US embassy cables: China 'would accept' Korean reunification

Guardian reposts a wikileaked cable.

[Vice Foreign Minister Chun Yung-woo] commented that China had far less influence on North Korea "than most people believe." Beijing had "no will" to use its economic leverage to force a change in Pyongyang's policies and the DPRK leadership "knows it." Chun acknowledged that the Chinese genuinely wanted a denuclearized North Korea, but the PRC was also content with the status quo. Unless China pushed North Korea to the "brink of collapse," the DPRK would likely continue to refuse to take meaningful steps on denuclearization. [...]

[...] Chun claimed XXXXXXXXXX believed Korea should be unified under ROK control.XXXXXXXXXXXX, Chun said, were ready to "face the new reality" that the DPRK now had little value to China as a buffer state -- a view that since North Korea's 2006 nuclear test had reportedly gained traction among senior PRC leaders.

Read the whole thing.

Planning for North Korean collapse

strategypage writes: U.S. military planners have discovered that China's current arsenal of non-nuclear ballistic and cruise missiles could probably knock out five of six major American air bases in Japanese and South Korea. Oops. To make matters worse, this has become an issue as North Korea stumbles towards political collapse, and China indicates that it will assume control in the north if that happens. South Korea believes it should move north to deal with a collapse, and this plan is becoming a contentious issue with China.

India focusing more on China?

According to this article, India's military leaders now consider China their biggest threat.

China is modernizing its military at a rapid rate, including upgrades and exercises aimed at moving Chinese forces thousands of kilometers in a short period of time. China naval activity in the Indian Ocean has been on the increase.

India's headline-grabbing adversarial relationship with Pakistan, on the other hand, appears to be on the wane. Pakistan is thought to be much less of a threat to India, a realization brought about in part by the first-ever publishing of Pakistan's military budget, which produced a number smaller than expected.

Will China be satisfied with the Himalayans as a buffer? History tells us that China is not very expansionistic, particularly compared to Russia, though it does like friendly (or puppet) buffer states.

Details of China's Internet censorship leaked

Wikileaks posted extremely sensitive Chinese government-mandated censorship keyword lists and policies from the leading mainland Chinese search engine, Baidu.cn. The material is revelatory.

China wins economic war game

According to The Politico, The Pentagon recently sponsored an "economics war game," a first of its kind for the US military. Professors, hedge fund employees, investment bank managers and others played roles as various countries: United States, Russia, China, etc.

Apparently, China won. Their control of so many US dollars was a decisive factor.

Why China needs US debt

Stratfor posted a good article covering why China continues to need (buy) US debt.

Job losses top 20 million in China

FT: Downturn causes 20m job losses in China

Press freedom in China

McClathy newspapers' Beijing bureau chief Tim Johnson blogs about the state of press freedom in China. In terms of overall policy,

[China's] Foreign Ministry announced that press freedoms instituted this year for foreign reporters during the Olympics were being extended indefinitely.

Of course, Johnson also notes, it remains important for a foreign journalist to prepare to be detained for any reason, by a local village chief, factory owner, local police, etc.

Johnson also links to a BBC collection of foreign journalists' anecdotes from October 17, on the state of press freedom.

China (and India?) absent from debate

Daniel Drezner noticed the same thing I did about the first presidential debate: Lehrer asked no question about China, and the candidates themselves barely mentioned China at all.

The sum total of all mentions of China:

• Obama mentions China in space, noting America must remain competitive in math and science
• McCain soundbite: "We owe China $500 billion", in a discussion about spending restraint
• Obama, later, mentions we are borrowing billions from China.
• Obama refers to China (and Russia) as required partners in any meaningful sanctions on Iran
• McCain mentions Nixon's trip to China, and how Kissinger preceded him, while attempting to lecture Obama on the finer points of diplomacy with dictatorships.

That's it, as far as I can tell from the transcript.

India is not mentioned at all.

As this blog often notes, China and India — one third of our entire planet — are growing and industrializing at light speed, which will have a major impact on geopolitics, the environment, and many other aspects of life as we know it.

