Regional Roundup for Week of 10.5.2013

This is a big week for Asia, a big week for ExSE. For ExSE, as you can see, we have officially launched the new phase of our blog. Thanks to the hard work of our web designer Franz, we now have a beautifully organized interface, with easy to navigate categories and new article designs that will make it easier to learn more about China, Southeast Asia and everything in between. Please email us at to let us know what you think of the new design, we always want to know what our readers are thinking. Also, if you have any interest in writing, please let us know at , we’re in the market for new contributors.

Also this week is the APEC conference. This economic conference, which attracts all ASEAN leaders plus those of the many surrounding states is kicking off, but one important player is missing. President Obama, due to the government shutdown and debt ceiling crises back home, will not attend the conference. Many in the media and blogosphere see this as a loss for US power in the region, a move that might cause ASEAN states to lose confidence in the US’ “pivot to Asia.” However, our own Brian Eyler has other ideas. Check out his article here.

Lastly, a strong salute to General Vo Nguyen Giap, dead at 102 – the Vietnamese guerrilla commander who defeated the French and American forces in the Indochinese Wars.


Party organs affirm “criticism” resolution after Xi’s remarks – Xinhua The CPC provincial committees and Party units at state organs and major state-run enterprises and universities have moved quickly to study remarks made by Xi while attending local Party committee sessions in Hebei last week. According to an official statement obtained by Xinhua on Thursday, Party officials have vowed greater “courage and resolution” for criticism and self-criticism at intra-Party sessions attended by top officials…Such sessions are part of the CPC’s ongoing year-long “mass line” campaign that is dedicated to removing undesirable work styles among officials and forging closer Party-people ties. Xi told the Hebei officials that he wanted no “fancy words” from them but “real criticisms and self-criticisms,” referring to a work style that has long been cherished by the CPC as a weapon for solving intra-Party contradictions and making self-improvements.

Tourpocalyse photos during China’s National Day holidays never get old | Offbeat China There is no better time than China’s annual “golden week” National Day holidays to get a feel of how many people China really has – so many that to use the term “tourist apocalypse” isn’t an exaggeration.

China ex-security chief’s public appearance throws doubt on graft reports | Reuters China’s former domestic security chief was all smiles as he attended an alumni celebration at his former university on Tuesday, his first public appearance since overseas media reported that he was being investigated for corruption. Zhou Yongkang, 70, one of the most powerful Chinese politicians of the last decade, attended an alumni celebration at the China University of Petroleum, according to photographs posted by the university on its website.

Dealmaker linked to Zhou Yongkang case had ties with ex-vice-president | South China Morning Post Hong Kong-listed mainland developer Fantasia Holdings provides a key link between Wu and Zeng’s family. Fantasia Holdings’ largest shareholder and executive director is Baby Zeng Jie, better known as Zeng Baobao, who is a niece of Zeng Qinghong. The company holds a controlling 58.8 per cent interest in Fantasia Chengdu Development, Zhongxu holds 10 per cent, while a person named Qiu Qiongming controls the remaining 31.2 per cent, according to Fantasia’s prospectus for its 2009 listing. Qiu’s identity is unknown, although the person has the same family name as Wu’s wife, sources said.

Firm Linked to Embattled CNPC Has Shanghai Offices Sealed – Caixin Agricultural Bank of China (ABC) asked a court to seal an office building owned by Hong Kong-listed Wison Engineering Services, a source says, while it pressures the company to pay 186 million yuan in loans and interest.

Xi Jinping’s graft purge sets sights on China’s military–Sydney Morning Herald The biggest corruption case in Chinese military history is being prepared for trial, as President Xi Jinping extends his anti-corruption campaign into the secretive People’s Liberation Army (PLA). The value and range of the assets alleged to be involved in the case of disgraced lieutenant-general Gu Junshan could be staggering, according to a source with ties to senior military figures.

China Policy Institute Blog » Five Misconceptions About the Chinese Military Written by Dennis J. Blasko.-The conventional wisdom about the Chinese military appears simple on the surface but becomes more complex upon closer examination.

China’s Economy, Back on Track –  NEXT month, President Xi Jinping and Prime Minister Li Keqiang will use an important meeting — the so-called Third Plenum of the Communist Party’s 18th National Congress — to unveil China’s priorities for reforming economic policy for the next decade. Yet because it will probably decide only general policies, leaving the specifics for later, some cynics have already begun to dismiss the reforms as too little, too timid and too late. They note that a decade ago, a previous generation of leaders failed to reduce the influence of state-owned enterprises and to complete the economic reforms of the 1990s. But I believe the prospects for restructuring China’s economy — bolstering the role of the market, expanding opportunities for small and medium-size businesses, allocating capital more efficiently and improving the balance between consumption and investment — are better than at any point since the 1990s.

