CHINA AND LATIN AMERICA - PARTNERSHIP FOR A NEW WORLD

Brazil's huge new port highlights China's

drive into South America

Investments guarantee Chinese access to soy, oil and other badly

needed resources

The Guardian

Wednesday 15 September 2010

The 'super port' in Sao Joao da Barra is the largest port

investment in Brazil and will have capacity for the largest

ships in the world. Photograph: Douglas Engle/Australfoto

Blades slicing through the morning heat, the helicopter

rose from the tarmac and swept into a cobalt sky, high

above Rio's Guanabara Bay.

It powered north-east over deserted beaches, dense Atlantic

rainforest and fishing boats that bobbed lazily in the

ocean below. Then finally, 80 minutes on, the destination

came into view: a gigantic concrete pier that juts nearly

two miles out into the South Atlantic and boasts an unusual

nickname: the Highway to China.

Dotted with orange-clad construction workers and propped up

by dozens of 38-tonne pillars, this vast concrete structure

is part of the Superporto do Acu, a £1.6bn port and

industrial complex that is being erected on the Rio

coastline, on an area equivalent to 12,000 football

pitches.

Reputedly the largest industrial port complex of its type

in the world, Açu is also one of the most visible symbols

of China's rapidly accelerating drive into Brazil and South

America as it looks to guarantee access to much-needed

natural resources and bolster its support base in the

developing world.

When Acu opens for business in 2012, its 10-berth pier will

play host to a globetrotting armada of cargo ships, among

them the 380-metre wide ChinaMax – the largest vessel of

its type, capable of ferrying 400,000 tonnes of cargo.

Millions of tonnes of iron ore, grain, soy and millions of

barrels of oil are expected to pass along the "Highway"

each year on their way east, where they will alleviate

China's seemingly unquenchable thirst for natural

resources.

"This project marks a new phase in relations between Brazil

and China," Rio's economic development secretary, Julio

Bueno, said during the recent visit of about 100 Chinese

businessmen to the port complex, which is being built by

the Brazilian logistics company LLX and should receive

billions of dollars of Chinese investment.

This new phase of engagement with Brazil and South America,

is part of China's "going out strategy" – an economic and,

some say, diplomatic push for Chinese companies, many of

them state-run, to invest abroad, snapping up access to

minerals, energy and food by pouring the country's colossal

foreign reserves into overseas companies and projects.

China is expected to overtake Japan as the world's second

largest economy this year and may already be the world's

greatest energy consumer. Now it is set to become Brazil's

top foreign investor, with its companies plowing $20bn into

the country in the first six months of 2010, compared with

$83m in 2009. A recent study by Deloitte predicted that

Chinese investments in Brazil could hit an average of about

$40bn a year between now and 2014, with companies throwing

money at sectors ranging from telecommunications,

infrastructure and farming, to oil, biofuels, natural gas,

mining and steel manufacturing.

"Relations with Brazil in all areas have entered a new

era," Qiu Xiaoqi, China's ambassador in Brazil, recently

told the state news agency Xinhua.

The surge in China's South American spending is not just a

Brazilian phenomenon. Ecuador has already signed around

$5bn of bilateral deals with China this year, including

$1.7bn to help build a hydro-electric dam and $1bn

investments for oil exploration and infrastructure

projects. That compared with Chinese investment of just

$56m in 2009.

Chinese companies have sunk $1.4bn into mining operations

in Peru this year, while in April Hugo Chávez announced

that the Chinese, already major sponsors of Venezuelan oil

exploration, had agreed to open a $20bn credit-line for the

"Bolivarian revolution".

Michael Klare, author of Rising Powers, Shrinking Planet, a

book about the growing tussle for global resources,

described today's China as "the shopaholic of planet

Earth".

"The Chinese authorities understand that to sustain the

country's continued growth, they will have to ensure that

its industries are provided with adequate supplies of

energy, minerals, and other basic raw materials," he said.

But the "going out" strategy went far beyond business

transactions, he added.

"They seek to fashion a multipolar world in which no single

power – read the United States – plays an overwhelmingly

dominant role. To this end, they seek to bolster ties with

rising regional powers like Brazil and South Africa."

In Sao Joao da Barra, the city nearest to Acu and one of

Rio state's poorest regions, the Chinese presence is being

felt even before Brazil's Highway to China is complete.

Keen to impress, LLX staff at the Açu port lay on hot water

and Mandarin interpreters for visiting Chinese dignitaries.

Sao Joao da Barra's town hall, meanwhile, has started

offering free Mandarin lessons to locals interested in

working with the wave of Chinese guests that is

anticipated.

"You should see a 10-year-old boy saying, 'I understand …

the Chinese are coming and when the Chinese industries come

I want to work for them and if I speak Mandarin I'll have a

competitive advantage on the others'," beamed Eike Batista,

the billionaire entrepreneur behind the superport and one

of the most vocal cheerleaders for Chinese advances into

Brazil. "[It is] wonderful."

Leonardo Gadelha, LLX's CFO, said during a recent tour of

the port: "This is part of a Chinese strategy of going to

the market more and more. They are already a very

considerable presence in Africa and we are now going

through this moment in Brazil."

The Highway to China lay "in the middle" of this blossoming

relationship with China, he said, adding: "We are betting

that … this will continue growing."

Not all Brazilians, or indeed western governments, share

such enthusiasm.

"There are many in Washington who worry about China's

growing presence in Africa and Latin America and claim that

this poses a threat to America's long-term strategic

interests," said Klare, noting, however, that the US'

"fixation" with Afghanistan and the war on terror meant

there had been virtually no reaction.

In Brazil meanwhile China's arrival has prompted cries of

neo-colonialism. "The Chinese have bought Africa and now

they are trying to buy Brazil," the prominent economist

Antônio Delfim Netto complained in a recent interview with

the Estado de Sao Paulo newspaper, warning that it was a

"grave mistake" to allow a foreign state to buy "land,

minerals [and] natural resources" from another sovereign

power.

