China steps up Afghan role as Western pullout nears

By Sanjeev Miglani

KABUL – Sun Jun 3, 2012 3:38am EDT

(Reuters) – China and Afghanistan will sign an agreement in the coming days that strategically deepens their ties, Afghan officials say, the strongest signal yet that Beijing wants a role beyond economic partnership as Western forces prepare to leave the country.

China has kept a low political profile through much of the decade-long international effort to stabilize Afghanistan, choosing instead to pursue an economic agenda, including locking in future supply from Afghanistan’s untapped mineral resources.

As the U.S.-led coalition winds up military engagement and hands over security to local forces, Beijing, along with regional powers, is gradually stepping up involvement in an area that remains at risk from being overrun by Islamist insurgents.

Chinese President Hu Jintao and his Afghan counterpart Hamid Karzai will hold talks on the sidelines of the Shanghai Cooperation Organisation summit in Beijing this week, where they will seal a wide-ranging pact governing their ties, including security cooperation.

Afghanistan has signed a series of strategic partnership agreements including with the United States, India and Britain among others in recent months, described by one Afghan official as taking out “insurance cover” for the period after the end of 2014 when foreign troops leave.

“The president of Afghanistan will be meeting the president of China in Beijing and what will happen is the elevation of our existing, solid relationship to a new level, to a strategic level,” Janan Musazai, a spokesman for the Afghan foreign ministry, told Reuters.

“It would certainly cover a broad spectrum which includes cooperation in the security sector, a very significant involvement in the economic sector, and the cultural field.”

He declined to give details about security cooperation, but Andrew Small, an expert on China at the European Marshall Fund who has tracked its ties with South Asia, said the training of security forces was one possibility.

China has signaled it will not contribute to a multilateral fund to sustain the Afghan national security forces – estimated to cost $4.1 billion per year after 2014 – but it could directly train Afghan soldiers, Small said.

“They’re concerned that there is going to be a security vacuum and they’re concerned about how the neighbors will behave,” he said.

Beijing has been running a small program with Afghan law enforcement officials, focused on counter-narcotics and involving visits to China’s restive Xinjiang province, whose western tip touches the Afghan border.

Training of Afghan forces is expected to be modest, and nowhere near the scale of the Western effort to bring them up to speed, or even India’s role in which small groups of officers are trained at military institutions in India.

China wants to play a more active role, but it will weigh the sensitivities of neighboring nations in a troubled corner of the world, said Zhang Li, a professor of South Asian studies at Sichuan University who has been studying the future of Sino-Afghan ties.

“I don’t think that the U.S. withdrawal also means a Chinese withdrawal, but especially in security affairs in Afghanistan, China will remain low-key and cautious,” he said. “China wants to play more of a role there, but each option in doing that will be assessed carefully before any steps are taken.”

JOSTLING FOR INFLUENCE

Afghanistan’s immediate neighbors Iran and Pakistan, but also nearby India and Russia, have all jostled for influence in the country at the crossroads of Central and South Asia, and many expect the competition to heat up after 2014.

India has poured aid into Afghanistan and like China has invested in its mineral sector, committing billions of dollars to develop iron ore deposits, as well as build a steel plant and other infrastructure.

It worries about a Taliban resurgence and the threat to its own security from Pakistan-based militants operating from the region.

Pakistan, which is accused of having close ties with the Taliban, has repeatedly complained about India’s expanding role in Afghanistan, seeing Indian moves as a plot to encircle it.

“India-Pakistan proxy fighting is one of the main worries,” said Small.

In February, China hosted a trilateral dialogue involving officials from Pakistan and Afghanistan to discuss efforts to seek reconciliation with the Taliban.

It was first time Beijing involved itself directly and openly in efforts to stabilize Afghanistan.

Afghan foreign ministry spokesman Musazai said Kabul supported any effort to bring peace in the country. “China has close ties with Afghanistan. It also has very close ties with Pakistan and if it can help advance the vision of peace and stability in Afghanistan we welcome it.”

