THE STRANGE CASE OF THE MISSING TERRORIST SCIENTISTS IN THE NEWS

In April of this year the RCMP announced that they had uncovered a bio-terrorist threat involving two Canadian scientists working for the innocuous sounding: Canadian Food Inspection Agency (CFIA). The agency itself had been in the news lately due to regulatory failures leading to a number of food poisoning cases from bacterial outbreaks in a packing plant in Alberta.

The two CFIA scientists were busted for attempting to sell Brucellis virus to China. In fact one of the scientists, herself Chinese, had gotten away to China.1 They were under investigation for two years when it became known that they were trying to commercialize the bacteria they had developed with CFIA. 3

Last October 24, RCMP and Ottawa police intercepted Nielsen, a well-respected scientist, on his way to the Ottawa airport. Officers found 17 vials of pathogens in Nielsen’s possession that “he was attempting to export in an unsafe manner.“These vials were analyzed by the PHAC and found to contain live brucella bacteria that can infect livestock and humans.”
University of Guelph Prof. Keith Warriner said humans who come in contact with the bacteria can develop flu-like symptoms “that go on and on for months and months.” Warriner told CTV’s Power Play Wednesday that brucella is what is known as a select agent, because it is “very nasty” and highly contagious.

This bacteria is common in domesticated animals, mammals in general and can impact human health. it was also the first bacteria to become weaponized in 1954 by the US army.2

"Three types of the bacteria that cause brucellosis – Brucella abortus, Brucella melitensis andBrucella suis – are designated as select agents. This means that they have the potential to be developed as bioterrorism agents due to their ability to undergo aerosolization."     Center for Disease Control 

So we have a case where a world renowned specialist in the field of burcellosis, Dr. Nielsen  is busted for trying to smuggle weaponized potential bacteria out of Canada with his research partner in order to sell it to China.

Nielsen had been a seasoned researcher of the bacteria and was part of a team scientists that won a CFIA Technology Transfer Award in 2003 for developing a 15-second test for detecting brucellosis in cattle, the disease caused by brucella.
He is set to appear in a Canadian court on April 17, while Yu, a resident of Ottawa, is believed to be in hiding in China. Local police declined to confirm if extradition would be an option if Yu is apprehended overseas.

Now you would think this would be front page news; "Bio Terrorists Busted In Canada.", but it wasn't. In fact after barely a week in the press, as various news agencies picked up the story and repeated it in the inside pages, the story disappeared from the press. 

It is now three months later and there is no mention of these two lab coated terrorists in the Canadian press. Yet the press and the government have made a big deal over home grown terrorists, including the two complete losers who were set up for the alleged Canada Day bombing,  including this recent timeline by CBC which fails to include Nielsen and Yu.

In fact the RCMP charges themselves underplayed the importance of this as bio-terrorism, instead charging them with crimes around intellectual property. Nielsen was carrying 17 highly toxic vials of bacteria on himself, he was going to get on a plane, he was busted in a busy national airport. Had those vials broken or otherwise released their contents who knows what kind of serious bacteriological outbreak could have occurred. 

Backed up by its clandestine laboratory response team, the Ottawa Fire Services hazmat response team, and Ottawa Police Service first responders, RCMP "intercepted" Nielsen on Oct. 24. According to Rollings, Nielsen at the time was on his way to Ottawa's airport and was scheduled to leave Canada for China.
Upon arresting and searching Nielsen, RCMP said, they found in his possession 17 vials of pathogens which they allege he was "attempting to export in an unsafe manner." PHAC later analyzed the vials and found them to contain live brucellabacteria. Nielsen was then arrested for breach of trust and for "unsafe transportation of a human pathogen."

The other problem with this story has been the delay in releasing information, Dr. Nielsen was busted last October, yet the RCMP did not release any information about this until shortly before he was to go to trial April 17. Meanwhile his fellow accessory and partner had apparently gotten away to China. The investigation itself had been going on for two years. 

Now compare that with the instantaneous news about the Canada Day bombing plan, a bombing that never occurred, ( if it ever was even a real threat, it has all the makings of a  false flag operation) yet the B.C. couple busted for this were in the news for weeks, and still are in the news. Not so our two CFIA scientists.

Is it because of the lab coats? If you are a scientist does that make you special? Clearly in this case it does. First there is the fact that the charges do NOT explicitly deal with bio-terrorism,  or terrorism at all, they have to do with commercial property and breach of safety. 

Yet clearly this was a bacteria that could be weaponized. It was being sold to a foreign country in violation of the criminal code section on Treason.4  That's right the actions taken by Dr. Nielsen and his partner, could be construed as treason, let alone more serious charges around bio-terrorism, than what they have been charged with.

Is it because this had to do with China rather than AL-Qaeda? And while Chinese corporate or state espionage may be involved, that seems to have been deemed less of threat to Canada than supposed Al-Qaeda sympathizers, actually no proof of this allegation ever surfaced after it was made by the RCMP,  who lived in a hovel in B.C. and planed to supposedly make pressure cooker bombs, 

Is it because the media can't make an issue of two scientists being home grown 'Muslim' terrorists, because they aren't.

While the media went into great detail about the lives of the B.C, couple, no such story ran about Dr. Nielsen and his female Chinese assistant. Were they more than just lab partners?

Why would he risk his entire career? Was it  for love? How did she get away, was she a plant, did she seduce him as is common in spying. No research, no details were ever released. Go ahead Google it, nothing, zip, nada, all you can find about her is the story in press about the bust.

University of Montreal professor Christian Baron says he and his colleagues are wondering why Nielsen would take the risk of transporting such a readily available bacteria on a plane.
“Brucella is actually a bigger problem in Chinese agriculture than here [in Canada],” said Baron, who is the director of the university’s biochemistry department.
“I really don’t see what the reason would have been.”
The Chinese could easily have found their own bacteria in cattle that are widely infected with the disease in their own country, he sai

Now this is more than just lazy journalism, this is a media blackout it is also being downplayed by the RCMP and the Government.  Why? Because of Harper's new friendly relationship with China? Because this is another embarrassment surrounding the  CFIA?

Perhaps. But I believe it's because it's about commercialization of public research, the privatization and  selling of public research as intellectual property, something that the neo-liberals have been promoting and continue to promote for universities and other science and research facilities. it is that dark murky world of scientific research paid for by you and me but profiting others, the scientists and their pharmaceutical company allies and sponsors.

This story cries out for in depth coverage, it has all the elements of an espionage thriller, the potential to expose foreign spying in Canada and corporate espionage ala the Constant Gardner, and yet it has effectively disappeared from the news.

FOOTNOTES

1. RCMP intercepts dangerous pathogens from being exported out of the Country

OTTAWA – April 3, 2013 – The Royal Canadian Mounted Police (RCMP) has charged Dr. Klaus Nielsen and Ms. Wei Ling Yu, both former researchers with the Canadian Food Inspection Agency (CFIA), with Breach of Trust by a Public Officer. These charges stem from a criminal investigation called Project SENTIMENTAL, which was completed with the assistance of the Public Health Agency of Canada (PHAC) and the Department of Foreign Affairs and International Trade.

The matter was originally reported to the RCMP by the CFIA in March 2011. The investigation focused on Dr. Nielsen and Ms. Yu’s unlawful efforts to commercialize intellectual property belonging to the CFIA and a private commercial partner. 

On October 24, 2012, the RCMP with the assistance of the Ottawa Police Service (OPS) first responders intercepted Dr. Nielsen as he was heading to the Ottawa airport.  The RCMP’s Clandestine Laboratory Response Team, accompanied by the Ottawa Fire Services Hazardous Materials Response Team, arrested and searched Dr. Nielsen.  In his possession, Dr. Nielsen had 17 vials of pathogens he was attempting to export in an unsafe manner.  These vials were analyzed by the PHAC and found to contain live brucella bacteria that can infect livestock and humans.   Dr. Nielsen was arrested for Breach of Trust by a Public Officer and the unsafe transportation of a human pathogen. 

