Saturday January 2, 2010
By GRAHAM SIMMONS
Vladivostok, Russia’s charming city by the bay, is said to resemble San Francisco by those who have never visited San Francisco, and Sydney by those who have never been to Sydney.
The harbour city of Vladivostok, in the Russian Far East, occupies a superbly scenic position on the hills around Golden Horn Bay. Those who have never visited San Francisco says it’s like San Francisco. Those who’ve never been to Sydney say it is like Sydney.
In fact, Vladivostok is unique.
On the outskirts of Vladivostok, new bistros, advertising hoardings and “fast food” stalls dot the sublime birch forests that make up Russia’s heart and lungs. Orthodox churches, long fallen into neglect, are now being re-built. The roads are chock-a-block with new Japanese and Korean cars — even more so on weekends, when it seems that the entire population of the city is escaping to their country dacha.
Everything seems so normal . . . so utterly un-totalitarian, that any fears of landing in a re-emergent, quasi-Communist state are soon allayed. People here, it seems, want to enjoy the good life.
Vladivostok borders on the surreal. In Market Square, down by the harbour, a giant TV screen features Madonna and jazz artists, against a backdrop of a tall stark retro-Communist building, its hammer-and-sickle logo surely the last such emblem in the whole of Russia.
In the fast-changing streets, fashionable boutiques and cafés line the main shopping street, Svetlanskaya.
Start with the panoramic view over Golden Horn (or Peter the Great Bay), from the hill known as Eagle’s Nest. Originally, the plan was to build a Lenin statue here but, fortunately, perestroika intervened, and the mooted statue was replaced with the current Soul and Earth Park. As a result, a real, non-political view of this spectacular harbour can easily be had.
A brand-new monument is soon to rise in nearby Petrovskiiy Park, dedicated to the Russian Orthodox saints Pyotr and Fevroniya Muromskiye, who married each other after Fevroniya cured Pyotr of leprosy. Late in life, they retired to separate monasteries. They are said to have died within an hour of one another, and although buried in separate graves, they were later found together in the same grave.
On Naberezhnaya Street down by the harbour, a World War II submarine is the centrepoint of a waterfront park. Visitors can enter the sub and experience first-hand the cramped living space of the crew. The submarine and an adjacent memorial commemorate Vladivostok’s loss of 30,000 of her citizens in the war — a tiny fraction of the national total of around 20 million.
Nearby is a statue of the city’s founder, KM Arsenyev, whose name graces one of the city’s top museums, (the Arsenyev Regional Museum). Some fascinating cultural tours are offered by the Arsenyev Museum Centre (6, Petra Velikogo Street, tel +7 4232) 22 50 77).
These include Monuments of Religious Architecture, visiting a synagogue, Japanese Buddhist temple and other places of worship; Chekhov in Vladivostok, following the footsteps of the famous writer; and The Theatres of Vladivostok, visiting the Korean and Chinese theatres, the Pushkin Playhouse and other theatres of pre-revolutionary Vladivostok.
Food & drink
For the time being, forget the vodka. Beer is the new pre-occupation of most Russians.
At one of the numerous beer shops outside the Vladivostok rail station (check out the colourful ceiling frescoes), just off the tree-lined main street, a half-litre can costs 20-30 roubles (RM2.30-RM3.40) for a brew with as much as 11% alcohol, as strong as table wine.
For top Russian cuisine, try the Nostalgiya Restaurant (6/25, Pervaya Morskaya Street, tel 41 05 13), where the plush satin-lined dining room features statuettes and busts of the late Tsar Nicholas II and his family, and a triptych of dolls belonging to the Tsarina. Just 20 years ago, the mere existence of such a restaurant would have been enough to have its owners whisked off to a forced labour camp.
Another good choice if you don’t like Subway (the first Subway store opened in Vladivostok in June 2009) is Bar-Club La Trattoria (52, Svetlanskaya Street, tel 20 53 07), located in the house of the former governor-general of the Russian Far East, and featuring traditional Italian and old Russian cuisine.
From Saturnaya rail station in suburban Vladivostok, a short walk leads to the Captain Cook Restaurant, attached to the Vlad Motor Inn.
“Sorry, kangaroo is off the menu,” says Irina, one of the gracious young attendants at the restaurant. “But you can have crocodile, if you like, and all of our wines are from Australia, too”!
It seems a little bizarre to find an Aussie restaurant in Vladivostok, but in this frontier city, the unexpected soon becomes the norm.
Shopping
There is a good, albeit expensive, gift shop next to the Nostalgiya Restaurant, but for bargains, by far the best bet is the market stalls in Market Square, by the railway station. For clothing, one of the chic-est boutiques in town is La Dolce Vita (29, Semenovskaya, open 10am-6pm daily)
Music-wise, for everything from heavy metal to heavier metal, check out Design-studio “Dela” (Aleutsakaya Street, next to Hotel Zolotoy Rog, tel +7 4232 30 03 77). The range, from home-grown to the latest US CD and DVD releases, is astonishing.
One of the newest and maybe the weirdest shop in town is Stalin, selling vodka and chocolates bearing portraits of the late dictator.
Nightlife
Later at night, the Ellada Karaoke Bar (38, Verhneportovaya Street, tel 51 78 50) beckons — or if you’re well-heeled or thin-souled, try the Eldorado Casino (29/31, Okeansky Prospekt, open 24 hours) or Casino Versailles (10, Svetlanskaya Street, tel: 26 96 96, open 6pm-5am).