(Additional reporting by Chris Buckley in BEIJING; Editing by Daniel Magnowski)

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China top military paper warns of armed confrontation over seas

By Chris Buckley

BEIJING | Sat Apr 21, 2012 2:21am EDT

(Reuters) – China‘s top military newspaper warned the United States on Saturday that U.S.-Philippine military exercises have fanned risks of armed confrontation over the disputed South China Sea.

The commentary in China’s Liberation Army Daily falls short of a formal government statement, but marks the harshest high-level warning yet from Beijing about tensions with the Philippines over disputed seas where both countries have recently sent ships to assert their claims.

This week American and Filipino troops launched a fortnight of annual naval drills amid the stand-off between Beijing and Manila, who have accused each other of encroaching on sovereign seas near the Scarborough Shoal, west of a former U.S. navy base at Subic Bay.

The joint exercises are held in different seas around the Philippines; the leg that takes place in the South China Sea area starts on Monday.

“Anyone with clear eyes saw long ago that behind these drills is reflected a mentality that will lead the South China Sea issue down a fork in the road towards military confrontation and resolution through armed force,” said the commentary in the Chinese paper, which is the chief mouthpiece of the People’s Liberation Army.

“Through this kind of meddling and intervention, the United States will only stir up the entire South China Sea situation towards increasing chaos, and this will inevitably have a massive impact on regional peace and stability.”

Up to now, China has chided the Philippines over the dispute about the uninhabited shoal known in the Philippines as the Panatag Shoal and which China calls Huangyan, about 124 nautical miles off the main Philippine island of Luzon.

China has territorial disputes with the Philippines, Vietnam, Brunei, Malaysia and Taiwan in the South China Sea, which could be rich in oil and gas and is spanned by busy shipping lanes.

REGIONAL TENSIONS

Beijing has sought to resolve the disputes one-on-one but there is worry among its neighbors over what some see as growing Chinese assertiveness in staking claims over the seas and various islands, reefs and shoals.

In past patches of regional tension over disputed seas, hawkish Chinese military voices have also emerged, only to be later reined in by the government, and the same could be true this time.

Since late 2010, China has sought to cool tensions with the United States over regional disputes, trade and currency policies, human rights and other contentious issues. Especially with the ruling Chinese Party preoccupied with a leadership succession late in 2012, Beijing has stressed its hopes for steady relations throughout this year.

Nonetheless, experts have said that China remains wary of U.S. military intentions across the Asia-Pacific, especially in the wake of the Obama administration’s vows to “pivot” to the region, reinvigorating diplomatic and security ties with allies.

The Liberation Army Daily commentary echoed that wariness.

“The U.S. strategy of returning to the Asia-Pacific carries the implication of a shift in military focus, and there is no better strategic opening than China’s sovereignty disputes with the Philippines and other countries in the South China Sea,” said the newspaper.

“The United States’ intention of trying to draw more countries into stirring up the situation in the South China Sea is being brandished to the full,” it said.

(Editing by Sanjeev Miglani)

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Tokyo Is Planning To Piss Off China By Buying These Disputed Islands In The East China Sea

AP

TOKYO (AP) — Tokyo‘s outspoken governor says the city has decided to buy a group of disputed islands in the East China Sea to bolster Japanese claims to the territory, a move that could elevate tensions with China.

Gov. Shintaro Ishihara said the city is close to reaching an agreement with the private Japanese owner of three of the four islands in the group known as Senkaku in Japanese and Diaoyu in Chinese.

The islands, surrounded by rich fishing grounds, are also claimed by China and Taiwan. They have been a frequent flash point in diplomatic relations between Japan and China.

A collision between a Chinese fishing boat and Japanese coast guard vessels in 2010 near the islands set off a serious diplomatic spat, with Beijing temporarily freezing trade and ministerial talks.

