Sunday, December 26, 2010

The comeback clan

Imelda Marcos

Marcos Family: Philippines' 'Comeback Clan'

AOL News, May 14, 2010 -- There may be no second acts in American lives, as F. Scott Fitzgerald once wrote. But that rule certainly doesn't apply in the Philippines.

Monday's election saw the political resurgence of the Marcos family, with the 80-year-old, shoe-loving matriarch Imelda Marcos winning a House seat, her son Ferdinand "Bongbong" Marcos Jr. winning a Senate seat, and her daughter Imee winning a provincial governor's seat, all from their family stronghold of Ilocos Norte, in the north of the archipelago.

Outsiders might find it odd that a family linked to allegations of massive plunder and the Philippines' notorious martial law era could remain a political force.

But commentators say it reflects a distinctly Filipino brand of clan-based, patronage politics -- and shows how far the country's democracy still has to go before it grows up.

"I don't want to underestimate the Filipino people, but I think this [election] was a chance to make the right choice, and unfortunately we still failed -- and I'm not just talking about the Marcoses," said Maria Belen Bonoan, senior program officer for the Philippines at the Asia Foundation.

She noted as well the second-place showing of a convicted plunderer, former President Joseph Estrada, in Monday's presidential race. (Estrada is now alleging fraud in the vote, the results of which are not yet official.)

"Sometimes I feel ashamed about the whole thing, but I think it's part of our progression and evolution," Bonoan said. "We democratized a long time ago, but as far as real democracy goes, people are still trying to grasp and learn."

The Marcos family was worth an estimated $35 billion in the 1970s at the peak of their power, Imelda told a British journalist in 2006. Autocrat Ferdinand Marcos -- Imelda's late husband -- announced martial law in 1972, banned free media, dissolved Congress and oversaw a repressive regime that jailed and tortured its political opponents, some of whom disappeared without a trace.

In a 2004 report, Transparency International, the anti-corruption watchdog, ranked Ferdinand Marcos as the second largest alleged embezzler among world leaders in the past two decades with $5 billion to $10 billion in alleged graft, a spot behind Mobutu Sese Seko, the rapacious "Father of the Nation" of Zaire (now Democratic Republic of Congo).

The Marcos family has been the target of some 9,000 criminal and civil suits, but no one in the family has done jail time. The suits are generally dismissed or overturned on appeal, though a few are still pending.

Imelda denies any corruption by herself or family members, telling Reuters recently that "Marcos was not a thief" and that she hoped to get back some of the $5 billion in alleged ill-gotten family assets already seized by the government.

Ferdinand Marcos' regime crumbled in 1986 after one of his most outspoken critics -- Benigno "Ninoy" Aquino, father of the likely new president Benigno "Noynoy" Aquino III -- was shot and killed on his return to the Philippines. That assassination remains unsolved to this day. The "People Power" movement led by Ninoy's wife, Corazon Aquino, forced Marcos from office, and he and Imelda fled to the U.S.

Locals in Ilocos Norte don't seem disturbed by the Marcos family's checkered past. They gave Imelda a landslide victory -- about 80 percent of the vote -- on Monday.

The Asia Foundation's Bonoan explains that by noting that many Filipinos still base their votes on clan loyalties. She added that throughout the Philippines, vote-buying is pervasive.

Ferdinand 'Bongbong' Marcos, and his elder sister Imee Marcos

Ramon Casiple, executive director of the Manila-based Institute for Political and Electoral Reform, said that locals remain loyal to the family due to a long history of patronage.

"During Marcos' time, the whole province was pampered with so many infrastructure projects," he said. "So they managed to retain that support, even during People Power."

He said the Marcos family possessed in spades that most important of political assets: name recognition. And younger voters "have no experience of the martial law period," he said. The junior Ferdinand, "Bongbong," has charisma, to boot. "He's young, handsome and articulate," Casiple said. "If you don't know about the background of the Marcos family, you would be really attracted to him as a politician."

The comeback of the Marcos family and Aquino's likely ascent to the presidency sets the stage for a high-profile family feud over the legacy of Ferdinand Sr.'s rule.

Media reports have raised talk of a settlement with the Marcos family over a long-running effort to recover all of the family's allegedly ill-gotten gains.

Aquino has also said he will create a "truth commission" to probe his father's assassination, including possible links to Marcos, as well as other martial law-era crimes. But analysts say the probe is unlikely to get far, as many of the key figures are dead and the ones still living aren't talking.

The Marcos family has long campaigned for a military burial with full honors for Ferdinand, whose body now lies on display in a glass case in the family's mausoleum. Two presidential candidates were open to the idea. But not Noynoy Aquino. "We have so many problems from his time until now, why should we honor him? " he told reporters.

Bonoan raised a more practical concern, quipping: "What are they going to bury? It's not a real body anymore, it's wax. Everybody knows that, it's not a secret."

Original site

Noynoy set to take power

Benigno Noynoy Aquino attends a campaign rally April 28, 2010, in Manila, the Philippines.

Aquino Victory Looks Certain in Philippines Vote

AOL News, May 11, 2010 -- Benigno "Noynoy" Aquino, the son of the iconic figures of the Philippines' move to democracy, is set to take power after the nation's first automated national elections went off better than expected, albeit with widespread glitches.

The result isn't yet official, but in counting today, Aquino had 40 percent of the vote, with the trailing candidates at least 15 points behind. His mother, Corazon Aquino, was president from 1986 to 1992, after his father, Benigno, a senator and democratic activist, was assassinated in 1983.

Four of Aquino's rivals have conceded, with only former president Joseph Estrada, second in the polls, refusing to give up.

The election saw isolated cases of the violence that plagues Philippines elections, and snafus with automated voting machines. But the turnout was a high 75 percent, and the vote appears to have been a success.

Ahead of Monday's vote, final testing saw problems with the voting machines, and some observers feared that elections could fail or fuel fierce post-vote protests because of technical problems.

When his win is made official, as is now expected, Aquino will face the daunting task of bringing change to this perennial Asian underachiever, which is rich in natural and human resources but has lagged its regional peers due to widespread corruption and the dominance of a landed elite.

Aquino ran on an anti-corruption, anti-poverty platform and successfully sold himself as the "cleanest" candidate, while his rivals were tainted with allegations of graft. "I will not only not steal, but I'll have the corrupt arrested," he told reporters in a news conference today, according to The Associated Press.

But some wonder whether the un-charismatic Aquino, himself part of an elite family with large property holdings, will be able to deliver on his promises.

He has pledged, for example, not to raise taxes, not to distribute pork-barrel spending, and to pursue the outgoing, unpopular president Gloria Macapagal-Arroyo on corruption charges, according to the Financial Times.

But one political analyst says he's heading for a reality check. "He needs a little bit more of pragmatism or political reality will overwhelm him," says Ramon Casiple, head of the Institute for Political and Electoral Reforms, told the Financial Times.

At least nine were killed in election-related violence, with supporters of rival candidates involved in a shootout with police.

On election day Monday, Aquino himself experienced a five-hour delay in voting due to problems at his election station in Tarlac, his home province, according to ABS-CBN News.

His rival Estrada took exactly eight minutes to vote, out of superstition that eight is his lucky number, since he is the eighth of 10 children, according to the Manila Bulletin. Estrada, a former movie star, was ousted in 2001 amid allegations of massive graft. He was later convicted, then pardoned.

Monday's election also featured world boxing star Manny "Pacman" Pacquiao's bid for a House of Representatives seat (he was ahead in the polls as of late today), as well as the comeback of Imelda Marcos, the shoe-collecting wife of deceased autocrat Ferdinand Marcos. She won a House seat, as did outgoing president Arroyo.

Filipinos enthused about the new automated voting system in comments posted on BBC, saying it had curbed monkey business on election day.

Social media also figured prominently in the election, with one Filipino media outlet, ABS-CBN News, gushing that its Twitter page on the vote -- tagged #halalan, the Filipino word for elections -- vaulted past pop star Justin Bieber on Monday to become the third-highest "trending" topic.

Original site

Noynoy in the lead

Aquinos' Son Has Big Lead in Philippines Race

AOL News, May 7, 2010 -- A son of pro-democracy icons looks set to win Monday's presidential election in the Philippines. But problems with a new automated voting system have cast a shadow of anxiety over the vote.

