields that are “monopolistic in nature” or “used to be dominated by government investment and State-owned enterprises”.

In 2013, private-sector investment accounted for 63 percent of China’s total capital investment, according to the government, which had previously unveiled steps to encourage private capital in the construction of railways and affordable housing.

The State Council also decided that oil and gas exploration, public utilities, water resources projects and airport construction will be the next to open to private-sector investment.

To that end, the central government will sell 150 billion yuan ($24.2 billion) of railway financing bonds this year.

A railway development fund that welcomes private investment will rise to about 200 billion to 300 billion yuan each year, according to the National People’s Congress Standing Committee.

“All the railway projects that have been approved by the State Council should start construction as soon as possible, and preliminary work should be done to ensure railway investment will grow steadily,” the State Council said.

Signs of a slowdown in the first quarter had been evident in a series of economic indicators, prompting the government to unveil measures to promote growth, although it has ruled out a major stimulus.

The HSBC Purchasing Managers Index for April rose to 48.3 from March’s 48.0, but it was the fourth consecutive month below the 50 line separating expansion from contraction.

The State Council also said guidance for foreign investment review and approval will be released as soon as possible.

Ding Jihua, deputy director of the research and consulting department at Beijing New Century Academy On Transnational Corporations, said foreign companies in China will also be affected by Wednesday’s decision to open up some market access to private capital. “Foreign companies in China can take part in these monopolized industries in joint ventures or as a sole investor,” Ding said.

He suggested the government use the Public-Private Partnership as a way to encourage investment of private capital in infrastructure.

Tong Youhao, an official from the China Center for Promotion of Small and Medium-sized Enterprises Development, wondered if the policies can be as effective as they are meant to be, because the entry of private capital into monopolized industries involves reshuffling interests and has been difficult to carry out.

His concerns were echoed by Wang Yuanzhi, former chief of the small and medium-sized enterprises department under the National Development and Reform Commission. “The government has promised private investment into these industries for a long time, but it is too difficult to carry out in areas that can touch the interests of the monopolistic sectors,” Wang said.

By ZHAO YINAN (China Daily)

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Obama begins Asia tour with reassurance to Japan

President Barack Obama arrived in Japan on Wednesday for the first part of his Asia trip that started with reassuring Tokyo of U.S. support in its bitter territorial dispute with China.

Obama made his first stop in Tokyo on a weeklong tour that will also take him to South Korea, Malaysia and the Philippines.

Obama and Japanese Prime Minister Shinzo Abe met over what’s been described as the “world’s best sushi” at Sukiyabashi Jiro, a top-rated restaurant in the Ginza district. The dinner also brought out the new U.S. ambassador to Japan, Caroline Kennedy.

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China Won’t Necessarily Observe New Conduct Code for Navies

China won’t necessarily observe a new code of conduct for naval encounters when its ships meet foreign ones in disputed areas of the East and South China seas, according to a senior Chinese naval officer involved in negotiations on the subject.

The code for maneuvering and communicating between naval ships and aircraft was approved on Tuesday by 21 Western Pacific naval powers, including China, the U.S. and Japan, in an effort to reduce maritime tensions in the region.

U.S. naval officials have said they hoped all members of the group would observe the code in all places, including waters where China’s territorial claims are contested by its neighbors.

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China Defies Obama’s Slow Asia Pivot With Rapid Military Buildup

President Barack Obama’s trip to Asia this week will be dominated by a country he’s not even visiting: China.

Each of the four nations on the president’s itinerary is involved in territorial disputes with an increasingly assertive China. And years of military spending gains have boosted the capabilities of the People’s Liberation Army faster than many defense analysts expected, casting a shadow over relations between China and its neighbors and sparking doubts about long-term prospects for the U.S. presence in the Pacific.

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China Lifts Ban on New Refining Projects

China’s environmental watchdog lifted ban on new projects at its two largest refining companies after determining they met pollution targets last year.

The ban, in effect for nearly eight months, had been imposed as concerns about air pollution in China rose and Beijing came under increasingly public pressure to address the problem.

China’s Ministry of Environmental Protection said in an online statement posted Wednesday but dated April 18 that it was lifting the ban, which had applied to China National Petroleum Corp. and China Petrochemical Corp., known as Sinopec. Between them the two make up more than three quarters of China’s refining capacity.

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China Says Quality of Its Groundwater Has Worsened

Nearly 60 percent of the groundwater at sites monitored throughout China is of poor or extremely poor quality, with excessive amounts of pollutants, according to an annual report by the Ministry of Land and Resources.