Vladivostok also has a good nightclub scene. The long-running “Crazy” Nightclub (1, Okeansky Prospekt, in the Marine Passenger Terminal, open 9pm-6:30pm) has room for over 1,000 guests. Another popular hangout is the Zeleny Krokodil (“Green Crocodile”) Club at 12 Svetlanskaya Street.
If you don’t want to spend too much money, just grab a bottle of cheap Moldavian red wine and walk up the hill near Hotel Vladivostok. The views at night are spectacular.
And now the good news . . .
As of July 2009, the passenger ferry Eastern Dream, equipped with cabins, bars, restaurants and even a nightclub, sails weekly from Donghee (South Korea) to Sakaminoto in Japan and thence on to Vladivostok. In a first for Russia, ferry passengers disembarking in Vladivostok may stay for up to 72 hours in the country without a visa.
Ferry fares are significantly lower than airfare.
Getting there
If you don’t want to take the new ferry, Korean Airlines flies regularly from Kuala Lumpur to Vladivostok via Seoul. Vladivostok Airport is a long way (50km) from the city centre, and a taxi will cost RM60-RM70 or more. Alternatively, a bus runs between the central bus station and the airport every hour.
OUT OF TOWN At Vladivostok rail station, take the comfortable Okean train for the overnight trip north to Khabarovsk. The train follows the picturesque shoreline of Amursky Bay. The city of Khabarovsk, on the junction of the giant Ussuri and Amur Rivers, seems like an elegant transplant from Western Europe, its art nouveau architecture being unique in Russia.
ACCOMMODATION
Budget: Amursky Zaliv Hotel (9, Naberezhnaya Street, tel +7 4232 22 55 20, 22 5528).
Mid-range: Hotel Vladivostok (10, Naberezhnaya Street, tel +7 4232 412 808) is centrally located with great views over Amursky Bay. However, at weekends, it seems that the whole population of China and Korea has arrived for a quick break.
Upmarket: Best Eastern Versailles Hotel: (10, Svetlanskaya, tel +7 4232 26 42 01) is centrally located and near the railway station. Or, the four-star Vlad Motor Inn (11, Vosmaya, tel +7 4232 3 13 51), Canadian-owned, some distance from town, near Saturnaya rail station.
Luxury: Hotel Hyundai: (29, Semenovskaya Street, tel +7 4232 40 22 33, e-mail: marketing.vbc@gin.ru)
Friday, January 8, 2010
CHINA: China Tries a New Tack to Go Solar
As in a coal plant, concentrating solar power sites like this one near Seville, Spain, heat water to create steam that turns a turbine. Marcelo del Pozo/Reuters
January 9, 2010
HONG KONG — As it moves rapidly to become the world’s leader in nuclear power, wind energy and photovoltaic solar panels, China is taking tentative steps to master another alternative energy industry: using mirrors to capture sunlight, produce steam and generate electricity.
So-called concentrating solar power uses hundreds of thousands of mirrors to turn water into steam. The steam turns a conventional turbine similar to those in coal-fired power plants. The technology, which is potentially cheaper than most types of renewable power, has captivated many engineers and financiers in the last two years, with an abrupt surge in new patents and plans for large power operations in Europe and the United States.
This year may be China’s turn. China is starting to build its own concentrating solar power plants, a technology more associated with California deserts than China’s countryside. And Chinese manufacturers are starting to think about exports, part of China’s effort to become the world’s main provider of alternative energy power equipment.
Yet concentrating solar power still faces formidable obstacles here, including government officials who are skeptical that the technology will be useful on a large scale in China.
Much of the country is cloudy or smoggy. Water is scarce. The sunniest places left for solar power are deserts deep in the interior, far from the energy-hungry coastal provinces that consume most of China’s electricity. Provinces deep in the interior have few skilled workers or engineers to maintain the automated gear that keeps mirrors focused on towers that transfer the heat from sunbeams into fluids.
Concentrating solar power “is not very suitable for China,” wrote Li Junfeng, a senior government energy policy maker, in a detailed e-mail reply to questions this week.
Yet the private sector in China is racing to embrace the technology anyway.
A California solar technology company and a Chinese power equipment manufacturer plan to sign a deal on Saturday for the construction of up to 2,000 megawatts of power plants using concentrating solar power over the next decade, executives from both companies said this week. That is equivalent to the output of a couple of nuclear power plants. They will start with a 92-megawatt plant in Yulin, a town in a semi-desert area of Shaanxi Province in central China.
The Chinese equipment manufacturer, Penglai Electric, hopes to work with other Chinese manufacturers to drive production costs down precipitously, clearing the way for exports, although these would require further approval from the California licensor of the technology, eSolar.
Eric Wang, the senior vice president for international business development at Penglai Electric, said that manufacturing mirrors, turbines, towers and other equipment in China instead of the United States could cut costs by at least half. That could make concentrating solar power more competitive with other forms of power generation around the world.
China’s Ministry of Science, the Beijing municipal government and the Chinese Academy of Sciences are already building Asia’s first concentrating solar power plant on the outskirts of Beijing, although it is only a pilot operation to generate 1.5 megawatts.
Preparations are also under way for the construction of a 50-megawatt concentrating solar power plant in Gansu Province in northwestern China, said Min Deqing, a renewable energy consultant in Lanzhou, the provincial capital of Gansu.
