SEOUL: North Korea denounced on Monday (Jul 10) what it called a move by the United States to introduce a nuclear-powered ballistic missile submarine to waters near the Korean peninsula, saying it creates a situation that brings a nuclear conflict closer to reality. North Korea also claimed US reconnaissance planesContinue Reading
“NUCLEAR BLACKMAIL” The moves by the United States to introduce strategic nuclear assets to the Korean peninsula is “the most undisguised nuclear blackmail” against North Korea and regional countries and presents a grave threat to peace, KCNA said. “Whether the extreme situation, desired by nobody, is created or not onContinue Reading
The contradictions of China-bashing in the United States begin with how often it is flat-out untrue.
The Wall Street Journal reports that the “Chinese spy” balloon that President Joe Biden shot down with immense patriotic fanfare in February did not in fact transmit pictures or anything else to China.
White House economists have been trying to excuse persistent US inflation saying it is a global problem and inflation is worse elsewhere in the world. China’s inflation rate is 0.7% year on year.
Financial media outlets stress how China’s GDP growth rate is lower than it used to be. China now estimates that its 2023 GDP growth will be 5-5.5%. Estimates for the US GDP growth rate in 2023, meanwhile, vacillate around 1-2%.
China-bashing has intensified into denial and self-delusion – it is akin to pretending that the United States did not lose wars in Vietnam, Afghanistan, Iraq and more.
The BRICS coalition (China and its allies) now has a significantly larger global economic footprint (higher total GDP) than the Group of Seven (the United States and its allies).
China is outgrowing the rest of the world in research and development expenditures.
The American empire (like its foundation, American capitalism) is not the dominating global force it once was right after World War II. The empire and the economy have shrunk in size, power and influence considerably since then. And they continue to do so.
Putting that genie back into the bottle is a battle against history that the United States is not likely to win.
Denial and self-delusion about the changing world economy have led to major strategic mistakes. US leaders predicted before and shortly after February 2022, when the Ukraine war began, for example, that Russia’s economy would crash from the effects of the “greatest of all sanctions,” led by the United States. Some US leaders still believe that the crash will take place (publicly, if not privately) despite there being no such indication.
Such predictions badly miscalculated the economic strength and potential of Russia’s allies in the BRICS. Led by China and India, the BRICS nations responded to Russia’s need for buyers of its oil and gas.
The United States made its European allies cut off purchasing Russian oil and gas as part of the sanctions war against the Kremlin over Ukraine. However, US pressure tactics used on China, India, and many other nations (inside and outside BRICS) likewise to stop buying Russian exports failed. They not only purchased oil and gas from Russia but then also re-exported some of it to European nations.
World power configurations had followed the changes in the world economy at the expense of the US position.
War games with allies, threats from US officials, and US warships off China’s coast may delude some to imagine that these moves intimidate China. The reality is that the military disparity between China and the United States is smaller now than it has ever been in modern China’s history.
China’s military alliances are the strongest they have ever been. Intimidation that did not work from the time of the Korean War and since then will certainly not be effective now.
Former president Donald Trump’s tariff and trade wars were meang, US officials said, to persuade China to change its “authoritarian” economic system. If so, that aim was not achieved. The United States simply lacks the power to force the matter.
American polls suggest that media outlets have been successful in a) portraying China’s advances economically and technologically as a threat, and b) using that threat to lobby against regulations of US high-tech industries.
Of course, business opposition to government regulation predates China’s emergence. However, encouraging hostility toward China provides convenient additional cover for all sorts of business interests.
China’s technological challenge flows from and depends on a massive educational effort based on training far more STEM (science, technology, engineering and mathematics) studengs than the United States does. Yet US business does not support paying taxes to fund education equivalently.
The reporting by the media on this issue rarely covers that obvious contradiction and politicians mostly avoid it as dangerous to their electoral prospects.
Scapegoating China joins with scapegoating immigrants, BIPOCs (black and Indigenous people of color), and many of the other usual targets.
The broader decline of the US empire and capitalist economic system confronts the nation with the stark question: Whose standard of living will bear the burden of the impact of this decline? The answer to that question has been crystal clear: The US government will pursue austerity policies (cut vital public services) and will allow price inflation and then rising interest rates that reduce living standards and jobs.
Coming on top of 2020’s combined economic crash and Covid-19 pandemic, the middle- and-lower-income majority have so far borne most of the cost of the United States’ decline. That has been the pattern followed by declining empires throughout human history: Those who control wealth and power are best positioned to offload the costs of decline on to the general population.
The real sufferings of that population cause vulnerability to the political agendas of demagogues. They offer scapegoats to offset popular upset, bitterness and anger.
Leading capitalists and the politicians they own welcome or tolerate scapegoating as a distraction from those leaders’ responsibilities for mass suffering. Demagogic leaders scapegoat old and new targets: immigrants, BIPOCs, women, socialists, liberals, minorities of various kinds, and foreign threats.
The scapegoating usually does little more than hurt its intended victims. Its failure to solve any real problem keeps that problem alive and available for demagogues to exploit at a later stage (at least until scapegoating’s victims resist enough to end it).
The contradictions of scapegoating include the dangerous risk that it overflows its original purposes and causes capitalism more problems than it relieves.
If anti-immigrant agitation actually slows or stops immigration (as has happened recently in the United States), domestic labor shortages may appear or worsen, which may drive up wages, and thereby hurt profits.
If racism similarly leads to disruptive civil disturbances (as has happened recently in France), profits may be depressed.