A win for leading candidate Benigno "Noynoy" Aquino would return power to a dynasty that has near saint-like status in the Philippines.

His father, Ninoy Aquino, was a democracy activist and vocal opponent of martial law. He was gunned down and killed at Manila Airport in 1983. His mother, Corazon Aquino, subsequently led the famous "People Power" movement that ended martial law and ushered in democracy. She was later elected president from 1986 to 1992.

But skeptics doubt whether their uncharismatic son can effectively tackle the problems -- especially corruption -- that have fed the country's decline from one of Asia's richest nations after World War II to a perennial laggard.

"He has done a very, very effective job as presenting himself as the least corrupt candidate," said Pete Troilo, director of business intelligence at Pacific Strategies and Assessments, a risk consultancy. "But I doubt that he has the fire in the belly to really implement the shift in governance that the Philippines needs."

Aquino has 42 percent support, up four points from mid-April. Two trailing contenders are in a statistical tie at almost 20 percent each, according to a poll released today.

That makes Aquino an overwhelming favorite to win Monday's vote, although his competitors insist a comeback isn't impossible.

The wrench in the works: A new automated voting system, to be used for the first time in a nationwide election, was found to have serious glitches in a final test this week.

The technical hiccup led to talk of a possible postponement of the election. That could result in a succession crisis since the current, unpopular president, Gloria Macapagal-Arroyo, must step down June 30 according to the constitution. For now, election officials are insisting the vote will go ahead Monday.

Philippines elections are notorious for deadly violence, vote-buying and other fraud, and post-vote protests. Recent years have also seen frequent worries that Arroyo may try to extend her term. Arroyo's government has repeatedly denied this and said she will step down as legally required.

Any technical snafus delaying a result could fuel such conspiracy theories and worsen the Philippines' usual post-election unrest. Troilo, the risk consultant, said his firm is forecasting an "extremely high level of protests" after the election because of the uncertainty of the new voting system. "Apprehension is at an all-time high," he said.

Under pressure to ensure the new system works smoothly, Philippines election commission officials recently did something typical in this heavily Roman Catholic country.

They prayed. A lot.

"We pray, O God, that by your Divine Intervention, we will have the most honest, peaceful and orderly elections on May 10, 2010, of which we can be proud as the most credible electoral exercise in the history of our nation," said Commission on Elections chairman Jose Melo, in a prayer session at the commission's office with the Archbishop of Manila, according to a report in the Philippine Daily Inquirer.

Corazon Aquino's death last year led to an emotional outpouring and calls for Noynoy to take up the torch and run for office. He agreed reluctantly to follow his parents' path -- after retreating to a convent to seek spiritual guidance. "Why should I veer away from their footprints?" he told Time magazine.

But critics note that he served in the Philippines Senate without distinction and say he lacks the strong personality needed to clean up Philippines politics. The country ranked No. 139 in Transparency International's 180-country Corruption Perception Index last year, far worse than China (79), India (84) or even Indonesia (111).

Others complain that Aquino represents just another elite, landed family and as such won't likely be able to address the Philippines' sharp rich-poor divide. The country's per-person GDP, at $3,300 on a purchasing-power basis, lags behind many Asian peers, and about one-third of the Philippines' 100 million population live in poverty, according to the CIA World Factbook.

Aquino's main rival, Manuel Villar, is a self-made billionaire with a rags-to-riches story, who has tried to run a populist campaign promising more significant land reform. But his numbers have sagged in recent weeks amid criticism that he's too close to the deeply unpopular, outgoing president, Arroyo.

Villar is now statistically tied with movie star and former President Joseph Estrada, who was ousted in 2001 by a second "People Power" movement amid allegations of corruption.

The Philippines' economy relies in part on huge remittances from Filipinos working abroad. The country is also Asia's second biggest call center outsourcing location after India, hosting operations by most of the top U.S. outsourcing firms.

Original site

Sunday, May 23, 2010

Taiwan debates trade pact

Weighing the costs in Asian trade talks

International Herald Tribune, May 12, 2010

In a dimly lighted factory off a dusty road in southern Taiwan, Liao Li-hsin, 29, smacks a leather sandal into shape.

He pulls a shoe from a pile, snugly inserts a bright yellow plastic fake foot, and gives the leather straps a few thwacks with a hammer. Then he tosses the sandal on a pile and repeats.

Mr. Liao is one of tens of thousands of workers making shoes in Taiwan, mostly for consumers on the island.

As negotiations move ahead on a Taiwan-China trade deal that could lower tariffs on handmade shoes and hundreds of other products from the mainland, fears are mounting that the island’s traditional industries — like shoemaking — may suffer, even as high-tech, financial services and other sectors gain from freer access to the giant market across the strait.

The government, however, contends that the benefits would far outweigh the costs, and Taiwan’s president, Ma Ying-jeou, hopes to use the agreement to fully normalize economic relations with Beijing while expanding the island’s access to other markets.

“We can handle diplomatic isolation,” Mr. Ma said last month, “but economic isolation is fatal.”

The Economic Cooperation Framework Agreement, the Ma administration says, would be a prelude to similar deals with Malaysia, Singapore and, eventually, Japan or the United States. “Once E.C.F.A. is signed, we want to sign other free trade agreements and try to use mainland China to link with international markets,” a trade official involved in the negotiations, Hsu Chun-fang, said.

In recent years, Taiwan has watched as rivals like South Korea have signed free-trade deals throughout Asia, becoming more competitive in industries like machinery making and pushing their per capita gross domestic product ahead of the island’s.

Taiwan has been hampered in negotiating similar agreements because Beijing views the island as a part of China and objects to other countries’ signing formal treaties that could strengthen Taiwan’s claims to independence. The island has trade deals only with five Latin American countries, which buy a tiny slice of its exports.

The economies of Taiwan and China are already connected. Taiwan has invested $150 billion in China since the early 1990s, according to a Taiwan government estimate. About 40 percent of Taiwan’s exports already go to China, where they face average tariffs of 9 percent. Half of those exports are semifinished goods that are shipped to factories for assembly and other value-added services and then re-exported, according to Mr. Ma.

Yet many of the details remain vague, and that has fueled economic as well as political worries.

The pro-independence opposition says the deal would make Taiwan’s economy too dependent on China and would help conglomerates at the expense of small companies. It is gearing up for protests and is likely to employ stalling tactics in the legislature, where it holds 33 of 113 seats.

The opposition Democratic Progressive Party says the agreement would worsen income inequality and would not create jobs. It says the negotiations lack transparency and that the deal is politically dangerous given China’s goal of unification with Taiwan.

“China is always ambitious when dealing with Taiwan,” said Hsieh Huai-hui, deputy director of international affairs for the opposition party. “So we wonder if sovereignty has been the price for China opening its market for Taiwan.”

Mr. Ma’s government has sought to allay fears by insisting that the deal would not allow mainland workers into Taiwan or remove restrictions on mainland agricultural imports — at least at first. As for shoes, the government says they are not on the list of sectors to see the first tariff cuts.

The government says it will establish a 10-year fund of 95 billion Taiwan dollars ($3 billion) to help traditional businesses compete. Officials have identified 17 industries, including shoemaking, as particularly vulnerable. A special “Made in Taiwan” consumer label has been developed to promote high-quality products made locally.

The government has promoted a study that it sponsored that found that cross-strait trade liberalization could create 260,000 jobs and add 1.65 to 1.72 percent to Taiwan’s G.D.P., depending on the scope of changes.

Economists and research groups affiliated with the opposition dispute that forecast.

In a report on the trade agreement, the Standard Chartered bank did not estimate how the deal would affect the island’s G.D.P. but said it would “boost Taiwan’s long-term growth potential.”

The government said most new jobs would be in sectors like machinery, where exports could increase. Most of Taiwan’s machine products are produced for export, and China buys about 30 percent, followed by Southeast Asia at 15 to 20 percent, according to Wang Cheng-chin, president of the Taiwan Association of Machinery Industry.

But Taiwan’s machinery faces tariffs of about 10 percent in China and 3 to 5 percent in Southeast Asia. South Korea, in contrast, has a trade deal with the 10 members of the Association of Southeast Asian Nations and now exports machines there tariff-free, Mr. Wang said. South Korea and China are studying a trade deal.

