China’s interest rates will have upside bias when freed : central bank chief

China’s borrowing costs will have a tendency to rise once controls on interests rates are lifted due to buoyant demand for funds, Central Bank Governor Zhou Xiaochuan said on Monday.

Zhou said in an interview with Caijing magazine that elevated interest rates will be a “unique trait” of China’s economy as rapid development in the world’s second-largest growth engine keeps borrowing costs high.

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Coal Demand Growth to Slow in Next Five Years on China, IEA Says

Work for Better Big-Power Relations

– In commemoration of the establishment of Sino-US ties 35 years ago

On December 16 (Dec 15 US time), 1978, China and the United States simultaneously announced that they would formally establish diplomatic relations on January 1, 1979. Since then, the relationship between the two countries of totally different social systems has followed a tortuous course featuring contradiction, collision, compromising, cooperation and mutual adaptation.

Amazing changes have taken place in the past 35 years. Where will the Sino-US relationship head to in the next 35 year? That is a question people of both countries and the world hope to find a satisfactory answer to.

Presidents Xi Jinping and Barack Obama held a historic meeting at the Annenberg Estate, California. They exchanged views and reached consensus on the need to establish a new type of relationship between major powers. That signals the beginning of a new stage of development in the bilateral relations.

“No conflict, no confrontation, mutual respect and mutual benefit” make up the main content of the “new type of relationship”. To put these understandings into practice, both countries have got a slew of tasks to accomplish.

First, work towards a new agreement concerning Sino-US relationship. A series of documents were signed at different stages of the development of bilateral relations. The most prominent are the three Joint Communiqués, which are of over-all significance to the development of the Sino-US relationship. Now time has come for the two countries to sign a fourth joint communiqué, the theme of which will be the newly conceived “new type of major-power relationship”. It will define the significance, content and goals of the new-pattern relationship and how it will be built. It will serve as a roadmap for China and the US to develop their relations in the new epoch.

Second, build up and enhance mutual trust. For too long a time, there has been excessive talk about mutual suspicion between China and the US. That mind-set has to be changed. Instead, the Sino-US relationship should be that of partnership, which is based on contemporary concepts about security and obligation-interests relation. Admittedly, serious distrust exists between the two countries and they have different views on many issues. But mutual suspicion has never been the main consideration in either side’s drafting of policies concerning their relations, otherwise the bilateral relationship could not have achieved so much progress as we see today. And trust and distrust are mutually replaceable. According to declassified audio recordings of Richard Nixon, the late US president said when he decided to establish ties with China that “Sino-US relationship is the key to world peace.” It was thanks to a change of the way of thinking that anti-communist Nixon became a pioneer to turn the Sino-US relationship into one of positive interaction.

Third, strengthen the role of economic and trade ties as the stabilizer in the bilateral relationship. It is known to both sides that the two economies are mutually dependent. According to a study hosted by the China-United States Exchange Foundation with participation of specialists and former top-officials from both countries, China and the US will become each other’s largest trade partner 10 years later. By then, the American exports to China will be $450 billion, creating more than 2.5 million jobs for the US. To realize this goal, both sides should work with sincerity and determination and clear away all obstacles to expedite the negotiations for the bilateral investment agreement and explore the possibility of reaching a free-trade agreement.

Fourth, reinforce the security pillar. The Sino-US relationship is like a grand building designed by both countries’ leaders and sustained by the economic foundation. It also needs pillars to ensure safety. These “pillars” are both sides’ mutual trust in the area of security and willingness to increase military exchanges and cooperation. Neither side should take the other as a potential or realistic adversary when drafting the security strategy. They should guard against any third party who, out of its private interests, tries to drag them into disputes over security problems. They should also respect each other’s core interests and major concerns.

It is encouraging that positive signs have emerged in military exchanges between the two countries. To further that momentum, both sides should conduct the security dialogue on higher government levels and explore ways to increase military transparency.

Fifth, create a constructive media environment. Media is the most active part of society. Media’s independence, its influence on society and its role as a watchdog are all necessary. Both China’s and US’ media are playing an indispensable role in the development of bilateral relations. However, there is no denying that the media environment between China and the US is not fair and objective enough. Some media outlets have always fabricated or played up the so-called China threat, US decline and China-US mutual suspicion and confrontation in disregard of facts. Journalists should have conscience and sense of social responsibility. They should play a positive role in protecting sovereignty states’ interests and promote world peace and progress. The new type of major-power relationship between China and the US is in building, during which media is a needed source of positive energy.

