How Does Centrally Planned China Raise Capital?-Answer, Hong Kong

(THIS ARTICLE IS COURTESY OF FORBES INVESTING MARKET MOVES)

 

Investing #MarketMoves

How Does Centrally Planned China Raise Capital?

I write financial newsletters for investors on how to profit in Asia.  Opinions expressed by Forbes Contributors are their own.

A general view from Victoria Peak shows Victoria Harbour and the skylines of the Kowloon district (background) and Hong Kong island (foreground) on July 3, 2017. (ANTHONY WALLACE/AFP/Getty Images)

Through careful planning and strategic economic policy reforms, mainland China has evolved from a country struck by poverty to the world’s second largest economy. But don’t think this was solely the Chinese bureaucrats’ doing.  The U.K.’s special “present” to China proved to be essential to the story of China’s miraculous development.

In 1997, Tony Blair, who was U.K.’s prime minister at the time, went to Hong Kong to give the city back to Beijing. 156 years of colonial rule had completely transformed the city.

What was once a backwards fishing village, was now one of the worlds’ most important financial hubs.

Hong Kong currently has the highest concentration of international banks in the world. The 71 largest international banks and almost 300 international fund management companies are housed in Hong Kong. The island also has most beneficial legal regulations for both residents and companies.

China basically saw Hong Kong attending a 150 yearlong financial course. The financial powerhouse now belongs back to the Middle Kingdom that uses it to funnel foreign capital into its centrally planned economy. Something the mainland wasn’t able to do by itself.

Never before has a centrally planned economy ever received such a precious gift as Hong Kong.

How Hong Kong feeds China

Companies in planned economies – like China’s – typically have a hard time raising capital. That makes Hong Kong a key factor in China’s economic development.

With its leading financial institutions in place, Hong Kong is able to raise capital unhindered by political or economic instability. A problem free market economies like in the U.S. generally have to deal with.

Four years before Hong Kong was given back to China, it was responsible for 27% of China’s GDP. Let’s put this in perspective. At the time, only 6.5 million people lived in Hong Kong while mainland China had a population of 1 billion people. It’s easy to see that Hong Kong’s impact on China’s economic growth was tremendous.

The mainland did catch up over time as the graph below clearly illustrates. By 2017, Hong Kong accounted for merely 3% of the GDP.

One Road Research

Hong Kong’s Share of China’s GDP

Hong Kong’s return in 1997 coincided with the dramatic rise of China’s GDP.

One Road Research

China’s GDP in Current US$

China’s economic growth was partially due to twenty years of export-oriented policies from Beijing. But without Hong Kong’s well-established financial markets, necessary funds couldn’t have been raised.

China’s Leadership Will Never Tolerate Anyone Being Truthful

(THIS ARTICLE IS COURTESY OF THE SHANGHAI CHINA NEWSPAPER ‘SHINE’)

(CHINA’S COMMUNIST PARTY LEADERSHIP WILL NEVER TOLERATE ANYONE WHO DARES SPEAK ‘THE TRUTH’)(trs) 

China probes foreign companies labeling China’s territories as independent countries

Reuters

China’s aviation authority on Friday demanded an apology from Delta Air Lines for listing Taiwan and Tibet as countries on its website, while another government agency took aim at Inditex-owned fashion brand Zara and medical device maker Medtronic Plc for similar issues.

The moves follow a regulator’s decision on Thursday to suspend Marriott International Inc’s Chinese website for a week to punish the world’s biggest hotel chain for listing Tibet, Taiwan, Hong Kong and Macau as separate countries in a customer questionnaire.

The Civil Aviation Administration of China asked Delta to investigate the listing of Taiwan and Tibet as countries on its website, and called for an “immediate and public” apology.

The aviation authority also said it would require all foreign airlines operating routes to China to conduct comprehensive investigations of their websites, apps and customer-related information and “strictly comply with China’s laws and regulations to prevent a similar thing from happening.”

In a statement, Delta apologized for making “an inadvertent error with no business or political intention,” saying it recognized the seriousness of the issue and had taken steps to resolve it.

Separately, the same regulator that penalized Marriott – the Shanghai branch of the state cyberspace administration – accused Zara of placing Taiwan in a pull-down list of countries on its Chinese website.

Medtronic had also put “Republic of China (Taiwan)” on one of its websites, the office said in a WeChat post.

Medtronic issued an apology via social media, saying it had updated the website. An executive who answered the phone at Zara’s Shanghai office was not able to immediately comment.

Foreign ministry spokesman Lu Kang told a regular briefing on Friday that Hong Kong, Macau, Taiwan and Tibet were all part of China.

“The companies that come to China should respect China’s sovereignty and territorial integrity, abide by China’s laws, and respect the feelings of the Chinese people. This is the minimum requirement of any company going to another country to carry out business and investment,” he said.

32 Missing After Ships Collide Off China’s Coast

(THIS ARTICLE IS COURTESY OF TIME NEWS)

 

The Panama-registered tanker "Sanchi" is seen ablaze after a collision with a Hong Kong-registered freighter off China's eastern coast on Jan. 7, 2018
The Panama-registered tanker “Sanchi” is seen ablaze after a collision with a Hong Kong-registered freighter off China’s eastern coast on Jan. 7, 2018
Korea Coast Guard/AP

By GERRY SHIH / AP

9:49 AM EST

(BEIJING) — An Iranian oil tanker collided with a bulk freighter and caught fire off China’s east coast, leaving the tanker’s entire crew of 32 missing and causing it to spill oil into the sea, authorities said Sunday.