“Tokyo has decided to buy the Senkaku islands. Tokyo will protect the Senkakus,” Ishihara said in a speech Monday at the Heritage Foundation, a conservative think tank in Washington. “The Japanese are acquiring the islands to protect our own territory. Would anyone have a problem with that?”

Ishihara, a strong nationalist, said the idea is to block China from taking the islands from Japanese control, as the central government is reluctant to upset China.

He did not indicate how much the city would pay, but said the deal would be finalized while he is visiting the United States.

In Beijing, Liu Weimin, a spokesman for China’s Ministry of Foreign Affairs, reacted harshly to Ishihara’s comment and reiterated China’s claim over the islands.

“Any unilateral measure taken by Japan is illegal and invalid, and will not change the fact that those islands belong to China,” he said in a statement.

Tokyo city official Tatsuo Fujii said details of the deal could not be released immediately and further discussions would be held with Okinawa prefecture, which has jurisdiction over the islands, and other related authorities.

The government currently pays rent to the owners of the four islands in the Senkaku group so they won’t be sold to any questionable buyer. It pays 24.5 million yen ($304,000) a year to the owner of the three islands, which are unused. The fourth island is used by the U.S. military for drills.

Chief Cabinet Secretary Osamu Fujimura reiterated on Tuesday that Japan has sovereignty over the Senkaku islands and said the central government might purchase them.

Japan and China also have disputes over undersea gas deposits in the East China Sea and Japan’s wartime history.

Ishihara previously helped to erect a lighthouse on one of the Senkaku islands, which a group of nationalists later replaced with a larger one recorded on navigation charts.

Ishihara’s comments about the disputed islands are also seen as politically motivated to discredit Prime Minister Yoshihiko Noda‘s government, which is struggling to gain public support.

 

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Forget The Election News: Keep Your Eye On Tim Geithner And The Love Trapezoid

David Kotok, Cumberland Advisors 

Jan. 10, 2012, 11:50 AM

If you can take your eyes off the primary election coverage, watch Geithner.  The US is engaged in a love trapezoid.  The four corners are Beijing, Tehran, Tokyo, and Washington.  Treasury Secretary Geithner is the Obama Administration’s front person.  Track the news for the names of the other agents.

This is a very serious time.  The pieces are linked.  Some bullets as you watch the news flow.

1. The US faces the pressure of follow-through on Iran sanctions.  Iran is an exporter of oil to Asia.  Japan is dependent on imported oil.  China is not self-sufficient.  One part of this trapezoidal geometry is about oil.

2. Iran is feeling the heat from sanctions.  The US wants to tighten them.  It cannot do so without help from Asian “friends.”

3. China and Japan are each buyers of US Treasury securities.  They each help finance the American fiscal deficit and the ongoing current-account deficits.  They each want to diversify their reserves.  They are not sellers, but they are reluctant additional buyers.  This is truer for China than for Japan, but it is true in both cases.

4. China is glacially proceeding toward world reserve-currency status.  It gradually allows its currency to strengthen against the dollar.  It follows a policy that is fully rational for the Beijing oligarchs.  It shrugs off political threats from Washington politicians (Schumer, Graham) who love to bash China while talking to their American constituents.  China understands our political processes and our weaknesses.  However, China also understands “realpolitik” and uses it.  They learned US use of realpolitik from Nixon and Kissinger.  Expect them to smile publicly but put some very intense private heat on Geithner.

5. Japan faces enormous economic pressure and sees the yen strength as now threatening.  In order to weaken the yen, it must acquire other currency holdings in large quantity.  (See the Cumberland website, www.cumber.com, for G4 central bank charts, and flip to those on the Bank of Japan.  You will be able to observe how Japan expanded its balance sheet several years ago and subsequently contracted it.  We expect them to expand it in 2012 as they seek to arrest yen strength.)

6. Japan is negotiating with China so that it may acquire reserve debt instruments denominated in Chinese currency.  Beijing likes this because it is a step toward achieving world reserve-currency status.  Geithner now worries, because the trend points toward a gradual and long-term weakening of the US position, as the world’s second (China) and third (Japan) largest economies maneuver their global positions.