The framework agreement would help Taiwan’s machine makers compete, especially with South Korea, though Mr. Wang emphasized that companies needed more than the trade deal. “First, we need good relations with mainland China,” he said. “Then, after signing E.C.F.A., we can talk with Southeast Asia, the E.U. and other countries.”

Petrochemical companies and automakers like Yulon Motor, which has partnerships with Chinese carmakers, could also benefit.

In the financial sector, recent agreements have paved the way for cross-strait mergers and acquisitions. But Taiwan banks want the framework agreement to give them preferential access that could, for example, shorten the waiting time for doing retail business in renminbi on the mainland.

Ms. Hsu, the trade negotiator, said talks had so far focused on issues like rules of origin, dispute settlement and “safeguard” tariffs that could, under some conditions, be slapped on Chinese imports if they were found to be damaging local industries. The list of sectors to see the first tariff cuts was likely to be “very limited,” she said, without giving details.

Past cross-strait agreements have become law after 30 days without legislative debate or a vote. But Ms. Hsu that said because the framework agreement was so wide-ranging and involved tariff cuts, more legislative involvement was required by the Constitution, though the exact process remained to be negotiated.

Though the opposition does not have the votes to block a deal, lawmakers could stall it with filibustering tactics. Taiwan’s legislative speaker often tries to broker compromises on crucial bills out of respect for the minority. One opposition party has proposed a referendum on the agreement; that application is under review.

To drum up public support, the government has begun a media campaign that includes rap videos and advertising. Mr. Ma and the opposition leader, Tsai Ying-wen, tangled over the agreement in a widely watched television debate last month.

Ms. Tsai accused Mr. Ma of recklessly pushing through a deal, saying he was creating a “false sense of urgency” when careful study was needed. The biggest difference between the ruling and opposition parties, she said, was that “we want to face China together with the world,” while Mr. Ma’s party “wants to go through China to deal with the world.”

But most commentators declared Mr. Ma the winner with his upbeat, folksy pitch to the cameras.

Accusing Ms. Tsai of lacking faith in Taiwan companies’ ability to adapt and compete, he asked, “Are we going to choose self-confidence, or are we going to choose fear?”

Original site

Was Gumby Shanghaied?

Has Gumby Been Robbed in Shanghai?

(April 30) -- The Shanghai Expo, the biggest world's fair ever, opened today amidst fireworks and lavish performances from Hong Kong movie star Jackie Chan and Italian tenor Andrea Bocelli.

But as the event's five-month run begins, at least one nagging question remains unanswered: Is the ubiquitous symbol of the extravaganza a straight rip-off of Gumby?

The issue came up amidst uproar at a Shanghai news conference April 23, when a National Public Radio reporter produced pictures that highlighted similarities between the beloved, bendable green American character and the Shanghai Expo's mascot, Haibao.

According to NPR, Expo spokesman Xu Wei responded, "Haibao was unveiled a long time ago. If anyone thinks that their copyright has been violated, that person would already have used legal means to address this by now."

In comments to United Daily News, Haibao's Taiwanese creator Wu Yongjian strongly denied plagiarism, saying he had not seen the Gumby character before conceiving Haibao. He said the accusations were a "huge insult to his integrity" and reputation, and that he would not rule out legal action against anyone making reckless claims.

Gumbygate followed similar charges in the Japanese media that a tune used as an "official" song for the Shanghai Expo was a knock-off of a Japanese pop song, and that the Expo's China Pavilion borrows concepts from a Japanese architect.

Japan's NTV News even tracked down Joe Clokey, the son of Gumby's late creator Art Clokey. "It looks like they were influenced by Gumby, because that's Gumby's eyes, Gumby's shape, and the cowlick, [it's] a little bit like Gumby's hair," the junior Clokey said.

"When people want to use Gumby's shape ... they should just contact us. Gumby could be in China," he said, before joking, "Looks like he already is!"

Chinese blogger Han Han had other concerns. "Haibao makes my head hurt," wrote Han Han, as translated by China Smack. "When everyone saw that he was flat, it raised a big problem for those who were trying to make three-dimensional Haibaos: what should his back look like? Does he have a tail? Does he have a butt? Does he have a butt crack?

"No one knew, so when we saw statues of Haibao in the city, the front sides were all the same, but some Haibaos had backs without cracks, and others had cracks. But recently, because the Haibaos without butt cracks were more numerous, the butt crack has been announced officially as having left China."

See original story for a brief look at how the two cow-licked humanoids stack up.

Taiwan's real-life Sopranos

A Taiwanese godfather known as "Fool-face" goes out in style.

Global Post, May 4, 2010

TAIPEI, Taiwan — They came by the thousands to pay their respects — politicians, Buddhist nuns and hundreds of tough-looking guys in black.

The object of their veneration: Lee "Fool-face" Chao-hsiung, a top godfather of the Taiwanese mob who died in March.

Lee went out in style last week, his body carried to a crematorium in a 108-car convoy of Rolls-Royces, Mercedes-Benzes and Beemers. As a nervous phalanx of police rolled videotape, the cream of Taiwan's underworld filed past, joined by scores of politicians, female models and chanting, robed nuns and monks from the island's top Buddhist groups.

Like their counterparts the world over, Taiwan's gangsters boast colorful nicknames and truck in drugs, gun-running, prostitution, human trafficking, construction firm kickbacks, petty extortion and other racketeering.

But what sets Taiwan's wise guys apart from their Sicilian or Japanese brethren is the extent of their open involvement in political and religious life. No event better highlights that tangled web than a mob funeral like that of "Fool-face."

"Some gangsters aren't so bad, and have close relations with political parties and local religious factions," said Chiu Hei-yuan, a sociologist at Taiwan's Academia Sinica. "That's a part of Taiwan society."

In Taiwan, gangsters don't just "buy" politicians, they become them. About 15 to 20 percent of local township and county councilors and township heads are gangsters, or "heidaoren" (people of the black way) according to Chao Yung-mao, an expert on Taiwan politics and the mob at National Taiwan University.

The numbers are especially large in rural central and southern Taiwan, where traditions and old-boy networks still run strong.

He said about four or five gangsters hold office in the national legislature, and one wise guy even held a powerful county commissioner seat.

Chao dates the mob's big move into politics to the 1980s, when illegal lottery fever swept Taiwan and gangsters were looking to get a cut of the action. "That was a good time to get into politics, so you could host the games and make money," he said.

"Fool-face" didn't hold elective office. Instead, he made a name as a trusted judge of underworld disputes, earning him the moniker "Big Fool-face" in his later years, according to the China Times. He was a top figure in the Tiandaomeng, or Heavenly Way Alliance, a "super-group" of local Taiwanese gangs formed by top mobsters while they were jailed together in a crime sweep, said Chao.

Heavenly Way's underworld competitors are "Mainlander" gangs like the Bamboo Union with roots in the 1940s Kuomintang exodus to Taiwan; that rivalry was the backdrop of a recent hit film "Monga."

Gangsters also have indirect pull on politics, leaving office-holders bound in ties of obligation. They can help mobilize votes, through "vote-buying" or intimidation. That can be important in a close election, said Chin Ko-lin, an expert on Taiwan organized crime at Rutgers University.

"For a politician, what are you going to do, take the risk of losing an election?" said Chin. "And not many people will criticize you for showing up at a gangster's funeral."

The politicians in attendance at Fool-face's farewell included more than 10 legislators, the legislative speaker (who doubled as the head of Fool-face's funeral committee), the local county commissioner, the local city council head and a prominent mayor, according to the China Times. The mayor said he was there to show gratitude for Fool-face's $630,000 gift to the city.

The don also donated large amounts to Buddhist groups, which isn't a surprising development. Gangsters here attempt to influence religious life. One mobster-turned-legislator runs a famous temple in central Taiwan, not far from Fool-face's home turf. Chiu, the sociologist, says he has difficulty explaining to foreign colleagues how local people could accept this. (Imagine a Michael Corleone who doubles as a congressman and also runs a prominent local Catholic church.)

Chiu suspects it has something to do with Taiwan's casual take on religion. "Taiwan folk religion is so secular. It's not sacred," he said. Rural Taiwanese worship a jumble of Taoist, Buddhist and folk figures, and gods who don't answer prayers are promptly kicked to the curb. Temples are rowdy places, with cell phone ring tones mixing with the clacking sound of divination blocks hitting the ground.