Chinese authorities dispatched police vessels and three cleaning ships to the scene after the collision, which happened late Saturday. The South Korean coast guard also sent a ship and a plane to help search for the missing crew members — 30 Iranians and two Bangladeshis.

The Panama-registered tanker Sanchi was sailing from Iran to South Korea when it collided with the Hong Kong-registered freighter CF Crystal in the East China Sea, 257 kilometers (160 miles) off the coast of Shanghai, China’s Ministry of Transport said.

All 21 crew members of the Crystal, which was carrying grain from the United States, were rescued, the ministry said. The Crystal’s crew members were all Chinese nationals.

It wasn’t immediately clear what caused the collision.

State-run China Central Television reported Sunday evening that the tanker was still floating and burning, and that oil was visible in the water.

It was not clear, however, whether the tanker was still spilling oil. The size of the oil slick caused by the accident also was not known.

Earlier Sunday, Chinese state media carried pictures of the tanker on fire with large plumes of smoke.

The Sanchi was carrying 136,000 metric tons (150,000 tons, or nearly 1 million barrels) of condensate, a type of ultra-light oil, according to Chinese authorities.

By comparison, the Exxon Valdez was carrying 1.26 million barrels of crude oil when it spilled 260,000 barrels into Prince William Sound off Alaska in 1989.

The Sanchi has operated under five different names since it was built in 2008, according the U.N.-run International Maritime Organization. The IMO listed its registered owner as Hong Kong-based Bright Shipping Ltd., on behalf of the National Iranian Tanker Co., a publicly traded company based in Tehran. The National Iranian Tanker Co. describes itself as operating the largest tanker fleet in the Middle East.

An official in Iran’s Oil Ministry, who spoke to The Associated Press on condition of anonymity because he was not authorized to speak to reporters, said 30 of the tanker’s 32 crew members were Iranians.

“We have no information on their fate,” he said. “We cannot say all of them have died, because rescue teams are there and providing services.”

The official said the tanker was owned by the National Iranian Tanker Co. and had been rented by a South Korean company, Hanwha Total Co. He said the tanker was on its way to South Korea.

Hanwa Total is a 50-50 partnership between the Seoul-based Hanwha Group and the French oil giant Total. Total did not immediately respond to a request for comment.

It’s the second collision for a ship from the National Iranian Tanker Co. in less than a year and a half. In August 2016, one of its tankers collided with a Swiss container ship in the Singapore Strait, damaging both ships but causing no injuries or oil spill.

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South Korea seizes ship it claims transferred oil to North Korea

(THIS ARTICLE IS COURTESY OF CNN)

 

South Korea seizes ship it claims transferred oil to North Korea

Seoul (CNN)South Korea has seized a Hong Kong-registered ship that allegedly transferred oil to a North Korean vessel in violation of United Nations sanctions.

The South Korean Foreign Ministry said the Lighthouse Winmore left the port of Yeosu in South Korea carrying refined oil which was then transferred to a North Korean ship in international waters on October 19.
The US Treasury Department released satellite imagery in November of two ships allegedly performing an illegal ship-to-ship transfer in international waters on the same day.

Satellite imagery the US says shows a ship-to-ship transfer, possibly of oil, between two vessels in an effort to evade sanctions on North Korea.

It identified one of the ships as a sanctioned North Korean vessel, the Rye Song Gang 1, but did not name the other. South Korean officials could not confirm Friday if the second ship was the Lighthouse Winmore.
“UN Security Council sanctions prohibit the transfer of anything to a North Korean ship,” a South Korean Foreign Ministry official told CNN, adding the Lighthouse Winmore was seized when it re-entered Yeosu on November 24.
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President Trump said Beijing had been “caught red-handed,” after the satellite images were republished in South Korean media earlier this week.
South Korea said the Lighthouse Winmore and its crew were still in South Korean custody and under investigation. There were 23 Chinese nationals and two Burmese nationals on board the ship, officials said, adding they would be permitted to leave only when the investigation was concluded.
China has denied breaching UN sanctions on North Korea.
The Lighthouse Winmore was one of 10 ships the US asked the UN to ban from international ports this month over its alleged dealings with North Korea, according to Reuters.
That move came after the UN blacklisted four ships in October, including one that was caught smuggling 30,000 North Korean-made rocket-propelled grenades in 2016.
According to South Korea, the Lighthouse Winmore was being leased by a Taiwanese company, the Billions Bunker Group, and was en route to Taiwan when it made a ship-to-ship transfer of its oil cargo to four ships, including one North Korean ship.
“This is one of the main ways in which North Korea uses an illegal network to circumvent UN Security Council sanctions,” the South Korean Foreign Ministry spokesman said. It is customary in South Korea that officials do not give their names.
The Hong Kong government said in a statement Friday it had noted media reports that the Lighthouse Winmore had been seized. “We are liaising with the Korean parties concerned to obtain further information about the incident, and will take appropriate actions as necessary,” the statement said.

‘Very disappointed’ in China

China’s Foreign Ministry spokeswoman Hua Chunying on Friday reiterated that Beijing is enforcing all UN Security Council sanctions against North Korea, aimed at curbing Pyongyang’s missile and nuclear weapons development.
In an interview with the New York Times published Thursday, Trump claimed “oil is going into North Korea” and appeared to blame China, saying if Beijing fails to put pressure on Pyongyang then the US may take punitive economic actions against Beijing.
“China on trade has ripped off this country more than any other element of the world in history has ripped off anything,” Trump said.
“If they don’t help us with North Korea, then I do what I’ve always said I want to do. China can help us much more, and they have to help us much more.”
He added: “China’s hurting us very badly on trade, but I have been soft on China because the only thing more important to me than trade is war.”