Batista, Brazil's richest man, rejected such criticism,

saying: "The association between Brazil and China is a

two-way highway." Chinese companies such as Wuhan Iron and

Steel had committed to helping build a $5bn steel mill at

the port complex, rather than always shipping out primary

resources to process at home, he pointed out. "You want to

get three tonnes of raw iron ore, [so] produce one tonne of

steel in Brazil," he said. "That philosophy is sinking in

and is great for both sides."

Neither would Chinese companies be allowed to flood the

complex with hordes of foreign workers as had happened in

Africa, said Gadelha, the CFO.

"If it was up to them they would bring lots of Chinese

workers as they are used to doing," he admitted. "[But]

Brazil's legislation is very strict in this sense."

Batista suggested that rather than complaining about

China's courtship of Brazil, western powers should urge

their own companies to pay more attention to the region

themselves.

"In the last 15 years or so the [American and European]

CEOs have stopped coming here and that is why they are a

little bit behind," he said. "We are pushing European

companies and saying: 'You're not really understanding what

is happening in Brazil'."

"Don't put Brazil in the same bag as our neighbours," he

added. "We are not Central America. We are not Venezuela.

We are not Argentina."

============================

Beijing's deals

Brazil In November 2009 Brazilian energy giant Petrobras

signed a $10bn loan deal with China's Development Bank. As

part of the deal Petrobras will guarantee the supply of

200,000 barrels of oil per day to China over the next 10

years. Chinese companies and state banks pumped around

$20bn into Brazil in the first half of this year

Venezuela Hugo Chávez, pictured, unveiled a $20bn credit

line from China's Development Bank to fund the "Bolivarian

revolution" in April

Ecuador The country has already signed around $5bn of

bilateral deals with China this year, including $1.7bn to

help build a hydro-electric dam and $1bn investments for

oil exploration and infrastructure projects. In 2009 direct

Chinese investment in the country was just $56m

Peru Chinese companies invested $1.4bn in mining operations

in Peru during the first four months of this year, making

China the country's second largest trade partner

NOAM CHOMSKY ON CHINA, SPEAKING AT PEKING UNIVERSITY

Chomsky: "What is challenging the US
is not China’s development, but its independence."

Global Voices Online

On 13 August, Noam Chomsky delivered a speech at the Peking University in Beijing. Chomsky, one of the leading public intellectuals of our age, is famous for his political activism and contributions to linguistic and philosophy. The talk, titled Contours of World Order: Continuities and Changes, was mostly about two dominant threats facing humanity: nuclear wars and environmental degradation.

While Chomsky has re-emphasized his criticisms on the United States, he has also expressed his opinions on China. In Chomsky’s view, emerging countries like China and India still have a long way to go to challenge the America. Of particular concern is the environmental cost of China’s development model, and the many internal and social problems that China has to tackle. This week, the Southern Metropolitan Daily publishes an interview with Chomsky. An excerpt of the interview is translated below.


SMD: Most Chinese have accepted globalization. In the past three decades, especially after China joined the World Trade Organization (WTO), many Chinese have benefited tremendously. But it seems that you see globalization in poor lights.

Chomsky: China’s economic achievement has little to do with globalization. It is related to trade and export. China has gradually become an export-oriented country. No one, myself included, is opposed to exports. But this is not globalization. In fact, China has become a factory in the Northeast Asian production system. If you look at the whole region, you will find it very dynamic. China’s export volume is enormous. But there is something we have overlooked. China’s export relies heavily on the exports of Japan, Korea and the US. These countries provide China with high-tech components and technologies. China is just doing the assembly, and labelling the final products as ‘Made in China.’

China has developed rapidly by following wise policies. But while millions of people were lifted out of poverty, costs such as environmental degradation are high. They are merely transferred to the next generation. Economists will not worry about them, but these are costs that someone needs to pay for ultimately. It may be your children or grandchildren. These have nothing to do with globalization and the WTO.


SMD: Do you think the rise of China will change the world order? Will China play the role that the US is playing now?

Chomsky: I don’t think so; neither do I hope so. Do you really hope to see a China with 800 overseas military bases, invading and overthrowing other governments, or committing terrorist acts? This is what the America is doing now. I think this will not, and cannot, happen on China. I do not wish it to happen neither. China is already changing the world. China and India together account for almost half of the world’s population. They are growing and developing. But relatively speaking, their wealth is only a small part of the world. Both countries still have long ways to go and face very serious domestic problems, which I hope will gradually be solved. It is meaningless to compare their global influences with those of rich countries. My hope is that they will exert some positive influences to the world, but this has to be watched carefully.

China should ask itself what role it wishes to take in the world. Fortunately, China is not assuming the role of an aggressor with a large military budget, etc. But China does have a role to play. It is am enormous consumer of resources, and there are pros and cons. For example, Brazil will benefit economically if it exports to China. On the other hand, its economy will also be damaged. For countries with abundant resources like Brazil and Peru, one problem is their reliance on exports of primary resources, which is not a good development model. To change their mode of development, they first need to solve their domestic problems and transform themselves into producers, not just exporting primary products to other producer countries.


SMD: Is the success of China a challenge to Western democracies?

Chomsky: Let’s make a historical comparison. Was the rise of the United States a threat to democratic Britain? The United States was founded on the slaughtering of indigenous population and the slave system. Is this model suitable for other countries? Do you want China to learn from this model? It is true that the US has developed into a democratic country which is strong in many respects, but its democracy is not developed from this model, which any rational person would not want to imitate.

China is developing, but there is no evidence to prove that its internal development is causing a threat to the West. What is challenging the US is not China’s development, but its independence. That is the real challenge.