Gangsters also have strong support in their home communities, usually poor farming or fishing villages, said National Taiwan University's Chao. They make their money on the sins of the city, while doling out cash, favors and "face" to their loyal and affectionate hometown crowd.

"They take care of their home communities, and only 'hunt' or do something illegal in urban areas," said Chao. "That's why they can win elections."

Chao said gangsters' political reach distorts Taiwan's democracy and hurts society. He cited poor-quality construction and the appointment of gangster cronies to local government posts as just two examples.

But he was hopeful that change is coming, even if slowly, as rural traditions fade.

"Urbanization is a big challenge for the mafia world," said Chao. "Young people don't care as much about 'guanxi' [personal networks of obligation] — they care about a politician's performance. That's a good environment for change."

Just don't tell that to Fool-face.

Original site

Mob funeral captivates Taiwan

Mobster's funeral draws the great and good

AOL News, April 27, 2010

TAIPEI, Taiwan (April 27) -- How big is organized crime in Taiwan? Very big indeed, judging by the attendance at this week's funeral of a top mob boss, which drew prominent politicians, Buddhist monks, TV variety show celebrities and foreign dignitaries.

Gangster Lee Chao-hsiung died last month of liver cancer at the age of 73. The 108-car funeral procession conveying his body to a crematorium Monday included a Rolls-Royce hearse, Mercedes-Benzes and BMWs. Fetching female models carried large signs announcing each delegation in what amounted to the closing ceremony for an Olympian of Asian organized crime.

It was believed to be the island's biggest ever gangster funeral, with more than 20,000 attending and lines of spectators stretching for more than a mile.

"He was the big boss, and it's natural that many gang members want to bid a last farewell to him," said an assistant to a Taiwan legislator quoted by Agence France-Presse.

What was perhaps more remarkable were the other guests. They included the island nation's legislative speaker, who doubled as head of the funeral committee; a prominent mayor; and more than 2,000 chanting Buddhist monks and nuns.

Why all the reverence? Though details of Lee's past were scant, he was known as an arbiter of underworld disputes. He helped negotiate the safe release of several kidnapped politicians, according to AFP.

And then there's the money. He donated just under $2 million to four of the island's main Buddhist groups and to his native city of Taichung, according to the the Apple Daily. Donations at his funeral yielded another $1.6 million for charity, even after deducting $1.2 million to cover the funeral costs. It's not clear to whom or what that money will go, the Apple Daily said.

"Everyone pushed me to lead the funeral committee," Taiwan's legislative speaker told Taiwanese reporters. "I think he has a benevolent heart," said Taichung's mayor of the deceased wise guy.

Gangsters play an ambiguous role in Taiwan society, with many engaging in both criminal activity -- "the black path" in Chinese parlance -- and legitimate business ventures, or "the white path." They are often enlisted to arbitrate business disputes.

"In Taiwan it's not a big deal to be associated with an underworld figure," said Chin Ko-lin, an expert on Asian organized crime at Rutgers University. "In fact, a lot of people are even proud of it."

Gangs have long had close ties with big businesses and politicians, and moved into the construction and entertainment industries in the 1990s. Chin said some Taiwan politicians enlists gangsters' help at election time and attend funerals and other functions to tighten bonds.

"They want the support of the Taiwan underworld," said Chin. "It shows that the whole issue of 'black-gold' [corrupt] politics is going to continue to exist for a long time in Taiwan."

Monday's funeral drew a star-studded cast from Taiwan's underworld, according to the Apple Daily. They included a top figure from the Bamboo Union, Taiwan's largest gang, leading a 500-mobster delegation; the head of the Heavenly Way Alliance with another 500 wise guys; and Four Seas head Chang "Brother-man" Jian-ying, with 300 gangbangers.

Gangsters from Japan's feared yakuza and Hong Kong and Macau triads also made a showing.

Large-scale mob funerals are a regular occurrence in Taiwan and are generally tolerated by police. A 2007 funeral put to rest former Bamboo Union leader Chen Chi-li, who had spent his latter years in a luxury home in Cambodia after serving time in Taiwan for his role in the murder in California of a Taiwanese journalist. One of Taiwan's top pop stars attended that large service.

But Rutgers University's Chin said that Taiwan cops were unhappy with an ostentatious funeral of a top Four Seas gang boss, and since then have worked out funeral guidelines with gangsters.

As a result, youths under 18 were not allowed to attend Monday's funeral. The police detained 148 such kids and called their parents to come get them, according to the Apple Daily.

Original site

Saturday, April 24, 2010

Beef-storm hits Taiwan

US beef imports rear a very ugly head. Cow patties are on the menu, too.

Global Post, April 23, 2010

TAIPEI, Taiwan — Is the tongue an internal organ?

That's the timeless question that gripped Taiwan this week, as the issue of U.S. beef imports once again reared its ugly head.

The spark was Taiwan officials' statement Monday that U.S. beef tongues, testicles, tails and other choice bits are not "internal organs" and therefore not included in a ban on some U.S. beef products passed in January. This meant such imports would be allowed, albeit with close inspections.

That led to an outcry from opposition lawmakers, who accused the government of being sneaky, and splitting hairs.

Just a day later, Taiwan's government flip-flopped, saying it now "suggested" that Taiwan firms not import tongue and some other U.S. beef bits for the time being, until public worries are addressed.

The issue is ostensibly about health concerns over mad cow disease and its human variant. But it's been politicized by opportunists looking to bash President Ma Ying-jeou's government, as well as critics of Ma's governing style. America's top diplomat here said as much this week to Taiwan reporters in remarks aired on Taiwan TV.

"It's unfortunate that some people, for political reasons, are making this into a new issue," said William Stanton, head of the American Institute in Taiwan, which handles U.S.-Taiwan relations in the absence of formal ties. "I eat beef tongue myself, and I don't think it's a problem."

In fact, U.S. beef has become a political issue across East Asia. After North Korean nukes and the value of the Chinese yuan, it's one of the biggest headaches for American diplomats.

It all started in 2003, when a single cow in Washington State tested positive for mad cow disease. The brain-wasting disease is linked, through tainted beef consumption, to variant Creutzfeldt-Jakob disease (vCJD) in humans. There's no known cure, and it's fatal.

Japan, then America's No. 1 export market for beef, promptly enacted a ban on U.S. beef after the finding. Taiwan, South Korea and other countries followed suit.

Since then, the U.S. has insisted its beef is safe and pressured Asian countries to re-open their markets — with mixed success. Japan opened its market to some imports in 2006, only to tighten up again after banned bone parts were found in shipments from the U.S. Tokyo recently announced it would re-open beef talks with the U.S.

Taiwan's political beef-storm hit last autumn, when the government announced it had inked a deal with the U.S. to relax its ban and allow some imports. Protesters were furious that Ma's government had not consulted with the legislature or communicated with the public on the issue first.

Perhaps the most notorious of the anti-U.S. beef protesters was Chu Cheng-chi, a grad student in sociology at Taiwan's top school, National Taiwan University. Incensed by the government's move and frustrated at protesters' inability to change policy, he decided drastic tactics were in order.

So he went to Yangmingshan, a cowfield-dotted, scenic mountain area north of the capital, and collected a cow patty. He then took a video camera-toting friend to the Presidential Office, propped up a table, and proceeded to fix and eat (with ketchup) a cow-dung burger. See his film here:

Under pressure from protesters like Chu, ruling party and opposition lawmakers and the media, the government backtracked. The legislature passed a law keeping a ban on U.S. beef products believed to be most at risk for mad cow disease, including ground beef, skulls, eyes, intestines and other organs.

On the day that law passed, Chu got a large tattoo on his back with a clenched fist and the words "The people stand up," in Chinese.

In an interview this week, he insisted he really ate cow-dung, saying, "I decided we needed a more special and personal way to make our demands known."

He agreed that the beef issue had become politicized. But he said the latest flap again showed the Taiwan government's contempt for the public.

"They didn't talk to the legislature or people first. They didn't communicate," said Chu. "The people's feeling is that the government doesn't respect us, and that it's trying to sneak these products into Taiwan."

Chu ticked off a list of concerns about U.S. beef. He said there was no cure for vCJD, and that consumers couldn't avoid risks by skipping beef, since tainted beef parts could make its way into other products.