There are many things between China and the US that should be done and can be done. But for things that cannot be done or should be prevented, both sides should try to avoid them in tacit agreement.

The first thing that should not be done is exaggerating China’s strength or overstating the US’ decline. China is much weaker than the US, especially in science and technology and in military power. Exaggerating China’s strength will cause China’s growth to be burdened with higher cost, including overdraft of responsibility. Likewise, the media also overstated the weakening of power the US has suffered from the financial crisis and the wars in Iraq and Afghanistan. Such exaggeration is harmful to the US in its effort to revitalize economy. The US has all the conditions for the economic revival. Actually it is on the road to that end. A correct comparison of their strengths is helpful to the building of the new type of relationship between China and the US. China needs to overcome the troubles in its growth; the US needs to get rid of its strategic anxieties.

The second thing they should refrain from doing is finding fault with the other side when handling one’s own problem. Both countries have their own problems. Though many of these problems are correlated and one should have the other’s interests in mind when seeking its own development, the largest challenges for each of the two countries originate in their own concepts and policies and their own motives for development. China and the US should be magnanimous to each other instead of tracing one’s own problem to the other.

Thirdly, neither side should do anything to harm the other side’s sovereignty and safety or interfere in the other’s internal affairs. Regrettably, the US has done too many of this kind of things. American military aircraft frequently carry out reconnaissance flights near China’s airspace; and US Congress often hold hearings on Chinese affairs, where congressmen make irresponsible comments on issues involving China’s core interests. Such acts of interfering in China’s domestic affairs have hurt the feelings of the Chinese people and proved harmful to a healthy development of the bilateral relations.

The fourth thing undesirable is harming the other side’s interests when one tries to develop relations with the other side’s neighbors. Both sides should make their moves more transparent to each other and try not to be hijacked by certain third parties with private motives.

Last but not the least, do not equate “equal treatment” with “equal status”. These are different concepts. The former refers to the attitude and standards one country should follow when dealing with another country. It means all countries, big or small, should treat each other with equality and respect. The latter refers to the two sides’ status on equal footing. China holds that all countries should be respected with regard to the social systems and development models they have chosen and that all countries enjoy equal rights in international affairs, which should be handled with justice and transparency. China does not deny the positive side of the role US has played in shaping and dominating the post-war world order. Some political elites in the US worried that China would seek an equal status as that of the US and share what they think is their country’s exclusive leading role in the world. These worries are groundless. China has neither the need nor the ability to share the US’ status as the leader of the world. What China seeks is justice and equality and a constructive role that is commensurate with its capability.

After 35 years, China-US relationship is entering the stage of maturity. Favorable political, economic, social and cultural conditions are ripe for the two countries to establish a new type of big-power relationship. That’s a great cause. The two peoples will definitely accomplish it.

Chen Yonglong is Director of the US Center of the China Foundation for International Studies.

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Better dialogue urged after naval incident

Chinese warship, US cruiser came close to collision in South China Sea

The navies of China and the United States should reinforce their communication and cooperation in the Asia-Pacific to reduce the risk of conflict amid Beijing’s maritime buildup and Washington’s rebalancing in the region, observers said.

The comments were made after the US Pacific Fleet said on Friday the guided-missile cruiser USS Cowpens was forced to take evasive action to avoid a collision with a Chinese warship maneuvering nearby, Reuters reported.

China’s amphibious dock ship was less than 500 meters from the US warship when the encounter happened “in international waters” in the South China Sea on Dec 5, a US defense official was quoted as saying.

“Eventually, effective bridge-to-bridge communications occurred between the US and Chinese crews, and both vessels maneuvered to ensure safe passage,” he said.

The USS Cowpens was operating near China’s sole aircraft carrier, the Liaoning. Flanked by escort ships, including two destroyers and two frigates, the Liaoning has been in the South China Sea for exercises since the end of November.

The US raised the latest incident at a “high level” with the Chinese government, according to a State Department official quoted by the US military’s Stars and Stripes newspaper.

The Chinese government has not yet officially commented on the confrontation.

Experts said it was not the first time that US reconnaissance activities in the South China Sea have caused confrontations, and they called for a sound bilateral framework to manage divergences.