You can tell from every day’s headlines that the current focus of US foreign policy is Iran. The year 2010 is called ‘The Year of Iran.’ Iran is portrayed as a threat to US foreign policy and the world order. The US has imposed harsh, unilateral sanctions, but China has not followed suit. China has never followed the US lead. Instead, it supports UN sanctions, which are too weak to matter. A few days before I left for China, the US States Department warned China in a very interesting way. It said China has to bear international responsibilities, i.e. follow US orders. This is China’s international responsibilities.

This is standard imperialism, which is that other countries have to act according to our requests. If not, they are irresponsible. I think officials from the Chinese Foreign Ministry must laugh when they hear this. But this is the standard logic of imperialism. In fact, Iran becomes a threat because it does not follow US instructions. China is a bigger threat, as it is a big problem when a major power refuses to obey orders. This is the challenge that the US faces.

MICHAEL MOORE: "CAPITALISM IS EVIL ... YOU HAVE TO ELIMINATE IT"

Moore talks about his new film

Michael Moore says of Capitalism: A Love Story, ‘I want audiences to get off the bench and become active.

After guns and the Iraq war, Michael Moore is now taking on an entire political and economic system in his latest documentary, Capitalism: A Love Story. So what message does the man who once planned to become a priest have?

Chris McGreal
The Guardian
Saturday 30 January 2010

Michael Moore has been accused of many things. Mendacity. Manipulation. Rampant egotism. Bullying a frail old man with Alzheimer's. And that is by people who generally agree with his views. His latest film Capitalism: A Love Story is already out in the US when we meet. He comes storming down the hotel corridor, predictably unkempt in ragged jeans that have the unusual quality of appearing both too large and too small at the same time.

I wasn't sure what to expect. Arrogance, perhaps. Cynicism. But he begins to schmooze while he's still some distance away, shouting he feels he knows me. A few months ago one of Moore's producers interviewed me for the film. I was cut from the finished version but Moore says he watched my every word.

Settled on a couch I ask why he hasn't managed to persuade the downtrodden, uninsured, exploited masses to revolt. "My films don't have instant impact because they're dense with ideas that people have not thought about," he says. "It takes a while for the American public to wrap its head around some of the things I'm saying. Twenty years ago I told them that General Motors was going to collapse and take a lot of towns down with them. I was ridiculed, and GM sent around this packet of information about me, my past writings – pinko! With Bowling for Columbine, I told people that these shootings are going to continue, we've got too many guns, too easy access to the guns. [In Fahrenheit 9/11] I'm telling people that we're not going to find weapons of mass destruction in Iraq, we've been lied to."

Capitalism: A Love Story seems the natural culmination of all his others, an overarching look at the insidious control of Wall Street and corporate interests over politics and lives. Its timing is exquisite, coming in the wake of the biggest financial collapse in living memory. And once again Moore is bracing himself: as the film drew to a close at its premiere in Los Angeles, he posted a message on Twitter: "The packed house gets up to grab their torches and pitchforks …"

The film is certainly shocking. Early on, Moore sets out the meaning of "Dead Peasants" insurance. It turns out that Wal-Mart, a company with a revenue larger than any other in the world, bets on its workers dying, taking out life insurance policies on its 350,000 shop-floor workers without their knowledge or approval. When one of them dies, Wal-Mart claims on the policy. Not a cent of the payout, which sometimes runs to a $1m (£620,000) or more, goes to the family of the dead worker, often struggling with expensive funeral bills. Wal-Mart keeps the lot. If a worker dies, the company profits.

Wal-Mart is not alone. Moore talks to a woman whose husband died of brain cancer in 2008. He worked at a bank until it fired him because he was sick. But the bank retained a life insurance policy on the unfortunate man and cashed it in for $4.7m (£2.9m) when he died. There were gasps from the audience in a Washington cinema at that.

They came again as Moore focused on the eviction of the foreclosed. The Hacker family of Peoria filmed themselves being chucked out of their home because of skyrocketing mortgage payments. Randy Hacker, gun owner, observes that he can understand why someone might want to shoot up a bank. In a final twist, the eviction squad offers the Hackers cash to clear out their yard.

The Hackers are Republicans. So was the widow of the bank worker. It is the gap, between the ordinary American – Democrat or Republican, middle-class or dirt-poor – and predatory banks and mammoth corporations that Moore has made his target ever since Roger and Me, his first film, set out to expose the damage wreaked by General Motors on his hometown of Flint, Michigan.

"One movie maybe can't make a difference," Moore says. "I'll say, what's the point of this? What do I want [my audiences] to do? Obviously I want them to be engaged in their democracy. I want them to get off the bench and become active."

Last summer something happened that renewed Moore's conviction that his film-making was politically worthwhile. "I'm in the edit room and there's Bill Moyers on the TV interviewing the vice-president of Sigma health insurance. Massive, billion-dollar company. He's sitting there, telling the country that he's quit his job and he wants to come clean. That he and the other health insurance companies got together and pooled their resources to smear me and the film Sicko to try and stop people from going to see it because, as he said, everything Michael Moore said in Sicko was true, and we were afraid this film would be a tipping point.

"I came away from that, with 'Wow, they're afraid of this movie, they believe it can actually create a revolution.' The idea that cinema can be dangerous is a great idea."

Moore's critics would argue this is his ego speaking. The idea that his film about the failings of the US healthcare system was on the brink of prompting a revolution of any kind looks all the more far-fetched given how the political fight over the issue has panned out. But if Moore's primary intention is to send up a warning flare, to alert Americans to what is going on in their country but not usually reported, he's been pretty successful.

At the end of Capitalism: A Love Story, Moore makes a pronouncement: "Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people and that something is democracy." Michael Moore once planned to be a priest. In his youth he was drawn to the Berrigan brothers, a pair of radical priests who pulled anti-Vietnam war stunts such as pouring blood on military service records. In an instructive moment for Moore, the brothers made clear they weren't just protesting against the war, but against religious organisations that kept silent about it.

These days he disagrees with Catholic orthodoxy exactly where you would expect him to – he supports abortion rights and gay marriage – but he credits his Catholic upbringing with instilling in him a sense of social justice, and an activism tinged with theatre that lives on his films.