This complex investigation drew on resources from a variety of federal departments, law enforcement agencies and first responders. The RCMP, in collaboration with their partners, were able to quickly and efficiently mobilize and respond to this threat which helped minimize the public’s risk of exposure to these contagious substances.

Dr. Nielsen faces one charge under the Criminal Code and several under the Export and Import Permits Act, the Transportation of Dangerous Goods Act and the Human Pathogens and Toxins Act. His next court appearance is scheduled on April 17, 2013 in Ottawa.

A Canada wide warrant has been issued for Ms. Yu.

-30-

2 Biological warfare[edit]

In 1954, B. suis became the first agent weaponized by the United States at its Pine Bluff Arsenal near Pine Bluff, Arkansas. Brucella species survive well in aerosols and resist drying. Brucella and all other remaining biological weapons in the U.S. arsenal were destroyed in 1971–72 when the Americam offensive biological warfare (BW) program was discontinued by order of President Richard Nixon.^[6]

The experimental American bacteriological warware program focused on three agents of the Brucella group:

• Porcine Brucellosis (Agent US)
• Bovine Brucellosis (Agent AB)
• Caprine Brucellosis (Agent AM)

"Agent US" was in advanced development by the end of World War II. When the U.S. Army Air Forces (USAAF) wanted a biological warfare capability, the Chemical Corps offered "Agent US" in the M114 bomblet, based on the four-pound bursting bomblet that was developed for spreading anthrax during World War II. Though the capability was developed, operational testing indicated that the weapon was less than desirable, and the USAAF designed it as an interim capability until it could replaced by a more effective biological weapon.

The main drawbacks of the M114 with "Agent US" was that it was an incapacitating agent, whereas the administration of the USAAF wanted deadly weapons. Also the stability under storange was too low to allow for storing at forward air bases, and the logistical requirements to neutralize a target were far higher than originally planned. This would have required an unreasonable amount of logistical support.

Agents US and AB had a median infective dose of 500 organisms/person, and for Agent AM it was 300 organisms/person. The time-of-incubation was believed to be about two weeks, with a duration of infection of several months. The lethality estimate was based on epidemiological information at one to two percent. Agent AM was believed to be a more virulent disease, and a fatality rate of three percent was expected.

3 SEROLOGICAL DIAGNOSIS OF BRUCELLOSIS 

Nielsen K., Yu WL. 

Ottawa Laboratories (Fallowfield), Canadian Food Inspection Agency, 

Nepean, Ontario, Canada 

Review of Detection of Brucella sp. by Polymerase Chain Reaction

Wei Ling Yu and Klaus Nielsen

4. Treason - The Canadian Encyclopedia

 discloses, without lawful authority, military or scientific material to agents of a foreign state, if he or she knows or should know that the material may be used to impair Canada's safety or defence, 

Hewers of Wood, Drawersof Oil

This headline once again reveals the untainted truth; China is a capitalist nation and as a world power of capital is Imperialist.

PetroChina, Encana and the eventual export of B.C. natural gas

Regardless of the ideology proclaimed by the state, the fact is that China is a capitalist economy; even if it is a state capitalist one.

As Herr Dr.Marx points out it's about the relationships we have to the means of production, who controls it and who doesn't. In other words once you have industrial production and capital in perpetual production by a working class, capitalist society exists, regardless of its political superstructure. The transformation of peasants into an urban proletariat is the key function of capitalist means of production. And China fits that description as much as England did in the late 18th Century or America in the late 19th Century.

The irony in the relationship between Canada and China is that they are both state capitalist economies. One is more bourgeois democratic, the other is based on an authoritarian command economy. However the state, is crucial in both political economies in determining national interests.

In the case of Canada we are once again being the hewers of wood and drawers of water, a resource based export economy to developing industrial economies. Today we are hewers of wood and drawers of oil.

Is China Western Canada's new best friend?

``Between 2000 and 2010, Canadian exports to China have increased by 3,300 per cent. In fact, Canada surpassed Russia this year as the biggest exporter of softwood lumber to China.''

BC wood-culture push brings Chinese success

This is reminiscent of the original colonial model of Canada vis a vis France and Britain, and then our relationship with America. Now we deal with a modernizing industrial China, as their new resource base as we sell off our manufacturing to other global capitalists.

French Canada was initially a colony of resource extraction, not a colony of settlement. During brief periods when settlement became paramount, Canada was a theocratic society, reminiscent of modern Iran. And when settlement and development was finally pushed determinedly, Canada became a laboratory in
which Jean Baptiste Colbert, the father of French mercantilist economics, tested his theories with development schemes similar to Third World misadventures in the 1960s.

The irony is that the current Federal government in Canada is politically opposed to China, yet they espouse the virtues of free trade, going so far as to call themselves libertarians on this matter. But the fact is that the Harpocrites right wing ideology belies the political economic reality which is Canada, it has always been a state capitalist nation.

However the nature of Canadian political economy belies any true tradition of free trade. It evolved from mercantilism to state capitalism, without the problematic tendencies of free trade.

The first share capital corporations were the North West Company of Fur Traders, and the Hudson Bay Company, fur trading companies that still were mercantile, not really free enterprise. They relied on being monopolies. In fact all of the early capitalist development in Canada was monopoly mercantilism run by a few families. Whether it was fur trading or canal building.

Henry Hudson’s 1610 claim for Britain to the lands around Hudson’s Bay lay unexploited until 1670, when Charles II granted his cousin, Prince Rupert, a fur trade monopoly and rechristened the region Rupertsland. Rupert organized The Company of Adventurers of England trading into Hudsons Bay (a.k.a.
The Hudson’s Bay Company, or ‘the Bay’), a joint stock company, to raise funds.10 The forts, trading posts, and ships required - as well as the risks inherent in the fur trade - were beyond the resources of even the wealthiest individual families. Thus, the Hudson’s Bay Company, like the British East India Company and the Dutch East Indies Company, was among the first joint stock companies formed.

In 1779, British and Loyalist merchants in Montréal established the
Northwest Company to compete with the Hudson’s Bay Company for the fur trade, contesting the legitimacy of the latter’s monopoly. The original founders of the Northwest Company included Simon McTavish, Todd and McGill, Charles Grant, Benjamin and Joseph Frobisher, the firm of McGill and Patterson and five other merchants and firms.15 The resulting wealth gave the same names prominence in
banking, shipping, and railroad promotion decades later. Since the Hudson’s Bay Company had its own militia, the Northwest Company needed one too.
Their battle for market share is best described in military terms.

During this period, the most entrepreneurial regions of British North America were the Maritime Colonies – Nova Scotia and New Brunswick. Abraham Cunard, a master carpenter, arrived in Halifax in 1783 and rapidly established stores, mills, lumbering, sawmills, shipbuilding, an accounting firm, and other businesses. Despite strong competition from other “timber barons” like Gilmour, Rankin, & Co.,
Philemon Wright & Sons, William Price, and John Egan, A. Cunard & Son prospered. Many timber barons, including Christopher Scott, John and Charles Wood, and the Cunards, expanded into shipbuilding and shipping. Bliss (1986, p. 135) remarks that all of these fortunes were technically founded on theft, for the timber was almost all harvested from Crown land. The Cunard Line prospered,
especially after it obtained a monopoly on delivering the Royal Mail between Britain and the Americas.

The biggest enterprises in Upper Canada in the early 19th century were canals. The government built the Rideau Canal from the Ottawa River to Lake Ontario. William Hamilton Merritt organized the Welland Canal, linking Lake Erie and Lake Ontario, as a joint stock company controlled by the Family Compact. After providing generous state subsidies and loans, the Upper Canada government finally
bought out the owners of the failing venture in 1841. The newspaperman William Lyon Mackenzie charged that the whole project was a scam to enrich the Family Compact. Upper Canada’s public finances never recovered.

The creation of both the CPR and CN rail companies was facilitated by the Canadian State, including early on in the last century when immigration was promoted to help develop Rail lands.