Trump: 'disappointed' China allowing oil into NK

Trump: ‘disappointed’ China allowing oil into NK
A senior US State Department official told CNN Thursday the US is “aware that certain vessels have engaged in UN-prohibited activities, including ship-to-ship transfers of refined petroleum and the transport of coal from North Korea.”
“We have evidence that some of the vessels engaged in these activities are owned by companies in several countries, including China,” the official said. “We condemn these acts and hope that any UNSC members, including China, work more closely together to shut down smuggling activities.”
Pyongyang has for years used deceptive shipping practices to help bring in revenue for the country’s regime, analysts say, and the US has called for more to be done to crackdown on ships transporting goods to and from North Korea.
UN Security Council resolutions passed this year stipulate “all Member States shall prohibit the entry into their ports of such designated vessels,” save for some circumstances, including in emergencies or if they are granted humanitarian exceptions by the UN.
Correction: An earlier version of this story misstated the date of the seizure as December 24.

Over 1000-year-old sunken Chinese treasure returns home

(THIS ARTICLE IS COURTESY OF THE HINDUSTAN TIMES OF INDIA)

 

Over 1000-year-old sunken Chinese treasure returns home

The 162 pieces of treasure were part of a huge cargo of ninth-century porcelain traded from China during the Tang Dynasty.

WORLD Updated: Dec 11, 2017 18:26 IST

Press Trust of India, Beijing
A Ru Guanyao brush washer bowl from China's Song Dynasty is displayed during a press conference after its record breaking sale for $ 37.7 million at the Sotheby's Chinese Works of Art Autumn Sales in Hong Kong on October 3.
A Ru Guanyao brush washer bowl from China’s Song Dynasty is displayed during a press conference after its record breaking sale for $ 37.7 million at the Sotheby’s Chinese Works of Art Autumn Sales in Hong Kong on October 3.(AFP File Photo/Representative image)

A stash of 1,200-year-old Chinese treasure found under the sea has been returned to China’s central Hunan province.

Experts believe they will provide evidence of China’s overseas porcelain trade during the Tang Dynasty (618-907).

The 162 pieces of treasure were part of a huge cargo of ninth-century porcelain traded from China during the Tang Dynasty via an Arab dhow, which wrecked in Indonesia’s Java sea.

In 1998, a German salvage company discovered the shipwreck and named it ‘Batu Hitam’.

More than 67,000 pieces of treasure were found in the ship, 85 per cent of which came from a kiln in Changsha, now Hunan’s capital city.

Most of the porcelain is now owned by Tilman Walterfang, head of the salvage company.

In September, the administration office of the kiln in Changsha signed an agreement with Walterfang to return a collection of 162 pieces to China, state-run Xinhua news agency reported today.

The treasure sent home includes fine ceramics from several kilns in the provinces of Hunan, Zhejiang, Hebei, Henan and Guangdong.

The treasure is expected to be accessible to the public at a museum in Changsha by early 2018.

China Busts a $3 Billion Underground Bank

(THIS ARTICLE IS COURTESY OF THE SAUDI NEWS AGENCY ASHARQ AL-AWSAT)

 

China Busts a $3 Billion Underground Bank as it Tightens its Grip on Money

Sunday, 3 December, 2017 – 11:00
More than 10,000 people have used an underground bank to effectively funnel billions of dollars out of China. (AFP)
Beijing – Sui-Lee Wee

The money came from all over China — its wealthy southern and eastern coasts as well as the arid northwest — as thousands of people scrambled to circumvent the country’s strict controls on wealth.

In the end, more than 10,000 people had used an underground bank to effectively funnel $3 billion out of the country before the authorities put a stop to it, Xinhua, China’s state-run news agency in November.

The discovery of the underground bank in Shaoguan, in the southern province of Guangdong, demonstrates the furtive lengths that Chinese citizens go to in order to skirt government limits and get more of their money out of the country.

The sums involved are enormous, large enough to not only affect China’s economy but resonate around the world. Two years ago, a loss of confidence in China’s outlook led many of its people to send their money abroad — a flow that helped drive a $1 trillion drop in China’s stash of surplus foreign money. The exodus was enough to darken the country’s long-held image as a major global economic growth engine.

China appears to have since stemmed the surge of money abroad, thanks to an improved economic outlook and tough new efforts to keep the money at home. But the underground bank bust announced Thursday showed the lengths that the authorities will pursue to enforce limits on money leaving the country.

The Chinese police have detained seven people believed to be involved in the bank, according to the Thursday reports. The authorities discovered 148 “illegal and fraudulent accounts” from the bank, involving more than 10,000 people, the Xinhua report said.

Underground banks are illegal but common in China. According to China’s Ministry of Public Security, underground banks handled more than $137 billion in transactions last year. There are also lawful ways of moving princely sums out of China without surpassing government limits: directing money to casinos in Macau — the only Chinese territory where casino gambling is legal — as well as using credit cards to buy luxury goods abroad and purchasing insurance policies that can be cashed out overseas.

China imposes strict limits on how much money can leave the country. Those limits help the government keep a firm hand on the value of its currency, and the Chinese authorities credit the limits with helping keep its financial system steady during emergencies like the 1997 Asian financial crisis and the global crisis that began in 2008.

The government sets a $50,000 limit on the money Chinese citizens can move out of the country in a year, though businesses and those making strategic investments can send out much more.

But growing numbers of people began dodging the limits two years ago, when a stock market crash, a surprise government-led currency devaluation and prospects of slowing economic growth led many to seek safer havens for their money.

President Xi Jinping has made it a top priority to keep more money in China. His government has shut down platforms that trade crypto-currencies; announced controls on outbound investment in property, entertainment and soccer; and imposed curbs on payments overseas.