But what does it mean, to replace capitalism with democracy? He sighs and tries to explain. In the old Soviet bloc, he says, communism was the political system and socialism the economic. But with capitalism, he complains, you get political and economic rolled in to one. Big business buys votes in Congress. Lobbyists write laws. The result is that the US political system is awash in capitalist money that has stripped the system of much of its democratic accountability.

"What I'm asking for is a new economic order," he says. "I don't know how to construct that. I'm not an economist. All I ask is that it have two organising principles. Number one, that the economy is run democratically. In other words, the people have a say in how its run, not just the 1%. And number two, that it has an ethical and moral core to it. That nothing is done without considering the ethical nature, no business decision is made without first asking the question, is this for the common good?"


These days Moore, the son of a Flint car worker, lives in the smalltown surrounds of Traverse City with his wife Kathleen Glynn and stepdaughter Natalie, a four-hour drive and a world away from where he came from. But Traverse City, which is on Lake Michigan, has endured its own decline. Walking along the restored foreshore, a sign says that the city was once a major lumber exporter. Now it is known as the "Cherry Capital" of America.

"When I first got here the theatre was boarded up," says Moore. "It was a mess. I said, look, let me reopen this theatre, I'll create a non-profit. It has brought, like, half a million people downtown in the first two years. If they're downtown they go out to dinner, they go to the bookstore. It livens everything up. Stores open. Now there's no plywood on any windows." This, says Moore, has made him something of a local hero even in a town that votes Republican.

"The county voted for McCain and for Bush twice. But not a day goes by when a Republican here doesn't stop me on the street and shake my hand and thank me. Me, the pariah!"

There are conservatives who get Moore's message, particularly families such as the Hackers who have been betrayed by the system they thought was working for them. But identifying their suffering, and even the cause of their problems, is very different from persuading them that capitalism is evil, although they might just buy in to what Moore says is the core message of his latest film – "that Wall Street and the banks are truly the enemy, and we need to tie that beast down and quick".

His enemies in the rightwing media will be doing everything they can to ensure this doesn't happen, portraying him as a propagandist. And even some of his supporters say he is too willing to leave out inconvenient facts. But there's no denying some very powerful truths in Capitalism, one of which is that it didn't need to be this way in America.

Moore has dug out of a South Carolina archive a piece of film buried away 66 years ago because it threatened to rock the foundations of the capitalist system as Americans now know it.

President Franklin D Roosevelt was ailing. Too ill to make his 1944 state of the nation address to Congress, he instead broadcast it by radio. But at one point he called in the cameras, and set out his vision of a new America he knew he would not live to see.

Roosevelt proposed a second bill of rights to guarantee every American a job with a living wage, a decent home, medical care, protection from the economic fears of old age, sickness and unemployment, and, perhaps most dangerously for big business, freedom from unfair monopolies. He said that "true individual freedom cannot exist without economic security and independence".

The film was quickly locked away.

"The next week on the newsreels – and we've gone back and researched this – they didn't run that," said Moore. "They talked about other parts of his speech, the war. Nothing about this. The footage became lost. When we called the Roosevelt presidential library and asked them about it they said it wasn't filmed. His own family told us it wasn't filmed." Moore's team scoured the country without luck until they were given a tip about a collector connected to the university of South Carolina.

The university didn't have anything archived under FDR's speeches that fitted, but there were a couple of boxes from that week in 1944.

"We pop it in. It was all there. We had tears in our eyes watching it. For 65 years not a single American saw that speech, not one. I decided right then that we're going to fulfil Roosevelt's wishes that the American people see him saying this. Of all the things in the film, probably I feel most privileged that I get to share this. I get to give him his stage." It's a powerful moment not only because it offers an alternative view of American values rarely spoken of today – almost all of which would be condemned as rampant socialism – but also an interesting reference point with which to compare the more restrained ambitions of the Obama administration.

It is hard to imagine any circumstances in which Obama could put forward such an agenda, I suggest. Moore disagrees.

"He could make that speech."

And survive politically?

"He has told people he's going to operate these four years not with an eye on getting re-elected but on getting things done. I have been very happy for the last year. We came out of eight dark years and his election was – what's the word? – the relief I felt that night, I've been filled with hope since then. Now my patience is running a bit thin. He hasn't taken the reins and said: I'm in charge here, this is what we're doing. Do it. I can understand he's afraid but he's gotta do it."

Dude, where's my country? Michael Moore's America
"A thief-in-chief … a drunk, a possible felon, an unconvicted deserter and a crybaby"

On George Bush, 2001


"I say stupid white men are always the problem. That's never going to change"

After 9/11, in response to his publisher's pleas that he go easy on Bush


"It was pretty much like any other morning in America. The farmer did his chores. The milkman made his deliveries. The president bombed another country whose name we couldn't pronounce"

In Bowling for Columbine, 2002


"Back home we call it fuck-you money, OK? What that means is, the distributor of the film can't ever say to me, 'Don't you dare say this in the interview' or 'You better change that in the movie because if you don't, you're not going to get another movie deal.' Because I already have my home and my family taken care of, and enough money from this film and book to make the next film, I'm able to say, 'Fuck you.' No one in authority can hold money over me to get me to conform." 2002


"There is a country I would like to tell you about. It is a country like no other on the planet. Many of you, I am certain, would love to live there. It is a very, very liberal, liberated, and free-thinking country. Its people hate the thought of going to war. The vast majority of its men have never served in any kind of military and they aren't rushing to sign up now … The majority of its residents strongly believe in equal rights for women and oppose any attempt by the government or religious groups who would seek to control their reproductive organs ..." 2003


"There's a gullible side to the American people. Religion is the best device used to mislead them … and we have disastrous media." 2003


"I would like to apologise for referring to George W Bush as a 'deserter'. What I meant to say is that George W Bush is a deserter, an election thief, a drunk-driver, a WMD liar and a functional illiterate. And he poops his pants." 2004


"Halliburton is not a 'company' doing business in Iraq. It is a war profiteer, bilking millions from the pockets of average Americans. In past wars they would have been arrested – or worse." 2004


Research by Isabelle Chevallot

Capitalism: A Love Story is released on 26 February

CHINA CONTINUES TO RENATIONALISE

What's yours is mine in China's coalfields

The Australian
January 25, 2010

NOWHERE is renationalisation more blatant than in the rich
coalfields of Shanxi.