SPECIAL REPORT-The education of China’s oil company | Reuters it is now anything but clear that the Nexen acquisition was wise for CNOOC’s constituents – the Chinese government and shareholders in the publicly traded company. As one company insider told Reuters: “For CNOOC, the closing of the deal marked the end of euphoria, and the beginning of pain.” The central problem, analysts say, is that in a global energy industry transformed by the shale gas revolution in North America and elsewhere, CNOOC overpaid. And it underestimated the risks of monetizing the landlocked oil-sands and shale-gas assets in Canada that account for 75 percent of Nexen’s proven and probable reserves.

Chinese IPOs: back in the USA? | beyondbrics Sentiment has also been helped by the successful debut of the two Chinese companies that listed last year. Vipshop, an online flash sales retailer (think Vente Privée in France or Gilt in the US), has seen its shares gained by more than 836 per cent since its IPO last March. Having debuted at $6.50 a share, the stock is now trading at $60.85. Shares in YY, a social gaming portal, are up 358 per cent at $48.09 since it went public last November.

Inside the world of China’s “shadow banks” | “My friend lent some money to a businessman who agreed to pay it back with interest in 60 days,” mutters Gao, “But then the guy disappears. We’ve been looking for him, but he ran away.” This has become common in Wenzhou. Private loan defaults have soared over the past two years. Dozens of Wenzhou businessmen unable to pay back their loans have gone missing or been found dead. Yin Zhichao, deputy director of the China household finance survey, has studied China’s shadow banking sector for years. He fears these types of defaults could lead to social instability throughout China.

China’s Investment Addiction by Yu Yongding – Project Syndicate While investment in social housing should be welcomed, real-estate investment, currently running at 10-13% of GDP, is already far too high. On the other hand, if real-estate investment growth falls, overcapacity will be difficult to eliminate. This dilemma highlights the structural-adjustment challenge that China faces – and should give investors reason to hold their breath. That said, there are two caveats. First, unlike other categories of investment, real estate investment does not increase productive capital stock. There is no fundamental difference between a house and an expensive durable consumer good. Second, in China’s statistics, the growth rate of gross fixed-asset investment is much higher than that of gross capital formation. This indicates that data on the growth rate of fixed-asset investment may have exaggerated the pace of capital-stock accumulation. Hence, while the Chinese government should be firm on reducing the dependence of growth on investment, it must exercise utmost care when doing so.

ANALYSIS: Japan seeks tough stance, U.S. pushes cooperation in dealing with China – The Asahi Shimbun China, as expected, was the main theme of a Japan-U.S. security meeting, but differences emerged over how to deal with the rising power. Japan, currently feuding with China over sovereignty of the Senkaku Islands in the East China Sea, wanted to send a forceful message to Beijing at the Security Consultative Committee meeting on Oct. 3 in Tokyo. But the United States, whose economic ties with China are growing, pushed for reconciliation and cooperation with Beijing to ensure stability in East Asia

RPT-UPDATE 2-Turkey says Chinese missile deal not final | Reuters Arinc did not single out the United States in his criticism, saying comments from U.S. officials about the decision had been “respectful”, but reiterated that Turkey did not need to consult on matters of domestic defence. “We are a member of NATO and we have had good relations from the beginning with NATO countries, especially the United States. However, when it comes to the subject of defending Turkey … we have the power to take a decision without looking to anyone else,” he said.–President of Russia–Meeting with President of China Xi Jinping We are continuing to develop our political contacts. I would like to note that our coordinated position on the international arena is paying off. We have been able to achieve coordinated decisions on the most difficult matters, with Syrian issues being the latest example. We are developing economic ties. We are cooperating in some very sensitive areas, such as military technology cooperation and military affairs. Our service members have already conducted two major trainings, on land and in the sea. We have very good prospects. I am happy for the opportunity to discuss the directions of our further cooperation with you today.

China Courts Central Asia| The Diplomat| In an unprecedented tour also locking in energy deals with Uzbekistan, Kazakhstan, Tajikistan, Kyrgyzstan and Russia, Xi has consolidated Chinese power in Central Asia as Beijing looks to reconfigure its economy based on cleaner, more diversified energy sources amid rising overall demand for fuels. But the impacts are expected to reach much farther and wider than simple economics or within China’s borders.