Economic expansion paralleled an immigration boom. Under Laurier, Canada’s population rose 44%. Western Canada was rapidly populated along the proliferating transcontinental CPR system. All sectors of the economy grew rapidly and simultaneously to accommodate this infrastructure investment,
and the millions of new consumers flooding in. The situation thus closely resembles what Murphy et al. (1989) call a big push – rapid development sustained by the simultaneous expansion of many interdependent sectors, so demand for intermediate and final goods grows apace with their supply.
The railway, and the immigrant settler farms springing up around it created an economic low pressure zone. Every sort of new business was needed to supply the railroad, the settlers, and all the othernew businesses opening to serve them.

Canada's corporate structure was always mercantile state capitalism. In fact the origin of the Canadian State coincides with the development of the Railways.

The colony’s political leaders felt hamstrung by their inability to subsidize such new ventures. Francis Hincks, an entrepreneur and Member of Parliament, partially solved this problem with a new Municipalities Act, which let towns float debt. A more complete solution appeared in 1849, when Canada began guaranteeing railroad debt, but only if prominent politicians, such as Hincks and Galt, were
on the board to “guarantee good management.” After a brief financial crisis in 1849, a boom and bust in railroad stocks ensued, and railroad construction resumed on a grand scale. Although railroads built honest fortunes, like that of the engineer Casimir Gzoski, corruption was endemic. Sir Allan Napier
MacNab, president of the Great Western Railway, served Canada as chair of the Parliamentary Standing Committee of Railways and Telegraphs. The grandest project, the Grand Truck Railroad, run by Prime Minister Hincks, was ineptly built and almost unusable. A British lobbyist hired by Hincks to lobby
members of parliament wrote:I do not think there is much to be said for Canadians over Turks when contracts, places, free tickets on railways, or even cash was in question.
A Barings investigation exposed rampant fraud, kickbacks, and deceit; and Barings blocked further Canadian listings in London to obtain a veto over additional debt financing and guarantees in 1851. This merely tested the ingenuity of the colonial political elite in circumventing such checks. Railway subsidies became a top government priority. According to Naylor (1975), railroad construction and
financing in colonial Canada were “appalling even by the standards of the day.” Virtually every important politician now moonlighted as a railway officer or director, and railway subsidies both enriched political insiders and drained government coffers. Current, past, and future Prime Ministers Francis
Hincks, Alexander T. Galt, and John A. MacDonald, respectively, and most of their cabinet ministers all had railway financial ties. In 1858, Alexander Galt, now Finance Minister, subordinated Canada’s sovereign debt to railroad common stock and raised the tariff to obtain funds for larger railway subsidies. By the 1860s, Canada had both a shoddily built, poorly run railroad system and a near bankrupt
government.
Now, only union with the solvent Maritime colonies of Nova Scotia and New Brunswick promised fiscal rescue. When the United States abrogated the Reciprocity Treaty in 1866, Galt lowered the tariff slightly on manufactured goods to match those of the Nova Scotia and New Brunswick colonies,
in preparation for their union with Canada. In 1867, British investors blocked New Brunswick and Nova Scotia financing in London to force such a union. The resulting confederation was the Dominion of Canada, a self-governing entity within the British Empire. Canadian independence is usually dated to 1867, though Responsible Government came earlier and Canada remained within the Empire long after. Since the Canadian parliament assumed almost all of the powers of the parliament in London in 1867, this date is probably more appropriate than any other.

When it comes to politics those who complain that China is a one party state overlook the fact that Alberta is a One Party State as well. The longest running one party state in North America! And of course Alberta as a resource based economy, is looking to China to sell to.

Alta.'s economic future lies in Far East

Asia’s state-owned companies have taken significant positions in Alberta’s resources over the past year-and-a-half. Encana, the second-largest natural gas company in North America, announced a $5.4-billion joint venture deal with PetroChina Co. Ltd. last Wednesday, adding to its Canadian projects. Sinopec Corp., Korea National Oil Corp., and Thailand’s PTT Exploration and Production Public Co. Ltd. all made recent investments in Alberta. China Investment Corp. also struck a deal last year.

Like Albertans the Chinese people believe they have a peoples government. Like those on the right who mythologize Alberta's history as a perpetual enclave of right wing individualism, those in China believe that their way of life is good and it is thanks to the government. Even if like in Alberta, it is a minority that elects the government.

ZACHARY KARABELL: Right now, the Chinese government is a good government in that it's providing more affluence to more people in a way that, from anything you can glean, many people in that particular society find minimally acceptable. But I don't know if we would say that's good governance.


IAN BREMMER:You don't get to vote in China. Yet many of them seem reasonably happy with the government they have had for the last 30, 40-plus years. We're going to have to address that.

One interesting point that I want to throw out. I was with Tony Blair a few months ago. He was talking about the fact that we needed to step up and really show our leadership in the G20 and all the rest. My response was, as I raised at the beginning of this question, "The Chinese are much happier with their government today than a lot of us sitting around the table are with our own. How do you address that? How do you respond to that?"

Tony Blair said, "When you look around the world, you see that people want democracy. It's a very tough question, but ultimately, the Chinese will come around; when they get richer, they're going to understand that we have the right system."

Yep just like Alberta, we might eventually have a real democracy here to.


Without an industrial policy in Canada, we will continue to be hewers of wood, and drawers of water and oil. And despite the hang wringing from the right wing about human rights in China, capitalism has no such qualms about making deals, after all the only thing that matters is the bottom line. Without developing secondary and tertiary industries and new industries, we will remain a resource economy with all the flaws that brings.

SEE:

His Masters Voice

Stiglitz On Market Fundamentalism

The New Imperial Age

China Fuels US Inflation

China Burps Greenspan Farts Dow Hiccups

Neo-Liberal State Capitalism In Asia
China: The Triumph of State Capitalism
US vs China for Global Hegemony
China No Longer Red Nor In The Red

China Needs Free Unions

Japanese State Capitalism

China's Trickle Down Economy

New Asian Dragon

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Your New IPad

Today Canada and the rest of the world gets to buy Apples IPad...

iPad launches in Canada, around the world

‎Just remember who made it and why it is so cheap.

Globalization of labour demands a global labour movement.....for those who say unions are out dated......China is a developing capitalist country in case anyone still thinks it is communist......

Suicides at Apple maker spotlight China's migrant workers

They work up to 12 hours a day, six days a week, assembling products that most cannot afford to buy themselves: Apple iPhones, Dell computers and Nokia mobiles.

Experts said deep-rooted problems lie behind the deaths of so many young workers.

Guo Yuhua, a sociology professor at Beijing-based Tsinghua University, said Foxconn represents the status quo of China's profit-driven manufacturing industry, in which companies are trying to offer low salaries to workers to control production costs.

Workers are usually kept in closed industrial parks with no access to social activities and no way to develop social relations, she said.

"This problem is not limited to Foxconn, and it's not only a psychological problem but also a social one," she said.

Guo also said labor-intensive manufacturing companies like Foxconn should make more efforts to enable their employees to have normal social lives.

"There should be communities and the workers should have time to have contact with others," she said.

The monthly salary for a typical Foxconn employee is about 900 yuan ($131), so many workers volunteer to work extra hours to earn more money.

Lu Huilin, an associate professor of sociology at Peking University, said the string of jumps also reflects the poor situation of the second-generation migrant workers.

All the confirmed dead Foxconn workers are between 18 and 24 years old, and most come from the rural and less-developed regions.

US Protects Chinese Investments

There are more mercenary forces, euphemistically called 'contractors', in the American war zones of Iraq and Afghanistan then regular U.S. armed forces. They will remain behind when regular U.S. forces withdraw.

Mercenaries today operate in Iraq and Afghanistan, supplementing U.S. troop strength and guarding diplomats. In the spring of 2008, 180,000 private contractors worked in Iraq; by the spring of 2009, 68,200 were operating in Afghanistan. These “soldiers of fortune” treat each new posting as a “tour of duty” (a term used by a former Blackwater employee working in Afghanistan). Their deaths and casualty numbers are not included in the official Department of Defense numbers.

According to new statistics released by the Pentagon, with Barack Obama as commander in chief, there has been a 23% increase in the number of “Private Security Contractors” working for the Department of Defense in Iraq in the second quarter of 2009 and a 29% increase in Afghanistan, which “correlates to the build up of forces” in the country.

