CHINA & US: Race Is on to Develop Green, Clean Technology

January 30, 2010

Davos 2010

By KATRIN BENNHOLD

DAVOS, SWITZERLAND — It is shaping up to be the Great Game of the 21st century. To top officials and business executives here at the World Economic Forum, Topic A this year was the race to develop greener, cleaner technology, which is emerging as one of the critical factors in reshaping the world economy as emerging powers snap at the heels of battered Western economies.

With the United States and China sizing each other up across the Pacific and Europe seeking to maintain its economic stature, it is a battle for potentially millions of jobs and trillions of dollars in export revenues. The outcome — which pits a venture capital-driven market approach relying on government subsides against a top-down system of state capitalism — has the potential to influence how economic and political systems evolve.

Concern that China may be edging ahead in potentially lucrative growth sectors like renewable energy was palpable here, where senior officials from the United States and Europe warned that the West could not afford to be complacent.

“Six months ago my biggest worry was that an emissions deal would make American business less competitive compared to China,” said Senator Lindsay Graham, a Republican from South Carolina who has been deeply involved in climate change issues in Congress. “Now my concern is that every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.”

He added: “China has made a long-term strategic decision and they are going gang-busters.”

Christine Lagarde, the French finance minister, agreed. “It’s a race and whoever wins that race will dominate economic development,” she said. “The emerging markets are well-placed.”

The global economic downturn, which hit the aging developed world far harder than fast-growing emerging markets, has focused attention on the job-creating potential of green technology, seen by many here as the next industrial revolution. In the energy sector alone, the deployment of new technologies, like wind and solar power, has the potential to support 20 million jobs by 2030 and trillions of dollars in revenue, analysts estimate.

Ms. Lagarde estimated that as many as 240,000 jobs could be added in France over the next few years, helping offset the 400,000 lost last year in the slump.

While new energy sources will initially be more expensive than fossil fuels, politicians in the West, mindful of a stagnant or shrinking manufacturing base, are hopeful that clean technology offers a way of rebuilding older industrial areas by creating a comprehensive green supply chain.

The quest for a new comparative advantage, economists say, is all the more urgent as the crisis has left the financial-services sector reeling — a sector that was long considered one of the last bastions of Western sophistication.

From China’s perspective, experts here said, climate change offers the opportunity to leapfrog Western competitors.

“The low-carbon economy is the future,” said David Li Daokui, a professor at the Center for China in the World Economy in Beijing.

But others cautioned against framing the development of alternative energy as a pure competition. If the United States and China “work together we can deal with almost all the major global crises,” said Robert Hormats, the U.S. undersecretary of state for economic, energy and agricultural affairs. He stressed that success in clean technologies was not a “zero-sum game.”

But he agreed with those who see green technologies as important job generators. “Don’t leave the jobs on the table — the Chinese get it,” he said.

Moreover, the quest for sustainable energy and industrial processes is playing out against the backdrop of vastly different economic and political systems.

In China, the government poured an estimated $440 billion into clean energy last year. It is investing heavily in renewable energy and nuclear power. It also is pursuing efforts to make extraction of its vast coal reserves cleaner. Already home to one-third of the globe’s solar-energy manufacturing capacity and 400 solar-energy companies, China is expected to surpass Spain this year as the No. 3 country in terms of wind power installations, behind Germany and the United States.

William Rhodes, senior vice chairman of Citigroup and board vice chairman of the National Committee on U.S.-China relations, predicted that Beijing’s research into storing carbon emissions underground could soon lead to a major breakthrough.

In the United States, meanwhile, President Barack Obama faces an uphill battle in Congress to pass politically-sensitive legislation aimed at capping carbon emissions.

“China has the type of centralized industrial policy that we can’t match and don’t want in the United States or the European Union,” said Fred Krupp, president of Environmental Defense, a U.S. advocacy group. “What we have to compete with China is the power of our marketplace. A clear and declining cap on carbon emissions will send the essential market signal to industry, and that will engage our market directly in this competition.”