Yet there's money lying beneath this unalluring mix. Loads
of it. Taiyuan is scattered with Bentley showrooms, Rolex
boutiques -- in fact, all the luxury brand names from New
York, London, Paris, Hong Kong and Shanghai. And the locals
like to talk about money.

"When a Shanxi businessman goes to Beijing to look for
houses, he doesn't just look at one apartment -- he looks
at the entire side of the building," a Shanxi executive
said in Taiyuan last week.

Most of the money has come from coal, the black gold that
fuels China's power stations and its steelmaking blast
furnaces, processing Australia's iron ore. Fortunes have
been built on the back of the province's mine workers, and
with their blood: there were 2631 deaths in China's coal
mining sector as a result of mine accidents last year, but
the figure was down by 20 per cent on 2008.

Shanxi is changing. Once home to thousands of small and
mid-sized mines and mining companies, now the government is
taking over again. Shanxi's coal sector is a high-profile
symbol of renationalisation: the second coming of
state-owned enterprises.

Tens of thousands of state-owned enterprises were pulled
apart in the 1980s to allow capitalism to develop. But now
the country's leadership is becalmed as it heads into its
last two years in power after years of only incremental
economic reform.

China's ruling politico-corporate complex has also been
emboldened by the opportunities of the global financial
crisis, which saw more than $US1.5 trillion pumped into the
economy, most into state-run companies.

The crisis has also been used to step up plans for
consolidation in eight key industries: the aim of this is
to have a smaller number of large companies which China
wants to be able to compete with large foreign
multinationals as well as expanding globally.

It's not just on a national level. In Shanxi, home to 30
million people, seven provincial coal miners have been
allocated a slice of the private sector at a bargain price.

In Shanxi close to 2000 small mines have been forceably
reclaimed, officially for efficiency, health and safety and
environmental concerns. These are real concerns: the
government attributes the fall in deaths to small mine
closures and says 70 per cent of fatalities are at small
mines. But one miner owner says he instituted the extra
safety and environmental controls but was still forced to
sell to the government at a loss of 5 million yuan
($833,000).

Businesses from the wealthy province of Zhejiang and its
famously rich capital Wenzhou are the biggest single source
of investment in Shanxi's coal sector.

"Wenzhou, one of the regions with the most active private
economy, has only 4.5 per cent GDP growth in the first half
of last year, far below national level," Xia Yeliang, a
professor at Beijing University, says.

"One of the reasons is Wenzhou's private entrepreneurs have
invested in about 600 coal mines in Shanxi with 200 billion
yuan, which face mergers now.

"It has severely hit Wenzhou's economy. The
renationalisation will have irrevocable impacts on China's
economy. It will have a profound negative effect on wealth
distribution and future development of China, and it must
be stopped now."

Lawyers claim their clients are getting only about 30 per
cent of the real value of the business in the forced sale
of coal mines. The provincial government has appointed its
own valuer, but lawyers have claimed this is against the
law. Mines are effectively being bought back for the price
of exploration licences handed out during the first decade
of the century and this does not take into account capital
spending and commercial contracts, says Zhang Yucheng, a
lawyer at national Chinese law firm Dacheng Law Office.

Last year China depended entirely on government funding to
achieve its 8.7 per cent growth. It was a tough year for
businesses in China -- recent government figures showed 20
per cent of small businesses went broke between November
and May and a further 20 per cent went close to collapse --
but China's state-owned enterprises got richer.

Last week the state press reported that China's SOEs were
expected to generate 750 billion yuan in profits and
achieve sales revenue of 12 trillion yuan in 2009.

In the first 11 months of 2009, the 131 SOEs under the
direct supervision of the State Assets Supervision and
Administration Commission (SASAC) posted 3.4 per cent
year-on-year growth in profits to 710.9 billion yuan on
revenues of 11.1 trillion yuan. "China will continue to
push ahead with the restructuring of its SOEs next year and
will encourage state-owned companies to pursue mergers and
acquisitions across different regions and countries," SASAC
director Lo Rongrong says. "We will also back private
enterprise investments in state-owned entities."

Initially, aggrieved mine owners, unaware of their legal
rights, were loath to take on the government. But now
China's biggest law firm, Dacheng, has taken on the case
for a group of mine owners.

"The Shanxi government has no right to handle the ownership
of private coal mines. It violates the Chinese
constitution, contract law and mineral resource law," Zhang
says.

"The transfer deal price should be assessed according to
market value."

The law firm is pushing for the appointment of an
independent arbiter to reassess the valuation of the mines
and says the Shanxi government has breached a number of
laws and regulations.

This is an interesting case in a country with no private
property rights.

sainsburychina@gmail.com - Michael Sainsbury

RIGHT-WING YANKEE THINK-TANK ADMIT THAT USA USING HAITIAN EARTHQUAKE TO PUSH THE EMPIRE

Naomi Klein Issues Haiti Disaster Capitalism Alert
Democracy Now!

AMY GOODMAN: Let’s go back to Naomi Klein. We’re going to try that tape again, her commenting on what is going on in Haiti right now and who is profiting already.

NAOMI KLEIN: But as I write about in The Shock Doctrine, crises are often used now as the pretext for pushing through policies that you cannot push through under times of stability. Countries in periods of extreme crisis are desperate for any kind of aid, any kind of money, and are not in a position to negotiate fairly the terms of that exchange.