However the irony is that even the regular US forces are now acting not in defense of American idealism but in the pragmatic protection of Chinese foreign investments in these countries.

Of course the Americans will deny they are merely cops for China but after all they are in debt to China and as the old saying goes; he who pays the piper....

China cut its US Treasury-bill reserve by $3.4 billion to $797.1 billion in August, though it remained the largest foreign holder of US T-bills

When America reduces its regular armed forces in these war zones the mercenaries will be left behind to protect corporate interests not only American but Chinese.

China showed little interest in Afghanistan throughout the 20^th century but its growing energy and natural resource demand combined with increasing Afghan openness to foreign investors have alerted Beijing of the country’s potentials. This growing interest was particularly manifested with Beijing’s giant $3.5 billion investment in Afghanistan’s Aynak copper field late last year, the far largest foreign direct investment in Afghanistan’s history. Reports from Kabul also indicate that additional Chinese investments are underway. Although these investments may be the engine in Afghanistan’s economy, the Chinese piggy-backing on ISAF’s stabilization effort is bound to be unpopular in the U.S. and Europe, though not necessarily with the Afghan government.

America fights, China profits?
In making the case for converging U.S. and Chinese interests in Afghanistan, Robert Kaplan wrote last week in a New York Times opinion piece that, "The problem is that while America is sacrificing its blood and treasure, the Chinese will reap the benefits. The whole direction of America’s military and diplomatic effort is toward an exit strategy, whereas the Chinese hope to stay and profit."

In the op-ed, titled "Beijing’s Afghan Gamble," Kaplan also noted, "China will find a way to benefit no matter what the United States does in Afghanistan. But it probably benefits more if we stay and add troops to the fight."

No doubt the discussion will boil over after James Yeager, an American geologist, and former congressman Don Ritter, who has an advanced degree in metallurgical engineering and studied in Moscow, hold a press briefing in Washington on Thursday. The event is provocatively titled, "Report on the Aynak Copper Tender in Afghanistan: How China Won and the West Lost."

China Has Great Potential To Invest In Afghanistan: Interview With First Secretary Of Afghan Embassy In China

Q: On Nov. 20 in 2008, the Afghan Industry and Mines Minister, Ibrahim Adil divulged the name of the winner in the tender for the largest Aynak copper mine. The China Metallurgical Group company, offering $3 billion, won the tender. Did this Chinese company make investments? How do you evaluate the future relations between Afghanistan and China?

A: Yes, the Chinese company has made these investments, and on July 10, the ceremony took place to mark the start of production of copper at the Aynak mine. This is the biggest investment in Afghanistan. If we take into account the number of the unused mines in Afghanistan, it will become apparent that China has huge potential for investment in Afghanistan. Along with the increase of China's influence in the region, it will serve peace and stability in the region as a whole.

Q: China and the United States are the strategic and economic rivals. What can You say about the impact of this rivalry on Afghanistan?

A: The United States and China are working closely together in Afghanistan. Currently, Afghanistan has become a center of international cooperation. China is friendly neighbor for Afghanistan. Afghanistan is an independent country and determines how to build relations with other states. On the other hand, our strategic allies support the economic development of Afghanistan and the whole region, including China.

Q: China, taking advantage of its position and opportunities, helps Afghanistan to join the Shanghai Cooperation Organization (SCO). Is China concerned about the presence of NATO in Afghanistan?

A: China is a neighboring country that has never had problems with Afghanistan and, therefore, intends to increase cooperation with our country. China supports Afghanistan's political development. China's investment in Afghanistan's various projects can testify this fact. We invite China to invest. Creating a "trade corridor" will further develop relations.

With regard to the NATO presence, I can say that the alliance troops are in Afghanistan under the UN Security Council resolutions. China is also a member of the UN Security Council. As to China's concern about the presence of NATO in Afghanistan, I can say that we do not feel such concern. China supports the presence of international forces in Afghanistan because it actively fights against terrorism, which is a threat throughout the region.

Global Implications of China’s Big Investment in Iraq and Afghanistan

Helena Cobban

This article assesses the significance of China’s recently announced investments in large copper and oil development in Afghanistan and Iraq respectively, with potential significance not only for development and peace in the two war-torn nations, but also for China’s global role and the US-China relationship. With foreign and domestic investment in both nations barely trickling in despite UN, World Bank, NATO and US efforts, the Chinese plans are highly significant.

They are indicative not only of China’s aggressive search for energy and resource development opportunities, but also of a shift in US goals in the two countries: while all signs pointed to earlier US attempts to monopolize control of Iraqi oil for American companies, under present strategic conditions, the US appears to more than welcome the Chinese initiative.

Chinese firms eye Iraq oil fields

2009-10-09 10:45 BJT

Oil contracts could spell a win-win situation for both China and Iraq. The contract for Rumaila is key to Iraqi plans to breathe new life into a sector rich in reserves, but desperate for foreign cash to overhaul broken down facilities and obsolete practices. While Chinese oil giants are seizing the opportunity to invest and expand overseas.

Iraq has proven crude reserves of 115 billion barrels, ranking number three in the world after Saudi Arabia and Iran. But among the 80 oil fields, only 20 have been developed. Iraq opened its oil fields to foreign companies for the first time in June this year, putting six oil fields and two gas fields on auction. Many bidders turned up. But with many put off by instability in local security, only Rumaila found partners.

The Iraqi government says the second round of bidding for oil contracts is due in the first half of December. And the government says it's committed to offering better security and all facilities needed for investments by foreign companies. Meanwhile, Chinese oil giants are also expanding investment in the country. Earlier this year, China's largest oil refiner Sinopec bought Addax Petroleum for about seven-and-a-quarter billion US dollars, to secure the Swiss oil explorer's high-potential oil blocks in West Africa and Iraq.

Iraq cabinet ratifies oil deals

The Rumaila project aims to increase output at the field by 2m barrels a day

Iraq's cabinet has ratified a deal with two foreign energy companies to develop the giant southern oilfield in Rumaila.

The contract with Britain's BP and CNPC of China is the first major deal with foreign firms to be signed since an international auction in June.

Iraqi crude deal 'boost' for China's oil security quest

The successful joint bid by BP and China National Petroleum Corp (CNPC) to develop an oilfield in Iraq has offered unique opportunities for the Chinese company to tap crude reserves in the oil-rich nation, analysts said yesterday.

But domestic oil producers should prepare themselves well for any uncertainties in the war-torn country, which boasts of the third-largest oil reserves in the world, they added.

Iraq on Tuesday made its first auction of major oil contracts since the 2003 US-led invasion. A consortium by BP and CNPC was finally awarded a contract to develop the Rumaila oilfield, the largest of six oil and two natural gas fields in the bidding.

The BP-CNPC group beat a bid from a consortium by Exxon Mobil and Malaysia's Petronas for the oilfield. It was the only successful bid in Tuesday's auction.

Besides CNPC, China's two other oil majors, Sinopec and CNOOC also took part in Tuesday's auction.

Rumaila is the workhorse of Iraq's oil sector, with a current capacity of 1.1 million barrels per day (bpd) out of Iraq's total national output of 2.4 million bpd.

With a foothold in Iraq, China can diversify its oil supplies to enhance energy security, said Lin Boqiang, professor, Xiamen University, adding that the consortium model can reduce risks both for BP and CNPC.

China, which became a net oil importer 16 years ago and which relies on imported oil for nearly half its requirement currently, has already seen domestic production peaking, said Lin. "The increase in China's oil consumption in future may all come from overseas oil reserves."

SEE:

China Burps Greenspan Farts Dow Hiccups

China: The Triumph of State Capitalism

China No Longer Red Nor In The Red

US vs China for Global Hegemony

Neo-Liberal State Capitalism In Asia


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Command Capitalism

China remains a one party state, not unlike Alberta, and the command economy has transformed into command capitalism. China's model of capitalism is an alternative to American style capitalism, and to prove its model to the world it is expanding its own form of Free Trade agreements with newly emerging capitalist economies. Welcome to 21st Century Imperialism.