Much of China’s underground banking activity is centered in cities that border Hong Kong and Macau, special administrative regions of China that are governed by their own laws.

In Shaoguan, the police were alerted to a suspicious bank account that was opened in 2011 in the city by a Mr. Zhong, a resident from the southern city of Zhuhai that borders Macau, according to Guangzhou Daily, an official newspaper. It did not further identify Zhong. After almost no activity for years, there were 121 transactions involving $15 million in 2016, prompting the authorities to look more closely at who was involved.

Ultimately, the Xinhua report said, the authorities discovered that the people running the underground bank had illegally bought and stole the identity documents of more than 200 people to open the fake accounts that underpinned the enterprise. News reports did not disclose detailed information about how the underground bank worked.

The Shaoguan government and the police did not respond to requests for comment.

The trail appeared to lead to Macau, according to the news reports. The suspicious bank account that prompted the investigation was opened specifically for a gambler in Macau called Peng to transfer money, Xinhua said. “Several members of the criminal gang” then converted the renminbi into Hong Kong dollars for Peng, according to the report. Hong Kong has its own currency, which tracks the value of the United States dollar.

The Xinhua report did not offer details about Peng.

Macau is under pressure to keep a tight rein on capital outflows. Most recently, it installed automated teller machines with facial recognition software to monitor transactions for people using Chinese bank cards, according to Macau Daily Times.

The Xinhua report acknowledged that underground banks are “seductive,” especially for people who struggle to get financing, but warned that “the people will suffer tremendous loss” if the banks abscond or cheat their clients.

The New York Times

Saudi King Meets Chief Executive of Hong Kong

(THIS ARTICLE IS COURTESY OF ASHARQ AL-AWSAT SAUDI NEWS AGENCY)

 

Saudi King Meets Chief Executive of Hong Kong

Sunday, 3 December, 2017 – 10:45
Custodian of the Two Holy Mosques King Salman bin Abdulaziz meets Chief Executive of Hong Kong Carrie Lam in Riyadh. (SPA)
Asharq Al-Awsat

Custodian of the Two Holy Mosques King Salman bin Abdulaziz held talks on Sunday with Chief Executive of Hong Kong Carrie Lam, reported the Saudi Press Agency (SPA).

Meeting Riyadh, the two officials discussed areas of cooperation and ways to develop and bolster them in various fields.

The audience was attended by Prince Abdulaziz bin Saud bin Naif bin Abdulaziz, Minister of Interior, Minister of State, chief of the Royal Court Khalid bin Abdulrahman Al-Issa, Minister of Energy, Industry and Mineral Resources Engineer Khalid bin Abdulaziz Al-Falih, Minister of Finance Mohammed bin Abdullah Al-Jadaan and Saudi Consul General to Hong Kong Omar bin Bakhit Al-Bunyan.

Taiwan is a Nation of Mature, Consolidated Democracy

(FOLKS THIS ARTICLE IS COURTESY OF TAIWAN’S ‘THE LIBERTY.COM’ NEWS AGENCY)

 

Taiwan is a Nation of Mature, Consolidated Democracy

An Interview with Dr. Lo Chih-cheng, the Democratic Progressive Party Legislator in Taiwan

 

6935_02

Lo Chih-cheng

Taiwanese politician, Legislator, Director for the Department of International Affairs, the Democratic Progressive Party (DPP). Associate professor of Political Science at Soochow University.

Last year Tsai Ing-wen (蔡英文) was elected as the president of Taiwan. This made big changes from the previous government. The former president Ma Ing-jong (馬英九) and his Chinese Nationalist Party government was relatively close to the Chinese Communist Party in China. Regarding the “One China” policy, there remains some controversy among the U.S., China and Taiwan. The following interview with Dr. Lo Chih-cheng (羅致政) will benefit us for a better understanding of these issues. He is in charge of international affairs for the ruling Democratic Progressive Party.

 

The Meaning of Peaceful Transition of Power

Interviewer: How did you see the change of government in Taiwan last year? It was a transition from the Chinese Nationalist Party (KMT or Kuomintang) to the Democratic Progressive Party (DPP).

Lo: This is the third time we had a peaceful transition of power from one party to another. In 2000, we had a transition from the KMT to the DPP. In 2008, we had the DPP to the KMT. Now we are coming back to power. So, this is further evidence of consolidation of democracy in Taiwan. In other words, democracy is the rule of the game. That is, whoever is in power has to respect the will of the people. That’s very important. That makes a big difference between Taiwan, the People’s Republic of China (PRC), and Hong Kong as well. Democracy is a very important mechanism for making policies in Taiwan, such as the Cross Strait policy, foreign policies or even defence policies. When it comes to the future of Taiwan, everybody including the leaders in parties will have to respect the will of the people. Taiwan now has a mature, consolidated democracy.

Secondly, we are in absolute control of the government. Last time, the DPP administration did not control the majority in the legislature. This time, we control the Executive Branch and also the Legislative Branch. So in general, we can get things done all by ourselves.

Thirdly, there is a difference between the first time in power and the second time. For the past eight years from 2008 to 2016, the KMT was in power and created a situation that was quite unique from the previous DPP administration. Taiwan had become very dependent on China, economically, politically and even militarily. That’s a new situation.

When Chen Shui-bian (陳水扁) was in power, the interaction between Taiwan and China was very limited in general. We didn’t have that kind of dependency. As a matter of fact, when the Lee Teng-hui (李登輝) administration was in power, their policy was “no haste, be patient, go slow”. But when Ma Ying-jeou (馬英九) was in power, they very much depended on China. That puts our DPP administration in a much more difficult situation, because we hadn’t reversed this kind of dependency on China. That’s quite a different situation. We should not depend too much on China.