And I just want to pause for a second and read you something, which is pretty extraordinary. I just put this up on my website. The headline is “Haiti: Stop Them Before They Shock Again.” This went up a few hours ago, three hours ago, I believe, on the Heritage Foundation website.


“Amidst the Suffering, Crisis in Haiti Offers Opportunities to the U.S. In addition to providing immediate humanitarian assistance, the U.S. response to the tragic earthquake in Haiti earthquake offers opportunities to re-shape Haiti’s long-dysfunctional government and economy as well as to improve the image of the United States in the region.” And then goes on.


Now, I don’t know whether things are improving or not, because it took the Heritage Foundation thirteen days before they issued thirty-two free market solutions for Hurricane Katrina. We put that document up on our website, as well. It was close down the housing projects, turn the Gulf Coast into a tax-free free enterprise zone, get rid of the labor laws that forces contractors to pay a living wage. Yeah, so it took them thirteen days before they did that in the case of Katrina. In the case of Haiti, they didn’t even wait twenty-four hours.


Now, why I say I don’t know whether it’s improving or not is that two hours ago they took this down. So somebody told them that it wasn’t couth. And then they put up something that was much more delicate. Fortunately, the investigative reporters at Democracy Now! managed to find that earlier document in a Google cache. But what you’ll find now is a much gentler “Things to Remember While Helping Haiti.” And buried down there, it says, “Long-term reforms for Haitian democracy and its economy are also badly overdue.”


But the point is, we need to make sure that the aid that goes to Haiti is, one, grants, not loans. This is absolutely crucial. This is an already heavily indebted country. This is a disaster that, as Amy said, on the one hand is nature, is, you know, an earthquake; on the other hand is the creation, is worsened by the poverty that our governments have been so complicit in deepening. Crises—natural disasters are so much worse in countries like Haiti, because you have soil erosion because the poverty means people are building in very, very precarious ways, so houses just slide down because they are built in places where they shouldn’t be built. All of this is interconnected. But we have to be absolutely clear that this tragedy, which is part natural, part unnatural, must, under no circumstances, be used to, one, further indebt Haiti, and, two, to push through unpopular corporatist policies in the interests of our corporations. And this is not a conspiracy theory. They have done it again and again.

AMY GOODMAN: Naomi Klein speaking last night at the Ethical Culture Society. She’s the author of The Shock Doctrine: The Rise of Disaster Capitalism.

NEW MULTI-POLAR WORLD LEADERS - BRAZIL, RUSSIA, INDIA, CHINA - PUSH FOR GREATER RIGHTS FOR NON-WESTERN WORLD

The Guardian

UNITED NATIONS REFORM

"We express our strong commitment to multilateral diplomacy with the United Nations playing the central role in dealing with global challenges and threats. In this respect, we reaffirm the need for a comprehensive reform of the U.N. ... We reiterate the importance we attach to the status of India and Brazil in international affairs, and understand and support their aspirations to play a greater role in the United Nations."

Give us more clout at IMF, say BRIC nations

By Sarah Arnott

The Independent

Wednesday, 17 June 2009

The first formal summit of the four emerging "BRIC" powers concluded in Russia yesterday with calls for reform of international economic institutions and a curb on protectionism.

The Presidents of Russia, China and Brazil and the Prime Minister of India met in Yekaterinburg, nearly 900 miles east of Moscow, to thrash out ways to rebuild the world economy.

Between them, the BRIC nations account for 22 per cent of the £42trn global economy and have bankrolled a large proportion of the developed world's attempts to repair its balance sheet. In a joint communiqué issued yesterday, the leaders called for a stronger role in the world's shared financial institutions.

They have already secured a louder voice on the Financial Stability Board, the internatinoal college of regulators and central bankers. But the main beef is the International Monetary Fund (IMF), where BRIC countries have few votes proportional to their influence.

"We are committed to advance the reform of international financial institutions, so as to reflect changes in the world economy," the communiqué said. "The emerging and developing economies must have greater voice and representation in international financial institutions, and their heads and senior leadership should be appointed through an open, transparent and merit-based selection process."

Russia and China have both been outspoken critics of the dollar's role as the world's reserve currency, and even proposed its replacement by the IMF's "special drawing rights", a basket of currencies created in the late 1960s to facilitate international trade.

Although overt mention of the dollar was notably absent from yesterday's statement, there were strong hints. "We also believe there is a strong need for a stable, predictable and more diversified international monetary system," the communiqué added.

Alongside its calls for a bigger role, the BRIC is also pushing for a clampdown on protectionism. "We recognise the important role played by international trade and foreign investments in the world economic recovery," they stated. "We urge the international community to keep the multilateral trading system stable, curb trade protectionism, and push for comprehensive and balanced results of the World Trade Organisation's Doha Development Agenda."

Chinese president makes proposal for tackling global financial crisis at BRIC summit

Xinhua

...BRIC countries should commit themselves to pushing forward the reform of international financial system, Hu [Jintao] said.

To establish a new international financial order that is fair, equitable, inclusive and well-managed, and provide guarantee for the sustainable development of the global economy in terms of system and mechanism conforms with the trend of the historical development and is in the fundamental interest of all parties, he said.

BRIC countries should improve the international financial supervision mechanism and ensure the effective participation of the developing countries in world financial supervision organizations such as the Financial Stability Board, Hu said.

Third, BRIC countries should commit themselves to implementing the UN Millennium Development Goals (MDGs), the president said.

The international community should not overlook development issues and cut the input for development while dealing with global financial crisis, he said.

Instead, it should pay close attention to the impact that the crisis has left on developing countries, especially the least developed ones, he added.

The BRIC countries should call on all parties to continue to implement the MDGs and urge the developed economies to fulfil their commitment to assistance, he added.

Fourth, BRIC countries should commit themselves to ensuring the security of food, energy resource, and public health, he added.