Chinese Views on Cybersecurity in Foreign Relations | Hoover Institution Michael D. Swaine–In recent months, the issue of cybersecurity has become a major source of both tension and potential cooperation for the U.S.-China relationship. With Western assessments pointing to China—not only to Chinese individuals, but also most likely the Chinese government (and especially military) sources—as the source of an increasing number of destructive cyberattacks on commercial enterprises and government institutions, Washington has greatly intensified its expression of concern to Beijing.

World Briefing | Asia: China: Big Energy Project Planned|NYT| China is planning to build its largest coal gasification energy project in the western region of Xinjiang, according to a report by Xinhua, the state news agency.


Cancellation of Trip by Obama Plays to Doubts of Asia Allies – This week, Mr. Xi became the first foreigner to address the Indonesian Parliament, offering billions of dollars in trade to the country that was Mr. Obama’s childhood home. Mr. Xi then moved on to Malaysia, before preparing to attend two Asian summits that Mr. Obama had to abandon because of the government shutdown. With the cancellation of the visits, the much-promoted but already anemic American “pivot” to Asia was further undercut, leaving allies in the region increasingly doubtful the United States will be a viable counterbalance to a rising China.

Obama’s Absence Leaves China as Dominant Force at APEC – The absence of Mr. Obama took some gravitas out of the conference, and there were deep questions about how the president could get a trade pact through Congress given the hostility of conservative Republicans in the House of Representatives toward his domestic programs. The prime minister of Singapore, Lee Hsien Loong, who maintains friendly relations with China, was the most direct in describing the damage to the summit meeting by Mr. Obama’s absence. “No other country can replace” the American engagement in Asia, he said. “Not China, not Japan, not any other power. That is something which we continue and encourage at every opportunity.”

How Damaging is the Cancellation of Obama’s Asia Trip? | Asia Unbound| But many of the nations in Southeast Asia are democracies, and though they—and most Americans—may think that the American political process is crazy, they do understand that the president has to address domestic priorities first. And one trip by Xi while Obama is not around is not going to alter the fundamental shift in China-ASEAN relations that has taken place over the past five years, as China has increasingly aggressively stated its position on control of the South China Sea, as well as over other disputed islands in Northeast Asia.

Xi Jinping holds Malaysia talks in regional charm offensive | South China Morning Post President Xi Jinping said after talks with Malaysian Prime Minister Najib Razak that both nations would step up co-operation to promote regional stability as he continued his maiden presidential tour of Southeast Asia in Kuala Lumpur. Xi’s trip is seen as an attempt by Beijing to gain leverage over the Association of Southeast Asian Nations (Asean), especially over the handling of territorial disputes and offset the impact of Washington’s so-called pivot to Asia. With US President Barack Obama scrapping his Asian tour due to the US government shutdown, Xi’s meetings with regional leaders have grabbed the limelight.

Commentary: High time to build new maritime silk road – Xinhua In his speech at the Indonesian parliament on Thursday, Chinese President Xi Jinping proposed to build a China-ASEAN community of common destiny and provided guidance for constructing a new Maritime Silk Road of the 21st century. After a decade of fruitful cooperation since the launch of strategic partnership between the two sides, we have every reasons to believe it is high time to bring the brilliant concept of a new maritime silk road between China and the ASEAN into reality.

Back in Asia, Hagel Pursues Shift To Counter China’s Goals in Pacific – “With Secretary Kerry spending most of his time and energy on the Middle East, additional responsibility has fallen on Hagel to demonstrate the United States commitment to Asia,” said Ely Ratner, the deputy director of the Asia-Pacific Security Program at the Center for a New American Security. But, Mr. Ratner said, Mr. Hagel’s efforts are “arguably at the cost of reinforcing perceptions in the region that the rebalancing policy is primarily a military endeavor.”

Storey: China Runs Rings Around Asean – China has thus ensured that talks with Asean regarding a code of conduct will be protracted and process- rather than results-oriented. A year or two from now the final product will be full of fine words, but short on specifics. Critically, it is unlikely to ameliorate tensions in the South China Sea. As China grows stronger and more confident, it sees little reason to sign a legally binding and substantive code that limits its freedom of action in a body of water in which it believes “historical facts” make it the final arbiter.

Trilateral statement on maritime disputes seen as targeting China | South China Morning Post A joint statement by the United States, Japan and Australia opposing “coercive unilateral actions” in East China Sea territorial disputes is being seen as aimed squarely at Beijing. The statement issued after a three-way meeting on the sidelines of the Asia-Pacific Economic Co-operation forum summit was the fruit of Japan’s efforts to rally support in the dispute over the Diaoyu, or Senkaku, islands, analysts said.