If China-bashing leads the United States and Beijing to move further against US businesses investing in and trading with China, that could prove very costly to the US economy. That this may happen now is a dangerous consequence of China-bashing.
Because they believed it would be in the US interest, then-president Richard Nixon resumed diplomatic and other relations with Beijing during his 1972 trip to the country. Chinese chairman Mao Zedong, premier Zhou Enlai, and Nixon started a period of economic growth, trade, investment and prosperity for both China and the United States.
The success of that period prompted China to seek to continue it. That same success prompted the United States in recent years to change its attitude and policies. More accurately, that success prompted US political leaders like Trump and Biden to now perceive China as the enemy whose economic development represents a threat. They demonize the Beijing leadership accordingly.
The majority of US mega-corporations disagree. They profited mightily from their access to the Chinese labor force and the rapidly growing Chinese market since the 1980s. That was a large part of what they meant when they celebrated “neoliberal globalization.” A significant part of the US business community, however, wants continued access to China.
The fight inside the United States now pits major parts of the US business community against Biden and his equally “neoconservative” foreign-policy advisers. The outcome of that fight depends on domestic economic conditions, the presidential election campaign, and the political fallout of the Ukraine war as well the ongoing twists and turns of the China-US relations.
The outcome also depends on how the masses of Chinese and US people understand and intervene in relations between these two countries. Will they see through the contradictions of China-bashing to prevent war, seek mutual accommodation, and thereby rebuild a new version of the joint prosperity that existed before Trump and Biden?
This article was produced by Economy for All, a project of the Independent Media Institute, which provided it to Asia Times.
As Janet Yellen kicks China’s economic tires in Beijing this week, she may be surprised by how often the attention is veering toward neighboring Japan.
It just so happens that Yellen’s first China trip as US Treasury secretary coincides with intense debate about Asia’s biggest economy experiencing a Japan-like “balance sheet recession,” one that, if true, will be devilishly hard to reverse.
The reference here is to economist Richard Koo’s oft-cited observation about why Japan plunged into deflation and stagnation in the 1990s. Specifically, this is when economic insecurity prods a critical mass of households and companies to prioritize boosting savings and paying down debt over consuming and investing.
Unlike a formal recession, where gross domestic product (GDP) contracts, the balance sheet variety condemns an economy to underperform for several years.
It’s clear that as 2023 unfolds, “investors are concerned that China may have entered a liquidity trap or is experiencing a balance sheet recession,” says economist Carlos Casanova at Union Bancaire Privée, with the caveat that for now “these fears might be overstated.”
Yet the trouble with Japan-like economic funks is how souring sentiment can take on a life of its own. Herein lies the greater risk for Chinese leader Xi Jinping and Premier Li Qiang.
“Chinese policymakers are going about tackling the different factors underpinning weak sentiment,” Casanova explains. “Given the scattered nature of this support, it may take time for upside pressures on domestic asset prices to build and the Chinese yuan to stabilize.”
Koo, too, thinks China “is entering a balance-sheet recession,” partly because “people are no longer borrowing money” due to worries about the growth outlook and stability of asset markets. As households and companies focus on reducing debt, China’s growth can’t return to pre-Covid levels, he worries.
“I hope Chinese policymakers understand and respond to these challenges, because this might be the last chance for China to reach the living standards of the First World,” Koo explains.
Economist Ting Lu at Nomura Holdings worries that “China’s real estate sector is now starting to look somewhat similar to Japan in the 1990s.” As of May, for example, contract sales among the mainland’s 100 top developers were down roughly 57% versus pre-Covid-19 levels in 2019.
Though Japan’s plunge into deflation had several causes, cratering land prices — and the high degree of exposure to those prices among the nation’s biggest banks — was a key catalyst. The overhang set in motion the bad loan crisis that was core to Japan’s multi-decade malaise.
Economist Alicia Garcia Herrero at Natixis says land sales are “one of the most important components of China’s local government revenue.” She adds that “given the challenges faced by China’s property market are largely structural, i.e., slower income growth, population aging, we expect the land sales revenue to continue being under stress down the road.”
Xi’s policymakers have sought to downplay such concerns. In March, Chinese Finance Minister Liu Kun argued that a 2 trillion yuan (US$276 billion) drop in land sales would only result in a 300 billion yuan loss to local governments’ fiscal positions. That neat assessment may or may not add, however.
Clearly, economists can take the Japan-China comparisons too far. In 2021, economist Lan Xiaohuan published a best-selling book, “Embedded Power: Chinese Government and Economic Development”, detailing the unique dynamics of local property markets.
As Lan explains, “the real power is not ‘land as fiscal finance,’” but “using land as collateral to accelerate bank lending and other forms of credit. When ‘land as fiscal-finance’ meets the capital market and adds leverage, it becomes ‘land finance’” with Chinese characteristics.
Extreme opacity is an added problem. Along with privately-owned real estate companies, the top power brokers are state-owned entities known as Local Government Financing Vehicles (LGFVs), which borrow to finance infrastructure, industrial parks and housing across Asia’s biggest economy.
LGFVs’ outsized revenue role is now among the “main obstacles for broad-based macro support” for an economy losing momentum, says Casanova. They’re at the core of “PBOC concerns about financial risks” along with “households remaining on the fence” about “deploying pandemic surpluses due to weak sentiment.”
However, Casanova notes, “without additional targeted measures, those two reinforce each other, resulting in a deflationary spiral and making it harder for the economic recovery to broaden its base.”
Yet Koo argues that China has a key advantage over Japan: it can learn from Tokyo’s mistakes.