Links

FT.com gives you the hard number overview of today's action. This caught my eye: SEC took additional steps to curb equity short-selling. Bloomberg has details. Overstock.com CEO Patrick Byrne, who has ranted long and loud on this subject in the past, responds to the SEC's press release. Useful analysis, but do read it with a grain of salt.

From McClatchy's China Rises: An analysis of McCain and Obama's positions on China, summarizing an Asia Foundation report.

Marginal Revolution continues to provide useful insight. Robert Reich weighs in as well.

Weekend links

As this blog continues to predict, UAVs on the battlefield enable a wide range of new tactical possibilities. Recently, Woodward has been dropping hints about a new secret weapon in Iraq. Today, The L.A. Times describes higher-tech Predators having a major impact in Iraq.

This is only the beginning. Drones have strategic as well as tactical attributes.

Other links:

Far Eastern Economic Review suggests several ways to collaborate with China, during the next presidency.

And the Washington Post agrees with this blog: A civilian nuclear technology deal between India and the United States is a positive step, even though it makes plain what Iran and North Korea have already demonstrated: the Non-Proliferation Treaty is not worth the paper it is printed upon.

China blogging

Two excellent links from Danwei:

• China's first blogger, Isaac Mao, talks about the beginning of China blogging, censorship, and Google.
• FT: China needs proof of democracy’s advantage. A must-read analysis piece from Arthur Kroeber, who gives an overview of the current ruling elite. I am pondering an extended blog post, going into detail on this.

Obstacles to China's growth

Today, Chinese president Hu Jintao emphasized growth as a higher priority than inflation. Seeking Alpha noted this in their PBoC relaxes lending caps article, which also noted potential shifts in RMB policymaking apparatus.

Those articles led me to an excellent blog post from March 2008, summarizing challenges to China's growth: ROI, energy efficiency, pollution, desertification, demographics, high sustained outside investment levels and slumping business competitiveness.

And while ringing alarm bells regarding copper, this article paints a useful picture about the slowing state of Chinese exports, and commodities in general.

Finally, the current issue of Foreign Affairs examines the US-China partnership and speculates about future policy improvements, suggesting in particular a "G-2".

Food price linkage to ethanol

Interesting article, related to my previous post: Secret report: biofuel caused food crisis. Internal World Bank study delivers blow to plant energy drive.

The key paragraph (as it relates to my last post):

President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: "Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases."

With regards to biofuels, using a food source was always a stupid idea. Waste biomass is a much more plentiful source, one that does not compete with food.

With regards to India and China and my last post, that industrialization and urbanization shift is not something that occurs in a matter of months, like these food price increases.

The article doesn't discuss how much of the food price increases were linked to oil price increases (food must be transported to the market, after all). Analysis I've read in FT and elsewhere seems to think that the oil price increases are not yet fully factored into food prices, implying further price increases are coming.

Just the facts

World population: 6.6 billion (link)
India population: 1.1 billion (link)
China population: 1.3 billion (link)
United States population: 0.3 billion (link)

Our industrial revolution began in the late 1700s. Our Western society took decades upon decades to fully industrialize, with progress continuing (and accelerating) to this day.

The rapid industrialization and urbanization in India and China has been going on for, maybe, 10 years. That means 36%, or one third of the entire planet, is moving at light speed towards Western-style lifestyles and consumption rates. Raw materials are at record prices, as China in particular requires ever-more food, oil, steel, concrete, ...

The law of supply and demand is like the law of gravity: it just is. When there is more demand, prices will go up and consumption will go down. When there is less demand, the reverse occurs. Politicians cannot wish away the increases in demand from China and India.

American politicans — both Democrats and Republicans — have their favorite blame targets (evil oil companies, evil environmentalists that prevent domestic drilling), but don't believe the hype.

We need to prepare our country for some fundamental shifts, such as a country four times as big as ours, all wanting cars and Taco Bell.

And don't even get me started on looming demographics in Western countries (thanks D for the link), and what happens when you build monetary programs like Social Security on the assumption that population will always increase over time.