This is why Bush and Harper have spent the last few weeks in international meetings defending American Capitalsim, China and Europe offer other models of capitalism, with China coming to the aid of countries abandoned by the Americans or in some cases like Costa Rica directly competing for market share with the Americans. China has embraced Free Trade in direct competition with the U.S. including in its own backyard. And depsite Bush's claims that free markets creat free people, China proves that democracy and freedom are not inherent to capitalism.

Capitalism in the west developed out of the collapse of autarchic fuedalism, not much differnt than the autarchy of command economies in the East. In fact all of Asia's capitalist development has been by autarchic state capitalsm, some under right wing military dictatorships, such as Korea and Taiwan, or through the Japanese model of an integrated Military Banking Industrial State complex or through the Chinese model.

And all ot the real growth in Asia has come about with fordist manufaturing and the creation of a proletariat.And with the development of a Chinese proletariat based on fordist manufacturing model comes the inevitable, workers organizing to improve their standards of living. And being tied into the international capitalist market place means that China too suffers when capitalism melts down. Forcing it to expend its mass of capital in promoting trade for its products and to speed up production for its own consumption.

Governments need to move fast, because this crisis, which has taken several forms already, is about to change form again. In the past few months, we've moved from a seizing up of credit markets to the collapse of economic demand in the mainstream economy. Soon we could see a string of sovereign defaults of poor and emerging economies that can't meet their debt obligations.
Even worse, hundreds of millions of previously poor people from Hungary and Turkey to India and China - recent arrivals in the global middle class who've benefited from an economic boom fuelled by endless quantities of cheap credit - are about to see their standard of living fall of a cliff. Around the world, Western-style capitalism will be discredited, as it's perceived to have wiped out people's jobs and life savings.

The United States' superpower status will wane over the next two decades as power spreads among several countries and moves from the West to the East, a report by the country's intelligence agency says.
The National Intelligence Council's Global Trends report, issued every four years to document looming problems, predicts a new global system will emerge where no single state dominates.
"By 2025, the U.S. will find itself as one of a number of important actors on the world stage, albeit still the most powerful one," the report by U.S. intelligence agencies says.
China is poised to have more impact than any other country, but the report also foresees a rise by India and Russia.
If trends continue, the report predicts China will have the world's second-largest economy by 2025, be a leading military power, while becoming the world's largest importer of natural resources and also the biggest polluter.
What is striking, the report notes, is that none of the three rising stars adhere to a Western liberal model but rather a system of state capitalism, under which the government takes a key role in economic management.
The transition will leave a world system "almost unrecognizable" in comparison to today, the report says.

Hu visit marks China's growing interest in Latin America
Chinese President Hu Jintao begins a Latin America tour on Monday, taking in Costa Rica, Cuba and Peru, as China tightens economic ties and the region hopes for help in tougher times.
The Asian giant has increased diplomacy and investment in Latin America in recent years, with an eye on its natural resources and developing markets for manufactured goods and even arms.
Many in Latin America hope for an investment boost to help ride out the economic crisis.
Exports from the continent to China include soya and iron ore from Brazil, soya from Argentina, copper from Chile, tin from Bolivia, and oil from Venezuela.
The trade is still only a small percent of the continent's total, but it is growing.
China's state-run Xinhua news agency reported this month that exports to Latin America grew 52 percent in the first nine months of 2008 to 111.5 billion dollars.
Hu will visit San Jose and Havana between a G-20 meeting on the global crisis in Washington on November 15 and an Asian Pacific Economic Cooperation forum summit in Peru on November 22.
"It's more than just symbolic that Hu Jintao has decided to come, because it is clearly making the point that it is no longer a Taiwanese stronghold," said Costa Rican analyst Luis Guillermo Solis.
Both Taiwan and China have been accused of using so-called "dollar diplomacy" to get nations to ally with them.
But China's economic might is hard to compete with, especially in tough economic times.
Part of China's incentives to Costa Rica came from China's enormous foreign exchange reserves with an offer to buy 300 million dollars in bonds.
Costa Rica, a major exporter of computer components, is now prepared to negotiate a free trade deal with China, the foreign trade minister said here this week, dismissing fears of an invasion of Chinese products into the tiny Costa Rican market.
China has expanded its high level missions to the whole continent in recent years, making investments and agreements with such oil producers as Venezuela, Ecuador, Colombia, Argentina, Brazil and Mexico.
"The fact is that China has been locked out of a lot of countries for energy deals" in the past, Brown said. "It's going to be going into these areas more and more."
China has also advanced to economic assistance and direct investment, sometimes taking over from the region's main commercial partner and neighbor, the United States.
The teaching of Chinese in schools and universities and scholarships to China, as in Costa Rica's deal, add to a charm offensive.
And although Latin American economies are in a stronger position to withstand financial setbacks than in the past, a strong economic partner such as China is more attractive than ever.

China is Costa Rica's second-largest trading partner -- although the amount of trade between the two countries is subject to interpretation. China claims it imported $2.3 billion in goods from Costa Rica in 2007, and exported $570 million. Costa Rican officials have said exports to China were valued at $848 million and imports at $763 million. Either set of numbers seems like small potatoes compared to Costa Rica's trade with the U.S.: $3.9 billion in exports last year, and $4.6 billion in imports, according to the U.S. Commerce Department.

A free trade agreement to be signed by China and Peru in March will go into effect in the second half of 2009, if everything goes as planned, the Chinese Ministry of Commerce announced. The agreement will benefit China’s light machinery industry as well as those of its electronics, domestic appliances, heavy machinery, automobile engines, chemical items, vegetables and fruit. Peru's fishmeal and aquatic products industry, as well as its mining sector, among others, will be reaping benefits from the accord, Reuters reports.

Tacos, Ugly Betty gain Mexico a foothold in China
MEXICO CITY — Armed with tortillas and telenovelas, Mexican companies that have relied on trade ties to the United States are heading to China, challenging old images of a country that many Mexicans consider a rival for foreign investment and jobs.
Mexican exports to China have jumped nine-fold since 2000, soaring from $ 204 million to $ 1. 9 billion in 2007. It’s the fastest growing market for and seventh-largest buyer of Mexican goods, according to Mexico’s government.
Some of Mexico’s most prominent companies have opened operations in China since 2006, expanding beyond their traditional trading turf in the Americas and Europe to vie for a foothold in what is expected to become the world’s biggest market. Even amid the current economic slowdown, China’s 2009 growth rate is projected to hover around 8 percent.
“This is a great signal that commercial relations between Mexico and China are on a good path,” said Juan Jose Ling, director of GDEM, a business development group that promotes Chinese-Mexican ties.
But Mexico relies more than its neighbors on manufactured exports, and many Mexicans saw the Asian giant as an economic enemy that diverted jobs and foreign capital. Since 2000, hundreds of thousands of Mexican jobs have been lost as foreign-owned assembly plants moved to China — which displaced Mexico as the secondlargest supplier of goods to the United States after Canada in 2003, U. S. Census Bureau data show.
China also was accused of flooding markets with low-cost toys and textiles. Even ubiquitous statuettes of Mexico’s iconic Lady of Guadalupe now bear the stamp “Made in China.” Yet more than a dozen big Mexican companies no longer see China as a financial foe, and have joined the global race to capture a slice of its $ 1. 3 trillion retail market.