The key lesson, Koo says, is that stimulus treats the symptoms of China’s troubles, not the underlying ailment. While it’s vital that Beijing steps forward to ensure that giant building projects are completed, reforms to repair the property sector and build robust social safety nets are the key to avoiding “Japanification” risks.
Stabilizing property is vital to improving the quality of economic growth and reducing the frequency of boom-bust cycles. Social safety nets are needed to prod households to save less and spend more.
The good news is that China has “a fairly strong administrative system which can put losses where they should be — where they can be easily absorbed,” Raghuram Rajan, former chief economist at the International Monetary Fund, told Bloomberg.
It may help, too, that the economic reform portfolio is now in Li’s hands. Unlike his predecessor, the newish premier appears to have Xi’s full confidence. That top-level buy-in is vital if Li is to pull off a monumentally difficult balancing act.
Li must support growth in the short run while maintaining the progress China has made in reducing extreme leverage and getting under the economy’s hood to recalibrate engines from exports to domestic consumption. Naturally, the People’s Bank of China (PBOC) will play a key role in smoothing out GDP.
Markets need to be “thinking about the likelihood of further easing ahead,” says economist Rob Carnell at ING Bank referring to benchmark Chinese interest rates. He adds that “we’re going to get plenty more of those” moves to add liquidity in coming months “to keep [the] yuan on the back foot.”
Economist Joey Chew at HSBC Holdings says “some think that more concrete, non-monetary stimulus measures will only come out at or after the Politburo meeting in end-July. If so, some foreign-exchange policy smoothing may be needed in the meantime as we head into the dividend outflow season for China.”
Not everyone is convinced big stimulus moves are coming. Goldman Sachs economist Maggie Wei notes that recent meetings with greater China region investors unearthed lots of doubt. “Local clients did not expect major policy easing measures or structural reform measures to be rolled out in the July Politburo meeting” later this month, Wei says.
To some extent, the yuan’s 5% drop this year limits the PBOC’s options. Indeed, additional rate cuts might weaken the yuan to levels that exacerbate trade tensions with Washington and Tokyo. At the same time, a weaker yuan would increase default risks for China’s bigger property developers.
“The lesson from Japan’s lost decades is that without a timely debt clean-up and demand stimulus, the deleveraging mindset could become entrenched in the private sector and, after a certain point, even zero interest rates would not be able to help,” says economist Wei Yao at Societe Generale. It follows that “such a danger seems increasingly relevant for China, as evident in households’ strong appetite for savings.”
In the interim, interest margins among mainland banks “will be under persistent downward pressure if more of their lending capacity is used for extending loans to LGFVs at below-market rates,” Yao says.
China also faces an imponderable that Japan didn’t in the 1990s: a full-blown trade war with Washington.
Yellen’s presence in Beijing this week speaks to the high drama complicating Li’s job in stabilizing the economy. To some observers, Yellen’s trip is meant to reduce the geopolitical temperature following US Secretary of State Antony Blinken’s recent visit.
“I would say it’s a little bit like good cop, bad cop, Blinken being the bad cop,” former IMF chief economist Ken Rogoff told the BBC. “And now Yellen going in as the good cop trying to say, look, you know, we have a lot in common. Let’s see what we can do together.”
Even so, Yellen manages to throw some sharp elbows. On Friday, she chided Beijing for policies toward US companies and a recent move to limit the export of gallium and germanium, niche minerals used in some chip-making.
“During meetings with my counterparts,” Yellen said, “I am communicating the concerns that I’ve heard from the US business community — including China’s use of non-market tools like expanded subsidies for its state-owned enterprises and domestic firms, as well as barriers to market access for foreign firms. I’ve been particularly troubled by punitive actions that have been taken against US firms in recent months.”
Xi’s government, of course, has its own gripes about US President Joe Biden’s efforts to make American manufacturers less reliant on Chinese production.
In the meantime, though, it’s hard to refute that “China’s economic development model resembles that of Japan over 30 years ago with high savings and high investment, but with restrained consumption and rigid institutions weighing increasingly on macroeconomic success,” notes George Magnus, a research associate at Oxford University’s China Centre.
Magnus adds that “China’s chronic over-investment and misallocation of capital, particularly in the property sector, pose a potentially bigger economic problem than Japan’s banking crisis in the 1990s.”
On the bright side, Magnus says, “China has some advantages over Japan, such as a state-owned financial system that can prevent significant banks from failing and a closed capital account that can protect the country’s banking system and the economy from the risk of significant capital flight. This however might not prevent China from taking the same economic trajectory [of] Japan.”
That requires urgent and creative moves to repair the property market, create robust social safety nets and put China on a path toward more productive economic growth. China can surely avoid Japan’s lost decades, but there’s not a moment to waste in shifting the narrative about the economy’s downward trajectory.
Follow William Pesek on Twitter at @WilliamPesek
Any decision on NATO membership is between the 31 Allies and aspirant country. And so, in this case, when it comes to Ukraine, we have been discussing with our NATO Allies and Ukraine how we can collectively support Ukraine’s aspiration for Euro-Atlantic integration.
Ukraine would have to make reforms to meet the same standards as any NATO country before they join. President Biden thinks that Ukraine can do that.
US President Joe Biden will spend three days in Europe at the NATO Summit in Vilnius scheduled for 11 and 12 July. The main topic will be Ukraine and where to go from here.
Ukraine is pushing for either immediate NATO membership or actionable security guarantees from NATO. But Ukraine’s position is undermined by the failure of the counteroffensive against Russia, and the failure of its attempts – via sabotage, assassination and lethal drones aimed at the Kremlin – to destabilize the Putin government. Now Ukraine is saying it needs NATO air power to be able to win its war.