Mr. Krupp said it was Washington must make the next move since the Copenhagen climate talks last month failed to produce a binding global deal, because China may be in no rush to unleash America’s renowned capability for innovation. That could prove disastrous not only to the environment, analysts said, but also to the economic prospects of today’s advanced industrial nations.

Said John Chipman, director of the International Institute for Strategic Studies in London: “Climate change has become a theater of geopolitical competition.”

View Article on The New York Times

RUSSIA: Celebrating a master’s birthday – Chekhov turns 150

Edited 29 January, 2010, 23:17

January 29 marks the 150th anniversary of the birth of one of the world’s greatest playwrights and short-story tellers, the leading light of Russian drama, Anton Chekhov.

The jubilee of the celebrated author of “The Seagull”, “Three Sisters” and “The Cherry Orchard” is being celebrated throughout the world, with some of the largest-scale festivities taking place in Russia, namely in Taganrog, the writer’s city of birth.

President Dmitry Medvedev has laid flowers at the monument to Chekhov in southern Russia. He also met with some of the leading stage directors from Russia and overseas to discuss the playwright’s legacy, as well as theater in general.

“My parents had the whole collection of Chekhov’s works, back in the time when some books were hard to get hold of in the Soviet Union. It so happened that I’ve read everything by Chekhov. I was first interested by his short comic stories and then switched to more serious novels and plays. I was further amazed when I even started reading Chekhov’s letters, although this genre wasn’t aimed at young people. Frankly speaking, I’m happy I did it then, otherwise I don’t know when else I’d have a chance to do it,” Medvedev said.

Apart from exhibitions and festivals taking place in Chekhov’s motherland on the Sea of Azov, a number of events are currently in full swing in the Russian capital.

The “Days of Chekhov” festival in Moscow features performances based on the writer’s timeless works.

However, one of the most highly-anticipated events of the year is the 9th International Chekhov Festival, which will take place this summer.

View Article on Russia Times

CHINA: China to review laws on eviction

Page last updated at 12:26 GMT, Friday, 29 January 2010

Critics say evicted people often receive limited compensation

The Chinese government has outlined major changes to the way in which land can be seized for redevelopment.

Under the draft proposals, using violence and coercion to make people move would be banned and owners would be able to appeal against evictions.

Anyone losing land or property would have to be given at least its market value in compensation.

Forced evictions are a key social concern in China and have frequently lead to rioting.

The country has been plagued by the perception that local authorities acquiesce in, and sometimes actively aid, summary land grabs.

China's cabinet said all strong-arm tactics used to force people to leave their properties - including violence and cutting off water or power - would be banned, the Xinhua news agency reported.

Local governments would have to ensure public opinion was heard before going ahead with development.

In homes deemed to be old or dangerous - a reason often given for demolition - 90% of homeowners would have to give approval before they could be taken down.

The new proposals are open for public comment until mid-February.

Violence

All land in China is effectively controlled by the state and current laws allow local governments to claim land and confiscate homes for urban development projects.

But critics say the system is open to abuse and that evictees often receive a fraction of the value of their home in compensation.

Such cases have led to several violent clashes between residents and police or private security guards.

Several people have also set themselves on fire to protest against their home being seized.

Hundreds of thousands of people in China have been moved in recent years to make way for major projects including the Three Gorges Dam and the redevelopment of the capital for the 2008 Olympics.

View Article on BBC News

JAPAN: Akebono Won’t Stop Believing

Check out this promo for the Japanese version of “Glee” featuring Retired sumo grand champion Akebono.

RUSSIA: Russia is one of US’ key strategic partners – political scientist

Published 28 January, 2010, 14:25

Russia was one of the few mentions during President Obama’s State of the Union Address. Political analyst, Irina Kobrinskaya, thinks this is a sure sign that the US sees Russia as an important strategic partner.

Kobrinskaya thinks that the delay in the signing of the START treaty is merely a result of technical issues and not political. She also expressed belief that the US-Russia relations are heading for the better.