World Bank cuts China, East Asia growth forecasts | Reuters The World Bank now expects the Chinese economy to expand by 7.5 percent this year, down from its April forecast of 8.3 percent and below the International Monetary Fund’s most recent forecast of 7.75 percent. China’s 2014 growth is estimated at 7.7 percent, the World Bank said, down 0.3 percentage point from the previous prediction. The IMF is due to publish its new world economic outlook on Tuesday ahead of the fund’s annual meeting.

Unequal Asia | ADB| 3.5 million people in Asia and the Pacific region are millionaires while 800 million survive on less than $1.25 a day, many without clean water, education, electricity, or good transport.

Tony Abbott expects free trade pact with China in the next 12 months | World news | Tony Abbott told reporters in Bali he would be “disappointed” if Australia couldn’t conclude a “significant” free trade agreement with China during the next 12 months. Abbott also used the opportunity to send an unequivocally positive message on Chinese investment in Australia, including from state owned enterprises – an issue that has been a vexed one internally within the Coalition because of philosophical resistance by the Nationals to foreign purchases of farmland and agri-businesses, particularly by foreign government interests.

India and China preparing to ink Border Defence Cooperation Agreement during Manmohan Singh’s Beijing visit : India Today On the 22nd of October, Prime Minister Manmohan Singh will be travelling to Beijing. Sources have told Headlines Today, that in all likelihood, the two sides will sign the Border Defence Cooperation Agreement or the BDCA during this visit. Here are some of the exclusive details of what the Indian side is pushing for in the final draft


Many Indonesians falling out of love with Obama–USA Today Running parallel to Indonesia’s growing disillusionment with Obama’s presidency is a broader awareness of the U.S.’s declining economic influence in the increasingly China-dominated Asia-Pacific region. China’s President Xi Jinping did make the trip this week, and was talking trade and warm relations the entire time. “I think that the U.S. is important to Indonesia of course, but increasingly more so is China. Most Indonesian exports are going to China,” said Imanuel Reinaldo, a second year economics student at the University of Indonesia, where Obama gave a speech during his visit in 2010.

Peeling Off Indonesia’s Veneer of Tolerance|ASEAN Beat| For the Indonesian government, discussing Santoso’s brutal death wouldn’t just be an impolite cocktail party topic for visiting dignitaries – including U.S. President Barack Obama and Russian President Vladimir Putin. It would lift the curtain on Indonesia’s rising religious intolerance and related violence and put the lie to the government’s slick veneer of national “dynamism and diversity.” The last thing that Yudhoyono wants during one of the last high-profile international events he’ll host before he steps down in 2014 are awkward questions about his government’s failure to defend internationally guaranteed rights to religious freedom and to protect religious minorities from attack by militant hate-mongers.

The Melanesian delegation | SEA Globe| The Melanesian Spearhead Group (MSG) – an intergovernmental organisation composed of Fiji, Vanuatu, Papua New Guinea, Solomon Islands and the FLNKS, an alliance of political parties in New Caledonia – has promised to send a mission to West Papua, Indonesia’s resource-rich, easternmost region. On the agenda will be assessing whether the West Papua National Coalition for Liberation (WPNCL) should be allowed to join the MSG – something Jakarta would prefer to avoid.


Crossing the line | South China Morning Post For Laos, the cost of the HK$56 billion high-speedrail link connecting Vientiane to Yunnan may far outweigh the benefits. In the first of a two-part series on China’s growing economic interests in its neighbour, David Eimer looks at why the project may have grave consequences for one of Asia’s poorest nations

Back to the Earth: IFAD Helps Build Better Lives in Laos |Asia Life| Armed with this understanding, the International Fund for Agricultural Development (IFAD) has been engaged in Laos where it has helped jumpstart and run rural development programs since 1980. The goal is simple: to train the nation’s green thumbs to grow nutrient rich crops – feeding themselves and society – and build a robust economy in the process. In celebration of the progress that has been made in the country through this effort, IFAD has just released Laos: A Rural Perspective, a book of photographs snapped by internationally renowned Bangladeshi photojournalist G.M.B. Akash, who visited the verdant countryside provinces of Attapeu, Champasak and Luang Prabang to document locals at work (and play) in 2012.