Moreover, he said, the large-scale U.S. beef industry, with its huge machinery and chemical fertilizers to grow cow feed, is environmentally unfriendly. "It takes up so many resources," he said. "It's such a wasteful product."

Meanwhile, U.S. beef exporters, powerful U.S. politicians in beef-exporting states and U.S. trade officials have grown increasingly frustrated with Taiwan and other Asian trade partners. Trade officials this week said they were "deeply disappointed" at Taiwan's planned inspection process, and other U.S. officials insisted American beef is safe.

No vCJD cases have been linked to consumption of U.S. beef. (Of three known U.S. cases of vCJD, two were "likely exposed" in the United Kingdom, and the third was "most likely" infected as a child in Saudi Arabia, according to a recent U.S. Centers for Disease Control and Prevention fact sheet.)

And American officials cite a 2007 ruling by the World Organization for Animal Health that U.S. beef was safe for export "provided that certain slaughter and beef processing conditions are met." They note that there's been no case of mad cow disease in any U.S. cow born after 1997.

But it's hard to convince the Taiwanese public, especially when they can watch a cow-dung-burger-eating protester instead.

Original site

Chinese chase porn star

Porn star prompts Chinese to jump "Great Firewall"

AOL News, April 21, 2010

TAIPEI, Taiwan -- In the past few weeks, thousands of Chinese netizens have successfully jumped the "Great Firewall," China's cyberblockade on sensitive Internet content.

But they're not after democracy, human rights or Taiwan independence websites. No, they're chasing a Japanese porn star.

The porn star in question, Aoi Sola, launched a Twitter site at the end of March. Her Chinese fans went nuts over the news -- but then realized Twitter is blocked in China.

No matter -- they've been distributing software among themselves that allows a user inside China to get around the "Great Firewall." Thousands have piled into Aoi Sola's Twitter site already, in a wave of interest that took the Japanese star by surprise.

"What sparked so much discussion about me by Chinese people? What happened?" she wrote, according to the Dongguan Times. "Please tell me."

The flock to Aoi's Twitter site shows how easy it is for determined Chinese to get around Beijing's cybercontrols. But it also highlights what types of content will actually motivate them to go through the trouble.

"In China you can get anything you want on the Internet, you just have to want to bad enough," said David Wolf, a Beijing-based tech industry expert at Wolf Group Asia.

The Dongguan Times ran photos of the star with an April 13 article headlined "Japanese 'top girl' opens microblog, 15,000 Chinese netizens 'jump the wall' to pay homage." The paper reported that users who needed a helping hand over the Great Firewall could get instructions by e-mailing

An e-mail to that mailbox got an automated response with detailed instructions in Chinese on how to access Twitter from inside China, plus links.

China's Great Firewall consists of sophisticated controls to block Chinese users' access to content deemed sensitive by the Beijing government. Such content includes excessive criticism of the central government, promotion of Tibet or Taiwan independence, anything related to the banned religious group Falun Gong and pornography.

Wolf said the most common means of jumping the Great Firewall are with a proxy server, which "masks" a user's location and activity, or with a virtual private network that creates a "private tunnel through the Internet." The latter is used by foreign banks and other firms in China to secure data transmission, he said, but it is not that easy for normal Chinese to get one.

"It's simple for someone with some minimal technical acumen" to scale the Great Firewall, said Wolf. "But that means that it's too difficult for most of China."

Aoi Sola's fans got up to speed quickly. In a post on her blog translated by, a writer purporting to be her gave a shout-out to the wall jumpers. "The 'Twitter incident' has caused reverberations in China and Japan. Speaking truthfully, this was a little unexpected, even for me,"'s translation read.

"Speaking 'without modesty,' I know that there are some Aoi fans in Asia," she wrote. "But when I directly faced the figures on Twitter, I could hardly hide my surprise. Thanks everybody for tweeting about me."

As of today, Aoi had more than 54,000 followers on Twitter. In one recent "tweet," she writes about an iPad purchase, in Japanese and English ("Listen!! I bought [an] i pad !! yeah! yeah!" she says).

Aoi has responded to the onslaught from the mainland by saying she's trying to learn Chinese and likes the proposal from one love-struck (or perhaps just lust-struck) Chinese for a fan club meet-up in China.

Josephine Ho, coordinator of the Center for the Study of Sexualities at Taiwan's National Central University, said the rush to Aoi's Twitter site reflected tight controls on sexual content in China.

"The reason there's such eagerness is because there's such a strong clampdown on sex and sex-related information, not only in China but also in Taiwan and Hong Kong," said Ho. "Sexual information is hard to get at, and Japan just happens to have a sophisticated porn industry.

"Japanese porn is very popular in all three Chinese-based cultures -- it's humongous, because Japan is very, very productive," she said.

Original site

The yuan diaries

Analysis: Your guide to understanding the yuan-dollar currency spat

Global Post, April 13, 2010

To get the scoop on China's currency, follow the "hot" money.

So says Shanghai-based independent economist Andy Xie, a highly regarded maverick who used to be Morgan Stanley's chief Asia economist.

Economists like Xie are locked in a fierce debate over the simple question: is the Chinese currency too cheap?

"Hot money" — or speculative foreign money — is the key to the answer, he says.

It's not just an academic tiff. If the currency is too cheap, that means Chinese imports are too cheap on Wal-Mart shelves. That's unfair to competing U.S. firms and means, politically speaking, China's a bad guy.

If the currency is fairly valued, that means Chinese goods at Wal-Mart are fairly valued, too. U.S. firms are just whining and should suck it up. All's fair in love and globalization. By this reasoning, China's just a savvy business rival.

U.S. political pressure was pushing the White House toward the first conclusion. It was about to label China a currency "manipulator" (read: a really bad guy.) But diplomacy appears to have won the day; a decision on that was postponed, and China in turn has hinted it will let its currency rise, at least by an itty-bit. The yuan-dollar level was on the table again Monday, when President Barack Obama met with Chinese President Hu Jintao in Washington.

That's not likely to end the economists' debate, though. To understand that, we first have to unpack a few suitcases of financial jargon.

For those who don't speak "Forex," here's the situation, as explained patiently by Nicholas Lardy, one of America's top go-to guys on China's financial system.

China usually sells a lot more stuff to America than it buys from America. China sells stuff for dollars and buys stuff with China's currency, the yuan or renminbi. That means China's firms end up with way more dollars than yuan. Follow?

The problem is, Chinese firms need yuan to pay their employees and suppliers and buy materials. So what do they do?

They go to China's currency market and swap their dollars for yuan. That creates a lot of demand for yuan. If you remember your Econ 101, a lot of demand should push up the price of the yuan, given a steady supply. In finance-speak, the yuan should "appreciate."

Here's where China's government intervenes. It pumps in extra supply of yuan and sells to all comers, at a roughly set price of 6.8 to the dollar, or about one yuan for 15 cents. "The natural tendency would be for the renminbi to rise," says Lardy. "The government doesn't want that to happen, so it steps into the market and sells the renminbi to keep its value low."

In doing so, China's government collects massive amounts of dollars, mostly U.S. Treasuries, to be more specific. Voila, China's ballooning "foreign reserves," which you've heard so much about. (Beijing's stash is now worth about $2.4 trillion, with $450 billion tucked away in 2009 alone.)

Now back to the debate. Wang Tao, the Beijing-based head of China economic research at investment house UBS, says the fact that China has to sell huge amounts of yuan every day means it's obviously too cheap. If China's central bank overslept one day, the market would drive the value of the yuan higher.

Sounds like an open and shut case. China is creating artificial supply to keep its yuan cheap and so help its exporters. "If the central bank was not buying forex day in and day out, the currency would have appreciated," says Wang.

But here's the catch, counters Xie: A big part of the demand for yuan is artificial, too — that's the "hot money."

Foreign speculators are betting the yuan is going to rise like stock in the 1990s. So they're rushing into China to buy the yuan at 15 cents a pop, hoping to sell it later when the price is, say, 17 cents, pocketing two cents per yuan profit. Sounds like chump change, but it adds up if you're swapping large amounts.

Meanwhile, speculators are parking their yuan in Chinese property. That's driving a massive property bubble, particularly in places like Shanghai. The country's in the grip of a speculative "mania," warns Xie, and "the day of reckoning will come."

