News | RG21 - Part 27

China-Japan Tourism Rebounds in 2014

China Tourists Japan.jpg (Photo: China Daily)

For the first half of 2014, the numbers tell a simple story: Chinese tourists are back. Back in Japan that is. Despite political squabbling over the Diayou/Senkaku islands and Chinese and Japanese defense buildups and posturing, Japan is again a hot destination for Chinese travelers.

Tensions aside, the Wall Street Journal reports at a recent survey indicates that 29% of Chinese rank Japan as their #1 destination. A China Daily report mentions that the number of tourists visiting Japan might return to the pre -2012 territorial-dispute level. Reasons given are eased visa restrictions and favorable exchange rates.

Going the other way, visitors from Japan to China in 2014 show a consistent, double-digit drop except for February and May, when the Chinese New Year and Japanese Golden Week are celebrated.

http://www.tourism.jp/en/statistics/

http://blogs.wsj.com/scene/2014/01/15/where-rich-chinese-tourists-are-traveling-in-2014/

http://usa.chinadaily.com.cn/epaper/2014-03/03/content_17318237.htm

Flying Over A War Zone – Who is Responsible?

Our modern world is made up of complex systems overseen by humans. And we all have to believe that somewhere, someone is making rational and sound decisions on things that affect our safety. So when we board an aircraft, we must assume that people have done their best to assure that the aircraft will arrive at its destination. We assume that the people who make the decisions about or lives know what they are doing, and know a lot more about their business than we will ever know. Regarding the downing of Malaysian Airlines Flight 17 this past week, perhaps the people who were making the decisions didn’t know what they were doing. Internet reports say that commercial flights fly over war zones all the time. And we must assume this is true, for our planet is not without its patchwork of conflict zones. Reports about WHY the Malaysian plane was flying over a hot war zone where two aircraft had been shot down contain some shifting of blame. Malaysia says it had been assured by IATA and the UN organization that the route was safe, but both organizations say they do not guarantee safety. It is also worth noting that Air France, British Air and Cathay Pacific have been flying a more southerly route that avoids eastern Ukraine. And media reports indicate that Malaysian crew had reservations about overflying a war zone. Mr. Tony Tyler, Director General of IATA says:

At this time, it is important we are very clear: safety is the top priority. No airline will risk the safety of their passengers, crew and aircraft for the sake of fuel savings. Airlines depend on governments and air traffic control authorities to advise which air space is available for flight, and they plan within those limits.

So the airlines would not try to save money on fuel by flying over a war zone. Right. And it is the government’s responsibility to advise airlines about their airspace. In short: we are not responsible, the airlines would not do such a thing. And yet a commercial plane flew over a known war zone and was shot down. A war zone where two aircraft had been downed by missiles. A war zone that was avoided by British Air, Air France and Cathay Pacific.

Let us say nobody is to blame–but somebody is surely responsible. Please log in and post your thoughts

Mr. Tyler’s statement: http://www.iata.org/pressroom/pr/Pages/statement-MH17-2014-07-18.aspx

Asian Low Cost Carriers (LCC) Are Industry Game Changers

640px-9V-OTD_Boeing_777-212_ER_(cn_28510_90)_Scoot._(7791633944).jpg LCC Scoot Air Boeing 777-212 ER (Wikimedia)

by David Parmer / Tokyo

The Asian airline industry’s big story for 2014 will surely be the continued expansion of the Low Cost Carrier (LCC) segment of its business. CAPA Center for Aviation estimates the LCC fleet to be 1,000 aircraft at present with a staggering 1500 orders in place. Airbus and Boeing are bullish on the market estimating the need for 7,000 wide body aircraft and 20,000 narrow body aircraft in the next 20 years. Now there are 47 LCCs in the region, with another 10 expected to be launched in 2014. Orders for new aircraft are huge. Aviation Week reports that Lion Air has outstanding orders for 500 Airbus 320s and Boeing 737-800s. Air Asia has orders for 337 aircraft and Viet Jet has orders for 90 A320s. In general, LCCs buy the same type of plane to keep costs down. And fleets tend to be younger due to the presence of newer aircraft.

The expansion of LCC in the region is impressive. Airbus estimates that LCCs sell 25% of total seats across Southeast Asia. CNNs estimate is close to double that. LCCs share of seats in North Asia is estimated to be just 9%. Japan Airlines reportedly has no plans to acquire a stake in an LCC until there is what it sees as an inevitable shakeout in the market. Rumors of an open skies policy within ASEAN to be discussed in 2015 fuel visions of a one billion plus future passenger market.