He said while tackling the ongoing global financial crisis, efforts should be made to properly handle some outstanding problems that hinder development, such as climate change, food, energy, resource and public health security. A long-term approach and overall plan should be adopted to take all factors into consideration as these issues bear on the wellbeing of all peoples in the world and their overall interests, he added.

He also urged BRIC countries to increase investment in agriculture, develop advanced agricultural technique and curb market speculation. He also called for greater food assistance and closer agricultural and food cooperation.

"We should also accelerate our efforts in developing clean and renewable energy, and establish advanced research and promotion systems in a bid to diversity our energy supply," Hu said.

He urged the four countries to strengthen information exchanges and communication, share the experience on epidemics preventions and control, and work together to develop and share vaccines, and cooperate in pandemic control and prevention.

G20: NEWSPAPER OF THE BRITISH FINANCIAL ELITE TALK OF INCREASING STRATEGIC POWER OF CHINA

'A wider order comes into view'

By Quentin Peel

April 6 2009

Financial Times

[emphasis added - Sons of Malcolm]

It may take months to discover whether the actions taken by

last week's Group of 20 summit in London are enough to

rescue the world economy from a prolonged recession, if not

depression. The substance of its conclusions will have to

convince capital markets, global financial institutions,

investors and humble consumers that they can start to

spend, borrow or lend again.

But the symbolism of the event may be more important than

the substance. For even if the G20 countries are a strange

ad hoc selection, initially brought together by the Asian

financial crisis in 1997, they represent a whole new

element in the world order. They are not the Group of Seven

- the club of western powers and Japan - or the G8 (the G7

plus Russia). The use of the G20 at this moment of global

crisis is a clear indication that the old order has

outlived its time.

Another pointer came four months ago when the US National

Intelligence Council, part of Washington's security

apparatus, published a startling forecast. The

international system as constructed after the second world

war would, it predicted, be "unrecognisable" by 2025,

thanks to globalisation, the rise of emerging powers and

"an historic transfer of relative wealth and economic power

from west to east".

"The next 20 years of transition to a new system are

fraught with risks," the document declared. "Strategic

rivalries are most likely to revolve around trade,

investments and technological innovation and acquisition,

but we cannot rule out a 19th-century scenario of arms

races, territorial expansion, and military rivalries."

That report was largely written before the full force of

the financial and economic crisis had become apparent.

Nevertheless, its authors were convinced that the "unipolar

moment" of unchallenged US hegemony after the Berlin Wall

came down was already drawing to an end. The future world

order would be "multipolar".

The extraordinary thing about the present moment is that

several fundamental adjustments are taking place at the

same time. That is what makes the outcome so unpredictable.

The end of the cold war, with the fall of the Wall in 1989,

cleared the way for new powers to rise - China and India in

particular - and removed ideological obstacles to

globalisation. Cross-border migration has surged. The

technological revolution of the internet has transformed

international communications, the flow of information,

financial trading and political awareness. The breakdown in

the global financial system, caused not just by the bubble

that burst in the US subprime mortgage market but also the

explosion of financial speculation across world markets,

has rapidly turned into a recession in the real economy. No

one has been spared. Credit has frozen up in markets from

Africa to eastern Europe.

A massive rebalancing is starting to take place in world

trade flows between the unsustainable US trade deficit and

the equally unsustainable surpluses of China and other big

exporters. US consumers are no longer going to be the

engine for Chinese export-led growth, but nor can Chinese

savers continue to finance American borrowing.

Finally there is the underlying adjustment - one that would

normally still take decades to be realised - that the NIC

report identifies, of the switch in power from west to

east, especially the rise of China and India to reassume

the prominence they held when Europe was in the Dark Ages.

There is an assumption in many parts of the world that the

"crisis of capitalism" represented by the freezing up of

the financial system will accelerate the long-term

geopolitical shift, heralding the decline of US power and

European influence. Last year's choice of the G20 as the

forum to tackle the crisis was a belated recognition that

China, India and Brazil, at the very least, must be at the

table. But will the G20 provide lasting leadership? It

smacks of an emergency solution, not a considered

construction. For a start, it has no permanent secretariat.

Gordon Brown, UK prime minister, as current chairman

struggled for months with a tiny team of British civil

servants to forge a consensus. There were divisions between

the US and Europe. More important, there were different

priorities for the industrialised countries and emerging

economies. It was remarkable they managed to agree on a

communiqué.

"It is an arrangement that works for finance ministers and

central bank governors to meet once a year," says Trevor

Manuel, the South African finance minister. "When you take

it up to heads of state and government, the imbalances are

accentuated."

But at least there were few signs of schadenfreude in

London. Expectations in 2007 and 2008 of a "decoupling"

between the crisis-hit economies of the west and the less

exposed emerging markets have vanished. The pain is global

and the solution had to be, too.

The real economic effect of the financial crisis has hit

emerging markets harder than the developed economies, with

a collapse in trade flows and a dramatic fall in commodity

prices. It is clear that those worst hit will be the

poorest - especially in Africa - who have the least to fall

back on.

Second hardest hit are those commodity producers that have

always faced big social and demographic challenges, such as

energy-rich Russia, Iran, Nigeria and Venezuela. Even Gulf

oil producers have been affected. All had become used to

swollen export and tax revenues and face readjustment.

Finally, emerging economies still in transition from

poverty to prosperity - or from communism to democracy -

have been caught by the economic crunch before they could

build stable systems of governance and root out endemic

corruption. They include many in central and eastern Europe

that emerged from the Soviet empire.

Some observers are sceptical about the geopolitical fallout

from any financial crisis. "Geopolitical events like the

disappearance of Mao in China, or the fall of the Berlin

Wall, have far greater consequences than financial shocks,"

says Robert Cooper, director-general of external affairs at

the Council of the European Union. "Look at the technology

bubble in the 1990s. There were no obvious consequences. Or

the 1970s crisis with oil prices. Any geopolitical

consequences rapidly disappeared."