But while nuclear power, wind energy and photovoltaic solar panels have strong backing from China’s political leaders and enormous financing by government-owned banks, concentrating solar power still faces deep-rooted skepticism in senior ranks of the government.
Unlike in the United States, the roots of that skepticism do not lie in concerns about disrupting the habitat of rare species in sunny, desert areas — a worry that may block some attempts to build concentrating solar power plants in the Mojave Desert.
Mr. Li wrote that concentrating solar power works best when cheap water, cheap land and lots of sun are available in the same place — a rare combination in China. Mr. Li also expressed concern that concentrating solar power would prove more expensive per kilowatt-hour generated than photovoltaic solar power, a technology in which China is already the world’s low-cost supplier.
Mr. Li has a lot of influence on these issues. He is a deputy director general for energy research at the National Development and Reform Commission, the top economic planning agency in China. And he is the secretary general of the government-backed Chinese Renewable Energy Industries Association, which helps oversee these industries’ operations in China.
But Mr. Li did say that he saw a limited role for concentrating solar power, particularly in places where it could be combined with other power plants, or where it could be combined with a way to store power overnight. Penglai and eSolar hope to do both.
Water consumption, mainly to condense the steam after it has been used to generate electricity, is another potential weakness of the technology. Water tends to be scarce in deserts, of course. Penglai and eSolar are leaning toward air cooling instead of water cooling, at the price of cutting the efficiency of their plant.
Mr. Gross said the eSolar technology could also be used to create extra heat during the day, with the heat being stored and used to generate power at night — a form of the electricity storage sought by Mr. Li.
Despite the government’s skepticism, renewable energy investors remain enthusiastic about the potential for concentrating solar power projects in China. K. K. Chan, the chief executive of Nature Elements Capital, a renewable energy investment fund in Beijing, said that he had been looking at such deals in recent months after concluding that the valuations for photovoltaic solar projects were unreasonably high, possibly because that technology had such strong government backing.
Mr. Min in Lanzhou said that while there was little data yet on the cost of concentrating solar power, the price tag was likely to fall in China. “Eventually, when 100 percent domestically produced mirrors are used,” he said, “the cost will be lower than solar panel power plants.”
SOUTH KOREA: 10 stories that rocked Korea
December 31, 2009
Suicide of former President Roh Moo-hyun
Korea’s 16th president, Roh Moo-hyun, jumped off a cliff in his hometown on May 23 amid a prosecution investigation into a bribery scandal, becoming the first Korean president to commit suicide. The predecessor of incumbent President Lee Myung-bak was accused of receiving at least $6 million from Park Yeon-cha, a Busan-based businessman and longtime patron. Roh left a note saying, “Don’t feel sorry. Don’t blame. It’s destiny.” Hours later, prosecutors wrapped up their probe.
The social repercussions were immense. Hundreds of thousands of citizens crowded into makeshift mourning altars across the country over several days of mourning before Roh’s official funeral. Anti-government protests ensued.
Kim Dae-jung, Cardinal Stephen Kim die
Korea lost two other spiritual leaders in religion and politics this year: Cardinal Stephen Kim Sou-hwan in February and the former president Kim Dae-jung in August. After the death of Cardinal Kim, who was widely respected among Catholics and others alike for fighting for minorities and taking a key role in the nation’s democratization, the whole country was gripped with grief. During a three-day mourning period, more than 400,000 people visited Myeongdong Cathedral to pay tribute. The late former president Kim was the country’s first Nobel Piece Prize winner for his lifelong efforts to promote democracy and for seeing through the first inter-Korean summit meeting with North Korean leader Kim Jong-il in June 2000. During his six-day state funeral, about 750,000 people visited 184 temporary mourning altars located across the nation.
North tests nuke amid tumultuous year
North Korea conducted a nuclear test in May, further harming an inter-Korean relationship that had already been worsening under the conservative Lee Myung-bak administration in Seoul. South Korea joined the international community in condemning the action and in applying tough sanctions on the North, which responded by declaring the stalled six-party talks “dead.” The prospects for improvements in inter-Korean relations appeared bleak. Then the roller-coaster ride began. In August, North Korea agreed to resume a suspended tourist program at the Mount Kumgang resort and in September the two Koreas staged the first reunion of separate families in two years. But November brought a naval clash on the west coast, the first in seven years, when a North Korean ship crossed the sea border. The North’s ship was badly damaged, but Pyongyang warned in December that the South should stay away from the area near the sea border it had set.
Fear of the new flu grips nation
Just a month after the first death from influenza A(H1N1) was reported in Mexico in April, the first fatality from the illness was reported in Korea in May. The death toll from the pandemic later rose, though not as catastrophically as some had feared. Still, government-designated hospitals for A(H1N1) influenza treatment were packed with patients and visitors with symptoms. Flu fears forced the cancellation of large public events, led to the temporary closure of schools across the country and caused delays at airports as incoming international passengers were made to sign health forms and have their temperatures taken. According to the Korea Centers for Disease Control and Prevention, over 2.8 million people had been infected with the virus and 187 had died from it in Korea as of Dec. 28. After raising its alert level to red, the highest, on Nov. 3, the Health Ministry finally lowered it back to orange on Dec. 1. It was the first time Korea had used the red level since it adopted the four-phase alert system in August 2006 to respond to avian influenza.
Political divide on Sejong City project
Controversy over Sejong City, the new administrative hub, reignited this year after the Lee Myung-bak administration made public its decision to overhaul the project.
