February 22, 2008

Taiwan Reunification Watch - Update

A big significant step taken in the Beijing - Taipei thaw reported today by the London Financial Times. Fubon Bank of Taiwan will be allowed to buy a 20% stake of Xiamen Commercial Bank (of Xiamen on the mainland side of the Taiwan straits) through its Hong Kong susidiary with the Hong Kong Monetary Authority acting as go-between.

This is yet another example of how Beijing will use Hong Kong as intermediary (if not overt example) for its absorption of Taiwan. Gaze at the geography of greater Xiamen in the map above - could it be another Hong Kong in the making? Nothing prevents it but outdated (and non-Chinese) ideology...

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February 21, 2008

General Motors Turns Chinese - New China Funds - Coal Boom?

Full Transcript at www.sinomania.com

February 19, 2008


The German daily Der Spiegel interviewed Henry Kissinger and the conversation reveals Kissinger is as obsessed as ever over Israel's survival and opposing Russia. Here's what he had to say about China:

SPIEGEL: Is China still a partner or primarily a rival?

Kissinger: China has to be treated as a potential partner. We must use all ingenuity to create a system in which the great states of Asia -- which really are not nation-states in the European sense but large conglomerates of cultures -- can participate. We have no choice.

SPIEGEL: Does the fact that "guided democracies" like Russia or China are currently more successful in economic terms undermine the attractiveness of Western-style democracy? Is that a new model that is becoming attractive for young people?

Kissinger: The problem of guided democracies is that they have great difficulties solving the problem of succession and of giving access to the widest possible pool of talent. China has come closer to solving that problem than any other undemocratic system. I believe that the democratic model is better and more durable for the future but not automatically. It depends on our vision and determination.

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SARS Bat Link Confirmed

Five years ago, during the press hysteria (and smokescreen to the USA's invasion of Iraq) on SARS, I brought my readers' attention to reports and research on the connection between bats in south east Asia and the SARS virus.

New research has confirmed the link.

February 15, 2008

USA Escalates Arms Race In Space

About that wayward American spy satellite the Pentagon wants to shoot down, from an article on Wired.com blog:

"My real concern is that this is simply a knee-jerk reaction made by the administration in response to the purported threat by the Chinese. Since the April 2007 ASAT [anti-satellite] test, there have been rumors and whispers going around that the Administration and like-minded individuals are looking for more sticks (instead of carrots) to use against China. While this "shoot down" is not a direct action against China, it would be a clear signal that the US can possess an active ASAT capability at any time if it so desires. That is a serious development as the previous US ASAT system using F-15s was mothballed in the 1980's.

There are many significant political ramifications that would happen as a result of this. The US has been berating the Chinese on their ASAT test but now demonstrate that it is okay as long as it occurs at a low enough altitude to prevent long-lasting debris and can "save lives". This is close to an implied "ok" for the US and other nations to conduct more ASAT tests, which could open another arms race. I am also certain that Russian and China would also see this as a slap in the face as they are trying to revive the Peaceful Uses of Outer Space treaty discussion and ban on space weapons. It would further negatively affect the relations between them and the US. Which could lead to increased tensions, arms buildup, etc etc etc. Nothing good for anyone outside of arms manufacturers and politicians that need a bogeyman to scare people into voting for them. "

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Japan Forex Reserves Growing "Suspiciously Fast"

Stephen Jen of Morgan Stanley's Global Economic Forum team says:

"Japan’s reserves are growing suspiciously fast. Japan’s foreign reserves expanded from US$946 billion in September 2007 to US$996 billion in November, an increase of US$50 billion in four months. Assuming a 2.5-3.0% return on the underlying assets, Japan should only be enjoying US$25-30 billion in annual investment earnings, or US$6-8 billion a quarter. Further, it is widely assumed that Japan has the bulk (90%) of its reserves in USD, and the MoF never diversified away from USD. With such low holdings of EUR, valuation changes – from the rise in EUR/USD – should not have been a major factor generating gains in reserves. Indeed, what is embedded in our reserve tracker file assumes 90% USD holdings. Our presumptive calculations identified a US$13.7 billion gain during September-January due to the returns on the underlying assets, and another US$18 billion from valuation changes, leaving US$18 billion of the reserve increases unexplained by our metric. Could the MoF have conducted secretive interventions worth US$18 billion? "

Morgan Stanley believes the net result is not stealthy intervention but skillful day trading of Yen/Euro positions and that the data reveals Japan is diversifying away from the US Dollar to over 20% Euro composition in its foreign exchange reserves.

If true, this raises another interesting question: Is America's loyal Asian satellite dumping the Dollar?

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February 14, 2008

GM Turns to China

General Motors posted another record loss this week and now wants to lose its union labor force. GM is offering buyouts to all 74,000 union workers in the United States. This is yet another sign that GM is shifting its production overseas and I expect a lot of it will end up in China.

GM says its China operations are the one bright spot for its future. Last year GM sold over one million cars in China, a surge of 18 and a half percent. Indeed GM is poised to overtake Volkswagen in the success of its Chinese investments.

Just last month, GM and Shanghai Automotive Finance sold almost $2 billion Yuan worth of bonds backed by its car loans, the first ever securitization of car loans by an automobile financer in China.

In its efforts to fast track production of the Chevy Volt electric car, GM announced Monday a new global organization for hybrids and electric cars that will be partially based in Shanghai. Through a German consulting firm GM is recruiting engineers and senior managers for a future operation in Shanghai.

And visitors to Detroit’s new international air terminal are greeted with Chinese announcements, signs, and even a China UnionPay ATM. UnionPay is the ironically named debit card network in China. Detroit is ready for an influx of Chinese moneymen and business travelers when the new Northwest Airlines Detroit – Shanghai route starts a year from now.

Across the Detroit River in Ontario, the Canada China Business Council is actively encouraging Chinese direct investment in the region’s depressed auto and auto parts industries. China’s actual foreign direct investment in Canada is nearly one and a half billion dollars with more anticipated.

All this activity makes me wonder why opportunistic politicians in America are so worried about the Mexican border when parts of Michigan and Ontario may become Shanghai suburbs.

February 11, 2008

Hang Seng Plunge! Macro Effects of the Winter Storms - IPOs - AND Happy Year of the Rat!

Hong Kong, Shanghai stocks battered, macro effects and analyst opinions of the winter storms, IPOs on the ASX, Happy Chinese New Year wish...
Sinomania! Volume II Webisode 47, February 6, 2008

 Complete transcript at www.sinomania.com

Taiwan Reunification Watch

Another sign of the quickening thaw, direct links are now open between mainland China and Taiwan island for mainland Chinese arriving by ship.

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February 08, 2008

Japan's Scientific Killing Spree

Japanese whaling is about as "scientific" as the experiments on Chinese in Manchuria in the '30s and '40s.

It's time to end the Japanese genocide on whales.

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February 07, 2008

Happy Year of the Rat!


2008 is the Year of the earth Rat. It is the start of a new “great year” in the Chinese calendar system and is the 25th year of the 18th cycle of the 2nd epoch of the Chinese lunisolar calendar. The last year of the earth rat was 1948 and before that 1888. Look back to those eras for some clues as to what to expect this year.

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