“Pragmatic interests on both sides give us hope. This will not be a short improvement but a long-lasting development which will be for the good of security in the world,” Kobrinskaya said.

View Article in Russia Times

CHINA: China's Next Leader Offers a Glimpse of the Future

January 29, 2010

By KATRIN BENNHOLD

DAVOS, SWITZERLAND — China gave the world a glimpse of the next generation of Chinese leaders on Thursday when Li Keqiang, widely expected to be the next prime minister, vowed that his country would act swiftly to shift from an over-reliance on exports toward greater domestic consumption.

But, in a half-hour speech at the World Economic Forum here, he carefully avoided any mention of the issue that was foremost on the mind of many in the audience: the undervalued Chinese currency. He offered no clues as to whether or when Beijing might allow the renminbi to appreciate against the dollar.

Mr. Li opened with a clear signal that China, which has weathered the global financial crisis better than most, did not consider it to be over. “The storm has not subsided,” he said.

Against the backdrop of growing calls for protectionism in the United States, Mr. Li appeared eager to emphasize a pledge to remake the Chinese economy in a way that would help address, at least over the longer run, China’s gaping trade surplus with the United States and its lesser trade gap with Europe.

“As we stand at a historic juncture,” Mr. Li said, “we must change the old way of inefficient growth and transform the current development model that is excessively reliant on investment and exports.”

“We will focus on boosting domestic demand,” he added, listing a number of initiatives from providing a stronger health care safety net, which would lessen the need for Chinese families to set aside large amounts of savings, to subsidizing farmers who buy household appliances. “The growth in domestic consumption in China will not only drive growth in China but also provide greater markets for the world.”

At the same time, Mr. Li repeatedly emphasized the importance of international cooperation, from continued coordination on fiscal stimulus to a global accord on climate change, something that economists in the audience welcomed as a sign of a China that would stay open and engaged.

Mr. Li, who is currently the executive deputy prime minister of China, is expected to take over from Prime Minister Wen Jiabao in the leadership change scheduled for 2012; the prime minister is the second-highest government official in China after the president. His speech to the world’s political and business elite in Davos was his first high-profile international appearance. A year ago, it was Mr. Wen who took the podium here.

There were traditional references to Confucius in his address, but also shades of novelty. He took the stage in confident strides, smiling and waving to the packed auditorium. He said he would to press ahead with pro-market changes, break monopolies and introduce more competition. China would “allow the market to play a primary role in allocation of resources,” he said.

In the middle of the speech he even made a veiled and seemingly conciliatory reference to the issue at the heart of the simmering spat with Google.

“Efforts need to be made to improve intellectual property rights,” Mr. Li said.

China’s rapid emergence and its diplomatic dance with the United States on everything from trade conflicts to climate change to geopolitics is shaping up as one of central issues on the global stage in the coming months and years.

The risk of a backlash in the United States over the Chinese currency was on stark display in Davos. Representative Barney Frank, chairman of the Financial Services Committee of the House of Representatives, called for actions to “level the playing field” at a time when America’s jobless rate has reached 10 percent.

“China has been very uncooperative and the currency is a major part of it,” Mr. Frank said in an informal interview here. “They want the world to be open to them but refuse to be open to the world.”

The threat that Western countries might retaliate by blocking China’s exports is one of the leadership’s biggest concerns. “Trade protectionism practices will only exacerbate the economic crisis,” Mr. Li said, urging a swift conclusion of the Doha trade round.

“The international financial crisis is not over,” he warned, “and the foundations of the economic recovery are still weak.”

He noted that more than half of Chinese exports were manufactured by foreign companies in China and that China had now become the second-biggest importer in the world.

Members of the U.S. administration here acknowledged the positive role China had played in bolstering growth and welcomed signs that the leadership was getting serious about restructuring the economy.

“I think China is moving in that direction,” said Robert Hormats, U.S. Under Secretary of State for Economic, Energy and Agricultural Affairs.

Mr. Li also hinted at why China had recently moved to curb its feverish growth with tighter monetary policy. The country needs to “strike a balance,” he said, between “steady and fast growth” and “properly managing inflationary risks.”