7. Our Asian friends know that the US election cycle creates maximum vulnerability for the United States.  That also makes circumstances more dangerous and raises risk profiles.  Europe is of no help to us, given its internal crises.

We recall that a three-legged stool is a stable form.  A four-legged stool is less stable.  A four-legged stool with a trapezoidal top is least stable.  Especially when one of the legs is Iran.

Watch Geithner in Asia and the news flow.  Read between the lines, since the public statements will all be scripted and self-serving.  Risk is high.  Also, stay overweight energy.  We are.

Read more: BI

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Shadow Banks on Trial as China’s Rich Sister Faces Death

By Bloomberg News – Apr 11, 2012 2:24 AM CT

When a Chinese court sentenced 28- year-old Wu Ying, known as “Rich Sister,” to death for taking $55.7 million from investors without paying them back, it sparked an unexpected firestorm that has drawn in China’s top leadership.

Her crime involved a common, illegal practice in China: raising money from the public with promises to pay back high interest rates. Known as shadow banking, these underground lending and investing networks are estimated to total $1.3 trillion, according to Ren Xianfang, an economist with IHS Global Insight Ltd. (IHS) in Beijing. That’s the size of the 2011 U.S. government deficit.

Chinese businesswoman Wu Ying who was accused of illegally raising funds and defrauding investors weeps during a trial at the Intermediate Peoples Court of Jinhua in Jinhua city, east Chinas Zhejiang province, 16 April 2009. Photograph: Imaginechina via AP Images

Operating outside the banking system or government regulation, the informal networks provide an important source of economic growth, capital for private companies and return for investors seeking to beat inflation. Premier Wen Jiabao, in an unusual move, weighed in on the Wu case at a March 14 news conference. His comments highlighted a public debate over the importance of shadow banking to the Chinese economy, government efforts to bring it under control — and whether capital punishment is an effective means to do so.

“Chinese companies, especially small ones, need access to funds,” Wen said when asked about Wu’s case. “Banks have yet to be able to meet those companies’ needs, and there is a massive amount of idle private capital. We need to bring private finance out into the open.”

Unfairly Singled Out

Wu’s lawyer says his client, now 30, was unfairly singled out and is no different from the estimated 42 million Chinese business owners who rely on the shadow-banking system for financing when they cannot get loans from state-owned banks. The Supreme People’s Court is reviewing the 2009 verdict and will decide as early as this month whether Wu Ying lives or dies.

“Entrepreneurs are paying attention to it because today’s Wu Ying could be any of them tomorrow,” the lawyer, Yang Zhaodong, said in an interview in Beijing last month. “There are so many of them doing the same thing Wu Ying did. This case not only relates to Wu’s life, but to whether China’s legal and judicial system is fair.”

Shadow banking has been fueled by a two-year credit squeeze in China and by large, state-owned banks’ preference for lending to government-run companies rather than small businesses. Private entrepreneurs account for 60 percent of China’s total economic activity and provide jobs for 80 percent of its urban population, according to China’s National Development and Reform Commission.

Meteoric Rise

“Underground banking filled the hole left by China’s state-owned banks, which have this long-term bias toward big enterprises,” said IHS’s Ren. “Even though it is an extremely opaque market and has a lot of hidden problems, the government needs it to meet the basic financing needs of small businesses.”

Wu’s rise and fall have been meteoric. The daughter of a farmer in Zhejiang province, south of Shanghai, Wu dropped out of technical school as a teenager to work at her aunt’s beauty salon and later opened two of her own, according to the state- run Global Times newspaper. She branched out into a foot-massage parlor and bought 10 cars which she rented out. An entertainment center and a boutique featuring Korean clothes followed, as did investments in real estate and copper, the report said.