Yet he admits that two financial crises of the 20th century

- the Depression of the 1930s and economic collapse in

Europe after the second world war - did have important

results. The former led to the rise of Nazi Germany, the

isolationism of America and the outbreak of war. The

latter, far more positive, resulted in the Marshall Plan

that financed the German Wirtschafts-wunder and economic

revival across the rest of the continent, which led to the

eventual establishment of the EU. The lessons of the 1930s

also led to the setting up of the Bretton Woods

institutions - the World Bank and International Monetary

Fund - to bring monetary order to the main industrialised

states and a system of crisis management that has survived

for more than 60 years. But today their legitimacy and

representativeness are being called into question.

The central nation in the ongoing geopolitical

transformation is China. It is also the most difficult to

read. "They want everything and nothing," says a senior IMF

official. "What they really want is just to be among the

big players. The coming 20 to 30 years will be the era of

the US and China. They are preparing for this game."

Beijing wants a bigger share of votes at the IMF, to

reflect its rapidly growing economy. But before the G20, it

did not want to contribute from its massive foreign

reserves to increasing the Fund's resources because China

is still, per capita, a poor country. In the end, Mr Brown

announced that Beijing would contribute $40bn, alongside

$100bn each from the EU and Japan, as part of a $500bn

total. "The crisis emphasises that China is a pivotal world

player," says Bobo Lo of the Centre for European Reform in

London. "It might not be a global superpower yet, but it

has accelerated that trend."

If China is a cautious winner, Russia is the most obvious

loser from the upheaval. The choice of the G20 as the

crisis forum rather than the G8 has abolished Russia's

privileged position as the only outsider at the same table

as the wealthiest countries. At the G20 it is one of many

middle-sized economies, such as South Korea and Turkey.

But Russia's weakness is more fundamental. The oil price

may rise and fall but the crisis has exposed its failure to

diversify beyond the energy sector. Its financial

institutions are inefficient, its judicial system corrupt.

In the longer term, it faces a chronic demographic crisis

likely to result in severe labour shortages in the next two

decades. What of the rest of Europe in the new world order?

Like Russia, the continent has an ageing, shrinking

population. Slow growth is inevitable, although most west

European economies have the reserves and the social safety

net to cope with the recession. That is not true of eastern

Europe.

For the EU, the risk is that solidarity within the Union

will crack, as sneaking protectionism undermines the single

market and the old member states show reluctance to bail

out the new ones that face acute social crises, with a

freeze on bank credit and investment.

The outcome of the G20 - reinforcement of the international

financial institutions and a big emphasis on regulation -

is what Europe wanted. But it may be a mixed blessing. On

the one hand, Europeans have a strong voice in the

institutions, especially the IMF. But they will have to

give up some of that influence in exchange for China's

contribution and the representation of other developing

countries.

As for the G20 itself, the chemistry of the group is

unstable. But what seems clear is that without a firm line

from Barack Obama's new US administration, the outcome

would have been more feeble. It was Washington that wanted

to triple IMF resources. The EU was happy just to double

them. Mr Obama played the role of mediator.

France's Nicolas Sarkozy was the only one who insisted last

week that the crisis spelt the demise of "Anglo-Saxon

capitalism". Yet experience suggests that of all the

countries affected, the US has the greatest resilience and

capacity to recover quickly. The EU and Japan seem stuck in

sluggish growth and declining demographics. As for China,

the requirement to adapt from export-led growth to a

radical expansion of domestic demand could be a huge

political challenge. The Communist party will have to

countenance a much faster growth of the middle classes than

it has prepared for. A new world order may be replacing the

old - but it will be a bumpy ride.

Respect quest

When the Group of 20 leaders met last November, there were

great expectations that China, the world's only large

economy still firing on most cylinders, would make a hefty

contribution to the debate.

In the event, China shied away from grabbing a larger role,

saying that its main useful role was to keep its own

economy, worth one-tenth of global output, ticking over at

8 per cent real growth by means of a $570bn fiscal

stimulus.

Last week's G20 was different. Both in the run-up and at

the summit itself, there were clear signs that the economic

crisis has accelerated China's emergence as a big player.

Perhaps the most closely scrutinised bilateral meeting in

London was the first encounter between presidents Hu Jintao

and Barack Obama. China's leader came with a more

co-operative stance than before on boosting the

International Monetary Fund. He also showed Beijing could

not be bounced into positions it did not like when he

objected to an attempt by France's Nicolas Sarkozy to brand

Hong Kong and Macao as tax havens. Ahead of the summit,

too, Beijing was far more active. It let it be known that

the US could not expect China to help fund its enormous

deficit without something in return. It lectured Mr Obama's

new administration on the need to follow stimulus spending

with a renewed effort at fiscal consolidation.

More startling still, a few days before the summit, Zhou

Xiaochuan, governor of China's central bank, suggested that

the IMF enlarge the scope of special drawing rights, its

unit of account, so that SDRs could challenge the dollar as

a global reserve currency.

Ben Simpfendorfer, economist at Royal Bank of Scotland,

says that while that proposal is unrealistic, "it

demonstrates global leadership and underscores the rise of

the east". China, he says, is staking a claim for its

renminbi to become the de facto Asian currency unit, which

would help consolidate its emergence as regional leader.

Shi Yinhong, a politics professor at Beijing's Renmin

university, says China knows that for now it has little

choice but to keep bankrolling the US. But in return for

buying a currency it suspects will one day collapse, it

will seek more respect for its views on issues including

arms sales to Taiwan, Tibetan independence and its

activities in countries such as Sudan.

Indeed, there are already signs that Beijing's strengthened

financial leverage is paying political dividends. When

Hillary Clinton, US secretary of state, visited China in

February, she said human rights "cannot interfere" with

bigger economic and diplomatic priorities. That Mrs

Clinton, of all people, should adopt such a restrained tone

shows just how far things have tipped in Beijing's favour.

(end)