Tests at 4,778 monitoring sites across China showed a slight increase in polluted sites over last year, from 57.4 percent to 59.6 percent, according to the report, released late Tuesday.

Beijing has been responding to public demands for transparency in environmental data. Last week, the government released a summary of a years-long survey that shows nearly one-fifth of the country’s farmland is contaminated, most of it with toxic metals.

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Obama Tries Again on Asia Pivot

President Barack Obama will try to turn his focus to Asia with a multicountry trip this week, but the conflict in Ukraine threatens to disrupt his plans.

The president leaves for Tokyo on Tuesday, just as Vice President Joe Biden wraps up two days of meetings in Kiev and as the White House weighs increasingly grave sanctions against Russia.

Mr. Obama heads to Japan, South Korea, Malaysia and the Philippines with a long to-do list. Security and trade issues have grown all the more urgent following his decision to cancel an Asia trip last fall in the midst of a partial government shutdown in Washington.

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U.S. business lobby says market access concerns in China growing

Multinational firms are planning to invest less in China because of market access barriers and slowing growth in the world’s second-largest economy, a U.S. business lobby said on Tuesday.

China’s economy expanded 7.4 percent year-on-year in the January-March quarter, its slowest pace in 18 months.

Concerns over market access and slower growth are greater this year than they were in the past, the American Chamber of Commerce in China said in its annual report on the business climate in China.

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China Premier Li Reiterates Plans to Boost Clean Energy

China, the world’s biggest investor in renewable energy, reiterated plans to boost construction of solar and wind power plants along with projects to transmit electricity from the clean sources.

The nation will also start construction of some key nuclear power projects in eastern coastal areas and “reasonable” hydropower plants, according to comments from Premier Li Keqiang posted on the central government’s website.

The statement reinforces China’s commitment to look for alternative sources of energy as the nation’s policy makers grapple with improving the nation’s air and water supplies.

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China Impounds Japanese-owned Ship in Legal Dispute Dating to 1930s

Tensions between China and Japan over wartime history took on a new dimension after Chinese authorities impounded a ship owned by Japan’s Mitsui O.S.K. Lines Ltd. over a legal dispute dating back to the 1930s.

The Shanghai Maritime Court ordered the seizure on Saturday of the Baosteel Emotion—an iron-ore carrier—at a port in the eastern Chinese province of Zhejiang, according to statements on the websites of the court and Mitsui.

Japan’s Foreign Ministry said on Monday that this was the first time that Chinese authorities had seized a Japanese company’s assets because of a civil suit pertaining to claims for wartime reparations from Japan.

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China Gives Timetable for National Property Registry

China’s land ministry said a nationwide property registry will be operational before 2018, in a move that could help stem corruption and discourage speculative home buying.

“China is developing the foundation of a unified property registration system this year. In 2016, it can establish the property registry and before 2018, the platform for information management will be operational,” the Ministry of Land and Resources said in one of its online publications.

While a national registry has been widely anticipated, this is the first timetable the ministry has offered for the system, which would allow the government to keep track of home ownership.

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Troubled history fuels Japan-China tension

Strolling through China’s sprawling memorial to a 1937 massacre by Japanese troops, a 64-year-old retired teacher said the incident remains an open wound.

“Japan is a country without credibility. They pretend to be friendly, but they can’t be trusted,” Qi Houjie said as a frigid wind swept the austere plaza of the Nanking Massacre Memorial Hall.

Across the waters, Japanese visiting a Shinto shrine in Tokyo that enshrines 14 convicted war criminals among 2.5 million war dead say they’re tired of Chinese harping, underscoring a gradual hardening of attitudes toward their neighbor. China criticized Prime Minister Shinzo Abe on Monday for having a “wrong attitude to history” after he sent a traditional offering to Yasukuni Shrine at the start of a 3-day spring festival.

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Musk Says Tesla Will Make Cars in China in Next 3-4 Years

Tesla Motors Inc. Chief Executive Officer Elon Musk, who’s preparing to begin deliveries of the Model S electric vehicle in China, forecast the company will be making cars in the country in the next three to four years.

The company is also building a “big” network of battery-charging stations in China, including superchargers in Beijing and Shanghai, the billionaire said at a packed Geekpark Conference in the nation’s capital yesterday. Today, he told reporters in Beijing that the company plans to invest hundreds of millions of dollars in the country.

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Are China and the United States Competing for Influence in the Western Hemisphere?