But events on the ground point to the old truism that not ALL clouds have silver linings. Already there seems to be an adjustment in the volatile LCC market. And the dreaded “O” word is being spoken: oversupply. Reports are surfacing of aircraft orders being deferred and consolidation of carriers taking place. In the short term this may be the case, but as for the future, it looks like the shape of the airline industry will be dominated by the LCCs. Cheap and fast will most likely be the wave of the future for this part of the world.

North Korea’s Military – Laughable or Lethal?

N.Korea Uniforms.jpg (Photo: Army Recognition.com)

by David Parmer / Tokyo

Media reports on the DPRK military are often like the story of the blind men and the elephant. In the story each man grasps a different part of the beast and gives a different and wildly-divergent impression. The 2013 report by the U.S. Defense Department to Congress on North Korea gives an overall view that puts piecemeal reports by the press in a more understandable context.

The North Korean threat to the region is real, and it is an instrument of national policy. The raison d’être for DPRK forces are seen to be twofold; to keep the regime in power and to prevent any significant attack from the ROK, U.S. Japan or an expeditionary force made up of these three countries. At the same time, this capability enables the country to pursue a bellicose, contrarian and concession-extracting foreign policy.

North Korea fields a large, forward-deployed military that retains the capability to inflict serious damage on the ROK, despite significant resource shortfalls and aging hardware. (U.S. Dept. of Defense)

North Korean technology in conventional arms is far behind current world standards but effective. Aircraft date from the 1990s or earlier. While the DPRK has one of the world’s biggest submarine fleets, it along with the Navy (mostly a costal force) are seen as outdated technologically. Vintage Russian and Chinese designs are a big part of the defense mix. The DPRK has the 4th largest military in the world, with 70 submarines,13,000 artillery pieces and substantial armored and infantry units as well as its vintage air force. On paper this looks impressive, but the Pentagon cites serious shortcomings in the military machine of Kim Jong-un. Specifically:

Logistic shortages
Aging equipment
Lack of training

Despite these shortcomings, the threat from the north is credible. It starts with its artillery and rocket forces. Estimates suggest an artillery inventory of 13,000 pieces, many in hardened sites and targeting the territory south of the DMZ and Seoul itself. A second element in the threat is North Korean special forces (SOF). Other sources suggest that as many as 200,000 SOF personnel are on duty. These troops are seen as well equipped, highly motivated professionals capable of being inserted by land sea or air into the ROK to cause havoc and strike high-value targets such as air fields or command centers. Next comes the DPRK’s cyber warfare capability. In a cash-strapped national economy, cyber warfare can deliver a big return on investment. The Pentagon’s report suggests cyber attacks have already been launched on the south, with incidents of Denial of Service (DOS) attacks being attributed to the DPRK. And finally, the tip of Kim Jong-un’s spear is his rocket forces: short and long range missiles, less than sophisticated by world standards, but capable of getting the job done-i.e. threatening both his regional neighbors in China, ROK and Japan, but also the west coast of the United States. It seems that is only a matter of time before North Korea can perfect the launch and re-entry of an intercontinental ballistic missile capable of carrying a high yield nuclear warhead.

Seen from the Pentagon’s report, the military machine of the DPRK is a well-planned and well thought out instrument of national policy using strategy and limited resources to confront better equipped, better supplied and better trained potential adversaries. And so far this strategy seems to be working just fine.

U.S. Department of Defense Report on North Korea 2013

http://www.defense.gov/pubs/North_Korea_Military_Power_Report_2013-2014.pdf

Asian Waters—The Mighty Mekong in Crisis

Mekong Floating Market Viet Nam (Wikimedia)

by David Parmer

There is an old saying, “You can’t step in the same river twice.” Rivers by their nature flow and can be seen as manifestations of change. The Chinese concept of the nature of the universe, the Tao, was probably derived from the observation of flowing water. So a river changing is nothing surprising. Sadly, it seems as though, against all hope, Asia’s mighty Mekong River may be on the verge of irreversible change that will negatively impact millions of people locally, and countless people globally.

The Mekong River, Asia’s 12th longest waterway makes its way from the Tibetan plateau through China’s tropical Yunan province and south into Burma where it forms the Burma-Laos border, onward south where it again forms a border, this time the Laos- Thailand border. It enters Cambodia and exits into Vietnam’s Mekong delta and finally empties into the South China Sea. It is 4300 km or 2600 miles long.