 

Mr. Lee, a NGO Activist Caught in China

Interviewer: Regarding China, there was an incident in March where Mr. Lee Ming-cheh (李哲明), a human rights activist, disappeared in China. He was also known as a former DPP worker.

Lo: Unfortunately Mr. Lee, a NGO activist, has been caught in China. So far, we have very limited information about his whereabouts and situation. This is further evidence that China is not a democratic country and not under the rule of law. More importantly, that will damage the mutual trust between Taiwan and China. Some Western media – the U.S. media and the European media – covered the story. I don’t know how much coverage you have in Japan.

Interviewer: I think there are very few.

Lo: I don’t think that kind of thing just happened to Taiwan. It happened to Hong Kong. That could also happen to other countries. I don’t think it’s an isolated case only for the Taiwanese people to pay attention to. It’s an incident that everybody living in free democratic countries should pay close attention to. In the past, when the DPP was in power, there was a direct hot line between our government and the counterparts in China. But when this was took place, the hot line was cut off. So, there was no direct contact. The very purpose of having the hot line is that when there was an incident, we could connect ourselves to solve the problem. But the opposite is happening. That’s an unfortunate development.

 

The U.S-Taiwan Relation in the Trump Administration

Interviewer: What is your view on U.S-Taiwan relations? Last December, the Taiwanese President Tsai Ing-wen had a phone call with Trump. That was a surprising move.

Lo: First of all, the direct phone call that happened last December was between President Tsai and President-elect Trump. That was a very unique development. After President Trump was sworn in, that kind of phone call with a direct hot line did not happen again. We know the situation is quite tough and Trump needs cooperation from China, so they want to play down the importance of this kind of direct hot line between our president and her counterpart in the United States. Having said that, our direct contacts between our representatives and his counterparts in the United States are very direct and personal. We do have a very solid, robust relationship between Taiwan and the United States.

Interviewer: In June, the Trump Administration approved a 1 billion dollar arms sale to Taiwan.

Lo: The arms sale package is a very good case in point. We welcome the arms sale to Taiwan. That’s a very important decision. The timing of the decision was very important, because there were rumours about the U.S. Navy postponing it. According to the reports, the U.S. had concerns about a possible reaction from China. I think obviously, the U.S. cared too much about any possible negative response from China. As a matter of fact, after the announcement of the arms sale package, China did not react too strongly about it. So, we hope this deal can be implemented very smoothly. More importantly, we hope that our defence cooperation can be further enhanced.

The U.S. Congress has passed several resolutions. For instance, the National Defence Authorization Act (NDAA), encouraged the interaction between our high-level defence officials and their counterparts in the United States. So, that’s a good development. That’s also up to the administration to decide how to implement the NDAA. Let’s just wait and see. When it comes to the relationship with the United States, it takes two to tango. Our goal is to increase interactions between the two countries – to enhance our ties. But it is also up to the United States to respond to our requests.

There are two general questions about the future of the U.S. policy towards Taiwan in particular and to Asia in general. We don’t know who’s in charge and what Trump’s doctrine is. The people in charge change very quickly. They just changed the Chief of Staff. Who’s in charge of the East Asian policy? We don’t know. When it comes to daily operations, we need someone in charge in that particular position.

 

The Differences of the “One China” Policy Between the U.S and China

Interviewer: After conversation between Tsai and Trump, the “One China” policy became controversial again. There are different views between the U.S and China.

Lo: There’s a big difference between the “One China” policy and the “One China” principle. China insists on the so-called “One China” principle. According to that principle, Taiwan’s a part of the PRC. That’s something we can’t accept. The U.S. “One China” policy has some ambiguities. There’s some room for developing the idea that Taiwan is an independent country. The very reason that the U.S. can maintain military ties with Taiwan is because of this One China policy. It is somewhat ambiguous.

At some point in time, according to President Trump, the so-called One China policy isn’t negotiable. If that’s the case, we do have concerns about that. So, Taiwan doesn’t want to be bound by the One China policy. Taiwan wants to be separated from these interactions between the two big powers. We hope to develop a very solid, robust relationship between Taiwan and the U.S. regardless of what happened between the U.S. and China. But obviously China always wants to bring Taiwan into the dialogues between the U.S. and China.

Interviewer: On a January article for The Wall Street Journal, John Bolton, the former U.S. ambassador to the U.N., advocated that the U.S. army should station in Taiwan.

Lo: When John Bolton said that, he was not in the government. He said that because he was a scholar who had freedom of speech. He’s a very good friend of Taiwan. He has been very supportive of Taiwan. So, we appreciate those kinds of comments. But when it comes to actual policies, I don’t think that kind of policy is feasible in the near future. Of course, there were rumours last year that he may be joining the government. At the end of the day, we haven’t seen that yet.

 

Rising China’s Strategy Against Taiwan

Interviewer: Last year there was another incident. Chinese fighter jets circled Taiwan.

Lo: China is becoming stronger economically and militarily. China would definitely show their muscles to their neighbouring countries that they are stronger. Sending their aircraft carriers and their fighter jets to circle Taiwan is evidence to show that they can kick Taiwan into orbit. They don’t want Taiwan to lead the way from their sphere of influence.

Secondly, if there’s a military crisis in the Taiwan Strait, Taiwan is always hoping that we can sustain our survivability until other countries, especially the United States, come to our assistance. The China’s strategy is the Anti-Access Area-Denial (A2/AD). Circling Taiwan is the way to show that they have the A2/AD capabilities. That’s reasonable.