It will be very hard to get a NATO consensus on the road ahead, no matter how much arm twisting Washington uses on its European partners.
Europe is already in a recession thanks to the Covid catastrophe, the sanctions on Russian energy and the huge unemployment levels, which impact recent immigrants. The result of all that is social unrest across Europe. France is already experiencing a serious revolt, and while the French situation has eased in the past few days, it will come back.
Meanwhile, the German government coalition is steadily losing popular support and the AfD, Germany’s right-wing party, is now the second most popular party in the country. Olaf Scholz and his coalition partners don’t know what to do: they may try banning AfD as a last ditch effort. Italy is also far from out of the mess.
The country has a conservative leadership but is being battered by unprecedented waves of immigrants coming from the Middle East.
Europe is out of money and out of bullets. It is not in a mood to give a blank check to Ukraine or risk a bigger war that might spread into Europe. President Biden will have a hard time trying to squeeze more from the Europeans.
Biden knows that he cannot unilaterally use US forces, especially airpower, without airbases and supply centers in Europe. Right now, Washington has a free hand because US warplanes are not bombing Russian positions in Ukraine. Bombing them, however, would force a strong European reaction and shatter NATO.
Ukrainian leader Volodymyr Zelensky has been pressuring Washington for advanced warplanes, saying airpower would make it possible for Ukraine to win. But the only practical way forward with that over the next year is to operate from bases outside of Ukraine using US and possibly other NATO aircraft.
This would certainly mean war in Europe and the currently ruling governments in Europe either would have to say no or face being removed by force. It is, therefore, an unlikely, if highly dangerous, scenario.
Washington has already signaled that it has been unable to convince its partners about Ukrainian NATO membership. It is likely that behind the scenes Washington is trying to craft some sort of security guarantee for Ukraine, but any meaningful guarantee is probably a bridge too far.
Russia is also restive after the Yevgeny Prigozhin-led coup attempt. Putin wants a military victory soon, as does the Russian army, which was badly stressed by the Prigozhin accusations.
Holding the line against a Ukrainian counteroffensive is not really a victory for the Russians since their image remains tarnished at home. It is reasonable to expect, therefore, that once the Ukrainian losses mount up high enough in the coming weeks, the Russian army will make dramatic offensive moves against Ukraine.
The big unknown is what the Russian army will do: Will it launch a big attack on Kiev, Kharkiv or Odesa? If, after Vilnius, Moscow sees Zelensky without any expectation of NATO coming to save him, it will exploit the situation very quickly.
Part of the Western foundation for Ukraine’s offensive was the introduction of modern technology on the battlefield, represented especially by the appearance of the Leopard tank. Unfortunately for NATO, the Leopard tanks have not saved the day for Ukraine.
So far, between 16 and 20 Leopards have been knocked out on the battlefield along with lots of other NATO-supplied armor, including infantry fighting vehicles such as the US Bradley and mine clearing systems like the Finnish Leopard 2R HMBV and the German Wisent 1.
The Leopard and US Abrams main battle tank form the armor backbone of NATO’s land defense.
While the US and its allies have superior airpower, they have sparse and inadequate air defenses compared with what Russia can bring forward. This means that a land defense needs to stand up to Russian attack helicopters armed with missiles, lethal drones and air-launched mines in addition to artillery.
The failure of the Leopard in Ukraine represents a huge challenge for NATO and signals that the current NATO “tripwire” strategy may not work.
Under the tripwire paradigm, the idea is that an initial Russian attack (most likely in the Baltic states because Russian forces are very close to Estonia and Latvia) can be held for some days while the US ships heavy forces into Europe. But if the tripwire is illusory, then NATO is exposed to rapid Russian advances in Europe should an attack be launched.
The bottom line is that NATO’s strategy needs revision or, alternatively, that the Europeans and Russians need to work out a mutually acceptable security arrangement. It is exactly such an arrangement that Russia proposed to NATO in December 2021. It was rejected without discussion.
Now the ammunition cupboard is bare, even in the United States. The Russians are learning how to counter advanced Western systems, a negative development for NATO’s security. It could not be a worse time to risk Europe’s security on the basis of being able to stop a Russian attack.
It may be easy for British politicians to scream they want NATO to fight in Ukraine, but it isn’t London that is likely the first target of Russia’s missiles. Cracks in the alliance are emerging more quickly than anticipated, and Europe’s weak governments are in trouble.
It will be interesting to see how Vilnius plays out. It will certainly be a propagandistic show, but there is a good chance Vilnius will be a flop.
Stephen Bryen is a senior fellow at the Center for Security Policy and the Yorktown Institute. This article was originally published on his Substack, Weapons and Strategy. Asia Times is republishing it with permission.
Getty ImagesMillions of Asians tuned in on their television and mobile screens on what a Monday in March 2001 to watch Coco Lee sing A Love Before Time – the stirring theme from the acclaimed film Crouching Tiger, Hidden Dragon – at the 73rd Academy Awards.
Donning a red qipao, a traditional Chinese outfit, and golden chandelier earrings, Lee sang alongside a group of kungfu dancers, becoming the first Chinese-American to perform at the Oscars. The song was also nominated for best original song that year.
The then 26-year-old spoke of her ambition to leave an Asian footprint, literally, on the international stage. “I could sing for 30 years and never get the chance to perform like this,” Lee had said of the ground-breaking performance.