First proposed by Roh Moo-hyun as a presidential candidate in 2002, the plan has been the center of a political storm ever since. The current administration said the idea of relocating most government ministries to the site in South Chungcheong had to be revised because of its inefficiency, and the new concept focuses on science, education and business, with the aim of creating a city with a population of 500,000 by 2030.
The decision has prompted splits even inside the ruling Grand National Party. In November, President Lee issued a public apology on live TV for having backed the original plan ahead of the election two years ago. Despite persistent opposition from sections of the political community, Prime Minister Chung Un-chan said in December that the revised blueprint will be finalized by the end of January.
Korean sports stars win victories
It was a memorable year for sports fans, but two names stand out: Kim Yu-na and Yang Yong-eun.
Kim, 19, was a perfect five for five in global competition this year. She also set new scoring records, three times in the short program, once in free skating and twice in total points.
Yang, 37, grabbed headlines for his improbable comeback against Tiger Woods at the PGA Championships at the Hazeltine National Golf Club in Chaska, Minnesota, in August. In becoming the first Asian male golfer to win a PGA major event, Yang handed Woods his first loss at a major event at which he led the pack heading into the final round of play. The win was one of the biggest upsets in golf history, but the former body builder garnered wider attention due to his late start in the sport and humble background.
Brutal child rape leads to stricter penalties
The nation was whipped up into a frenzy after the rape of an 8-year-old child known as Na-young was featured on a current affairs television show on Sept. 22. The public was outraged at the 12-year jail sentence given to the 57-year-old rapist Cho Du-sun, saying the sentence was too light.
Legal measures and public support for victims of sex crimes have been reinforced since. The government introduced a new law extending jail sentences and introducing electronic anklets in October this year. The Supreme Court said on Dec. 21 that it is considering issuing additional penalties to sex criminals who use alcohol in their assaults on children. Public funds for helping child victims were created and medical doctors organized a sex crime task force.
Korea named host of G-20 summit in 2010
Korea was named in September as the host of the Group of 20 summit in November 2010, as the heads of state agreed in Pittsburgh to shift the main body for coordinating economic policy from the G8, the club of developed economies, to the G-20, which also includes major emerging economies.
Korea will be the first non-G8 country to host the G-20 summit, marking a symbolic turning point in global governance. Experts said Korea’s fast recovery from the global financial crisis also helped the country gain that status.
Free trade progress with EU, India
Korea and Europe in October signed a preliminary agreement on free trade, wrapping up negotiations that had lasted for more than two years. The agreement will give Korea access to the 27-nation economic bloc, expected to increase trade by around 40 percent. The biggest beneficiaries of the pact will be exporters, including the automotive and electronics industries. The agreement may also lend momentum to other talks, especially with China and Japan.
The comprehensive economic partnership agreement with India sealed in August was also another major economic achievement. Once enacted next year, Korea will have access to one of the world’s biggest markets, provoking a rise in GDP growth of 0.2 percentage point or roughly $800 million.
Violent reaction to media bills
A slate of media reform bills dominated National Assembly discussions for the better part of the year. The revision would allow a newspaper or business group to invest in a broadcaster starting in 2012, provided that the paper’s readership is below 20 percent of the market and that the conglomerate’s assets are less than 10 trillion won ($8.5 billion).
In July, the ruling Grand National Party managed to pass the bills amid pandemonium in the main chamber. One of the bills passed despite not meeting a quorum for voting. In October, the Constitutional Court ruled that the laws were valid but that the voting process had violated lawmakers’ rights. The media laws took effect Nov. 1.
[estyle@joongang.co.kr]
Copyright by Joins.com, Inc.
Suicide of former President Roh Moo-hyun
Korea’s 16th president, Roh Moo-hyun, jumped off a cliff in his hometown on May 23 amid a prosecution investigation into a bribery scandal, becoming the first Korean president to commit suicide. The predecessor of incumbent President Lee Myung-bak was accused of receiving at least $6 million from Park Yeon-cha, a Busan-based businessman and longtime patron. Roh left a note saying, “Don’t feel sorry. Don’t blame. It’s destiny.” Hours later, prosecutors wrapped up their probe.
The social repercussions were immense. Hundreds of thousands of citizens crowded into makeshift mourning altars across the country over several days of mourning before Roh’s official funeral. Anti-government protests ensued.
Kim Dae-jung, Cardinal Stephen Kim die
Korea lost two other spiritual leaders in religion and politics this year: Cardinal Stephen Kim Sou-hwan in February and the former president Kim Dae-jung in August. After the death of Cardinal Kim, who was widely respected among Catholics and others alike for fighting for minorities and taking a key role in the nation’s democratization, the whole country was gripped with grief. During a three-day mourning period, more than 400,000 people visited Myeongdong Cathedral to pay tribute. The late former president Kim was the country’s first Nobel Piece Prize winner for his lifelong efforts to promote democracy and for seeing through the first inter-Korean summit meeting with North Korean leader Kim Jong-il in June 2000. During his six-day state funeral, about 750,000 people visited 184 temporary mourning altars located across the nation.