In Beijing, well-planned modern infrastructure sits comfortably alongside historic monuments. Massive ring roads and modern high-rise apartments seem to be perfectly synchronised to ensure perfect movement of traffic and human beings.
This city of more than 11 million people lacks the chaos that is the hallmark of so many Asian megacities such as Mumbai. It also lacks the stern rigidity of cities of state-controlled countries.
China was not always like this. Free markets and capitalism were allowed to flourish in this communist country 30 years ago when the Chinese leader, Deng Xiaoping, introduced economic reforms that sought to modernise agriculture, industry, science and technology.
Known as the architect of China’s emergence as an economic powerhouse, Deng managed to unleash what the Lonely Planet guide refers to as “the long-repressed capitalist instincts of the Chinese” by reforming the agricultural sector, creating special economic zones and “growth poles” in urban areas that served as boomtowns and factories for China’s exports.
In the 1990s, China began intensifying its pro-urban development strategy by investing heavily in cities to boost economic growth.
The results have been remarkable. China’s economic growth has soared to 9 per cent a year and the country has been able to lift nearly 500 million people out of extreme poverty within one generation.
THE QUALITY OF LIFE FOR URBAN residents has improved with cities such as Beijing having the lowest levels of income inequality in the world. Shanghai now stands alongside Singapore and New York as a city with the tallest buildings.
More than 300 million rural migrants have moved to cities since 1980 and 60 per cent of the country’s population is projected to be urban by 2030.
Urbanisation has been one of the key pillars upon which China’s economic success rests.
But unlike other countries, particularly in Africa, rapid urbanisation has not led to the proliferation of slums. This is because China is still a command-and-control economy that can mobilise resources quickly to respond to changing demands.
According to James Adams, the vice-president of the World Bank’s East Asia and Pacific region, “China recognised early on that urban development is not possible on the cheap and that building ahead of demand makes lots of sense.”
He notes that Beijing and Tianjin spend more than 10 per cent of their GDP on roads, water and sewerage services, housing construction and transport, and that “China’s phenomenal ability to mobilise financial resources for urban development through domestic credit and foreign direct investment is what keeps the funds for cities coming.”
National policies that give Chinese municipalities the authority to implement regulations governing land use and transport and decentralised urban planning have also played a part in helping China’s cities to cope with rapid urbanisation more effectively than other middle-income countries such as Brazil and South Africa.
The cracks, however, are beginning to show. Sit-ins and protests by workers in China’s booming industrial cities are on the rise.
Rural-urban disparities are widening, and a growing urban middle class is beginning to ask difficult questions about democracy, freedom of expression and human rights.
The global financial crisis is also having an impact on the economic growth rate, which is projected to slow down.
Nonetheless, as I sipped a glass of Chinese Cabernet Sauvignon wine in a bookshop-cum-café in Beijing, I found it hard to make a case against China’s development model.
I mean, does it really matter if the CEO of your bank is an official of the Communist Party? And what use is democracy when it can’t help put dinner on the table?

Warning from China's premier
"We must be aware that this year would be the worst in recent times for our economic development," Chinese Premier Wen Jiabao warned in the Communist Party magazine Qiushi on November 1."It is very difficult to maintain high growth and a low inflation rate in the long run. These unfavourable factors have already affected our country, and will continue to. There are also many pronounced problems in domestic economic activity," he wrote.As Minqi Li explained in an article in the April 2008 Monthly Review, China's economic growth in the late 1990s and 2000s depended heavily on it being a net exporter. The US alone accounts for 20 per cent of China's total export market, so a US recession alone would have a major impact. In 2007, Europe replaced the US as China's largest export market but Europe too has gone into recession.China's rapid economic growth also relied on Chinese capitalists (state and private) and foreign capitalists operating in China exploiting labour at a rate of about "one-twentieth of that in the US, one-sixteenth that of South Korea, one-quarter of that in Eastern Europe and one-half of that in Mexico or Brazil".While, a large, productive, and cheap labour force allows Chinese capitalists and foreign capitalists in China to profit from intense and massive exploitation, this places a brake on domestic demand making up for collapsing Western export markets.

The initial phases of the Free Trade Agreement between China and the Association of Southeast Asian Nations have brought significant benefits for both parties, helping to absorb external pressures at a time of slowing global growth.
On Oct. 22, Chinese Vice Premier Wang Qishan told the fifth China-ASEAN Business and Investment Summit that it is paramount for the two partners to accelerate their economic cooperation in the face of weakening global demand. Association of Southeast Asian Nations (ASEAN) officials also stated their wish for deeper economic ties with China, stressing the need to reduce the bloc's exposure to slowing demand from the U.S., Europe and Japan.
Structural shift. China's economy is moving away from traditional processing and assembly operations, sourcing more components domestically as its industries move up the value chain. Southeast Asia lacks the technology and skills to provide many of the required high-end imports and raw materials. It thus risks the prospect of a shrinking trade surplus with China and greater vulnerability to currency fluctuations.

Reform of financial system
(China Daily)Updated: 2008-11-15 17:07
As leaders of the 20 largest economies gather in Washington DC to discuss a coordinated plan to deal with the global financial crisis, it is necessary to reassess the existing US dollar-dominated international financial system. It is a speculation-rife, supervision-lacking system.
After the collapse of the Bretton Woods System in the early 1970s, the US rushed to introduce the Jamaica System, which is still in effect, in an attempt to carry forward its financial dominance. The Jamaica System, strictly speaking, is not new, and it has elements of Bretton Woods.
Under this financial structure, the US has excessively indulged itself in the benefits, but has tried to shrink from its responsibility as the world's largest economy. The superpower's unrestrained issuance of dollars to bolster its unrestrained domestic credit consumption and its efforts to maximize its national interests by adopting policies, such as transferring financial risk and crisis to other countries, has added vulnerability to the international financial system.
An absolute authority always leads to corruption. The unchallenged hegemony of the US has contributed to its abuse of power and conduct.
Long ago the European Union proposed that the international community strengthen supervision over hedge funds, which mainly stem from the US, and serves as an important source of its financial capital.
The EU's recommendation has repeatedly been ignored by Washington. As an important prop of the Bretton Woods System, the International Monetary Fund (IMF), has long been utilized by the US as a tool to push for neo-liberalism worldwide.
While offering aid to some crisis-plagued emerging economies, the lame-duck organization has never given up its interference in the economic jurisdiction of recipients in contravention of the UN. This has plunged some of these countries into a worse economic situation, sometimes resulting in political and social upheaval.
Since the exposure of the US financial crisis, the IMF has remained idle and other international financial bodies, such as the World Bank and the Bank of International Settlement, due to serious defects, have also been unable to play their roles as creditors and effective monitors.
The current defective international financial system has been widely criticized, but no country can ignore the dominant role of the US in it.
However, the unprecedented international financial tsunami in a century we are experiencing, and the summit on the crisis, have offered a rare opportunity for some competing players to change the existing international financial establishment to their advantage.
The hegemonic status of the US is now under challenge from its friend on the other side of the Atlantic Ocean, the EU. For many years, the expanded EU has pushed for market integration among its members and accordingly consolidated its strength to rival the US. That can be seen by the rising status of the euro in international markets.
It has been elevated to a major international currency, but admittedly it still has a long way to go before dethroning the US dollar as the world's leading reserve currency.
Behind the euro there is no unified capital market, military or fiscal policy. European countries have different economic development levels and political preferences.
At the same time, the regional community is plagued by problems of immigration, and an aging population. All this present hurdles to snatching the world's No 1 financial status from the US.
The EU has also been a beneficiary of the US-manipulated international financial order. So it is not difficult to understand why up to now it has not proposed major reforms.
We look forward to some positive measures from the Washington summit but should not pin our hopes too high.
The author Jiang Yong is a researcher with the China Institute of Contemporary International Relations