Fan Jishe, a US studies expert at the Chinese Academy of Social Sciences, said the incident was very dangerous because any miscalculation would have led to a collision that would in turn have caused a major bilateral crisis.

“It is a relief that both sides exercised restraint this time, as there are channels for maritime consultation between the two sides,” Fan said. He added that previous incidents in the past decades had traumatized Sino-US ties.

Su Hao, a professor of Asia-Pacific studies at China Foreign Affairs University, said China’s action was necessary for protecting its maritime rights and interests, which were seriously violated by the US.

“China has demonstrated its determination and capability to resist any unfriendly moves in the South China Sea. After all, the Chinese took action only after the US vessels refused to comply with warnings,” Su said.

The confrontation was the most significant maritime incident between the two countries in the South China Sea since 2009, when a Chinese submarine collided with an underwater sonar array being towed by the USS John McCain.

Experts said that the risk of clashes between China and the US are high as the “going-out” Chinese navy will inevitably meet its active US counterpart in the region, which it considers subject to its sphere of influence.

Zhang Diancheng, a military commentator, said China needs to develop a strong offshore navy that can conduct combat missions in blue water to safeguard its maritime development and expanding trade.

Su said, through this incident, Washington needs to realize that there have been changes in the power balance between the two countries.

“The US has to acknowledge the fact that Chinese military forces have grown stronger, and re-evaluate its strategies given the overall Sino-US relations, instead of simply imposing containment,” Su said.

On the same day as the incident, US Vice-President Joe Biden was on a two-day visit to Beijing amid high regional tensions in East Asia due to a spat over China’s designation of its Air Force Identification Zone in the East China Sea.

“Washington is willing to manage differences with Beijing in a constructive manner and avoid letting them affect bilateral ties,” Biden said while meeting with President Xi Jinping.

Experts said the US has long been conducting near-shore reconnaissance against the Chinese navy’s normal military exercises and disturbing them under the justification of free navigation in international waters.

Zhang said US surveillance activities regardless of warnings from China aim to accelerate the US military deployment in the region in compliance with its rebalancing strategy.

Fan said Washington’s enthusiasm in collecting China-related intelligence in the South China Sea reflects its growing concern with China’s reinforced military power.

“Meanwhile, these actions have the symbolic meaning that the US is trying to brag about its presence in the region and that it has the ability to enter China’s exclusive economic zone,” he said.

By Pu Zhendong and Zhang Fan ( China Daily )

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Japan’s ‘checkbook diplomacy’ could bounce: observers

Though Japan has signed aid pacts in order to win support from ASEAN countries in its dispute with China, Japanese Prime Minister Shinzo Abe’s “checkbook diplomacy” may fail because his provocative political actions put the region into a difficult situation, observers said.

On Sunday, Abe concluded a three-day Japan-ASEAN summit in Tokyo during which Japan, in what experts called “an unusual gesture”, offered to provide 2 trillion yen ($19.2 billion) in aid for the 10-member bloc.

Japan also pledged fresh aid worth about $610 million in loans to Myanmar, mainly to help the Southeast Asian country’s infrastructure projects.

Despite Japan’s generous aid package, many of Tokyo’s suggestions targeting China were not included in the joint statement released on Saturday, due to opposition by ASEAN, Kyodo News Agency said.

“The word ‘threat’, in alluding to China’s actions in the South China Sea, was not written into the statement, because senior officials from Myanmar, Laos and Cambodia disagreed with the expression suggested by Japan at a pre-summit meeting on Thursday in Tokyo,” the Japanese agency reported.

The phrase “freedom of overflight” in the statement was changed from “freedom of overflight over the high seas” in the draft because the Southeast Asian side indicated that “the words ‘over the high seas’ could be taken as a specific measure focusing on China’s air defense identification zone”, Kyodo reported.

The statement, which said that the two sides promise to cooperate to ensure “freedom of overflight and aviation safety in accordance with universally recognized principles of international law”, is more like a meaningless diplomatic expression, which will not play a substantive influence in regional cooperation, said Yang Xiyu, an expert on international relations studies at the China Institute of International Studies.

“It seems like the statement somehow satisfied Japan’s requirement, but it doesn’t have any practical meaning. ASEAN didn’t play the game of taking sides as Japan wished.”

Abe said at a news conference on Saturday that China’s recent announcement of the air-defense identification zone over the East China Sea is “unjustly violating freedom of aviation over the high seas” and demanded Beijing rescind it.