He thinks "hot money" accounts for fully half of China's accumulated reserves.

UBS' Wang isn't as worried. She admits some speculators have bet on the yuan, especially since 2007. But she says China still keeps close tabs over foreign money flows, and has many controls. "It's not so easy to get in and out," she says.

That means small speculators may be able to move money back to the home country. But big institutional investors that could really distort China's currency market can't move money in and out of China the way they can in some other countries, says Wang.

Her investment house's latest estimate is that "hot money" accounts for less than 20 percent of China's accumulated reserves, or $480 billion at most.

So who's right?

Ask your nearest economist. And expect to hear three different answers.

Original site

Is the yuan too pricey?

The value of China's currency, the yuan, is one of the most hotly contested issues in US-China relations. The US says a high yuan is costing American jobs. But it also keeps consumer items, like TVs and computers, inexpensive. Will China soon adjust the value of its currency?

Christian Science Monitor, April 13, 2010

Washington agreed to postpone releasing a report that would have labeled China a currency manipulator. On Monday, Chinese Premier Hu Jintao and President Obama spent little time discussing this source of ongoing tension in US-China relations. Many analysts suspect that China will soon quietly adjust the value of its currency, the yuan.

Here's a short Q&A on this complex issue:

How does the value of China's currency affect the average American?

The value of China's currency, the yuan or renminbi, affects the price of Chinese-made goods sold in the United States by retail stores such as Wal-Mart.

A cheap yuan makes Chinese products cheaper in the US. A stronger yuan would make TVs, computers, and other things made in China more expensive for American consumers.

Goods from China now make up nearly 20 percent of America's imports. In 2009, top imports from China included electrical equipment, apparel, toys and games, and furniture.

But US manufacturers are hurt by a cheap yuan. They say Chinese goods are sold at a sharp "discount" in the US. For example, a Chinese-made chair should sell for $100 in the US if the yuan was fairly valued, but now sells for $75, they say – undercutting American competitors, and thereby costing American jobs.

Is China's yuan really undervalued?

Most economists say, "yes." As evidence, they point to China's massive foreign-exchange reserves and its huge trade surplus.

The rapid growth in China's foreign-exchange reserves means China's central bank has bought huge numbers of US Treasury notes and other foreign currencies to keep down the value of the yuan. Last year alone China's foreign reserves increased by $450 billion, to total $2.4 trillion.

China's trade surplus means it's selling the world far more stuff than it's buying. Some observers look at that growing gap and infer that Chinese goods are too cheap abroad – and therefore, that the yuan is also too cheap.

The International Monetary Fund has also said that China's yuan is undervalued.

But a few prominent economists dispute this notion. They include Goldman Sachs's chief economist, Jim O'Neill, and Shanghai-based independent economist, Andy Xie. Mr. Xie says it's wrong to conclude from China's trade surplus that the yuan is undervalued. And he says China's yuan may even be overvalued due to speculative "hot money" that's fueling a property bubble in China and putting sharp upward pressure on its currency.

"China is in a huge mania," says Xie. "The No. 1 issue isn't the exchange rate, it's financial mania."

But don't market forces determine currency value?

China's currency markets are not free or completely open. China's central bank intervenes in its currency market to control the value of the yuan.

Here's how it works: Chinese exporters accumulate US dollars or other currencies from foreign customers. However, they need to pay their Chinese employees and suppliers in yuan.

Chinese exporters go to China's currency market to swap their dollars for yuan. With thousands of firms doing this, the demand for yuan is high. In a free currency market, this would push up the price of the yuan as demand outpaces supply.

To prevent that from happening, China's central bank increases the market supply of yuan. It sells as many extra yuan as the market wants, targeting a rate of around 6.83 to the US dollar.

"It's a massive operation," says Nicholas Lardy, a top expert on China's economy at the Peterson Institute for International Economics in Washington, D.C. "For a big economy like China's, the scale of intervention in the market is without precedent in global history."

Why is China keeping its currency undervalued?

The short answer is that it keeps Chinese exports cheap. That helps Chinese firms make money and keeps China's export-driven factories humming. A cheap yuan also means political stability in a nation where tens of millions of Chinese peasants need jobs.

Economists say China didn't necessarily set out with the goal of a cheap yuan. In the late 1990s, the yuan was pegged to the US dollar at about 8.28 to 1. No one complained then, Mr. Lardy says, because the US dollar was strengthening.

The problems started around 2001, he says, when the US dollar weakened and took the yuan with it. The US and other trading partners watched with concern as China's trade surplus grew and its foreign-exchange reserves ballooned.

By that time, a powerful interest group had formed in China in support of a cheap yuan. This group included big exporters and politicians in China's coastal provinces, Lardy says. China's currency policy fueled export sales, and kept the money rolling in and the economy booming in those regions.

The US has been pushing China to revalue the yuan for years. When might China change its policy?

China has already changed its currency policy once before. In 2005, after a few years of pressure, it allowed the yuan to begin appreciating slowly. (Policy wonks call this a "managed float" policy.) From then until 2008, the yuan quietly gained more than 20 percent against the dollar.

China stopped doing this when the global economic downturn hit. It returned to a de facto peg to the US dollar. It did this to protect its exporters and ensure economic stability amid tough global conditions.

Now, economists say Beijing is waiting for clearer signs of a strong global recovery before going back to the "managed float" policy.

Lardy expects that China may begin allowing the yuan to appreciate against the dollar "in the next few weeks," and that we could see a 4 to 6 percent appreciation against the dollar by the end of the year.

"There are a lot of good domestic reasons for China to allow the renminbi to appreciate," says Lardy, including fighting inflation and helping create more service-sector jobs.

Xie also thinks Beijing may allow the yuan to appreciate this year, but only by a small amount. "China will not be able to make a change big enough to make Americans happy – it's impossible," Xie says.

Original site

Strait of confusion

Sure, ECFA is important. Just don't ask any Taiwanese to explain it.

Global Post, April 6, 2010

TAIPEI, TAIWAN -- It may sound like an infectious disease. But for Taiwan's government, ECFA is the tonic the island's economy desperately needs.

ECFA is a proposed trade deal — or economic cooperation framework agreement — between China and Taiwan. First mooted last year, it was in the news again in recent days as more talks were held at a swank resort south of Taipei. Taiwan hopes to ink the deal by June.

Too bad most Taiwanese can't figure out what it's all about.

"I don't really understand ECFA," said Julia Hsieh, 32, who works in the hotel industry in Taipei.

"I don't know what the real impact on Taiwan will be after we sign it. We already have a lot of economic exchanges now, so what difference will ECFA make? There's an advantage for the government, but not necessarily for normal people."

She's not the only one in the dark. According to a recent poll by Taiwan's pro-independence opposition party, 78 percent of Taiwanese are stumped by the deal.

That puzzlement is a problem for Taiwan's China-friendly president, Ma Ying-jeou. He wants the economic pact in order to seal his record as a peacemaker in the Taiwan Strait ahead of a 2012 re-election bid. But Taiwan being a democracy, he also wants the public on board.

So the government has launched a PR campaign to boost support for the deal, complete with hip ads shown on TV and the web. Last December it was a rap-techno video that put lyrics about banned Chinese agricultural imports to a throbbing dance beat.

A couple weeks ago the government released another ad, this one with a foreigner dressed as the God of Fortune, trying to get into Taiwan's locked doors.

Inside, a young man tries to convince an elder to support ECFA, saying that otherwise Taiwan could become an economic pariah like North Korea.

After much brow-knitting, the elder finally says "yes," the family cheers, the doors are thrown open and the Caucasian god of fortune strides in.

"The god of fortune means foreign investors," said a government official who was not authorized to talk to the media. "That's why we got a foreigner to play that part."

ECFA would lay out rules of the road for further cross-strait economic cooperation and tariff cuts. It's also expected to include an "early harvest" list of trade items to see the first cuts.

According to a government-backed study, the deal could help bring in nearly $9 billion in foreign investment and boost Taiwan's GDP. Pro-ECFA economists say the deal is Taiwan's ticket to the Asian free trade party.

"Every other country has signed agreements with other East Asian countries," said Liu Bih Jane, vice president of the Chung-hua Institution for Economic Research, which conducted the ECFA impact study for the government. "Only Taiwan and North Korea have been left out."