Orangutans rescued as haven takes shape in the wilds of Sumatra|The Guardian| Preparation has begun on the orangutan haven following the securing of a 48-hectare site in rainforest near the city of Medan, on Sumatra. An initial batch of three orangutans will be placed in the sanctuary, which will feature a series of small islands separated by water. Orangutans, which are scared by the prospect of swimming, will be free to roam their individualised islands, which will feature trees, feeding platforms and problem-solving puzzles. It is hoped that further disabled orangutans will be able to join the initial trio once the haven is completed.


Tin Htut Paing: On The Run in Myanmar| The Diplomat| A leader of Generation Youth – a loosely organized advocacy organization dominated by activists in their early twenties – Tin Htut Paing works to promote the fundamental rights and democracy denied to the people of Myanmar during 50 years of direct military rule. When he heard that a group of recently laid-off factory workers were staging a sit-in in the shadow of Sule Pagoda in downtown Rangoon, he raced over as quickly as he could, and lectured them on tactics for negotiating with the owner and the authorities. “Before the demonstrations started, I had already given advice and suggestions to the workers,” he told me. “When I heard they were protesting at Sule, I went down to encourage them to not give up.” With the activists’ support, the workers’ demonstration succeeded: the owner increased their severance package, offered to help them find new jobs, and they went home the following morning. But Tin Htut Paing wasn’t so lucky. Narrowly avoiding arrest at the demonstration, he’s been in hiding ever since. “After [the demonstration], the police came to my house at midnight, looking for me,” he said. “Today, the police came to my house again, and I heard that I would have to face trial.”

Myanmar’s ethnic conflicts: Waiting for the dividend| The Economist| This sort of investment is just what was hoped for from the Karen ceasefire, as well as from 13 similar agreements that have been signed between the government and other armed ethnic groups. The ceasefires are touted as one of the main achievements of Mr Thein Sein’s reforming government, and are crucial to everything else that it wants to achieve. As Aung Min, the minister in charge of negotiating the ceasefires, says, “without peace there is no democracy, and without democracy there will be no development.”

KNU is ready to sign nationwide ceasefire, says CEC member | Democratic Voice of Burma| “The KNU is looking to find solutions to all political issues through a nationwide ceasefire,” he said, adding that he envisages a “Panglong-like conference where representatives of the government, parliament, the Burmese armed forces, ethnic armed groups, political parties, civil society groups and women’s groups sit face to face to discuss political issues and amend the constitution.”

United States Makes Right Decision to go Slow on Military Cooperation with Myanmar | Asia Unbound| Given the weaknesses of IMET, and the fact that Myanmar’s inter-ethnic and inter-religious violence, some of which is linked to the security forces, shows no signs of abetting—in just the past two weeks there have been multiple attacks on Muslims in several parts of the country—the Obama administration has made the right decision on military-military ties, even if it is a decision that administration officials were forced to make by Congress and by Myanmar activist groups.


The Philippines and the West Philippine Sea| The Diplomat| Contrary to the thinking in certain quarters, the Philippines does not lay claim to the entire South China Sea (SCS), but rather to that smaller area of the SCS off the country’s western seaboard that is well within its Exclusive Economic Zone (EEZ) and continental shelf and is known as the West Philippine Sea (WPS). The Philippine government spelled out this difference when President Benigno Aquino Jr. issued Administrative Order 29 on September 5, 2012, which renamed the maritime areas to the country’s west. The Philippines is an archipelagic, maritime state, which makes the WPS a matter of serious national importance given its strategic location, security implications and resources.


Thai monarchy laws need reviewing, say critics pointing to recent cases| The Diplomat| Although King Bhumibol Adulyadej, 85, is considered a popular figure in Thailand, the law protecting the royal institution has been repeatedly condemned by human rights groups, pointing to the infrequency of bail being granted to those accused and the fact that anyone can bring a complaint against anyone else. Critics say a recent case in which a man accused his brother of anti-monarchy comments for reasons appearing to be nothing more than sibling rivalry shows that the laws are in urgent need of review

The View From Bangkok|NYT| A peaceful aerie — until something started falling from above.


Hanoi’s Mixed Signals: A State of Flux| ASEAN Beat| The harsh reality of Vietnam’s crackdown on dissidents has been well documented and Quan’s jailing tarnished a week of almost sensible announcements. Will this belligerent side of the Vietnamese government also be meted out in equal doses when it comes to further investigations of errant and corrupt businessmen?

General Vo Nguyen Giap obituary | The Guardian| General Vo Nguyen Giap, who has died aged 102, was a self-taught soldier who became one of the foremost military commanders of the 20th century. He used his charisma and tactical skills to transform a tiny band of Vietnamese guerrillas into an army that defeated both France and the US.

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