Thirdly, the Taiwan Strait is an international waters for freedom of navigation for all the ships. But to send aircraft carriers and fighter jets to circle Taiwan is the way the Chinese are hoping to show the world that the Taiwan Strait is in their sea and that it’s not international waters. It is a symbolic and political gesture.

Finally, it’s one way to substantiate their One China policy or One China principle. Taiwan will never accept the so-called One China principle. But China wants to show the world that there’s de facto One China principle, “Taiwan is a part of China” and “It is under our control”. Although it is very symbolic, it’s quite important for China.

 

The Disputed Island in the South China Sea

Interviewer: Last year, the Taiping Island in the South China Sea was disputed at the International Tribunal court of the United Nations Convention on the Law of the Sea. After its ruling denied Taiwan’s claim, you paid a visit. Could you give us tips on how to defend territorial rights?

Lo: It’s quite easy because we already control the island. We have controlled it for decades. We sent our marine guards. We continuously occupy and control it. There’s no way that other countries can ignore our actual occupation and control of it. There’s no way that we need to prove further that we have the territorial rights on the Taiping Island.

But when it comes to other islands, we claim that issues should be settled in a very peaceful way. We don’t want to use force to solve the problem. So, we are urging all the neighbouring claimant countries that we should put aside our differences. But unfortunately, when China and other claimant countries talk about the Code of Conduct in South China Sea, Taiwan has not been invited although we occupy the biggest island in the area. Taiwan is not even consulted about the issue. That’s a very unfortunate development, because Taiwan is a very important claimant of those disputed islands.

 

Disappearing Freedom in Hong Kong

Interviewer: What do you think of the situation in Hong Kong on the human rights issue? In July, the memorial event was held there.

Lo: When Beijing introduced the “One Country, Two Systems”, the goal was to make it appeal to the people in Taiwan. It’s the very reason that China used Hong Kong as a model for Taiwan. When China began to realize there was no use of using the Hong Kong model, then the importance of Hong Kong started disappearing. That’s why Beijing is tightening their control there for freedom of the press, freedom of association and so on. That’s why they began to wage some of the demonstrations on the streets.

A lot of people learned what happened in Taiwan for the past few decades. You start with the opposition movement and the opposition party. Then, you have this kind of democratic transition of power. Hong Kong is quite different. It is already controlled by China. It is a part of China. There’s not much room that can be negotiated about the future of Hong Kong. That’s why there are more and more Hong Kong people immigrating to Taiwan. They can enjoy much more freedom and democracy in Taiwan.

 

Japan and Taiwan Share Common Interests

Interviewer: What do you think the Japan-Taiwan relation should be like? The Japanese government has not recognized Taiwan as a nation.

Lo: On the bilateral relation between Taiwan and Japan, we have to start with the discussion about the nature of our relationship. I have to say that Taiwan and Japan are natural partners. We are facing many similar challenges. We have many common interests. For instance, Taiwan and Japan are both democracies. We share some of the philosophies behind our democracies, human rights, freedom, free market economy, etc. So, the two nations share some universal values. That’s a very important foundation for our bilateral relationship.

Secondly, there is a historical connection between Taiwan and Japan. We were under the colonial rule of Japan for fifty years, but there are some legacies of this kind of historical connection, for better or for worse. Especially for the older generations, people feel connected to Japan when something happens. For instance, when the tsunami and the earthquake happened in Japan, Taiwanese mobilized themselves to give some support to their Japanese friends. When asked which is the most friendly country to the Taiwanese, Japan is the number one country. The same thing can be said about the Japanese. So, we have this kind of strong people to people connection.

Both Japan and Taiwan are facing a rising China. I’m not saying that China is a threat already, but China’s increase in power in the region has put pressures on both of them. Japan and Taiwan cannot fight against the rising China by themselves. We need cooperation and coordination between the two countries in the face of the rising China. That’s very important. We have come up with a strategic interest. Having said that, we know there are some political obstacles, difficulties that we need to overcome to fully enhance our relationship.

Japan doesn’t recognize Taiwan as a sovereign country in all the difficulties, in all the impossibilities. Short of this formal diplomatic recognition, there are so many things that can be done. In other words, why don’t we try our best to enhance our de facto ties between the two countries? For instance, military cooperation between the two sides. We probably can’t come to the point of a direct, joint military exercise. There is no way for now. Some sort of dialogue between our two militaries should be feasible. Probably not in public, but at least in private. As you know, Taiwan and the United States have all levels of dialogue. Starting from strategic dialogue, defence dialogue, arms sale dialogue or people to people, and military to military on a daily basis.

We don’t have that kind of thing between Taiwan and Japan. For us, we have no reservation about having this kind of dialogue. It is Japan that is more reluctant or more reserved about having this kind of dialogue. Of course, you would be under a lot of pressure from China. However, it’s about common national interests. We have overlapped national interests. So, if that is the right thing to do, we should do it. We can start with the engagement of dialogues between the two governments and the two militaries. It will require a very strong political will to do it. We do have the political will to do it. We know there’s subtlety of doing these kinds of things. We need substantial cooperation between the two countries. We should get the things done in a more substantial way.

 

How to Deal with North Korea

Interviewer: My last question is on North Korea. Kim Jong-un is continuously launching ICBMs especially in recent months.

Lo: First of all, we welcome Japan to play a more proactive role in the regional security issues. Secondly, we welcome the enhancement of the relationship between the U.S. and Japan. We welcome Japan being proactive in many regional issues. As you know, China has always been very proactive in setting some agendas in the region. In the past, you had several Six-Party Talks to solve the North Korea nuclear issue. But now they have gone.