Crisis puts brake on sales of cars

By Patti Waldmeir Financial Times

It had to happen sometime: after several years of stratospheric growth, the Chinese vehicle industry has come back to earth with a bump - and found itself facing a grim reality of weak demand and cut-throat competition that could persist well into the future.Even before the western financial world imploded - stoking fears of a global recession that has chilled the hearts of car buyers, even in faraway China - industry analysts were expecting a slowdown in Chinese car sales this year. But by that, they meant 15 or 20 per cent growth (down from 34 per cent in 2006 and 24 per cent last year) - not low single-digits this year, and flat sales next year, as predicted recently by JD Power, the auto consultancy.Chinese car industry growth had defied gravity for so long - rising from only 5,000 cars in 1980 to 5.8m forecast for 2008, making it the world's second largest auto market - that it was hard to imagine anything could cause such a hard landing. But that was before the credit crisis.In many ways, Chinese car buyers ought to have been well insulated from the crisis: according to Mike Dunne of JD Power in Shanghai, 93 per cent of car purchases are still made with cash. But Li Shufu, chairman of Geely, one of China's largest automakers, says the effect is predominantly psychological. "If consumers think the global economic situation is bad, they also think maybe prices will fall," and they stop buying cars, he told the Financial Times recently in an interview. In China, no one wants to buy a car until the price is as low as possible.But China's car industry was already highly competitive, even before the threat of further price declines. According to Dieter Seemann, commercial executive director of Shanghai Volkswagen, one of VW's two carmaking joint ventures, China has 81 automotive brands compared with 47 in the US - the world's largest car market - and 47 carmakers compared to 16 in the US. VW says prices fell by a staggering 37 per cent from 2001 to 2007, and forecasts further price erosion of 8 per cent from 2008 to 2010. In the short term, says Joseph Liu, General Motors' Asia-Pacific head of sales and marketing, "everyone will suffer".But the medium- to long-term forecast is more cheerful. Nick Reilly, head of Asia-Pacific operations for GM, says market fundamentals remain strong. GM is still forecasting 10 per cent growth for this year and as much or more for next. "I don't see this as the start of a significant decline," he says.Jeffrey Shen, president of Changan Ford Mazda, one of Ford's Chinese joint ventures, says: "We see this as a shortterm adjustment. Long term the [growth] trend in the Chinese automotive industry will continue." Ford believes that when per capita GDP reaches $6,000, the industry will boom and carbuying "will get into every family", Mr Shen says.Ford acknowledges that car sales in China's richer, more export-focused east and south have slowed, but says sales in the interior are beginning to take up the slack - as China has shifted manufacturing production to cheaper regions.In the longer term, one basic fact remains paramount: only 20 out of 1,000 people in China own a car (compared wi th roughly 500 per 1,000 in the US and EU). That fundamental fact will drive the industry for many years to come.Most industry forces expect the Chinese government to stimulate demand in the short term, as a way of propping up the economy in difficult times. "The car industry can serve as a cushion for the overall economy," a senior official of Changan Motors, a large state-owned automaker, said recently. But in the longer term, Beijing's ambitions are much grander.China knows it missed out on decades of automotive technology, because of its Communist past. Now Beijing plans to leapfrog that gap to a new greener future: One plug-in hybrid electric car is expected on the Chinese market within weeks, from BYD, the upstart Shenzhen battery manufacturer that recently rose from nothing to become the biggest-selling Chinese auto maker. And nearly all of China's other leading auto companies say they are working on alternative fuel vehicles. They are counting on backing from Beijing - which has said that 10 per cent of China's cars must run on alternative fuels by 2012 - for everything from tax breaks to the massive infrastructure of charging stations needed for electric cars.China's peculiar brand of authoritarian semi-capitalism could even give Beijing an advantage in the battle, says Paul Gao, author of a recent McKinsey report on electric cars: democracies need to consult on such things as electric vehicles; but Beijing could just decide to support the technology, and it would happen."In China things can happen very fast, or very slowly," says Mr Liu of GM. If the past is any guide, change in the Chinese car industry will be fast-forward

China’s economy losing steam, workers losing jobs and wages
Guangdong province faces millions of job losses in coming months
Vincent Kolo, chinaworker.info
The global capitalist crisis has struck southern China’s export powerhouse Guangdong with the force of a super-typhoon. It is “the worst economic environment of our lives” exclaimed the chief economist of Hong Kong’s Chamber of Commerce. A domino effect of factory closures is rippling through industries such as toys, footwear, textiles and light engineering in Dongguan, Shenzhen, and other heavily industrialised cities in the Pearl River Delta. The Federation of Hong Kong Industries (whose members run their production from the delta) warns of 2.5 million job losses in the coming three months – 27,000 every single day! The same source said 20,000 Hong Kong-owned small and medium-sized enterprises could close down by the Lunar New Year (January 2009).“Depression”For years the world has marvelled at China’s spectacular growth figures, now it should prepare for spectacular figures of another sort! City leaders in Dongguan speak of a “depression” in the city of seven million people, mostly migrant sweatshop workers. Wang Zhiguang, vice chairman of the Dongguan Toy Industry Association, told Guangzhou Daily: “Of some 3,800 toy factories in Dongguan, no more than 2,000 are likely to survive the next couple of years.”Skyrocketing costs for fuel and raw materials, the Chinese currency’s rise, and shrinking export markets, have squeezed already narrow profit margins. “After the EU and the US changed the market thresholds for China-made toys, and because of recalls in 2007, our testing fees have gone up by about 25%,” a toy industry spokesman said.Several Hong Kong-owned factories have gone bust in the last week, including three run by the world’s largest toymaker Smart Union Group, which makes toys for Mattel and Hasbro. “It’s scary,” engineer Zeng Yangwen, 26, who worked for Smart Union for three years, told Reuters. “The companies that folded before were small. This is the first big one to go under.”Daily protestsThousands of workers have lost their jobs and many have taken to the streets to demand unpaid wages. Their former bosses in many cases have spirited away valuable assets and disappeared. Street protests and demonstrations at local government offices have been a daily occurrence in many townships in the region. In at least one case in Shenzhen, at the Xixian factory linked to luxury watch retailer Peace Mark, also Hong Kong-owned, more than 600 workers staged a sit-in for two days to demand their wages. More such protests are on the cards in coming weeks and months.Exporting regions like the Pearl River Delta are the first to be hit by the crisis, as their export markets wither under the impact of the global recession, while input costs have risen, and bank credit has become tighter. This is just the first phase of what is clearly a significant industrial slowdown in China, exacerbated by the simultaneous bursting of gigantic financial bubbles in the Chinese stock market and property sector. Added to this there is of course the global capitalist crisis, which is hammering export markets and threatens new financial upheavals. Asian stock markets sank to four-year lows this week on fears that growing difficulties in China and other ‘emerging markets’ will prolong the global recession. From being a possible ray of hope, China’s faltering economy is becoming another source of despair for the global capitalists.All the above factors mean the current industrial downturn can be far more serious than China’s leaders and most commentators publicly recognise. The Beijing regime continues to reassure the public how ‘basically strong’ the economy is. But in part these statements are tailored to avoid further frightening capitalist ‘investors’ (speculators) – who are more inclined towards panic from the global meltdown than they are to be calmed by recent market-supporting measures from the Chinese regime and central bank.“The slowdown in the Chinese economy so far is unexpectedly serious,” Li Wei of Standard Chartered Bank told China Daily. All the main economic data now point downward. China’s gross domestic product (GDP) growth slowed to 9% in the third quarter, the slowest rate since during the SARS crisis of 2003, and the fifth consecutive quarter of reduced growth. All the forecasts for 2008 and 2009 are being scaled down, and several economists now warn of growth dipping below the crucial 8% level in 2009. Morgan Stanley’s latest forecast is 8.2%, while CICC predicts just 7.3%. Li Wei of Standard Chartered forecasts 7.9% in 2009 and only 7% in 2010. Anything below 8% is a recession in the Chinese context, meaning rocketing unemployment and falling living standards for broad layers of the population.Investment slowsInvestment too, a key motor of GDP growth since the start of the century, has seen a sharp slowdown. The Chinese Academy of Social Sciences warns that real fixed asset investment (after compensating for higher producer prices) could grow by 15% overall this year, compared to 20% growth in 2007. This poses big problems for the central government: even its monetary easing (interest rates have been cut twice in the last month) and lifting of earlier credit restrictions on banks, may not have the desired effect if companies are reluctant to invest due to a sluggish market and huge levels of existing surplus capacity. Industries such as steel, coal, and power generation, have grown far beyond the limits of the Chinese economy in the course of a frenetic seven to eight year investment bubble, and are dependent on the country’s XXXL-sized export machine to sustain demand. If this machine fails, so do they. Steel and coal firms have announced production cuts for the first time in years in order to put the brakes on sharply falling prices brought about by lower demand and excess capacity. Coal prices are down 14% and steel by 30% since the summer. 23 of the nations 71 largest steel firms reported losses last month, and Beijing may reintroduce tax incentives for steel exports, despite opposition from the US and EU. Clearly, the slowdown is not confined to export industries or regions, although these are being hit first and hardest.While China’s overall GDP growth still seems impressive by global comparisons, its complex and fragmented economy can experience widely divergent processes at the same time. Guangdong and other coastal provinces are, because of globalisation (they trade more with the US and Europe than with the rest of China), showing clearer signs of recession at this stage than most Western economies. There has been a spate of suicides by capitalists in these provinces. All told perhaps 20 million workers have lost their jobs in 2008 as a result of business collapses. But as the overall economy is still growing, many of these worker (most are migrants) can be absorbed elsewhere. At a certain point in the downward cycle, however, this ability to soak up the new unemployed will likely break down and open unemployment will soar and, with it, the threat of serious unrest.Government measuresProperty markets – pumped up to fantasy levels in the speculative wave of recent years – have deflated sharply, by 40% in some cities such as Shenzhen. The coastal exporting regions that are suffering most from the crisis and the property meltdown are also the main launch-pad for the much discussed but yet to be seen “rebalancing” of the economy towards domestic consumption. Per capita GDP in the wealthiest coastal provinces is roughly twice the level in the north-eastern provinces, three times the level in the central provinces and five or six times the level in the poorest western provinces. Much greater consumption – close to double today’s level – would be needed to break the economy’s huge dependence on exports and avert a serious downturn. If increased consumption does not come from the wealthier provinces, then where? But the combined blows of falling property prices, factory closures and recession, migrants moving elsewhere, will serve to weaken rather than strengthen consumption in these regions. For the first time in modern Chinese history, since the pro-capitalist reform and opening process began 30 years ago, the coastal provinces may be headed for slower growth and greater dislocation than their poor relations in the interior. Already, coastal companies are gearing up for an assault on the markets of other provinces. The stage is being set for a dramatic increase in inter-provincial rivalries and economic disputes. Beijing may find itself in the role of referee at a dogfight!The central government has responded to the current slowdown with a series of measures that include even more investment in infrastructure, restoration of tax rebates to labour intensive export industries (these were cut two years ago as Beijing moved to soften US protectionism) and special rules to ease loan terms for small and medium-sized companies. The pace of currency appreciation will surely slow, if not reverse, and US protests over this fact may be bought off for a time with a Chinese commitment to keep up its lending to the US government’s huge state bailouts. Other steps have been taken to shore up the sinking stock market, to prevent the main CSI 300 index slipping below the psychologically important 2,000 mark. The market has plummeted 70% this year, but the latest measures – using state companies and the sovereign wealth fund, CIC, to buy up shares – have not prevented further falls (the CSI 300 is down on 1,833 points at the time of writing). The government will soon in all probability announce a stimulus package containing tax cuts and extra funds for public investment. It is rumoured that this package will be worth 400bn yuan ($58bn). That the plan has been delayed may reflect deep divisions inside the regime’s economic management team over what ‘mix’ of policies to adopt. Many CCP bigwigs now favour tax cuts, accepting the liberal economists’ argument that this is the fastest way to stimulate consumption. Less than one-third of China’s wage earners would benefit from a tax cut as the remainder do not earn enough to pay any tax. Fear of protestsWhat is the role of local-level governments in the Pearl River Delta and other export hubs in the rising wave of factory closures? There is of course a big risk of instability and even riots and the authorities are keen to diffuse this. At the same time the CCP local administrations have created an environment that allows corrupt capitalists to run their businesses into the ground and then abscond, leaving workers, creditors, and suppliers, in the lurch. Many of today’s fugitive bosses were well integrated with local officials and paid well for their services. Today the factories are being sealed for “immediate auction”, with workers allowed to remain temporarily only in the dormitories and canteens.At the same time the local governments are using public budgets to pay out unpaid wages to redundant workers, a fact that is drawing increasing criticism on similar lines to anger at bank bail-outs in the West. In order to clear the streets and prevent the anger of workers crystallising into a wider struggle across factory or township borders, governments are using the ‘carrot’ of compensation rather than the ‘stick’ of police repression – at least for the time being. The local government in Zhangmutou township, Dongguan, paid out more than 24 million yuan ($3.5 million) to compensate the 7,000 former workers of Smart Union Group, China Daily reported (23 October). This was the township’s entire budget for the coming year! Yet workers are owed four times this amount and may never receive the full amount. Once paid off and dispersed, the authorities hope migrant workers will move onto other jobs or other areas. Rival factories have been sending recruitment agents into the demonstrations in Dongguan and Shenzhen to fill their quota of vacancies.The main focus of workers’ protests has been to get part if not all of the wages they are owed. This is the still basic level at which the struggle stands today, not seeking to challenge the bosses’ right to turn thousands out onto the streets. The perspective of many migrant workers is that 1) they hope and believe that by moving again if necessary they can get new work, and 2) It is not really possible to challenge the bosses and officialdom: “They will do as they want, what can we do?”