North tests nuke amid tumultuous year
North Korea conducted a nuclear test in May, further harming an inter-Korean relationship that had already been worsening under the conservative Lee Myung-bak administration in Seoul. South Korea joined the international community in condemning the action and in applying tough sanctions on the North, which responded by declaring the stalled six-party talks “dead.” The prospects for improvements in inter-Korean relations appeared bleak. Then the roller-coaster ride began. In August, North Korea agreed to resume a suspended tourist program at the Mount Kumgang resort and in September the two Koreas staged the first reunion of separate families in two years. But November brought a naval clash on the west coast, the first in seven years, when a North Korean ship crossed the sea border. The North’s ship was badly damaged, but Pyongyang warned in December that the South should stay away from the area near the sea border it had set.
Fear of the new flu grips nation
Just a month after the first death from influenza A(H1N1) was reported in Mexico in April, the first fatality from the illness was reported in Korea in May. The death toll from the pandemic later rose, though not as catastrophically as some had feared. Still, government-designated hospitals for A(H1N1) influenza treatment were packed with patients and visitors with symptoms. Flu fears forced the cancellation of large public events, led to the temporary closure of schools across the country and caused delays at airports as incoming international passengers were made to sign health forms and have their temperatures taken. According to the Korea Centers for Disease Control and Prevention, over 2.8 million people had been infected with the virus and 187 had died from it in Korea as of Dec. 28. After raising its alert level to red, the highest, on Nov. 3, the Health Ministry finally lowered it back to orange on Dec. 1. It was the first time Korea had used the red level since it adopted the four-phase alert system in August 2006 to respond to avian influenza.
Political divide on Sejong City project
Controversy over Sejong City, the new administrative hub, reignited this year after the Lee Myung-bak administration made public its decision to overhaul the project.
First proposed by Roh Moo-hyun as a presidential candidate in 2002, the plan has been the center of a political storm ever since. The current administration said the idea of relocating most government ministries to the site in South Chungcheong had to be revised because of its inefficiency, and the new concept focuses on science, education and business, with the aim of creating a city with a population of 500,000 by 2030.
The decision has prompted splits even inside the ruling Grand National Party. In November, President Lee issued a public apology on live TV for having backed the original plan ahead of the election two years ago. Despite persistent opposition from sections of the political community, Prime Minister Chung Un-chan said in December that the revised blueprint will be finalized by the end of January.
Korean sports stars win victories
It was a memorable year for sports fans, but two names stand out: Kim Yu-na and Yang Yong-eun.
Kim, 19, was a perfect five for five in global competition this year. She also set new scoring records, three times in the short program, once in free skating and twice in total points.
Yang, 37, grabbed headlines for his improbable comeback against Tiger Woods at the PGA Championships at the Hazeltine National Golf Club in Chaska, Minnesota, in August. In becoming the first Asian male golfer to win a PGA major event, Yang handed Woods his first loss at a major event at which he led the pack heading into the final round of play. The win was one of the biggest upsets in golf history, but the former body builder garnered wider attention due to his late start in the sport and humble background.
Brutal child rape leads to stricter penalties
The nation was whipped up into a frenzy after the rape of an 8-year-old child known as Na-young was featured on a current affairs television show on Sept. 22. The public was outraged at the 12-year jail sentence given to the 57-year-old rapist Cho Du-sun, saying the sentence was too light.
Legal measures and public support for victims of sex crimes have been reinforced since. The government introduced a new law extending jail sentences and introducing electronic anklets in October this year. The Supreme Court said on Dec. 21 that it is considering issuing additional penalties to sex criminals who use alcohol in their assaults on children. Public funds for helping child victims were created and medical doctors organized a sex crime task force.
Korea named host of G-20 summit in 2010
Korea was named in September as the host of the Group of 20 summit in November 2010, as the heads of state agreed in Pittsburgh to shift the main body for coordinating economic policy from the G8, the club of developed economies, to the G-20, which also includes major emerging economies.
Korea will be the first non-G8 country to host the G-20 summit, marking a symbolic turning point in global governance. Experts said Korea’s fast recovery from the global financial crisis also helped the country gain that status.
Free trade progress with EU, India
Korea and Europe in October signed a preliminary agreement on free trade, wrapping up negotiations that had lasted for more than two years. The agreement will give Korea access to the 27-nation economic bloc, expected to increase trade by around 40 percent. The biggest beneficiaries of the pact will be exporters, including the automotive and electronics industries. The agreement may also lend momentum to other talks, especially with China and Japan.
The comprehensive economic partnership agreement with India sealed in August was also another major economic achievement. Once enacted next year, Korea will have access to one of the world’s biggest markets, provoking a rise in GDP growth of 0.2 percentage point or roughly $800 million.
Violent reaction to media bills
A slate of media reform bills dominated National Assembly discussions for the better part of the year. The revision would allow a newspaper or business group to invest in a broadcaster starting in 2012, provided that the paper’s readership is below 20 percent of the market and that the conglomerate’s assets are less than 10 trillion won ($8.5 billion).
In July, the ruling Grand National Party managed to pass the bills amid pandemonium in the main chamber. One of the bills passed despite not meeting a quorum for voting. In October, the Constitutional Court ruled that the laws were valid but that the voting process had violated lawmakers’ rights. The media laws took effect Nov. 1.
[estyle@joongang.co.kr]
Copyright by Joins.com, Inc.
CHINA: To Slow Growth, China Raises an Interest Rate
Workers demolishing a house to make way for a residential area in Changzhi, Shanxi Province, last month. Real estate construction is rising briskly, thanks to a surge in lending by government-controlled banks Reuters
January 8, 2010
By KEITH BRADSHER
HONG KONG — China’s central bank raised a key interest rate slightly Thursday for the first time in nearly five months, in what economists interpreted as the beginning of a broader move to tighten monetary policy and forestall inflation.