Lee died in Hong Kong on Wednesday at the age of 48. Her sisters, who broke the news on social media, said she had been suffering from depression for a few years and tried to take her own life on Sunday.
Long before representation became a talking point in entertainment, Lee became one of the first Asian singers to shoot to fame on both sides of the Pacific.
Born Ferren Lee on January 17, 1975, in Hong Kong, she moved to the US with her family when she was a secondary school student. After graduating from a public high school in California, she returned to Hong Kong, and then moved to Taiwan to launch her singing career. She soon broke into the Mandopop scene in 1994 with two albums.
Within a few years, she released English-language albums and crossed over to American charts. Disney hired her to voice the lead character in the Mandarin version of its hit film Mulan, for which she also sang the theme song, Reflection.
Her hit Before I Fall in Love made it to the soundtrack of the Julia Roberts-and-Richard Gere film Runaway Bride; and Do You Want My Love soared to the fourth spot on the US Billboard in 2000.
Lee will be remembered for “laying the groundwork, culturally and musically,” in bridging the gap between East Asian and Western audiences, entertainment blogger Brandon Lewis told the BBC. Some fans likened her to Mariah Carey.
She holds a special spot among Chinese millennials who grew up listening to her music in Mandarin and English. It was a time when Mandopop flourished as economies like China, Taiwan, Hong Kong and Singapore boomed. Amid a sea of demure female singers crooning ballads, Li Wen – as she is known in the Chinese-speaking world – stood out with her confident image, sexy dance moves and brightly-coloured locks.
One of her songs Di Da Di, a Chinese cover of a Danish pop song, became an instant hit and a karaoke staple after it appeared in an advertisement in mainland China.
Behind the fame and flamboyance, Lee remained close with her mother and sisters.
In the early years of her career, her sister Nancy served as Lee’s wardrobe consultant, public relations officer and makeup artist – including on Oscar night – while her mother was manager and accountant. It was in fact Nancy who suggested the moniker Coco.
As a child, Lee had wanted to follow in her mother’s footsteps to become a doctor. She initially tried to juggle singing with pre-medical studies in university, but eventually left school to focus on her pop career.
In an Instagram post on Wednesday, Lee’s sisters Carol and Nancy spoke poignantly of how their younger sister “worked tirelessly to open up a new world for Chinese singers in the international music scene”.
“She went all out to shine for the Chinese. We are proud of her,” they wrote.
Lee’s death came as a shock to fans and fellow artistes who remember her for her shiny smile and exuberance on stage. Inevitably, it sparked a discussion about mental health on social media.
Crouching Tiger, Hidden Dragon director Ang Lee said he was “very shocked” to hear the news, and star Jackie Chan said Lee had “such great talent and unique personal style” and was “born to be a star”. “There will be one more star in the sky from now on,” he added.
On YouTube, where fans are re-watching Lee’s music videos and leaving tributes, one comment read: “I hope Li Wen can continue singing up in heaven, far away from pain and illness. Your song will forever live in our hearts.”
Getty ImagesA controversial plan by Japan to release treated waste water from the Fukushima nuclear plant has sparked anxiety and anger at home and abroad.
Since the 2011 tsunami which severely damaged the plant, more than a million tonnes of treated waste water has accumulated there. Japan now wants to start discharging it into the Pacific Ocean.
The UN nuclear watchdog the International Atomic Energy Agency (IAEA), has published a report endorsing Japan’s plan.
But since it was announced two years ago, the plan has been deeply controversial in Japan with local communities expressing concerns about contamination.
Fishing and seafood industry groups in Japan and the wider region have also voiced concerns about their livelihoods, as they fear consumers will avoid buying seafood.
And Tokyo’s neighbours are not happy either. China has been the most vocal, accusing Japan of treating the ocean as its “private sewer”. On Tuesday it criticised the IAEA report, saying its conclusions were “one-sided”.
So what is Japan’s plan and how exactly has it churned the waters?
Since the disaster, power plant company Tepco has been pumping in water to cool down the Fukushima nuclear reactors’ fuel rods. This means every day the plant produces contaminated water, which is stored in massive tanks.
More than 1,000 tanks have been filled, and Japan says this is not a sustainable long-term solution. It wants to gradually release this water into the Pacific Ocean over the next 30 years, insisting it is safe to be discharged.
Releasing treated waste water into the ocean is a routine practice for nuclear plants – but given that this it the by-product of an accident, this is no ordinary nuclear waste.
Tepco filters the Fukushima water through its Advanced Liquid Processing System (ALPS), which reduces most radioactive substances to acceptable safety standards, apart from tritium and carbon-14.
Tritium and carbon-14 are, respectively, radioactive forms of hydrogen and carbon, and are difficult to separate from water. They are widely present in the natural environment, water and even in humans, as they are formed in the Earth’s atmosphere and can enter the water cycle.
Both emit very low levels of radiation but can pose a risk if consumed in large quantities.
The filtered water goes through another treatment, and is then diluted with seawater to reduce the remaining substances’ concentrations, before it is released into the ocean. Tepco says its system of valves will ensure no undiluted waste water is accidentally released.
Japan’s government says the final level of tritium – about 1,500 becquerels per litre – is much safer than the level required by regulators for nuclear waste discharge, or by the World Health Organization for drinking water. Tepco has said the carbon-14 level would also meet standards.
Tepco and the Japanese government have conducted studies to show the discharged water will present little risk to humans and marine life.
Many scientists have also backed the plan. “The water released will be a drop in the ocean, both in terms of volume and radioactivity. There is no evidence that these extremely low levels of radioisotopes have a detrimental health effect,” said molecular pathology expert Gerry Thomas, who worked with Japanese scientists on radiation research and advised the IAEA on Fukushima reports.