The river, which is often considered to be of two main sections: upper Mekong and lower Mekong, is rich in biodiversity. It is said to be second only to the Amazon in this regard, and is home to more than 1200 species of fishes and one species of fresh water dolphin as well as the giant catfish which can be 3m long and weigh up to 300kg. Seasonal variations in flow and rapids make navigation along the Mekong difficult, but a lively trade takes place along its length, and up to 2.5 million tons of fish are harvested from its waters each year.

In 1995 four of the six river stakeholders, Laos, Cambodia, Thailand and Vietnam set up the Mekong River Commission to foster river development and promote the livelihood of people along the river. China and Burma did not join the group, but are considered “dialogue partners.”

Left alone, or managed well, the river could sustain life for generations to come. Unfortunately, such does not seem to be the course of future events. The river is now under threat from a number of sources. World Wildlife Funds cites climate change, illegal wildlife trade, pollution, climate change and hydropower to be the main challenges. Of these, damming for electric power is the most potentially devastating because of its effects on local water levels and fish habitat.

Dams (Proposed and Existing) on the Lower Mekong

Dams have already affected the various river ecosystems, but the most troubling are the proposed dams in Laos, which aims to become “the battery of Southeast Asia” by selling electric power to its neighbors. Piecemeal and uncoordinated development along the length of this great waterway looks to be the course of future events, and will clearly not be in the long term interest of the people who make their living from the mighty Mekong.

International Rivers, Lower Mekong Factsheet: http://www.internationalrivers.org/resources/the-lower-mekong-dams-factsheet-text-7908

WWF, Greater Mekong: https://www.worldwildlife.org/places/greater-mekong

China Housing Market-So Far, the 2014 Numbers Are Down

(Photo: China Daily Mail)

by David Parmer

Before 1987, terms like “supply and demand” and “buyer’s market” were probably unknown in China except to a few specialists. In 2014, the reality of these concepts, if not the theory, is common knowledge. China’s housing market is a good case in point. After a go-go market that looked like it would extend out to the horizon, reality has settled in it seems. Oversupply has arrived in China’s housing market, with estimates of around 50,000+ unsold units in China’s first-tier eastern cities. The market is characterized as having big inventories combined with sluggish sales.

The currency trading website Forex Minute reported on June 13, 2014 that sales are down 11% from a year ago and construction of new properties are down 19% for the January-May period as compared to the previous year. Sellers are taking counter-measures by offering various incentives to buyers, and in some cases price cuts. Evergrand Real Estate has cut prices by 15% according to Reuters and sales are trending upward. Meanwhile,the present oversupply is causing ripple effects throughout the greater Chinese economy. Industries like iron and steel making, cement manufacturing, tile making and furniture wholesaling are feeling the pinch. Workers’ wages in all of the above industries are also negatively impacted by the slowdown. Property investment accounts for a hefty 12% of China’s GDP. The government’s target of 7.5% growth for the current fiscal year could be in doubt.

Some analysts predict deep price cutting in the second half of the year that could result in sales targets for 2014 being met. Also banks seem reluctant to underwrite the housing market, and tight lending seems to be the order of the day. The result could be an adjustment in oversupply, which, combined with price cutting, could see the market beginning to stabilize by early 2015.

http://www.forexminute.com/economic-indicators/chinas-home-sales-decline-11-percent-due-to-weak-demand-35044

Person of Interest: Elon Musk

319px-Charles_Bolden_congratulates_SpaceX_CEO_and_Chief_Designer_Elon_Musk_in_front_of_the_historic_Dragon_capsule.jpg

NASA Administrator Charles Bolden, left, congratulates SpaceX CEO and Chief Designer Elon Musk in front of the historic Dragon capsule that returned to Earth on May 31 following the first successful mission by a private company to carry supplies to the International Space Station on June 13, 2012 at the SpaceX facility in McGregor, Texas. (Photo: Wikimedia)

by David Parmer

If he did not exist…we would have to invent him.