View Article in The New York Times

JAPAN: Japan's Prices, Wages Continue To Fall

01.28.10, 07:40 PM EST 

By TOMOKO A. HOSAKA, Associate Press

TOKYO -- Japanese prices and wages continued to fall in December as deflation deepened its grip on the world's second biggest economy. Core consumer prices fell 1.3 percent from a year earlier, the government said Friday.

The key consumer price index, which excludes volatile fresh food prices, has now fallen for 10 straight months. The reading matches Kyodo's market forecast. Core CPI for the Tokyo area, seen as a barometer of price trends nationwide, retreated 2 percent in January.

For the 2009 calendar year, core CPI retreated 1.3 percent, according to the Ministry of Internal Affairs and Communications.

Lower prices may seem like a good thing, but deflation plagued Japan during its "Lost Decade" in the 1990s. It can hamper economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases. It also can increase debt burdens.

Indeed, paychecks are dwindling. Average monthly household income fell 4.8 percent in December from a year earlier, the ministry said in a separate report.

Workers must also contend with a still-lackluster labor market. The country's unemployment rate eased to 5.1 percent in December, better than 5.2 percent in November but still high by Japanese standards.

The average ratio of job offers to job seekers stood at 0.46, a tad higher than 0.45 a month earlier. The figure means there were 46 offers for every 100 job seekers.

Still, the economy was not without signs of hope.

Household spending posted a solid rise in December, up 2.1 percent from a year earlier. The figure represents a key indicator of private consumption, which accounts for about 60 percent of Japan's economy.

Industrial output climbed 2.2 percent in December from the previous month, just missing Kyodo News agency's forecast for 2.3 percent growth in its survey of economists. The trade ministry expects factory production to rise 1.3 percent in January and 0.3 percent in February.

Earlier this week, the government said that Japan's exports expanded for the first time in 15 months in December, helped by robust Asian demand.

View Article on Forbes

TRAVEL: Why doesn't cash fly on many airlines?

American Airlines is joining several other carriers in rejecting cash during some or all flights. Passengers who want to buy food, drinks or other items must use credit or debit cards. (Tomohiro Ohsumi / Bloomberg / November 26, 2009)

January 24, 2010

By David Lazarus

Beginning Feb. 1, your money's no good on American Airlines.
The carrier is the latest to go completely cashless during flights, meaning that if you don't have plastic, you won't be buying food, drinks, duty-free items or whatever.

"The implementation of cashless cabins on select flights last summer has simplified the in-flight transaction process for both customers and flight attendants," Lauri Curtis, American's vice president of onboard service, said in a statement.

"For this reason, we look forward to going cashless on board all American Airlines flights."

Wait a minute.

Take a look at the paper money in your wallet or purse. Look at the words on the left-hand side, either above or below the very impressive seal of the United States Federal Reserve System: "This note is legal tender for all debts, public and private."

It doesn't say "all debts unless a business would rather take plastic." Or "all debts except for when you fly."

It says "all debts." Period.

Yet American now joins United Airlines, Continental Airlines, Southwest Airlines, JetBlue Airways, Alaska Airlines, Frontier Airlines and other carriers in rejecting cash during some or all flights.

So how can an airline discriminate against cash users? Isn't that, well, illegal?

A spokeswoman for the Treasury Department told me I should ask the Fed.

A spokesman for the Fed said this was a matter for the Treasury.
Talk about passing the buck.

As it happens, the Fed spokesman was right. On the Treasury Department’s website I found some information about the Coinage Act of 1965, which delves into the minutiae of what "legal tender" means. And it's pretty straightforward:

"United States coins and currency (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues."

There it is, right? Cash is king.  Apparently not.

The Treasury Department goes on to say that there's no law "mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services."

"Private businesses are free to develop their own policies on whether or not to accept cash unless there is a state law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills."

Tim Smith, a spokesman for American Airlines, elaborated on this interpretation of the law. "Any business can do what it wants," he said. "If they say you have to pay in carrots, they can do it."