After breaking stride a year ago during the global economic slowdown, the Chinese economy resumed galloping growth over the summer. Government investments, real estate construction and consumer spending are all rising briskly, thanks to a surge in lending by government-controlled banks.
Even exports have begun to recover despite continued economic weakness in the European Union and the United States, China’s two biggest overseas markets.
Raising interest rates may help discourage speculative investments by Chinese companies and individuals in real estate projects and other areas of economic activity. China’s dilemma is that higher rates may also prompt overseas investors seeking higher returns to redouble their efforts to push money into China, despite the country’s stringent capital controls.
The People’s Bank of China announced Thursday that the yield from its weekly sale of three-month central bank bills had inched up to 1.3684 percent. The yield had been stuck at 1.328 percent since Aug. 13.
An increase of less than 0.05 of a percentage point might sound small, but economists said it was a harbinger of more interest rate increases to come.
They cited expectations that consumer and producer prices would rise in the months ahead, particularly compared with low price levels a year ago, when demand temporarily slumped in China as well as the rest of the world.
“It is a turning point,” said Ben Simpfendorfer, an economist in the Hong Kong offices of Royal Bank of Scotland. “There is a convergence of events that will lead to higher rates.”
The increase in the interest rate turned mainland China’s stock markets into Asia’s worst performers Thursday. The CSI 300 index of shares on the Shanghai and Shenzhen stock markets slumped 1.98 percent.
Air freight capacity out of mainland China and Hong Kong was almost fully booked in December, according to shippers, making it likely that China would post strong exports when it released a flood of monthly and annual economic data next week. But in interviews this week, senior corporate executives voiced a range of opinions about whether this strength would continue into the new year, or whether the surge in December represented a flurry of restocking by retailers who went into the Christmas season with meager inventories.
Victor Fung, the nonexecutive chairman of Li & Fung, a Hong Kong-based trading and supply chain management company that is one of the world’s largest, said that overseas demand had not been strong enough to sustain the strength in China's shipments seen last month. But he added that his own staff was somewhat more optimistic than he is, as are some investment bank economists.
Workers buy their lunch at a construction site in Changzhi, Shanxi Province Reuters
Thursday's slight increase in interest rates could prove even more significant if it marks the start of an effort by Chinese regulators to limit bank lending. Chinese banks have not only lent heavily at home, but stepped up lending in other countries as well, taking market share from Western banks hobbled by the global financial crisis.
Top officials at the People's Bank of China concluded an annual two-day policy review on Wednesday with a lengthy statement that had particularly strong cautions against bank lending to sectors of the economy with overcapacity or excessive energy use. Chinese bank regulators also warned banks in late November to show more caution in lending and raise more capital to underpin the surge in lending they have already done; the publicly traded Bank of China is widely expected to take the lead in raising money this year.
Thursday's interest rate increase is not the first since the bottom of the economic downturn. After cutting interest rates on the same 3-month central bank bills by 2.4 percentage points in the last quarter of 2008 as the world's financial system trembled, the People's Bank nudged up interest rates by 0.363 from late June to early August last year in a series of increasingly large weekly increases.
But the central bank has been on hold ever since, watching for more evidence of the economy's health. Thursday's increase appeared to confirm that the central bank was starting to become concerned again about rising prices, economists said.
Central banks around the world have a history of taking small steps at first when they begin raising interest rates after a long period of keeping them low in response to an economic downturn. Because China does not have a well-developed bond trading market, the yields on the weekly sales of central bank bills are widely watched as a barometer of the central bank’s intentions.
The central bank sells its bills mainly to banks, which pay in renminbi that the central bank then effectively takes out of circulation, slowing growth in the country’s money supply.
Weekly sales of central bank bills are part of a process that economists describe as “sterilization” of China’s extensive intervention in currency markets.
As U.S. dollars and other foreign currencies pour into China from its trade surplus and foreign investment, the central bank prints vast sums of renminbi and issues them to buy those dollars and other currencies.
To prevent all those extra renminbi from feeding inflation, the central bank then claws back the renminbi from the market through a series of measures that include the sale of central bank bills. China also requires commercial banks to keep large reserves on deposit at the central bank, partly to keep the banks from lending too recklessly but also so that the central bank can use that money to finance further purchases of dollars and other foreign exchange.
The goal of sterilization is to keep inflation under control in China while keeping the renminbi weak. That helps make China’s exports competitive overseas and preserves jobs in China, while contributing to unemployment in countries producing rival goods.
The U.S. dollars and other currencies go into China’s foreign exchange reserves, which stood at $2.27 trillion at the end of September; monthly figures through the end of December are due for release next week. China has the biggest foreign exchange reserves of any country, by far.
Because the central bank has essentially borrowed at home to finance that accumulation of reserves, there is considerable worry in China about losses on those reserves if the value of the U.S. dollar weakens further.
Comments on Internet bulletin boards in China about possible currency losses on the foreign exchange reserves are quickly deleted by censors, a sign of officials’ sensitivity.
China’s foreign-exchange regulators have redoubled their efforts in the past two months to prevent inflows of so-called hot money — capital that moves on a short notice to any country providing better returns.
With the exception of investments that bring the transfer of scarce technologies or management expertise, China has a dwindling need for foreign capital. A domestic savings rate of close to 40 percent has made ample money available for new projects.