With Chinese Foreign Minister Wang Yi now in Latin America for a nine-day visit to four countries, the White House has just recently announced that Vice President Joe Biden will travel to Brazil for the World Cup this summer. If previous patterns hold, the Vice President will also visit one or two additional countries, as well, expanding his role as President Obama’s informal envoy for regional issues. Although the World Cup is an appropriate reason for travel, such a high level visit to Brazil in the run up to Brazilian elections in October is in reality the continuation of a year-long effort by the United States to restore relations with Latin America’s largest economy.

Relations have been complicated since revelations by Edward Snowden of US spying on Brazil’s President Dilma Rousseff, which led to the cancellation of a planned State Visit to Washington last autumn by the Brazilian leader and a parade of senior-level US officials traveling to Brazil including the Secretaries of State, Treasury, and Agriculture, among others, and Biden’s own visit to Brazil one year ago. Undoubtedly, the Obama Administration hopes that the Vice President’s pending visit will be the capstone of this effort that will lay the groundwork for a re-launch of the bilateral relationship, most likely after the elections.

It is a significant and worthy effort, independent of anything that China may be doing and, coupled with the Vice President’s recent travel to Chile for the inauguration of the new president and his high-profile role with Mexico and other regional partners, shows the Obama Administration’s interest in preserving US influence and finding new ways to engage the region.

At the same time, there can be little argument that US leadership in the region is no longer unchallenged, if it ever was. Regional leaders are taking an increasingly active role and in some high-profile cases, such as the ongoing crisis in Venezuela and the peace negotiations in Colombia, the United States is not even at the table. This is a dramatic and historic shift, the implications of which are not yet fully understood or appreciated.

Other, non-regional actors are also increasingly active in the region, with China in the lead. Although the modern Chinese relationship with Latin America and the Caribbean is barely a decade old, nonetheless China has already risen to be the top trade partner of Brazil, Chile, and Peru, and the second largest trade partner of Argentina and Cuba. Chinese loans and economic largesse has underwritten populist political projects in Ecuador, Nicaragua, Venezuela, and various nations in the Caribbean, among others. Recent estimates put Chinese economic commitments to the region at some $15 billion in 2013, much of which has gone to Venezuela in exchange for energy supplies.

To this point, Chinese influence in the region is primarily based on economic connections, and Beijing has bent over backward to be seen as non-threatening, particularly to the United States, emphasizing economic relations while refusing to be drawn in to the region’s political arguments or ideological debates. Nonetheless, when China’s economy slows, as it is doing this year, commodities markets are affected and South America exporters get nervous. Chinese currency issues have challenged Latin American manufacturers. And China can be uncompromising in pursuing self-interest, as Argentina found to its chagrin in 2010 when China temporarily suspended import licenses for soy in response to various anti-dumping investigations Argentina was then pursuing.

As a result, at this point Chinese influence in the region is significant, because the economic leverage that Beijing has gained in both Latin America and the Caribbean has ballooned. So long as the basic outlines of the economic relationship remain constant, relations can be effectively managed. But the nature of China’s state-led economic engagement in Latin America and the Caribbean ensures that commodities exporting nations that have become dependent on China may not have the same policy levers they otherwise could use to rebalance relations. This is particularly true for countries that lack the economic and political weight of Brazil, and for those which, like Venezuela, have accepted and already spent billions of dollars in loans collateralized against future commodities sales.

China’s political presence in Latin America and the Caribbean is also growing. Last June, new President Xi Jinping traveled across the region for a week, a highly symbolic gesture, and was welcomed with open arms in Trinidad and Tobago, Costa Rica, and Mexico. Since he began in office, he has also led a strategic effort to develop closer ties with Mexico, which had been strained for several years previously. Next, he plans to travel to Brazil in July for the World Cup and a meeting of BRICS leaders; in anticipation of this visit, Chinese Foreign Minister Wang Yi is traveling to Argentina, Brazil, Cuba, and Venezuela from April 18-27, 2014. This is a significant amount of time for the Chinese Foreign Minister to be in the region, and shows the importance that Beijing places on developing regional ties.

Does this put China in competition with the United States for the hearts and minds of Latin America and the Caribbean? Not necessarily, since both governments appear to be taking steps—or not—based on their own internal calculations and priorities, and not in competition with each other or as a means to build relations at the expense of the other. Indeed, the United States has little influence with those countries where China’s leverage is highest: Argentina, Cuba, Ecuador, Venezuela, and possibly one or two others. But that doesn’t mean that Washington and Beijing will not cross each other’s path in the hemisphere. Nor does it mean that their interests are necessarily aligned. What it does mean is that Washington increasingly needs to contend for the Americas in a manner that shows the benefits of closer political and economic relations or it will fall behind. The future of the region is being written today.