I asked the Treasury Department why my money says one thing but the law is apparently interpreted differently. A spokeswoman reiterated that "there is no mandate requiring private enterprises to accept currency as payment for goods and services."

In other words, American and other airlines -- and all other businesses, for that matter -- are free to reject cash if they please.
Santa Monica resident Mark Bartelt, 61, flew American recently from Los Angeles to Boston. He said he bought a small bottle of wine during the flight for $5. The flight attendant wouldn't take cash.

"I was surprised," Bartelt said. "It's not really an inconvenience to have to use a credit card, but what if a kid is flying unaccompanied? What's the airline going to do, tell him that he has to go hungry?"

Bartelt added that when he asked the flight attendant about the cashless policy, she joked that it's because the airline doesn't trust crew members with passengers' money.

Smith, the airline spokesman, told me at first that this was indeed "a small factor" in the company's decision to go cashless. But he corrected himself later to say that sticky-fingered fight attendants weren't a factor at all.

"The vast majority of our flight attendants are hardworking and honest," he said.

Flight attendants are of two minds about the cashless flights.  "The good part is that flight attendants don't have to carry around the cash," said Corey Caldwell, a spokeswoman for the Assn. of Flight Attendants. "The bad part is that we have to rely on machines, and machines go kaput every now and then."

She said most cashless airlines try to make sure they have backup card-processing devices on board in case one breaks down. Caldwell also said that the issue of unaccompanied kids who lack plastic comes up from time to time.

"Usually the flight attendant will take care of any costs herself," she said, "or other passengers will pay."

American's Smith said the airline will typically cover any such expenses. "We don't make a big deal about it," he said.

People talk about heading toward a totally cashless society. It would be better for the environment, they say, and more convenient in general. I don't really have a problem with that.

But I believe you should mean what you say. If our money says it's good for everything -- and it does -- then it should be good for everything. Otherwise, it shouldn't promise something it can't deliver.

Our cash also says "In God we trust." Maybe I should take this up with a higher authority.

David Lazarus' column runs Wednesdays and Sundays. Send your tips or feedback to david.lazarus@latimes.com.

View Article in The Los Angeles Times

CHINA: China joins Somalia piracy drive

 

China has a force of three ships patrolling the Gulf of Aden

Page last updated at 05:07 GMT, Friday, 29 January 2010

China's anti-piracy role off Somalia expands

China has agreed to join an international naval operation to fight piracy off the coast of Somalia.

China has been focusing on protecting its own shipping in the area, but it will now join the naval forces of the US, Nato and the European Union.

This grouping, the Shared Awareness and Deconfliction (Shade), protects a shipping corridor in the western Indian Ocean.

This is the area where pirate attacks are most frequent.

Members of the international naval task force say that although attacks there have increased, fewer have been successful.

Ransoms

The BBC's United Nations correspondent Barbara Plett says officials believe having China on board will allow more ships to be diverted to the Somali Basin, a vast expanse of water in the western part of the Indian Ocean, where attacks are at an all time high.

The agreement also allows China to take on the rotating chairmanship of the naval task force that coordinates patrols.

China is believed to be interested in raising its participation in the anti-piracy drive partly because one of its ships was hijacked last October.

The De Xin Hai bulk carrier was reportedly freed in late December amid reports of a possible ransom payment.

Analysts say China is also eager to extend its naval reach beyond its shores.

Chinese media have reported the stepping up of China's role in anti-piracy patrols as the moment when China takes on a "central" and "leadership" role in an important international operation.

Hong Kong's South China Morning Post newspaper reported that China had been lobbying for the expanded role for months.

The newspaper editorialised that China would "show its worth as a global player".

Noting the concern, even alarm, among some of China's neighbours at the country's growth as a maritime power, the newspaper said China's participation in the anti-piracy effort would help increase trust.

South East Asian countries and China are rival claimants to islands and atolls across the South China Sea, and China's growing might and extended naval reach are being watched closely.