The central bank is already buying more than $300 billion a year of foreign currencies, mainly dollars, to keep the renminbi weak and preserve the competitiveness of Chinese exports in foreign markets. So the central bank has had little appetite to buy more foreign currencies so as to allow foreigners to invest in China’s growth while preventing the renminbi from appreciating.
JAPAN: Change in Japan a Tough Task for Finance Minister
Finance Minister Naoto Kan, who took office this week, has limited experience in running Japan's economy, but he is known for challenging government corruption and bureaucracy. Yuriko Nakao/Reuters
January 9, 2010
News Analysis
TOKYO — It sounds like a script written for Hollywood: an idealistic reformer put in charge of cleaning up his nation’s most powerful center of entrenched bureaucratic influence.
Political experts say that the appointment Thursday of Naoto Kan, a former civic campaigner against government corruption, to run the Finance Ministry does just that, pitting a veteran bureaucracy fighter against the most formidable of the central ministries that have presided over Japan’s postwar economic rise and subsequent stagnation.
They say that the choice of Mr. Kan, a deputy prime minister with limited experience in running the nation’s economy, shows the desire of the new prime minister, Yukio Hatoyama, to step up efforts to achieve his government’s main goal: changing the way Japan is governed by shifting power to elected politicians, away from career bureaucrats.
“Mr. Kan is the administration’s most recognizable face when it comes to overcoming the bureaucracy,” said Tomoaki Iwai, a politics professor at Nihon University in Tokyo. “This appointment shows Mr. Hatoyama’s desire to show his resolve.”
Mr. Kan will have his work cut out for him, battling a secretive institution that claims historical roots going back 13 centuries and that has long drawn the best and brightest graduates from top universities. The ministry has long wielded enormous influence over Japan, the world’s second largest economy, using its broad budgetary powers to control the nation’s purse strings.
In his first news conference since taking office, Mr. Kan vowed Thursday to impose his will on the ministry.
“In ways both good and bad, the Finance Ministry has been a symbolic presence in Kasumigaseki,” said Mr. Kan, 63, referring to the district in Tokyo where the central ministries’ head offices are located. “It will now become a model of how to change Kasumigaseki.”
In his previous role as deputy prime minister, Mr. Kan was one of two top officials directing the Hatoyama government’s still-early efforts to make the bureaucracy more answerable to elected politicians, and to drag policy making out of smoky back rooms. But Mr. Hatoyama has come under criticism that he has failed to rein in the powerful Finance Ministry, which analysts said still played a leading role in drawing up the new government’s revised budget for 2010.
One of the founding members of Mr. Hatoyama’s Democratic Party, Mr. Kan first gained fame as a battler of bureaucracy during his brief stint as health minister in the mid-1990s, when he exposed the Health Ministry’s failure to prevent the spread of H.I.V.-tainted blood used in transfusions.
In challenging the Finance Ministry, Mr. Kan faces an uphill fight that could determine the success of the fledgling government’s efforts to bring change, said Professor Iwai and other analysts. The ministry has successfully resisted past efforts to curtail its budget-making authority, though in the late 1990s it did lose its powers to regulate the financial industry and its control over the nation’s central bank, the Bank of Japan.
“This won’t be ‘Mr. Smith Goes to Washington,’ ” Mr. Iwai said. “He cannot just demonize the ministry. He has to find a way to win the bureaucrats over to his side and use them effectively.”
The new government’s success in fulfilling its promises to make Japan more democratically accountable could largely rest on Mr. Kan’s ability to control the Finance Ministry, which is widely seen here as one of the last bastions of Japan’s crumbling postwar order. Mr. Hatoyama badly needs a political victory as he faces mounting criticism over political financing scandals and a spat with the United States, Japan’s traditional protector, over an air base on Okinawa.
Mr. Kan replaced Hirohisa Fujii, 77, who stepped down for health reasons. Though respected in the Democratic Party, Mr. Fujii was facing increasing criticism in the Japanese news media for allowing ministry bureaucrats to control the 2010 budget, undermining the new government’s efforts to put politicians in charge.
On Thursday, Mr. Kan vowed to be different from previous finance ministers, who tended to defend the ministry’s interests and to advocate policies fed to them by ministry bureaucrats. During his inaugural news conference, he spent much less time speaking about financial policy than speaking about how he would strengthen Japanese democracy by bringing the ministry to heel.
“The minister is not a representative of the ministry,” Mr. Kan told reporters. “He is a representative of the people.”
As if to underscore his lack of experience in financial policy, he briefly stirred up currency markets on Thursday by saying at the news conference that the yen should be weaker, a comment taken by traders as meaning the government may intervene to drive down the currency’s value. He later said he was misunderstood, and did not mean to imply that the government would weaken the yen.
Mr. Kan left little room for misunderstanding in his criticism of ministry bureaucrats. He threatened to replace uncooperative ministry officials. He also vowed to increase public oversight of so-called special accounts, vast pools of money from pension funds and elsewhere that his and other ministries have controlled with little disclosure.
Lastly, he promised to bring similar public exposure to the thousands of public corporations that are controlled by ministries, and that critics say are used to provide comfortable retirement jobs for former bureaucrats.
Mr. Kan said the ministry’s role as budget compiler gave it a view of the inner workings of other ministries as well. He vowed to make this information public in order to aid the government’s efforts to exert more control over the entire national bureaucracy.
“The Finance Ministry has all sorts of information, and is in a position to see inside of the pocketbooks” of other ministries, he said. “I will make that information public.”