Wu collected 770 million yuan ($122 million) from private investors between May 2005 and February 2007, according to government prosecutors. She also accumulated more than 100 properties and 40 cars, including a $500,000 Ferrari, the Global Times said.

Knowing the Risks

Wu borrowed money to fund her businesses and didn’t lie to anyone, her lawyer said. She never committed fraud, Yang said, adding that her investors, like anyone who took part in the private-banking business, knew the risks involved.

“Even her biggest creditor who she owed 320 million yuan doesn’t think Wu was lying to her,” said Yang. “These were real projects.”

The court in Wu’s home province of Zhejiang said she “brought huge losses to the nation and people with her severe crimes and should therefore be severely punished” when it upheld her death sentence in January, according to the Xinhua News Agency.

Nicknamed “Fu Jie,” or “Rich Sister,” in the media, Wu and her case were discussed at the annual legislative session in Beijing in March, where delegates debated the larger issues of shadow banking.

“You cannot try to stop this just by killing people,” Wang Yongzheng, a delegate to China’s People’s Political Consultative Conference and owner of a textile company, told a small group session at the meetings.

‘Public Outrage’

In a country where public criticism of government policy is rarely sanctioned, state-run media outlets such as Xinhua and the People’s Daily, both Communist Party mouthpieces, have run stories, editorials and online chat sessions airing public sympathy for Wu.

On Feb. 8, the China Daily newspaper ran an article noting “public outrage” and the “wide sympathy and pleas for the fair-skinned woman with a short haircut.” It quoted a legal expert as saying the government’s seizure and sell-off of her assets was illegal.

On the Defensive

As the public outcry surrounding Wu’s case began to swell, court officials and police took the rare step of publicly defending their verdict. The presiding judge in her case, Shen Xiaoming, appeared in a Feb. 7 Internet chat to explain that Wu Ying was sentenced to death because the court found she intended to defraud investors.

“This was more than just illegal fundraising,” Shen said in the chat.

China’s entire shadow-banking system is bigger than just underground borrowing and lending, totaling about $2.4 trillion, a third the size of China’s official loan market, according to Societe Generale SA economist Yao Wei. In addition to informal lending, it includes the off-balance-sheet activities of banks, trust companies, and businesses lending to each other, Yao said. The amount is almost the size of U.S. consumer debt, which exceeded $2.5 trillion as of January, according to the U.S. Federal Reserve.

Ordinary Chinese savers also fuel the country’s shadow- banking system. They have few legal options if they want to earn a return that beats inflation, which hit 5.4 percent in 2011. The government sets China’s current ceiling for savings account interest rates at 3.5 percent, a figure that has trailed inflation for two straight years as of January. Wu offered interest rates of as much as 0.5 percent a day to attract investors, according to Xinhua.

Bankruptcies and Suicides

Zhejiang province, where Wu’s home village of Dongyang is located, has been at the heart of private lending activity. Between April and September last year, more than 80 indebted businessmen committed suicide or declared bankruptcy in its boomtown manufacturing city of Wenzhou because they couldn’t repay informal lenders, according to Xinhua.

Bankruptcies and arrests continue to be reported almost daily. Today, the China Securities Journal reported that Hangzhou Glory Real Estate Co., also located in Zhejiang, had filed for bankruptcy after borrowing 2.5 billion yuan from individuals.

Pilot Program

The government has stepped in to deal with the troubles and bring some aspects of shadow banking under government control. In October, Premier Wen traveled to Wenzhou, a city of 9.1 million people 230 miles (370 kilometers) south of Shanghai, pledging help for troubled businesses. Then, on March 28, China’s State Council approved a pilot program for Wenzhou that would ease some restrictions on private lending.

Private capital will be encouraged to participate in “innovative financial organizations” such as credit unions, and banks will be encouraged to lend money to small enterprises, the State Council said.

“The Wenzhou trial program has started us on the right track,” Zhou Dewen, president of the Wenzhou Small and Medium Sized Enterprises Development Association, said by phone the day after the announcement. “The trial program is a step forward toward making private lending a practice that’s legal.”