But the government's slick PR efforts don't seem to be paying off. According to the most recent poll from the pro-government TV channel TVBS, only 35 percent supported ECFA, down 11 percent from six months ago. Meanwhile, 32 percent opposed ECFA and the rest had no view.

The government's up against two big hurdles in selling the deal.

First is the distrust many Taiwanese feel about China. Despite its recent goodwill gestures, Beijing still has hundreds of missiles pointed at the island and an explicit goal of political unification. In a recent poll, 53 percent of Taiwanese listed Japan as their favorite country, with only 5 percent choosing China.

Mistrust of China was on display last week, as a small group of protesters scuffled with police outside the trade talks venue, and held up banners calling for a referendum on the deal.

The second hurdle is that talking seriously about ECFA involves mind-numbing jargon about rules of origin, WTO obligations, even the "Heckscher–Ohlin model" of international trade.

No wonder a lot of Taiwanese can't be bothered to figure it all out.

"It's a subject for professionals, most laobaixing [regular people] don't really understand it," said cab driver Chen Ji-hsin. "We don't know what it has to do with our lives, and whether it's good for us or bad."

Original site

Monday, April 5, 2010

The Red Scare

American manufacturers are raising a hue and cry about supposedly unfair competition from a new Asian rival, China

Newsweek International, August 11, 2003

Tom Hopson runs the last American-owned TV factory: Five Rivers Electronic Innovations in Greeneville, Tennessee. All the others have been killed off or bought out by Japanese competitors, and now Hopson says his plant, too, is near extinction due to a new Asian rival, China.

The threat became clear to him one day earlier this year, when he saw an Internet ad for one of his projection TVs right next to a Chinese-made model listed for $100 less.

Later a customer—Five Rivers assembles TVs for brands like Philips and Samsung—threatened to stop using his company unless it matched Chinese prices.

“We can’t understand how they’re cutting the price so low,” says Hopson.

In May, Five Rivers joined a petition asking Washington to slap tariffs of up to 84 percent on Chinese and Malaysian TV makers for allegedly dumping sets below cost. A ruling is due in October, and Hopson says he has to win, or his factory will be out of business by next summer.

This is not the first time American industry has raised the alarm about rivals from the East. In the late 1980s, the rise of another Asian economy scared America into believing it was doomed to be the world’s second superpower—and fueled a cottage industry of best sellers and magazine covers about Japan’s rising sun.

Now most of America is focused on terror, but within manufacturing industries, managers and workers alike see China as far more scary than Japan (or its copycat, South Korea) ever was. They say the Chinese are cutting prices much more dramatically, and seizing U.S. market share more quickly—yet also far more quietly—across a broader array of industries than any other competitor has before.

The backlash is now in full steam, driven in recent months by explosive growth in the U.S. trade deficit with China, which totaled $44 billion for the first five months of 2003, up 27 percent from the previous year. Since May, companies and unions in businesses from bedroom furniture to luggage, textiles and machine tools have all appealed to Washington to step in and stop “unfair” Chinese competition.

Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers, says calls about China from his 14,000 member companies have been doubling every month for the past year. “For our smaller member companies, China has become by far the No. 1 trade issue,” says Vargo. “It’s all they want to talk about.”

However, bald protectionist tactics like tariffs and quotas run counter to the free-market fashion of the age. So the focus of U.S. protests has shifted to the state-controlled and artificially low price of the Chinese currency, the renminbi, which makes Chinese products far cheaper in the United States.

This tactic has gained allies on Capitol Hill, where New York Sen. Charles Schumer and Illinois Rep. Don Manzullo are leading a push to get the Bush administration to demand the floating of the renminbi. Officially, the administration supports more flexibility in the exchange rate, but it is not lobbying Beijing with enough urgency to satisfy U.S. manufacturers.

They say time is running out. “There’s not a day that goes by that [China] is not the centerpiece of conversation,” says Edward Tashjian, vice president of marketing for Century Furniture, which plans to join the drive for protection.

Trade barriers are falling fast under the deal that brought China into the World Trade Organization in 2001. U.S. textile manufacturers say the scheduled end of textile quotas in January 2005 could spell the end for their industry. “We’ve got to put political pressure on this administration, or we’re not going to survive the removal of quotas,” says Cass Johnson, senior VP of the American Textile Manufacturers Institute. “We’re literally transporting our manufacturing sector to China.”

The numbers are striking. Imports of Chinese and Malaysian color TVs leaped to 2.7 million units in 2002 from 210,000 in 2000, according to the International Trade Commission’s preliminary investigation in the Five Rivers case. Imports of wooden household furniture from China rose from $1.14 billion in 1999 to $2.89 billion in 2002. Imports of man-made-fiber luggage from China surged 262 percent in the year ending May 2003.

Kate Bronfenbrenner, director of labor-education research at Cornell University’s School of Industrial and Labor Relations, says calls are flooding in from small manufacturers asking for the latest data on U.S. production moving to China. “You can feel the panic there,” she says.

Of course, they’ve felt this before. Japan at its peak bought big swaths of the United States, including all the surviving TV factories other than Five Rivers. But the Japanese soon stumbled, and experts like William Overholt, author of “The Rise of China,” say competition has made the U.S. economy stronger. “We don’t have a crisis,” says Overholt. “What we have is a gradual adjustment of our economy that has been making us rich for half a century.”

The decline of U.S. manufacturing has been underway for decades, says Dan Ikenson, a trade expert at the Cato Institute, adding that the current protests have a “Chicken Little” feel similar to the one that accompanied the anxiety about Japan.

Such talk gets manufacturers hot under the collar. “Go down to North Carolina and talk to manufacturing workers,” says Johnson. “These guys are in terrible shape.”

While the Japanese might have undercut prices by 20 or 25 percent, the Chinese are undercutting them by 60 or 70 percent in some markets, says Vargo. China also has a much larger supply of workers, and weaker protections for labor and the environment.

“When you’re talking about Japan, you’re not talking about slave labor, you’re not talking about child labor and you’re not talking about sweatshop labor,” says Bronfenbrenner. While Japan rose to power in select industries like automobiles, China is rising in everything from textiles to computer chips. China can also launch new industries at an astonishing speed, says Vargo, like power tools, in which he says Chinese production boomed by as much as 1,000 percent in the past year. Says Vargo, “China can go from 0 to 60 almost overnight.”

The manufacturers are preparing for political battle. Their demand for a stronger Chinese currency and punitive tariffs would mean higher prices for American consumers and other businesses. New tariffs would also further undermine U.S. global leadership on free trade at a time when George W. Bush is already accused of hypocritically protecting steel and agriculture.

Now the manufacturers are threatening to make the China scare an anti-Bush issue in next year’s congressional elections. With pressure on Washington to hold the line on free trade, expect a hot fight.

Wednesday, March 24, 2010

Asia's nuclear dilemma

Nuclear power has long been opposed on safety, environmental, security and business grounds. But Asian governments are saying they can't fight global warming without more of it.

Global Post, March 21, 2010

TOKYO, Japan and TAIPEI, Taiwan — East Asian governments are pushing nuclear power as part of the answer to global warming, causing dismay for some environmentalists.

Like the Obama administration in the U.S., governments here are saying nuclear power must be part of any realistic plan to reach targets for aggressive carbon emissions cuts while meeting energy demands.

Activists counter that governments should focus more on renewable energies and conservation. And skeptics say nuclear power is a dicey business that could leave taxpayers holding the bag.

For now, those concerns don't appear to be stopping what some have billed a global "nuclear renaissance."

The U.S. is planning the first new nuclear plants in 30 years, aided by the Obama administration's generous loan guarantees. In East Asia, global warming has given an extra push to nuclear expansion plans that were already underway.

The leading Asian nuclear power, Japan, plans eight or nine reactors by 2020, adding to its current 54, and hopes to begin reprocessing its spent fuel in Japan later this year.

South Korea plans six to eight more reactors by 2016, adding to its fleet of 20.

China has the most aggressive expansion plans, with 21 reactors now under construction to nearly triple its current fleet of 11. (Beijing wants a whopping 70 gigawatts, or 9.7 percent of the country's electricity needs, to come from nuclear by 2020, compared to just nine gigawatts and 2.7 percent of its electricity now.) Its plans have already sparked safety concerns.