N. KOREA: North Koreans Devastated Over Currency Changes
January 8, 2010
by Louisa Lim
A newly released North Korean bank note features an updated image of the country's founder, Kim Il Sung, portraying him as an elderly man with gray hair. Chosun Shinbo via Yonhap/AP
Imagine waking up and being told you can only keep around $40, and the rest of your money is worthless.
That's exactly what happened to North Koreans at the beginning of December when Pyongyang pushed through currency reforms. Since then, Pyongyang's currency changes have led to public dissatisfaction, a partial government clampdown, inflation and food shortages.
Tens of thousands of North Koreans began the New Year with a massive staged rally in central Pyongyang.
"Let's implement it!" they shouted, referring to government policy, as they pumped their fists into the air. Words aside, many fear what the new year might bring.
A month ago, North Korea announced currency reforms effectively slashing two zeroes off the currency. People were told to exchange their old currency for new at a rate of 100 to one, but they could only change around $40.
Even in this tightly controlled state, that caused widespread dissatisfaction; the depth of feeling was such that there were reports of people burning money or throwing it into the river. Both acts constitute political crimes since the old currency bears pictures of North Korea's founder, Kim Il Sung.
"It appears that the regime didn't anticipate the degree of pushback it would encounter on this," says Marcus Noland, a North Korea expert at the Peterson Institute of International Economics in Washington, D.C. "It was forced to raise limits on conversion in a series of what appear to be ad hoc steps, not only raising overall limits, but providing compensatory pay raises to certain favored groups."
South Korean groups with sources in the North say subsidies of 500 won — about $15 — were given to the whole population. Then at the end of December, salaries were distributed at the same rate as if the two zeroes hadn't been knocked off the currency.
"In effect there's been a hundredfold increase in purchasing power," says Noland, but he warns this generosity could backfire. "If there are no more goods on the market, that will manifest itself in inflation."
And that's already happening. Organizations in Seoul with sources in the North are reporting that many food prices have doubled since the changes, even though the stated aim was to battle inflation.
After salaries were disbursed at the end of December, the price of goods like pork were rising by the hour. Rice prices have quintupled, according to Open Radio for North Korea, which broadcasts from Seoul. Now rice is hard to find; supplies are being stockpiled, since traders believe prices will continue to climb.
Open Radio's President Ha Tae Keung says public opinion swung behind the reforms after the salary hikes, but now worries are returning — especially given the chronic food shortages.
"People again are getting frustrated just after two weeks," Ha adds. "People's emotions and reaction, very fluctuating, changing every week."
At the beginning of January, the use of foreign currency was banned. Analysts have expressed skepticism over whether this ban will be implemented.
"The elite hold the foreign currency," says North Korea expert Noland. "This ban, if it is to be implemented — an absolutely mind-bending degree of repression or the government is going to have to cut deals with certain groups, particularly the military. It is almost inconceivable to me that the government would successfully take foreign currency away from high-ranking members of the military."
Since the currency reform, the price of the new won on the black market has plummeted, with the dollar exchange-rate 10 times higher than usual, according to Open Radio's Ha.
Foreign trade has been affected, especially with China. One Chinese seafood trader, who would only give his name as Mr. Han, says the currency reforms have made importing North Korean goods uneconomical.
"About 20 to 30 percent of Chinese companies have suspended business," Han says. "We stopped last month, so we're doing OK. Those still doing business are losing a lot of money, in the tens of thousands of dollars."
The reforms constitute an attack on North Korea's emerging market economy and those newly minted businessmen who got rich from it. They signal a return to North Korea's form of socialism.
Some scholars believe, in symbol-laden North Korea where iconography is key, the content of the new notes is highly significant. The image of North Korea's founder Kim Il Sung is updated to show him as an elderly man with gray hair, while for the first time there is a coded reference to current leader Kim Jong Il, in a picture of the log cabin where he was born at Mount Paektu, according to official North Korea mythology.
In an article, the University of Vienna's Rudiger Frank spells out the importance of these changes. He writes: "Technically, the new North Korean currency is an attempt to bring the economy back under control. But the picture of the elderly Kim Il Sung, the first-ever appearance of Kim Jong Il, and the reminder that these two leaders form a unity and that the Party is above the military also indicate that a power change in North Korea is drawing closer."
Open Radio's Ha also believes this reform is laying the groundwork for the power succession from Kim Jong Il to his son and presumptive heir Kim Jong Eun.
"The ultimate goal is to attack newly emerging powers who might oppose the Kim Jong Eun group," says Ha, "by confiscating their wealth, controlling their dollars and weakening them."
He points out that what is unprecedented about these reforms is that, for the first time, the North Korean government has shown sensitivity to public opinion.
"This currency reform is the first policy initiative to stabilize Kim Jong Il's power succession," Ha says. "So if public opinion to this policy is going bad, it might jeopardize the power succession plan."
What's not clear, however, is how Pyongyang will continue to disburse such huge salaries and feed its hungry population.
Erica Kang, from the South Korean humanitarian group Good Friends, predicts there could be more unrest and the crime rate could go up, if there are food shortages.
Even South Korea's defense minister has warned his troops that it's difficult to estimate the threats that will arise in the aftermath of the currency reform.
"The collapse scenario is getting more probable after the currency reform," predicts Ha.
Though others caution the North Korean regime has shown extraordinary resilience in the face of adversity.
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