By the time Wu was in her mid-twenties, she had founded the Bense Holding Group — the name means “original color” — and established 12 companies, according to a profile in the Guangzhou-based Southern Weekly before her arrest.

Drawing Attention

Wu’s success drew the attention of the Chinese media. In its Feb. 1, 2007 profile, the Southern Weekly said she drove to the interview in a BMW and couldn’t explain where her wealth had come from.

“I don’t launder money,” Wu said, according to the newspaper. “My money is clean.”

According to the article, Wu had a tattoo of a rose on her chest and once donated 6.3 million yuan to charity. Less than two weeks after the article was published, authorities announced that Wu had been arrested on suspicion of illegal fundraising.

Prosecutors later upgraded the charges against her to financial fraud, a crime punishable by death in the most severe cases, for losing 380 million yuan of investors’ money. Two years later, she was sentenced to die.

The court found that Wu raised her money by “fabricating facts, deliberately hiding the truth, and promising high returns as an incentive,” according to Xinhua.

Photographs of Wu in court show her sobbing as she stands at the dock, clad in a yellow prison jacket, her tattoo peeking from the neckline. She has been in prison appealing her conviction since her arrest in 2007. Xinhua reported in April 2011 that Wu was writing a book called “Black Swan,” a fictional account of her life, while in prison.

Not the First

Wu wouldn’t be the first shadow banker to be put to death in China. On Aug. 5, 2009, the Supreme Court approved the execution of two female entrepreneurs in separate cases. Si Chaxian, age unreported, was charged with defrauding 300 people of 167 million yuan over five years and promising returns of as much as 108 percent annually, while Du Yimin — who was 44 at the time her death sentence was upheld — was charged with defrauding 709 million yuan by promising to pay as much as 10 percent per month, the official CCTV reported. Both women were from Zhejiang province.

On Death Row

At least 17 people, including Wu, now sit on death row after being sentenced for illegally raising funds from individuals, according to Chinese media reports compiled by Bloomberg since 2009. Seven of them are women.

In the latest case, on April 6, 30-year-old Wang Caiping was sentenced to death for borrowing along with her brother more than 100 million yuan from 15 victims, according to the official Xinhua News Agency. Wang and her brother, who has fled, invested the money in gold and futures speculation and incurred losses, the report said. They had paid out 5.8 million yuan in interest as of the day Wang was arrested, with 94 million yuan unpaid, Xinhua added.

In Zhejiang, sentences handed out for various shadow- banking-related crimes rose to 75 last year, up from eight in 2007, the official Legal Daily reported, citing the provincial high court.

In Shanghai, police said March 29 they had arrested Gu Chunfang, a woman in her early forties who runs a trading company, for racking up 500 million yuan in underground-lending debts, China Daily reported. Her nickname: “Most Beautiful Businesswoman.”

Striking a Chord

Wu’s case, unlike the two executions, 16 other death sentences and numerous arrests, has struck a chord and spurred a broader national debate.

“She’s not some sort of privileged person who just had everything handed to her,” said Sarah Schafer, a Hong Kong- based researcher with Amnesty International. “People see her as someone who is closer to them than they care to admit.”

Amid the demands for change to China’s shadow-banking system, Wu’s case has also been taken up as part of a parallel debate about China’s death penalty.

Groups including Amnesty International that monitor capital punishment say attitudes toward it have begun to change in China — especially in cases of financial fraud. The government has allowed broader public debate on the death penalty, and government officials have talked more often of pushing China toward abolishing the practice, according to Schafer.

Accepting Abolition

“The argument from the Chinese government has always been that the public wouldn’t accept abolishing the death penalty,” Schafer said. “This case has shown that maybe the public isn’t ready for full abolition but we think they are ready for abolishing it for nonviolent crimes.”