I think the Trump administration has a very naive expectation from China to help them to solve the North Korean issue. Personally, I don’t think China is sincere in helping other countries such as Japan, South Korea and the U.S., because North Korea is China’s bargaining chip. What China really wants is to contain the situation. They don’t want the escalation of crisis, but I don’t think they will help us to solve the problem. North Korea is a troublemaker. However, once the problem is solved, China will not have this bargaining chip.

Interviewer: What do you think our next move should be?

Lo: Japan, South Korea, the U.S. and Taiwan should intensify their dialogues to come up with a coordinated strategy towards North Korea. North Korea’s and China’s policy is always the “divide and defeat” strategy – “divide and conquer” strategy. They want to divide the alliance countries, Japan, South Korea and the U.S. That will give them room for manoeuvring. If they can come up with an orchestrated, coordinated policy and work together with a unified position, then I don’t think North Korea can have anything to play with.

But that’s not happening now. Trump is talking to China directly, bypassing Japan and South Korea. Trump did not consult its allies before then. They think China is the only country that can help the U.S. solve the problem. I don’t think that’s the case. The U.S., Japan and South Korea should come up with a coordinated policy in a unified position. That is the only way you can counter them.

China Jails 3 Hong Kong Pro-democracy Activists

(THIS ARTICLE IS COURTESY OF THE SOUTH CHINA MORNING STAR)

 

Thousands decry jailing of Hong Kong pro-democracy activists in ‘biggest protest since Occupy’

Demonstrators march to express outrage at sentences handed to former student leaders Joshua Wong, Nathan Law and Alex Chow

PUBLISHED : Sunday, 20 August, 2017, 6:36pm
UPDATED : Sunday, 20 August, 2017, 10:57pm

A march held in the blazing afternoon heat on Sunday to oppose the recent jailing of Hong Kong political activists was “the biggest protest since the 2014 Occupy movement”, according to organisers.

They said the turnout was higher than expected, but they were unable to come up with an estimate. Police put the figure at 22,000.

Led by pro-democracy groups including the Civil Human Rights Front, League of Social Democrats and Demosisto, crowds marched from Southorn Playground in Wan Chai to the Court of Final Appeal in Central, where a rally was held.

Many brandished yellow umbrellas – a symbol of the Occupy pro-democracy movement – while others donned mock prisoners’ outfits and makeshift cages over their heads.

They held placards branding the imprisonment of Joshua Wong Chi-fung, Nathan Law Kwun-chung and Alex Chow Yong-kang last week as acts of “political persecution”.

The activist trio were given jail sentences of between six and eight months by the Court of Appeal for storming the Hong Kong government ­headquarters compound at ­Tamar during an illegal protest that triggered the 79-day Occupy sit-ins.

Procession leaders, which included pan-democratic lawmakers and activists, held a long banner that read “no crime for fighting against a totalitarian government” as they shouted slogans calling for the release of the “political prisoners”.

Occupy student leader Lester Shum, one of the spokesmen for the organisers, said he believed the march was “certainly the biggest protest since Occupy in 2014”.

“The big turnout tells those in prison that they’re not alone. There are many Hong Kong people supporting them outside,” he added.

One participant, retiree Chan Cho-tak, said it was a shame the government had utilised legal means to suppress young activists. “The judges were wrong to send them to jail. What the young people did was for the good of Hong Kong.”

Another marcher, office worker Chu Ming-tak, 24, said the ruling had made him lose confidence in the city’s judiciary. “I hope the higher court can rectify the mistake,” he added.

Chinese University political scientist Ivan Choy Chi-keung said the guilty verdict for the activists was expected but that public fury was caused by what some felt was a harsh punishment, prompting more people to take to the streets in protest.

The Court of Appeal’s decision to jail Wong, Law and Chow marked a victory for the government, which had appealed to have tougher punishments imposed after a lower court last year gave the trio community service or suspended jail terms.

Separately, public prosecutors also succeeded in revising the punishments for 13 activists involved in a protest at the city’s legislature against a development project in Hong Kong’s northeastern New Territories in June 2014.

Joining Sunday’s march was former Civic Party legislator Margaret Ng Ngoi-yee. She said criticism of the sentences was not a personal attack on judges.

The criticism was aimed at Secretary for Justice Rimsky Yuen Kwok-keung and the Department of Justice, she said.

She rejected claims that there had been no political considerations in the court rulings. “You can’t prove there were none, either,” Ng said.

A government spokesman said any allegations of political interference in the courts were unsubstantiated and groundless and that the court’s judgment had sufficient legal justification.

Additional reporting by Phila Siu

Repression offers opportunity for Hong Kong’s pro-democracy movement

(THIS ARTICLE IS COURTESY OF THE ASIAN NEWS LETTER ‘WAGING NONVIOLENCE’)

 

Repression offers opportunity for Hong Kong’s pro-democracy movement

The Chinese government moved forward last week on a controversial high-speed railway development with Hong Kong, a move that would extend Chinese jurisdiction onto the city’s territory. The announcement came amid increasing efforts by Beijing to assert Chinese authority in Hong Kong, in conjunction with the suppression of its pro-democracy movement. These efforts reached a crucial moment the previous week when four pro-democracy lawmakers were removed from Hong Kong’s Legislative Council by a Hong Kong court, posing a setback to the city’s political opposition to Beijing.

The legislators — Nathan Law, Lau Siu-lai, Edward Yiu and “Long Hair” Leung Kwok-hung — were disqualified for inserting small acts of resistance into their oaths of office, such as shouting slogans demanding universal suffrage or pausing for several seconds after reading each word. Leung held a yellow umbrella during the procedure to symbolize the student-led Umbrella Movement — a 79-day mobilization in 2014, during which tens of thousands took to the streets, marching and camping out in tents to demand full democracy.