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UN-appointed human rights experts have opposed the plan, as have environmental activists. Greenpeace has released reports casting doubt on Tepco’s treatment process, alleging it does not go far enough in removing radioactive substances.
Critics say Japan should, for the time being, keep the treated water in the tanks. They argue this buys time to develop new processing technologies, and allow any remaining radioactivity to naturally reduce.
There are also some scientists who are uncomfortable with the plan. They say it requires more studies on how it would affect the ocean bed and marine life.
“We’ve seen an inadequate radiological, ecological impact assessment that makes us very concerned that Japan would not only be unable to detect what’s getting into the water, sediment and organisms, but if it does, there is no recourse to remove it… there’s no way to get the genie back in the bottle,” marine biologist Robert Richmond, a professor with the University of Hawaii, told the BBC’s Newsday programme.
Tatsujiro Suzuki, a nuclear engineering professor from Nagasaki University’s Research Center for Nuclear Weapons Abolition, told the BBC the plan would “not necessarily lead to serious pollution or readily harm the public – if everything goes well”.
But given that Tepco failed to prevent the 2011 disaster, he remains concerned about a potential accidental release of contaminated water, he said.
China has demanded that Japan reaches an agreement with regional countries and international institutions before it releases the water.
Beijing has also accused Tokyo of violating “international moral and legal obligations”, and warned that if it proceeded with the plan, “it must bear all consequences”.
The two countries currently have a prickly relationship, with Japan’s recent military build-up and China’s provocative moves around Taiwan raising tensions.
Tokyo has engaged in talks with its neighbours, and hosted a South Korean team of experts on a tour of the Fukushima plant in May. But it is not certain how far it would commit to getting neighbouring countries’ approval before it goes ahead with the plan.
In contrast to China, Seoul – which has been keen to build ties with Japan – has soft-pedalled its concerns and on Tuesday it said it “respects” the IAEA’s findings.
But this approach has angered the South Korean public, 80% of whom are worried about the water release according to a recent poll.
“The government enforces a strong no-littering policy at sea… But now the government is not saying a word (to Japan) about the wastewater flowing into the ocean,” Park Hee-jun, a South Korean fisherman told BBC Korean.
“Some of the officials say we should remain quiet if we don’t want to make consumers even more anxious. I think that’s nonsense.”
Thousands have attended protests in Seoul calling for government action, as some shoppers fearing food supply disruptions have stockpiled salt and other necessities.
In response, South Korea’s parliament passed a resolution last week opposing the water release plan – though it is unclear what impact this would have on Japan’s decision. Officials are also launching “intense inspections” of seafood, and are sticking to an existing ban of Japanese seafood imports from regions around the Fukushima plant.
To assuage the public’s fears, prime minister Han Duck-soo said he would be willing to drink the Fukushima water to show it is safe, while one official said last week that only a small fraction of the discharge would end up in Korean waters.
Elsewhere in the region, several island nations have also expressed concerns with the Pacific Islands Forum regional group calling the plan another “major nuclear contamination disaster”.
Japanese authorities and Tepco have sought to convince critics by explaining the science behind the treatment process, and they would continue to do so with “a high level of transparency”, promised prime minister Fumio Kishida on Tuesday.
In materials published on its foreign affairs ministry website, Japan also pointed out that other nuclear plants in the region – particularly those in China – discharge water with much higher levels of tritium. The BBC was able to verify some of these figures with publicly available data from Chinese nuclear plants.
But the biggest vindication may lie with the IAEA report, released by the agency’s chief Rafael Grossi while visiting Japan.
The report, which came after a two year investigation, looked into whether Tepco and Japanese authorities were meeting international safety standards on several aspects including facilities, inspections and enforcement, environmental monitoring, and radioactivity assessments.
On Tuesday, Mr Grossi said the plan would have a “negligible radiological impact on people and the environment”.
With the world’s nuclear watchdog giving its stamp of approval, Japan could start discharging the Fukushima water as early as August, according to some reports – setting the stage for an intensified showdown with its critics.
Additional reporting by Yuna Kim and Chika Nakayama.
If “personnel is policy,” as the old adage goes, then two big staffing moves over the weekend suggest China’s financial reform process is accelerating in critical ways.
Chinese leader Xi Jinping signaled as much by elevating protege Pan Gongsheng to Communist Party chief of the People’s Bank of China (PBOC) – and likely to the PBOC governorship in short order.
Xi also reportedly named Ding Xuedong, a senior State Council official, as party chief of the National Council for Social Security Fund (NCSSF).
Pan’s promotion was a particular surprise. Last year, he was stripped of his membership in the party’s Central Committee, a status that was held by his PBOC predecessor Guo Shuqing.
Yet, given Pan’s experience and policy preferences, his ascent also suggests Beijing plans to avoid the yuan depreciation markets now fear. And that Xi and Premier Li Qiang are stepping up efforts to repair China’s shaky property markets.
Pan, who’s done stints at Harvard and Cambridge, has led since 2016 the State Administration of Foreign Exchange, managing China’s US$3 trillion-plus in foreign reserves. As such, Pan is thought to favor stabilizing a yuan that’s down more than 5% this year.
Pan, 59, skews technocratic in ways likely to accelerate steps to repair China’s reeling property sector and boost consumer spending. He’s also believed to favor less adversarial relations with the US, significantly on the eve of Janet Yellen’s first China visit as US Treasury Department secretary.