The Chinese government does not release statistics on the number of executions it performs. Groups like Amnesty International, which track the cases in the media, say the reports may underestimate the total number of executions carried out, since the media tend to report only the most sensational crime and corruption cases.

Still, China has cut the number of executions it carries out every year from 8,000 in 2006 to 4,000 per year now, according to the San Francisco-based Dui Hua Foundation. Even so, it executes more people than every other government in the world put together. The next highest is Iran, with more than 360 in 2011, according to Amnesty International.

Starting in 2007, China’s Supreme Court decreed it must approve all the country’s executions. In a 2010 annual report, the court said it should “respect and protect citizens’ right to life, the most basic human right,” according to Xinhua.

Premier Wen’s remarks in March and the changes to the private banking system make Wu’s lawyer hopeful that the Supreme Court will commute her death sentence. On March 30, an editorial in the Financial News, a publication of the People’s Bank of China, said reforms in Wenzhou were a “turning point” for the development of private financing in China.

“Wu Ying’s case happened in a special time during China’s reform, where the financial system is hugely lagging behind economic development,” said Zhou, of the Wenzhou enterprise association. “Wu Ying won’t be executed now that the trial program has been announced. She can’t die before the dawn.”

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net; Yidi Zhao in Beijing at yzhao7@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

Source

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China paper defends Syria veto, doubts West’s intentions

BEIJING | Sun Feb 5, 2012 9:07pm EST

(Reuters) – China’s top newspaper on Monday defended Beijing’s rejection of a U.N. resolution pressing Syria‘s President Bashar al-Assad to abandon power, saying Western campaigns in Libya, Afghanistan and Iraq showed the error of forced regime change.

The commentary in the People’s Daily, the top newspaper of China’s ruling Communist Party, was Beijing’s clearest defence of its decision to join Moscow at the weekend in vetoing a draft United Nations resolution that would have backed an Arab plan urging Assad to quit after months of bloodshed.

The commentary suggested that Chinese distrust of Western intervention lay behind the veto, which was described by U.S. Secretary of State Hillary Clinton as a “travesty.”

“The situation in Syria continues to deteriorate and numbers of civilian casualties keep rising. Vetoing the draft Security Council resolution does not mean we are giving free rein to letting this heart-rending state of affairs continue,” said the commentary in the paper, which echoes government thinking.

China, not its Western critics, was acting “responsibly” for the sake of the Syrian people, it said. The author used the pen name “Zhong Sheng,” which can mean “voice of China” and is often used to give Beijing’s position on foreign policy.

“Currently, the situation in Syria is extremely complex. Simplistically supporting one side and suppressing the other might seem a helpful way of turning things around, but in fact it would be sowing fresh seeds of disaster,” said the paper.

China’s siding with Russia over Syria could add to irritants with the United States. Vice President Xi Jinping is due to visit there next week, burnishing his credentials as the Communist Party’s likely next top leader.

Beijing and Washington have also sparred over Iran, which faces tightened Western sanctions over its nuclear ambitions.

The commentary also laid bare broader Chinese concerns about Western-backed intervention in the Arab world and beyond.

China is one of the five permanent U.N. Security Council members that hold the power to veto resolutions.

In March, China abstained from a Council vote that authorised Western military intervention in Libya. That resolution became the basis for a NATO air campaign that led to the overthrow of Muammar Gaddafi, despite misgivings from Beijing and Moscow about the expanded campaign, which they said went beyond the resolution.

“Libya offers a negative case study. NATO abused the Security Council resolution about establishing a no-fly zone, and directly provided firepower assistance to one side in the Libyan war,” said the People’s Daily Commentary.

It also cited Iraq and Afghanistan in its case against the Syria resolution.

“The calamities of Iraq and Afghanistan should be ample to wipe clear the world’s eyes. Forceful prevention of a humanitarian disaster sounds filled with a sense of justice and responsibility,” said the paper.

“But are not the unstoppable attacks and explosions over a decade after regime change a humanitarian disaster?” it said.