Eric Farnsworth is Vice President of the Council of the Americas and Americas Society, heading the Washington, DC, office since 2003.

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Eased Arms Export Ban: Changed and Unchanged

The Japanese government’s recent approval of the new “principles and guidelines on the transfer of defense equipment” has triggered media uproar calling the move an abandonment of the Three Principles on Arms Export, which was set in 1967, but later evolved into an actual ban of weaponry exports, hence a desertion of the pacific road the country had followed after the end of the World War II. However, the old Three Principles had long become something for show only. Now, it is only too natural for the ornament to be replaced, which, as Shinzo Abe argues, has become “out of fashion”.

Americans should not feel surprised at the change, for it was none other than the United States that encouraged Japan to break the commandment 30 years ago. At that time, the Reagan administration wanted Tokyo to assume more security responsibility, thus the Japanese Maritime Self-Defense Force was authorized to carry out patrols in waters 1,000 nautical miles off the coast. As a result, the number of P-3Cs maritime patrolling aircraft licensed by Kawasaki Heavy Industries and Lockheed Martin increased dramatically in Japan’s armed forces. Ronald Reagan also persuaded the former Japanese Prime Minister Yasuhiro Nakasone to exclude the U.S. from the prohibited destinations of export of Japanese defense technologies. From then on, Japanese military technologies kept flowing into the U.S., such as SAM portable air defense missile, naval shipbuilding, radar equipment in the FS-X fighter cooperative production project and the digital-controlled flight technology for the improved model of P-3C. In 1985, Nakasone also took part in Reagan’s Strategic Defense Initiative, or the so-called “Star War Plan.”

Arms trade between Japan and the U.S. has never ceased over the past 30 years. In 2004, Japan’s arms export to the U.S. made a landmark breakthrough promoted by Prime Minister Junichiro Koizumi. In December that year, the Japanese government officially joined the Ballistic Missile Defense project initiated by the U.S. Though Americans undertook the designing of the weaponry systems and the project’s core technologies, such as dynamic warheads and radar systems, Japanese technologies were also widely adopted in the project. Japan’s arms manufacturers won large chunks of orders and the weaponry parts developed by them were transferred to their American partners unrestrictedly. To dodge restriction by the policies, the Koizumi administration announced that the BMD project was not within the ban of arms export.

In other areas, such as Southeast Asia, exports of Japanese weapons also evaded the Three Principles. Of course this was done with a necessary trick. That is, call a spade non-spade, or a weapon non-weapon, as Koizumi did. Japan is undoubtedly the most adroit in playing such an Orwellian newspeak-style gimmick, just as it did with its army. It calls its fifth world-ranked armed forces not an army, but a Self-Defense Force.

Tokyo obviously has a very innovative mind. Starting from 2006, it has associated its Coast Guard with Japan’s foreign aid programs. The Japan Coast Guard helped train Southeast Asian countries’ marine forces and provided them with technological supports. The JCG is actually Japan’s fourth armed force after the army, navy and air force but has been portrayed as a police department. Japan’s foreign aid authorities set up an anti-terrorism institutional fund, which has financed purchases of six patrol boats; three for Indonesia and three for the Philippines. Tokyo says the aid did not violate the arms export ban as the boats carry no weaponry and are used only for coastal patrol, though the vessels are armor-plated.

Given the aforementioned facts, the claim that the new principles announced on April 1 was a substantive change from the old principles has to be called nothing but an overstatement. Just like what Tokyo has done to erode the pacifist Constitution and the self-defense limitation bit by bit, Japan’s pacifist skin marked by the Three Principles of arms export ban has long been peeled off piece by piece.

If there has been anything that did change, that was the growing worries among the Japanese people. On April 6, visiting U.S. Defense Secretary Chuck Hagel told Abe that the U.S. “welcomes” Tokyo’s plan to revise the Constitution to allow the Self-Defense Force to exercise the right to collective self-defense. The following day, The Asahi Shimbun published a poll about the revision plan. According to the poll, 63 percent of the public agreed that Japan “should keep from exercising the right to collective self-defense,” nearly 10 percent more than a year ago. Only 12 percent agree that the Abe administration can “change the interpretation of the Constitution to fulfill the objective of exercising the right to collective self-defense.” Another 29 percent of the respondents opted for “exercising (of the right) tolerable,” but half of them said that as a prerequisite, Japan “needs to obtain understanding from neighboring countries.” Commenting on Article 9 of the Constitution, which has been viewed as the symbol of Japan’s pacifist spirit after World War II, 64 percent of the poll respondents chose “better not to revise it,” a remarkable rise from last year’s 52 percent, while a meagerly 29 percent opted for “better to revise it.” Opponents of the plan to change the arms export ban rose from 71 percent last year to 77 percent.