View Article in the BBC News

JAPAN: Woman held over death of 1 of 3 men believed killed through foul play

Jan 28 08:40 AM US/Eastern

(AP) - TOTTORI, Japan, Jan. 28 (Kyodo)

Police served a fresh arrest warrant on a woman Thursday on suspicion of killing one of three men believed to have died from foul play last year in Tottori Prefecture, the police said.

The Tottori prefectural police set up an investigative task force Thursday on the cases involving Miyuki Ueta, 36, a former snack bar employee in the city of Tottori.

Ueta is charged with robbery-murder as she is suspected of killing Hideki Maruyama, 57, an electric appliance dealer, who was found drowned in a river on Oct. 7, 2009, while evading about 1.23 million yen in payment to the victim for electric appliances she had bought.

Ueta was quoted as telling the investigators, "I don't know anything (about the allegations). I didn't do it."

In addition to Maruyama's death, the police also plan to look into whether Ueta was involved in the death of one of the two other men, Kazumi Yabe, 47, a truck driver whose body was found in the Sea of Japan off central Tottori Prefecture in November.

The third man -- 58-year-old Kazumi Taguchi -- was a resident of the same apartment building as Ueta. Taguchi died in October after being taken to a hospital.

Investigations showed that all of them tested positive for components of sleep-inducing agents, such as Halcion, and cold medicine.

The investigators have ruled out possible conspiracy by Ueta's 46- year-old male roommate over the murder of Maruyama, suspecting Ueta gave drugs to Maruyama, forced his face into the river and killed him on her own.

Ueta and her roommate were first arrested Nov. 2 on suspicion of fraud, and were served with several more warrants over fraud.

The roommate has told investigators that he, Ueta and Maruyama went to the Mani River in two cars on Oct. 6 but he left the scene, his lawyer said.

When the man returned to the river, only Ueta was there and her clothes were wet, he was quoted as saying.

View Article on News on Breitbart

CHINA: China's Li Delivers A Polished Future

January 28, 2010 - 2:43 pm

Paul Maidment

Editor, Forbes Media

China's Vice-Premier Li Keqiang cuts the polished, poised figure of the world leader he is about to become. Tipped to succeed Wen Jiabao as prime minister when China's leadership changes generations in 2012, China's headliner in Davos delivered a flawless summary of China's five year plan to deliver sustainable long-term growth--maintain steady and fast GDP growth, encourage domestic demand, modernize strategic industries, particularly green tech ones, continue with economic reform, minimize the income gap, develop urbanism across China, create jobs and spread the social safety net. Down to the white shirt, red tie and well-cut suit, he could have been a western chief executive doing a roadshow.

To round it off, there was a five-point action plan for China's growing global citizenship: continue to cooperate over recovery from the global financial crisis; fight protectionism and conclude the Doha round of trade talks; pursue balanced development, both North/South and South/South; jointly tackle the global issues of climate change, energy and food security, public health, and natural disasters; and improve the structure of global governance to reform financial regulation, international financial institutions and increase the involvement of developing nations. And all done with only the gentlest jibes against the developed countries. "We came to see the future," said one (Western) participant.

What wasn't to like in such a perfect world?

View Article on Forbes

JAPAN: Toyota Extends Recall To Europe, China

01.28.10, 07:59 AM EST 

By SHINO YUASA

TOKYO -- Toyota's massive recalls over problem gas pedals in the U.S. are being extended to China and Europe, the latest blow to the world's top automaker as it struggles to salvage its safety reputation.

The announcements Thursday come after the company earlier this week said it was suspending U.S. sales and production of eight models - including the Camry, America's top-selling car - to fix faulty pedals that could stick and cause acceleration without warning.

Toyota Motor Corp. ( TM - news - people ) also announced an additional recall of 1.09 million vehicles in the United States covering five models - 2008-2010 Highlander, 2009-2010 Corolla, 2009-2010 Venza, 2009-2010 Matrix, and 2009-2010 Pontiac Vibe.