If we were going to write a comic book, what the Japanese call “manga” and hipsters in Seattle call a “graphic novel,” we would need a hero. How about inventing an enigmatic hero, bigger than life who experiences a lonely childhood tinkering with computers on the southernmost part of the planet, then in his teens migrates to one of the most northern countries and begins university studies. After that he gains admission to a prestigious university in that country’s southern neighbor where he studies physics and economics at one of the nation’s top B-schools. He then starts a Ph.D. program at another elite school, but drops out after two days, whereupon he begins his stellar rise, i.e., a rise to the stars. First he hacks the financial system, makes it ridiculously easy to send money around the globe. From this he makes a cool $1.5 billion, then he goes on to co-found an electric car company named after the patron saint of geeks everywhere. He gets electric cars on the road, and along the way releases his patents so that others-without having to license his technology-can also build electric cars. He does this out of altruism, but also to get the industry (of which he is positioned squarely at the forefront) going. Sounds like a pretty good story? Shall we stop there, no, let’s keep going. He has an “interest” in space. He wants to see humans get off the planet, he is worried about our survival as a species. (What if a humongous asteroid hits the Earth? What if some virus threatens to wipe us all out?) So he forms a company, calls it Space X, and launches the first commercial satellite from a liquid fueled vehicle, and then gets a contract to send cargo to the planet’s orbiting space lab. He also plans to modify the cargo vehicle to carry a human crew into the far reaches of space. Well, OK, first to Mars– but a couple of decades before the nation’s space agency plans to do so. That should be enough for a good story, but wait, let’s add more: how about he invests in solar technology? His company becomes the largest provider of solar power systems and he plans a factory to be the biggest producer of solar panels on Earth. Finally, how about we add two wives and five children? OK, done. So what should we call the hero of our manga/graphic novel? Hmmmm. How about Elon Musk?

http://www.newyorker.com/online/blogs/currency/2014/06/elon-musk-shares-tesla-patents.html

http://www.bbc.com/news/technology-27758898

http://www.extremetech.com/extreme/184640-spacex-says-it-will-put-humans-on-mars-by-2026-almost-10-years-ahead-of-nasa

U.S. Issues 2014 Report on PLA

Soldiers_of_the_Chinese_People's_Liberation_Army_-_2011.jpg (Chinese Infantry Photo: U.S. Gov. Def. Wikimedia)

by David Parmer

Public Law 106-65, provides that the Secretary of Defense shall submit a report “in both classified and unclassified form, on military and security developments involving the People’s Republic of China. The report shall address the current and probable future course of military-technological development of the People’s Liberation Army and the tenets and probable development of Chinese security strategy and military strategy, and of the military organizations and operational concepts supporting such development over the next 20 years. The report shall also address United States- China engagement and cooperation on security matters during the period covered by the report, including through United States-China military-to-military contacts, and the United States strategy for such engagement and cooperation in the future.” (Prologue U.S. Defense Annual Report to Congress 2014)

The United States Department of Defense has released its annual report on China’s military. Titled “Military and Security Developments Involving the People’s Republic of China” The report states that the PRC continues its long-range modernization program that will improve its ability to fight and win short-duration high-intensity conflicts. China has focus on Taiwan, but is also the South and East China seas.

Military relations between the U.S. and China are expanding, but the U.S. side has concerns about China’s transparency regarding its real military spending figures.

In 2013, the report continues, relations were good, and the U.S. calls on China “to contribute constructively to efforts with the United States, our allies and partners and the greater international community to maintain peace and stability.”

The report consists of six chapters: four special topics and three appendixes.

Annual update
Understanding China Strategy
Force Modernization goals land Trends
Resources For Force Modernization
Force Modernization For A Taiwan Contingency
U.S.-China Military-to-Military Contacts

There are also four special topics and three appendixes. One of the special topics deals with China’s first aircraft carrier and one of the appendixes deals with China and Taiwan forces data.

China’s reaction was swift, and not positive. In a China Daily (USA) article entitled “Experts take aim at ‘biased’ Pentagon report on China” China’s Ministry of Defense is quoted as stating: “It is completely wrong that Washington issues this so-called report year after year, making irresponsible accusations over China’s normal development of its national defense and military.”

http://www.defense.gov/pubs/2013_china_report_final.pdf

http://usa.chinadaily.com.cn/2014-06/09/content_17573999.htm

Person of Interest: U.S. Secretary of Defence Chuck Hagel

imgHandler.ashx.jpeg (Photo: Dep. of Defense)

by David Parmer

“To question your government is not unpatriotic–to not question your government is unpatriotic.”