While the opposition in Hong Kong lost significant political power with this court decision — as it no longer has the ability to veto pro-Beijing legislation — China’s tightening of control in Hong Kong may actually signal renewed opportunity for resistance. Transforming such repression into action, however, will require unity among Hong Kong’s divided opposition, as well as a clear strategy moving forward. Despite their disagreement in terms of how to achieve democratic transition in Hong Kong, the various opposition groups nevertheless share many common aims and would benefit from dialogue.

The three main factions in Hong Kong’s pro-democracy movement — Progressive Liberals, Traditional Pan-Democrats, and the Pro-Independence or Localists — have been at odds since the Umbrella Movement rocked the city’s financial district three years ago. The movement was instigated by Beijing’s refusal to permit open nominations for the city’s Chief Executive and Legislative Council elections.

Cleavages between the three groups are not so deep as to preclude any cooperation and have more to do with how each faction envisions a theory for democratic change in Hong Kong. The traditional Pan-Democrats favor negotiation with Beijing and seek to gain influence by working through the system by gaining more power in the Legislative Council. This approach seems to hold less promise after the recent removal of the four legislators. The progressive liberals, on the other hand, favor street protests, direct action and social mobilization to pressure both the Hong Kong and Chinese governments for reform.

It is with the third and most radical faction, the Localists or pro-independence advocates, that a notable challenge arises for finding common ground. The Localists favor a more militant approach and have not publicly renounced violence in their aim for secession. This stands in opposition to what the other groups see as key to winning popular support and pressuring authorities for democratic change: maintaining nonviolent discipline. As such, the Localists have found themselves excluded from the leadership of the Umbrella Movement.

At the same time, however, the Localists’ position on China also leads to self-exclusion. In distancing themselves from Chinese affairs, the Localists refuse to take action on issues related to the promotion of democracy in China. They do not see it as Hong Kong’s concern. That is why the Localists did not join the July 16 vigil commemorating the life of Nobel laureate Liu Xiaobo, who died as a political prisoner in Chinese custody. Liu’s death — and the expedited, government-controlled ceremony to scatter his ashes — brought thousands into the streets in Hong Kong, demanding justice and resistance to Chinese authority.

Despite these disagreements, the opposition movement is ideologically aligned on many key points, such as the need for free elections, local autonomy and greater political freedoms. Although the Localists have not openly renounced violence, there are indications that they could move in this direction. Should they do so, they will be engaged in dialogue rather than pushed to the sidelines.

China’s tightening grip on dissent, both in the inhumane detention of Xiaobo and the recent crackdown on the four Legislative Council members, has set the stage for a renewed wave of mobilization among the people of Hong Kong. The path forward will depend on coordination among the opposition. Leaders will need to incorporate potential allies, develop a shared vision based on points of agreement, and identify the institutions and actors propping up Chinese control in Hong Kong to more strategically shape a campaign for full democracy.

Three important points should be kept in mind as Hong Kong’s pro-democracy movement looks ahead to the future. First, opposition groups must work to draw in as many potential allies as possible. Opponents of Beijing’s authority should not confuse the Chinese government with its citizens. Pejorative names and slurs for Chinese people — like the term “insects,” which some demonstrators have used — undermine the movement and fail to recognize that the Chinese are also victims of their government’s repression. Chinese citizens could be an important source of support in the movement against repressive Chinese rule. By incorporating the young, energetic students from the Umbrella Movement who are angered by the legislators’ dismissal, and the older people in Hong Kong who turned out to march in Xiaobo’s memory, the movement can unify different generations behind a common cause. Democracy must not be seen as only the ends, but also the means, for lasting societal change.

As the pro-democracy movement grows its base of actors, the second point that needs to be considered is the development of a shared vision. Factions in the opposition movement have been attacking each other because they hold different theories of change for Hong Kong. It is important to develop a vision that does not scare away traditional pan-democrats who want stability, while also accounting for the pro-independence faction, which wants to focus on Hong Kong’s internal affairs. Important examples show how dialogue regarding ideological differences can create a degree of consensus, such as the Tunisian dialogue platform that brought secular and religious groups into cooperation. There exists potential for Hong Kong’s opposition to find common ground on issues like urban development, independent judiciary, regulations on financial markets and improving Hong Kong’s position in East Asia. This kind of cooperation is hindered by the proportional representation system in Hong Kong’s Legislative Council, which pits groups against each other to compete for votes. A coalition within the social movement would thus provide an opportunity to build unity.

Finally, it is important for pro-democracy groups to better understand their opponent. Successful resistance efforts always target a variety of pillars, or institutions, upholding a regime. The strength of Hong Kong’s financial markets and its importance as a regional economic hub serve as leverage against Chinese authority. Civil society in Hong Kong can work to create shadow economic monitoring mechanisms that prevent corruption in Chinese investment. By focusing on areas where China is weakest, the pro-democracy opposition can team up with civil societies in foreign countries, exerting pressure on their governments to withdraw support for Chinese intervention in Hong Kong’s domestic affairs.

By uniting together around common issues and playing to Hong Kong’s strengths, the Umbrella Movement can enter a new phase of mobilization. Rather than seeing Beijing’s crackdown as a setback to the pro-democracy movement, it could instead be seen as a sign that China is growing increasingly worried about pro-democracy sentiment in Hong Kong. The recent events may be an opportunity for the movement to regroup, refocus and renew its struggle for democracy in the months and years to come.