Japanese public’s worries over the Abe administration’s feverish pursuit of military build-up should not be ignored. If Abe, with support from the majority in the Diet, eventually has the “cabinet decision” approved on the issues of arms export and the right to collective self-defense, things will not end there. Constitution Article 9, pacifist heritage and all other “hindrances” to Abe’s military expansion will be removed. In the end, not only the Japanese people’s will, but also the post-war world order led by the U.S., will be dumped. In a few years, it may dawn to the world that on April Fool’s Day 2014, Japan was truly changing the course of history.

Jin Ying is a Research Associate at the Institute of Japanese Studies at CASS.

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Major changes underway for China’s workers

China’s work force has been going through some seismic changes lately, as the momentum appears to be shifting from the nation’s employers to the employed.

Faced with a slowing economy, a rising cost of living, fewer new workers entering the job market and an ambitious new plan to move tens of millions of Chinese officially into urban areas, several regions in the People’s Republic have been raising their minimum wage rates in an effort to retain employees.

But there has been a remarkable surge in strikes and labor-related protests in China over the past several months. The China Labour Bulletin, a Hong Kong-based research and activist group, reported 119 such incidents last month alone, following the Lunar New Year holiday. And for the first quarter of this year, 202 strikes and protests were reported — a 31 percent increase compared with the same time period last year.

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Japan to arm remote western island, risking more China tension

Japan is sending 100 soldiers and radar to its westernmost outpost, a tropical island off Taiwan, in a deployment that risks angering China with ties between Asia’s biggest economies already hurt by a dispute over nearby islands they both claim.

Japanese Defence Minister Itsunori Onodera will break ground on Saturday for a military lookout station on Yonaguni, which is home to 1,500 people and just 150 km (93 miles) from the disputed Japanese-held islands claimed by China.

The mini-militarization of Yonaguni – now defended by two police officers – is part of a longstanding plan to improve defense and surveillance in Japan’s far-flung frontier.

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China Details Vast Extent of Soil Pollution

The extent of China’s soil pollution, long guarded as a state secret, was laid out in an official report that confirmed deep-seated fears about contaminated farmland and the viability of the country’s food supply.

Nearly one-fifth of the country’s arable land is polluted, officials said in the report, shedding unexpected light on the scale of the problem—a legacy of China’s three decades of breakneck economic growth and industrial expansion.

“The national soil situation overall does not offer cause for optimism,” said the report. “In some areas, soil pollution is relatively severe. The condition of arable land is troubling, with the problem of pollution from industry and mining particularly worrisome.”

While China’s problems with air pollution are well-documented, environmentalists have warned about the effects of less-visible contamination of the country’s land.

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Shares of Twitter-Like Weibo Surge on Opening Day, as China I.P.O.s Mount

The Chinese are still coming, and so are the investors.

Despite signs that the fervor for initial public offerings might be waning a bit, shares of Weibo, the Twitter-like Chinese microblogging service, surged 19 percent in their first day of trading on Thursday. And another Chinese company, the real estate website Leju, enjoyed nearly as big a pop.

The warm welcomes come ahead of the expected debuts of even bigger Chinese Internet players — particularly the Alibaba Group, the online marketplace that is part eBay, part Amazon.com and wholly dominant in that country. The company is expected to file for an I.P.O. as soon as next week; it is expected to be one of the world’s biggest since Facebook raised $16 billion two years ago.

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Strike at Nike, Adidas China Supplier Halts Output

Striking workers at a Yue Yuen Industrial Holdings Ltd. shoe factory in China halted production for a fifth day in a dispute over company contributions to employees’ social security and housing funds.

The stoppage at the shoemaker for sportswear brands including Nike Inc., Adidas AG and Asics Corp. continued while Yue Yuen communicates with workers about an offer to increase the social security benefit starting May 1, said George Liu, a spokesman for the Hong Kong-based shoemaker. Monitoring group China Labour Bulletin said on its website strikers at the Dongguan, China facility numbered at least 10,000.

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