Taiwan is the least ambitious East Asian country on nuclear power, due to a strong anti-nuclear movement that briefly halted expansion of nuclear power in 2000.

But under its current, more nuclear-friendly administration, it's hoping to renew the licenses of its small fleet (six reactors at three plants) for another 20 years, and to open a fourth nuclear power plant in 2011. And it wants to install three new reactors at its existing plants by 2025.

Both Japan and Taiwan are boosting renewable energies such as solar and wind power. But both governments say that in the near term, such sources are too pricey and unproven to provide more than a fraction of energy demands. In the meantime, they say, they can't do without nuclear power.

Land of the rising nukes

Japan's new government has pledged some of the world's most ambitious carbon emissions cuts. Under its center-left prime minister Yukio Hatoyama, it aims to cut emissions to 75 percent of 1990 levels by 2025, provided other big powers make similar cuts.

How it would actually get there is another story. In an interview in a bland meeting room in Kasumigaseki — the heart of Tokyo's bureaucracy — nuclear energy official Katsuyuki Tada marshaled graphs and numbers to show where the cuts would come from.

Out of 329 million tons of CO2 equivalent to be cut by 2020 — the "maximum improvement" under government projections last August — 61 percent will come from energy conservation. Meanwhile, 4.5 percent would come from control of chlorofluorocarbons. Just 5.4 percent of cuts are expected to come from "new energy" like wind and solar. And the rest of the cuts, almost 30 percent?

You guessed it: nuclear power, based on the assumption of nine new reactors by 2020.

Even those cuts only get Japan to 92 percent of 1990 emissions levels, still far away from Hatoyama's target.

"We think nuclear power plants are essential to combat climate change, because nuclear power doesn't emit any carbon dioxide," said Tada.

The prime minister agrees. On March 7, according to the Japan Times, he told reporters: "Although nuclear power presents problems of waste and safety, it is my understanding that it is an essential energy for saving the global climate and reducing carbon dioxide," remarks that promptly drew criticism from a staunchly anti-nuclear junior coalition partner.

Japan wants to boost nuclear power's proportion of total electricity generation to 40 percent in 2020, up from roughly 30 percent today, by building new nuclear plants and raising capacity at existing reactors. It wants another 10 percent of electricity to come from other zero-emissions sources such as wind and solar.

Tada said nuclear power has the advantage of being far cheaper than renewables: 4.8 to 6.2 yen (about five to seven cents) per kilowatt hour, compared to 10 to 14 yen/kwh for wind power, and 46 yen/kwh for solar. Renewables are just too expensive to be a bigger part of Japan's energy diet in the near future.

Nuclear not the answer: activists

Philip White, of the Tokyo-based Citizens' Nuclear Information Center, disputed those figures. "Renewable energies like wind and solar are not too expensive," wrote White in an email. "Wind is cheaper than nuclear now. Solar will soon be cheaper when economies of scale and the associated development advances get operating."

He says energy sources should be compared based on the retail cost to the consumer, since some renewable energies can be produced on-site, for example with rooftop solar panels. By those calculations, renewables are more competitive.

Activists like White cite studies pointing out nuclear power's shaky business model, such as this report on nuclear power in the UK, or a study from MIT that concluded that the drawbacks of reprocessing spent fuel outweigh the benefits. (Japan hopes to begin reprocessing its own spent nuclear fuel this year.)

"Renewables are a realistic replacement for fossil fuels at this point," White insisted. "Nuclear energy is an obstacle to solving problems associated with climate change."

Veteran anti-nuclear activist Makoto Kondo agrees. He disputes the notion that nuclear is a "clean" energy source, pointing out that parts of the nuclear generation process, such as mining uranium for fuel, do produce CO2. And he insists nuclear power is a risky gamble, especially in a country like Japan that's prone to frequent earthquakes.

One of the most recent big quakes, in 2007, toppled more than 100 barrels of nuclear waste at one plant, caused a fire and dumped 317 gallons of water with trace amounts of radioactive waste into the Sea of Japan.

Due to that and other accidents, as well as halts after falsifications of reports at other plants, Japan's nuclear fleet operated at only 58 percent of capacity in 2008, far below the 80 percent capacity assumed in government projections on emissions cuts.

"We need to develop more clean energy, not depend on nuclear energy," said Kondo. "This is the only way to fight global warming."

But Kondo admitted his longtime activism had had little impact. "I didn't do enough in the past 40 years," he said, shaking his head. "But I still hope we can stop nuclear generation some day. We can't give up."

Ambivalent island

By contrast with Japan, Taiwan's activists have successfully slowed, if not stopped, the island's nuclear expansion.

Now, however, a nuclear-friendly government is quietly turning back to nuclear power, and making the case that it's an essential part of any carbon-cutting plan.

Taiwan's government targets a modest reduction of carbon emissions to 2000 levels by 2025. It backs energy efficiency and renewables, hoping to get 55 percent of its electricity from "low carbon" sources by 2025, according to the Bureau of Energy.

"Nuclear is a non-carbon energy source," said Tu Yueh-yuan, spokeswoman at Taipower, Taiwan's state-run power firm, and its only electricity provider. "If we don't use nuclear, we'd have to increase energy supply from fossil fuels."

Like the Japanese nuclear power official, Taipower's Tu presented a graph showing Taiwan's CO2 emissions soaring from about 76.5 million tons of CO2 equivalent in 2000 to 180 million tons by 2025 under "business as usual" assumptions.

Of possible emissions cuts from that level, only 7 percent come from boosting renewables like wind and solar. Some 25 percent comes from boosting liquid natural gas. Meanwhile, 38 percent of cuts come from extending the operating licenses on Taiwan's three nuclear plants. And another 30 percent would come from installing three new nuclear reactors at existing plants.

Even then, emissions would only be reduced to 98.7 million metric tons, still far above 2000 levels. Energy conservation will have to kick in to get the rest of the way.

Tu notes that Taiwan has an independent electric grid and can't buy supply from any neighboring country, reducing its options. Meanwhile, wind and solar power are far more expensive than nuclear.

And if you hope to store electricity generated from wind or solar power, that will double those costs, said Tu. "In Taiwan, wind power is much more expensive than nuclear power," said Tu. "Solar will get more and more cheap, true, but there's not much land for solar panels, and most people in Taiwan live in condominiums, so there's not much roof space."

"So if you don't use nuclear, what are you going to do?" she said.

Save energy, don't produce more

Kao Cheng-yan has some ideas about that. He was studying computer science at the University of Madison, Wisconsin when the 1979 Three Mile Island accident happened. Like many of his generation, that accident — and even worse, the Chernobyl disaster of 1986 — set him against nuclear power.

Like many anti-nuclear activists, he says the key to curbing emissions is cutting energy use, not planning ways to meet ever-increasing energy demand. "Taiwan's energy is too cheap," he says (it's about NT$2.67 per kilowatt hour for the consumer, according to Taipower). "Our biggest problem is the need to cut energy consumption."

He points out that many nuclear plants are in low-lying coastal areas that could be inundated by rising sea levels. And in terms of the power that is used, he still thinks nuclear is too risky, particularly in earthquake-prone Taiwan, which experiences a magnitude 6 or greater quake every 100 days.

He and other Taiwan activists have long opposed any expansion of nuclear power, especially the long-delayed fourth nuclear power plant.

When an anti-nuclear party came to power in 2000, it immediately made good on campaign promises and halted construction of that plant. But after the ensuing political crisis, that government was forced to compromise. Construction of the plant resumed in line with a Supreme Court ruling, but lawmakers passed a resolution supporting an eventual "nuclear-free homeland."

That may have disappointed Kao and other activists. But it was far more than the anti-nuclear movement has achieved elsewhere.

Asked why Taiwan was more ambivalent about nuclear power, Kao speculated, "Taiwan is smaller, and when earthquakes happen, everyone feels them."

For now, anti-nuclear forces are focused on opposing any plans for a nuclear dumping ground. Like the U.S. and Japan, Taiwan has not found a final resting place for its nuclear waste, another reason not to expand nuclear power, say activists. Activists also want a referendum on the fourth nuclear plant.

Kao insists nuclear power can only hurt, not help, the battle against climate change.

"There's no way to solve global warming with nuclear power," he says. "Only renewable energy can solve the problem."

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