The Challenge Of The New Statism
The liberal democracies have experienced financial shocks and reacted, but not as free market advocates expected. Adam Smith’s name is not being loudly heard in the world’s central banks. Instead we have western governments recommending federal interference in their poorly regulated economies and incorporating methods similar to those that guide New Statist nations, such as China and Russia. This phenomenon reveals that Francis Fukayama, who received commendation for his 1989 philosophical tract: The End of History, might have spoken too fast."What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government."Fukayama repeated a thesis of often maligned Karl Marx that liberal democracy is an integral part of the capitalist system but refuted Marx's assertion that “capitalism would inevitably lead to increasing class polarization and class conflict,” and “through its own inherent processes of development it is destined to give rise ultimately to its own dissolution." It now seems that both of these scholars have erred and the more prescient is Azar Gat, Professor of National Security at Tel Aviv University. In a Foreign Affairs article: The Return of Authoritarian Great Powers, July/Aug 2007, Professor Gat argues that Fukuyama has not considered the emergence of imposing authoritarian nations, "which could 'end the end of history'." Gat proposes a challenge: “These authoritarian capitalist regimes could inspire other states to follow their model.”The New StatismIn a previous article, The New Statism, The Rise of Corporate States, Alternative Insight, Oct. 2007, the writer independently outlined a similar concept: "A new statism, in various prescriptions, exercises control over the political, moral, economic and social fabric of several nations and has the potential to control the destiny of the world."An earlier article, The Socialization of America, Alternative Insight, April 2005, stated: “The global economy has been pioneered by the United States but has not been a perfect fit for new pioneering nations. In order to provide prosperity for its people, the United States must implement policies that offset the deleterious effects of globalization. American history shows that private industry has never been the sole source of solutions to recurrent economic problems.”The former article described several nations that can be described as "authoritarian capitalist” regimes. China and Russia are the most prominent, but India, Israel, Venezuela, Bolivia and Vietnam, and several autocratic Arab nations can also be considered New Statist. Their institutions include significant New Statist characteristics:The government allows free enterprise but might invest in some industries (mixed economy) and control industries related to national defense, natural resources, communications and media. In some cases it also has extensive land ownership.The government, by direct or indirect mechanisms, partially regulates international money transfers, international trade, wages, prices, internal investment and segments of the labor market.The government promotes nationalism, reinforces chauvinism and allies the education system with these efforts.The government exercises powers that lessen opposition and prevent excessive dissent.With the liberal political and economic world suffering from an economic downfall, emerging nations might be less likely to adopt the free market model and more likely to consideration the autocratic Statist paradigm as an attractive alternative to liberal democracy. Even the free marketers are shelving their concepts and applying Statist solutions for private problems. Rather than an end to history, the liberal democracy movement has become only a stage in history. As predicted by rejected and non-conventional economists, a new stage of history is unfolding.

SEE:

His Masters Voice

Stiglitz On Market Fundamentalism

The New Imperial Age

China Fuels US Inflation

China Burps Greenspan Farts Dow Hiccups

Neo-Liberal State Capitalism In Asia
China: The Triumph of State Capitalism
US vs China for Global Hegemony
China No Longer Red Nor In The Red

China Needs Free Unions

Japanese State Capitalism

China's Trickle Down Economy

New Asian Dragon

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