“China’s weak economic recovery and worsening geopolitical tensions likely prompted Pan’s hasty elevation,” says analyst Anna Ashton at Eurasia Group. “He is a proponent of regulatory reform and oversight and boasts strong international knowledge and connections relative to other Chinese central bankers.”
Over the years, Pan understood more than most in party circles that China’s real estate boom might be followed by a dramatic reckoning. Back in 2014, he warned that “if citizens store their wealth by buying houses, it may cause the real estate bubble to burst or even [cause] an economic crisis.”
Yet Pan’s charge to increase consumer confidence could get an important assist from Ding’s arrival at the social security fund. Ding’s promotion seems a sign that Xi and new Premier Li are getting serious about building a deeper and broader social safety net, a prerequisite to a more vibrant, consumer-driven China.
Ding, 63, has served as executive deputy secretary-general in China’s cabinet since 2018. His resume includes stints at the Ministry of Finance, the Financial Stability and Development Committee and state-owned China Investment Corp.
NCSSF was established in 2000 mainly to act as a reserve to cover shortfalls in pension funds. It stands separate from local government-managed social insurance funds, pensions and health care and unemployment funds.
Tapping Ding suggests the fund’s missions may be getting supersized and turbocharged at the same time. It’s long been known that such a shakeup is needed to encourage 1.4 billion mainlanders to save less and spend more.
“The economic recovery provides opportunities for further reducing financial risks, strengthening the social safety net and implementing market reforms to encourage private investment while putting the economy on a more efficient decarbonization path,” says World Bank economist Mara Warwick.
She adds that “implementation of key structural reforms remains crucial to solidify the recovery and achieve China’s longer-term goals of environmentally sustainable, resilient and inclusive growth.”
The social safety net piece of the puzzle is vital to prod mainland households to increase consumption to facilitate a shift from an export-driven growth model to one powered by domestic demand, Warwick notes.
Elitza Mileva, also a World Bank economist focused on China, notes that “as in the past, robust economic growth that creates jobs and boosts household incomes will remain important for shared prosperity.”
Equally important, though, Mileva adds, is that “policy, both revenue and spending measures, can be effective in promoting more equitable income distribution among China’s population.”
Economist Sophie Wieviorka at Crédit Agricole notes that the “problem is that China doesn’t currently wield the right drivers for public policy in these areas.”
“As of now, intervention is focused on purely Keynesian measures – including vouchers to pay with at local stores – for short-term use instead of developing a real social safety net, which could be implemented by the central government since it still has some room for maneuver with regard to debt,” she adds.
Chinese authorities, Wieviorka says, “are caught in the middle” in part because of the “problem with over-indebtedness, which also partly explains the limited response of authorities regarding the budget.”
Wieviorka adds that “aware of its limited resources, China is painstakingly shedding its growth model, which is extensive – and based on an accumulation of labor and capital, and intensive – based on the optimization of existing resources. It’s a necessary move, but not always a winning strategy, as the middle-income trap is never far behind.”
So, building a better network of social safety nets has never been more important, as Ding’s arrival seems to suggest.
It’s more complicated than that, of course. As economist Brad Setser at the Council on Foreign Relations think tank observes, “China’s high domestic savings rate allows it to sustain higher debt levels than most emerging economies. No need for imported capital, and the state system can avoid internal confidence crises most of the time.”
Yet Japan reminds Asian peers about the evils of excessive savings. Zhu Min, a former deputy managing director of the International Monetary Fund (IMF), notes that China needs to fix the confidence gap to prod households to spend more. That, Zhu says, means better social safety nets by improving pensions and health care.
“I understand there is a lot of fear,” Zhu said. “We need really to take the fear away, rebuild the confidence. This is the most important thing.”
Current IMF economist Thomas Helbling notes that “expanding social safety nets, for example, by further increasing the adequacy and coverage of social assistance benefits and introducing a dedicated unemployment benefit system, would help enhance the automatic stabilizer role of fiscal policy.
“A comprehensive tax reform over the medium term to broaden the tax base is imperative to provide a stable source of revenue to meet long-term spending needs while ensuring fiscal sustainability.”
In general, Helbling says, the “prioritization of spending on households over investment would also deliver larger stabilization benefits. For example, means-tested transfers to households would boost aggregate demand 50% more than an equivalent amount of public investment. To ensure consistency across policies, fiscal policy should be undertaken within a medium-term fiscal framework.”
Helbling argues for “an ambitious but feasible set of reforms can improve these prospects, importantly in a way that is inclusive by raising the role of household consumption in demand.
“Reforms such as gradually lifting the retirement age to increase labor supply, strengthening unemployment and health insurance benefits, and reforming state-owned enterprises to close their productivity gap with private firms would significantly boost growth in coming years.”
As these vital reforms begin in earnest, Pan now has an opportunity to tap into what he recently termed China’s “rich experience” in responding to economic shocks using “plentiful macro-prudential tools.”
Initially, markets will be expecting Pan’s promotion to signal a “clearing of the way” for fresh stimulus moves, notes economist Hao Hong at GROW Investment Group.
Yet markets are also unclear about the big-picture meaning of Pan’s appointment. One source of confusion: does his relatively modest Communist Party ranking mean the PBOC is being downgraded in terms of its role in overall policymaking?
Already, the PBOC reports to Premier Li and the State Council, requiring their approval on managing the yuan or setting interest rates. Yet, on the other hand, indications are that Pan is on track to be both party chief and governor of the central bank. This, Eurasia’s Ashton notes, “will mark a return to the ‘single-head’ leadership structure that was the norm at the PBOC prior to 2018.”