During a meeting with Indonesian President Susilo Bambang Yudhoyono, Abe explained Japan’s stance on China’s air defense zone, which covers the disputed Diaoyu Islands, but Yudhoyono did not give a definite answer as Abe had hoped.

“When the border negotiations are still ongoing, having an open line of communication is crucial to avoid miscalculation that may occur in and around the disputed area,” Yudhoyono was quoted by Xinhua News Agency as saying, without naming a specific location.

Yudhoyono said, “It is important that Japan’s larger security role is pursued gradually, in a transparent manner and in ways that would strengthen international security, regional order and enhance confidence building.”

Foreign Ministry spokesman Hong Lei expressed China’s anger over Abe’s “malicious slander” of China in the international arena.

“As a defensive measure to safeguard national air security, the establishment of the East China Sea ADIZ is in line with international law and practice,” Hong said on Saturday, stressing that it does not affect aviation freedom.

Wang Ping, a researcher at the Institute of Japanese Studies, Chinese Academy of Social Sciences, said Abe’s Southeast Asian strategy of isolating China is stupid.

“China has become ASEAN’s largest trading partner and the biggest export market since 2011. The free trade zone between ASEAN and China is a good example for regional cooperation. There is no way that Japan can easily buy ASEAN,” she said.

“Abe forcing ASEAN to take sides in the disputes between Japan and China is apparently irresponsible,” she said.

Liu Jiangyong, an expert on Japanese studies at Tsinghua University, said Japan should be clear that the world expects Japan to handle its relations with China well, rather than building alliances against China.

“Japan originally hoped ASEAN countries would make a joint statement over issues like ‘freedom of overflight’, then use China’s ADIZ as one case to criticize China. ASEAN countries were crystal clear about Japan’s intensions,” Liu said.

Abe seems to like to push all visiting leaders in Japan to underwrite his ideas against China, he said.

By Zhao Yanrong in Beijing and Cai Hong in Tokyo ( China Daily )

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China to launch its Chang’e-5 lunar probe

China is scheduled to launch its Chang’e-5 lunar probe in 2017 and the mission will bring back samples collected from the moon, a senior scientist said Monday.

The development of Chang’e 5 is proceeding smoothly, said the administration’s spokesman Wu Zhijian at a press conference on Monday.

The just-concluded Chang’e 3 mission, the third-phase project of China’s lunar probe established in 2011, marked completion of the second phase of the program, which includes orbiting, landing and returning to Earth.

China’s first lunar rover and the lander took pictures of each other near mid-night on Sunday, marking the complete success of Chang’e-3 lunar probe mission.

The lunar program will enter the next stage of unmanned sampling and returning, which will include Chang’e 5 and 6 missions, according to Wu.

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China’s Tianjin to curb car ownership in anti-smog drive

China’s northern municipality of Tianjin will restrict traffic and issue new car license plates via bidding and lottery in a drive to fight traffic jam and air pollution.

The city will impose quota on its new car plates starting next Monday, requiring buyers to join lottery or bid in auctions to win a plate, according to a notice issued by the city government on Sunday evening.

The notice did not give details on the quota or how many plates will go for lottery compared with auction.

Tianjin will also follow Beijing’s step in adopting a similar traffic restriction scheme, which blocks cars from streets depending on the last digit of their plates, with two numbers banned each workday, said Miao Hongwei, head of the city’s traffic management bureau.

The ban, which will take effect on March 1, is expected to take one fifth of the city’s private cars off the road on workdays.

Moreover, the city will ban vehicles with non-local plates from driving into the city’s outer ring road during morning and evening rush hours on workdays, Miao said.

A statement by the municipal government said the move was part of the city’s effort to curb its ballooning car ownership, reduce traffic jams and fight smog.

Tianjin has registered 2.36 million motor vehicles by 2012, up from 1.2 mln in 2006, while the average driving speed on downtown roads during rush hours dropped to 19.5 kilometers per hour in 2011, indicating severe traffic gridlock in the city of 14 mln permanent residents.

Meanwhile, vehicle emissions have been held as a key source of the persistent smog plaguing Tianjin, its neighbor Beijing and other cities in the northern region.

Previously, Beijing, Shanghai and Guangzhou have limited the number of vehicles registered each year.

Shanghai uses a bidding scheme, while Beijing issues plates through a lottery. Guangzhou adopts both systems, half issued through bidding, the other half through a lottery.

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