On February 26, 2013, then Senator Chuck Hagel was confirmed as the 24th Secretary of Defense of the United States. His confirmation was not without controversy. Nominated on Jan 7, 2013 by President Barak Obama, he faced stiff grilling from congress, particularly his Republican colleagues. His nomination was the first ever to be filibustered. Ostensibly, congress was concerned about his support for Israel, which is a pillar of American foreign policy. Ultimately Hagel weathered the storm and was nominated. One would think that Republicans would be glad to have one of their own in a top position in a Democratic administration, and would have given him a pass. And the reason they didn’t? Probably very simple: from the beginning of his political career, Chuck Hagel has been his own man, i.e. he has followed his conscience and done what he sees as right and good for the country, not just his own party.

Hagel has had a steady, if not meteoric rise to the top. He was born on October 4, 1946 in North Platte, Nebraska the oldest of six children. He attended Catholic high school, started technical school and then volunteered for the U.S. Army. He served in Vietnam, was wounded twice and rose to the rank of sergeant. After the Army, he worked in various jobs in radio, and attended the University of Nebraska, graduating in 1971 with a degree in history. Hagel’s career in politics began when he was a staffer for Nebraska Republican Congressman John Y. McCollistor. After working as a lobbyist, he served on Ronald Regan’s successful presidential campaign. In the 1980s he cofounded Vanguard Cellular Systems, and in 1996 launched his own senate campaign. He was a U.S. senator from 1997-2009. During the Iraq war Senator Hagel was critical of the Bush administration and the policies of his own party. He was openly critical of Bush insiders like Carl Rove. He also strongly opposed Bush’s 2007 plan to send another 20,000 troops to Iraq.

From 2009, following his retirement from the senate and prior to his nomination in 2013, Hagel was a professor at the Edmund A Walsh School of Foreign Service at Georgetown University. He also continued to pursue his various business interests.

Secretary Hagel has come aboard in some interesting times. And the global chess board, once intelligible and potentially manageable, now looks more like a game of Jumanji. As Secretary of Defense he must deal with multiple challenges, including America’s pivot to Asia and its support for its Asian allies in the face of growing disputes with China, Russia’s actions in Ukraine, and the ongoing challenges of terrorism, failed states and the nuclear threat from North Korea.

The spearhead of American power must be sharp, but the spear must be wielded judiciously. And who better to do it than Chuck Hagel, a former soldier who has seen the face of war firsthand and knows the costs of war.

(Compiled from Web sources)

Hong Kong-17 Years And Counting

Hong Kong From Peak (Y.O.).jpg (Hong Kong From Peak. Photo: Y.O.)

by David Parmer

On a dark and rainy July 1, 1997 Hong Kong reverted to Chinese sovereignty after 156 years of colonial rule. The rain fell, the People’s Liberation Army marched in and the British sailed away. And that was that. In the lead up to the handover negotiated years before between Britain’s Prime Minister Margaret Thatcher, and Chinese leader Deng Xiao-ping anxiety about the future of the new Special Administrative Region was high. Many Hong Kongers headed overseas, or at least set up bases there. Destinations of choice included Canada, Australia, the United States and the United Kingdom.

July 1, 1997 came and went, and life went on. Some things remained the same, for example the use of English in schools, the freedom of the press, the use of SAR passports, and the British style of driving on the left. Also some roads’ British names remained. Changes after 1997 included the method of electing Hong Kong’s Chief Officer, the use of the PRC and Hong Kong flags, and the use of currency without the Queen’s picture on it.

Life went on, and problems remain. Pollution, just as in the rest of China is a serious threat to health. In 2003 Mainland tourists were allowed to come to Hong Kong on an individual traveller basis instead of only as members of a group. Mainland tourism has continued to mushroom, with 2013 numbers set at 40 million visitors.

The New York Times online reported that on May 27, 2014 Chief Executive Leung Chun-ying had proposed a 20% reduction in the number of Mainland tourists as one option to handle the flood of visitors. Predictably the business community was not enamored of his proposal. Other complaints against the Mainlanders include the use of health services, the buying of large quantities of baby formula and the driving up of property prices.

On the 16th anniversary of the Hong Kong handover in July 2013 a huge demonstration was held, with participants numbering any where from 60,000 to 400,000. In 2014 another demonstration is planned for June 20-22 by a group calling itself Occupy Central to hold what it says will be an “unofficial referendum.”

So after 17 years, life goes on in Hong Kong as it does it most other parts of the world-not without its pleasures, but not without its problems either.