From 2018 to 2023, she notes, current Governor Yi Gang and outgoing PBOC party chief Guo ran things as dual heads: Yi as governor and deputy party chief and Guo as party chief and deputy governor.
“Re-merging the roles of party secretary and governor,” Ashton says, “concentrates decision-making power and would ensure Pan greater authority within the central bank system.”
Either way, Pan seems a solid choice. PBOC leadership could do worse than being led by a Western-trained and battle-tested economist – one with in-the-trenches experience working at some of China’s ‘Big Four’ state-owned commercial banks. This includes experience at the Agricultural Bank of China.
And it includes an important changing of the guard at China’s social security apparatus that dovetails with new leadership at PBOC central. And by all past and present indications, both staffing moves bode well for China’s financial and economic reform prospects.
Follow William Pesek on Twitter at @WilliamPesek
As is frequently the case in diplomacy, the communique that the G7 leaders released in May following their meeting in Hiroshima omitted a crucial question: What is the distinction between” de – risking ,” which it expressed approval of, and” decoupling ,” which it disapproved?
These words weren’t defined in the G7 speech. It didn’t even mention that China is the main target of both decoupling and de-risking. For you, that is politics.
The United States, the United Kingdom, Canada, Japan, Germany, France, and Italy’s officials merely stated that they were coordinating their strategies for economic resilience and economic protection” based on diversifying partnerships and de-risking, no decoupling.”
The ambiguity was deliberate, as is frequently the case in geopolitics. Distinctions between the US and some of its allies were quickly covered up. Economic resilience and” economic security” are diplo-speak terms for preventing an excessive reliance on China( and, to some extent, Russia ) for essential goods and avoiding providing those nations with strategically important technologies.
Dispersion, the term that was popular up until recently, appears to mean taking a deeper break from China than de-risking, according to the president of the European Commission. De-risking suggests diversifying, putting an end to the sole reliance on China, more than withdrawing.
But in reality, expansion has also played a significant role in the decoupling to date. The distinction between coupling and de-risking for statement purposes is semantics. Because of this, despite the fact that there are significant differences between the US and its supporters in regards to their reliance on China, they were able to agree to the statement.
These variations are a reflection of their various political circumstances, particularly with regard to Taiwan. The likelihood of a Chinese military assault on the island is growing, to the point where US officials must make preparations despite their best efforts to prevent it.
Friends of Washington don’t. Japan might, at least economically, support the US in the event of an attack. It is imprisoned by its geography and history. A China strike on Taiwan would be much less likely to be perceived as a difficulty by Western allies. They might be persuaded to join a coalition of the willing, but that is not inevitably going to happen.
Therefore, the US is more concerned about giving China military-strengthening technology. It is more concerned about China cutting off vital supplies during warfare.
Federal protection is more important to governments when they are making war plans than economic efficiency. Those who, like many exporting industries like farming, think that financial markets allocate money more effectively than governments and that free trade results in the best financial outcomes may find this difficult to swallow.
However, it explains why some Republican supporters of free markets supported industrial policy efforts put forth by the Biden administration. And why, in spite of warnings from US high-tech firms that restrictions may include long-term financial repercussions, Republicans are firmly behind the Biden administration’s stepped-up efforts to block export of the most advanced semiconductor technology to China.
Although they have some of the same worries about China as the US, Western nations are not nearly as concerned about national security. Emmanuel Macron, the president of France, has cautioned Europe not to become” caught up in problems that are not ours” in reference to Taiwan.
Europeans are unhappy with the high-tech grants and buy-American regulations of the Biden administration because they believe they are deterring purchase from them just as much as from China.
Some Europeans are also wary of US work to obstruct China’s exports of high-tech goods. However, the French government gradually joined the US in limiting French companies’ exports of the most cutting-edge semiconductor manufacturing machinery to China.
In conclusion, Europe prefers” de-risking” because it opposes the US’s desire for financial isolation from China. Because it is properly ambiguous to allow allies to march to various drummers, the Biden administration accepted” de – risking.”
In actuality, but is dissipating. US-China trade in goods set a document in 2022, as did US exports to China, despite all the talk of it over the past few years, the president’s industrial policy changes, export restrictions, and company disclosures of plans to move production up to the US or to Eastern countries other than China.
At$ 36.4 billion, US farming exports to China even broke a record for the fiscal year 2022.
Despite being competitors, National companies’ supply stores are firmly established in China. China is the US’s and approximately 120 other nations’ largest trading partner, including American allies like Japan, South Korea, and Germany.
In some product categories, such as drones and thermal panels, China holds a disproportionately large market share worldwide. It is also an essential provider of countless thousands of other products. China may undoubtedly stop exporting goods to the US in a battle, so it makes sense to reduce reliance on China.
Regardless of which political euphemism is used to identify it, it is unclear how much today’s supply chains can or will be untangled outside of war.
Urban Lehner, a longtime editor and correspondent for the Wall Street Journal Asia, is now the editor-emeritus of DTN / The Progressive Farmer. & nbsp,
Copyright 2023 DTN / The Progressive Farmer is the title of this article, which was first released on July 3 by the latter news organization and is now being republished with authority by Asia Times. All right are reserved. Urban Lehner follows @ urbanize on Twitter.
BEIJING: In an apparent jab at the United States, China, Japan, and South Korea need to send a clear signal of regrouping towards cooperation and resist” the coercion of bullying and domination ,” according to top Chinese diplomat Wang Yi on Monday( Jul 3 ). The comments are made atContinue Reading