(Reporting by Chris Buckley; Editing by Paul Tait)

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New Terminal JV in China for Odfjell SE

Odfjell SE has made an agreement to enter into a joint venture via its subsidiary Odfjell Terminals Asia Pte Ltd (Singapore), with Tianjin Economic-Technology Development Area (TEDA) via its subsidiary Nangang Port Company to develop a terminal and marine facilities for bulk liquid chemicals, petroleum products and gases in the Nangang Industrial Zone (Tianjin) in China.

The initial phase of the joint venture will consist of three deep sea berths and have a total storage capacity of about 150,000 cubic meters.

The joint venture company will be named Odfjell Terminals Nangang (Tianjin), whereby Odfjell will hold 49% ownership and hold the operational management. The initial total investment is estimated to be about USD 160 million. The first phase will start operations during the second quarter of 2014. The Nangang Industrial Zone is located about 120 km from Beijing and will become the major petrochemical complex in the Western Bohai Bay area

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DOE sees rationing as US acts vs Iran

BY JOHN LOURENZE POQUIZ

The Department of Energy is readying its contingency plan in the event that the problem in Iran escalates and results in a local fuel supply shortage.

Energy Undersecretary Jose Layug said that the DOE is looking at mechanism where the government would ration fuel consumption in the event supplies become tight.

“We are reviewing our contingency plan. Part of that is cutting down consumption,” Layug told Malaya Business Insight.

“We would have a mechanism where people would be given allocations on the oil they consume. It’s a form of rationing,” he added.

Layug said that the Philippines sources only less than 1 percent of its requirements from Iran.

He said, however, local fuel supply would be threatened if the Strait of Hormuz, which is adjacent to Iran, would be blocked.

The strait is the only passage for ships carrying petroleum from major oil-exporting countries on the Arabian peninsula.

Layug said that because of the supply threats, world oil prices have been going up in past weeks, influencing local pump prices.

“In terms of Iran, (we source a) very small (amount). Less than 1 percent. But more importantly, ever since Iran test-fired its missiles (last week), the international market has gone up,” he said.

“In fact, for the past few weeks, the major reason for the price hikes is Iran. Prices in the international market have gone up,” he added.

Last week, oil firms raised the prices of their unleaded and premium gasoline products by P0.90 per liter. The price of regular gasoline went up P0.60 per liter, while diesel rose P0.30 per liter.

The sanctions approved by President Barack Obama on New Year’s Eve have highlighted the importance of Iranian oil supplies to East Asia’s energy-hungry economies. They have led to a clash of interests between Washington and key commercial and strategic partners over efforts to stop Iran’s nuclear program.

China, the biggest buyer of Iran’s oil, has publicly rejected US sanctions aimed at Tehran’s energy industry, while American allies Japan and South Korea are scrambling to find a compromise to keep critical supplies flowing.

Beijing is buying less Iranian crude this month, but analysts say China is unlikely to support an oil embargo. Instead, they say, the smaller purchases might be a tactic aimed at obtaining lower prices as the West squeezes Tehran.

“We are considering our response and are closely discussing the matter with the US,” a Japanese Foreign Ministry official, Kazuhiro Kawase, was quoted by The Associated Press as saying Friday.

A South Korean foreign ministry spokesman said this week Seoul is in talks with Washington aimed at “minimizing the negative impacts” of sanctions. South Korea imports 97 percent of its oil and depends on Iran for up to 10 percent of its supplies.

China’s foreign ministry rejected the sanctions this week and called for negotiations, leaving unclear whether Beijing might defy Washington, straining relations between the world’s biggest and second-biggest economies.

“Sanctioning is not the correct approach to easing tensions,” said a ministry spokesman, Hong Lei. “China opposes the placing of one’s domestic law above international law and imposing unilateral sanctions on other countries.”

US Treasury Secretary Timothy Geithner is due to visit Beijing and Tokyo next week for talks that officials say will include the sanctions.

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