Toyota dealers across the U.S. have been swamped with calls from concerned drivers but had few answers as the recalls snowballed.

A week before the sales suspension, Toyota issued a U.S. recall for the same eight models, affecting 2.3 million vehicles. In late 2009 it recalled 4.2 million vehicles amid concerns that floor mats could bend across gas pedals, causing sudden acceleration.

Toyota has insisted the problem of sudden, uncontrolled acceleration was "rare and infrequent" and said dealers should deal with customers "on a case-by-case basis." But drivers of Toyotas and those who share the road with them were left with uncertainty.

The automaker has informed Chinese authorities it will start a recall in February for 75,500 RAV4 sport utility vehicles that were manufactured in China between March 2009 and January 2010, said Toyota spokeswoman Ririko Takeuchi.

They use the same problem parts in accelerators that caused the recent spate of massive recalls in the U.S., she said.

In Europe, Toyota is still unsure how many vehicles are affected by the problem with pedals that are manufactured by CTS Corp. ( CTS - news - people ), based in Elkhart, Indiana.

Colin Hensley, a manager at the car maker's European operations, said the company is checking how many European models use the parts involved in the latest U.S. recall.

"Toyota is making every effort to address this situation for our customers as quickly as possible," its European arm said in a statement.

The sales suspension in the U.S. - Toyota's biggest market - could endanger the company's fledgling earnings recovery. Toyota only returned to the black for the July-September quarter with net income of 21.8 billion yen ($241 million) after three straight losing quarters.

Investors continued to dump shares in the global auto giant Thursday. Toyota dropped 3.9 percent to 3,560 yen even as the benchmark Nikkei 225 stock average gained 1.6 percent to close at 10,414.29. Toyota tumbled 4.3 percent Wednesday.

"It is still uncertain how this recall problem will affect Toyota's profits. But investors are worried it could really pressure the company's overall earnings," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd.

Fitch Ratings warned Thursday the massive recalls and sales suspension could dent Toyota's recovery, especially in the vital U.S. market.

Fitch placed Toyota's credit rating of 'A+' on watch negative, meaning the rating could be downgraded. That could increase the interest rate Toyota pays on any debt.

"The recalls and sales and production suspension cast a negative light on Toyota's reputation for quality, just as the company emerges from an unprecedented downturn in the auto industry," Fitch said in a statement.

Toyota spokesman Hideaki Homma said Toyota decided to recall more vehicles in the U.S. due to the risk of accelerator pedals becoming stuck in floor mats.

Toyota said in a statement it will fix or replace the accelerator pedals for the recalled vehicles to avoid the risk of floor mat entrapment. The company said it will replace floor mats as well for the latest recalled vehicles.

In March of 2007, Toyota started getting reports of gas pedals being slow to rise after being depressed for acceleration. Engineers fixed the problem in the Tundra pickup early in 2008.

But troubles persisted in other models, eventually leading to last week's U.S. recall and the plans to suspend sales and shut down of six factories while Toyota tries to fix the problems.

Associated Press writers Yuri Kageyama in Tokyo and Aoife White in Brussels contributed to this report.

View Article on Forbes

S. KOREA: Hyundai Motor's Q4 Profit Jumps

Associated Press, 01.28.10, 02:12 AM EST 

SEOUL, South Korea -- Hyundai Motor's net profit nearly quadrupled in the fourth quarter on higher sales following a strong performance during 2009 in the fast-growing Chinese and Indian auto markets.

South Korea's largest automaker and a growing force in the global market, earned 945.5 billion won ($820 million) in the three months ended Dec. 31, it said in a statement Thursday. Hyundai Motor Co. reported net profit of 243.5 billion won the same period the year before.

The Ulsan, South Korea-based maker of the Elantra and Sonata sedans and the luxury Genesis said sales during the quarter rose 9.3 percent to 9.65 trillion won from 8.83 trillion won a year earlier.

For all of 2009, Hyundai recorded a net profit of 2.96 trillion won, more than doubling from 1.45 trillion won in 2008. Sales for the year, however, fell 1 percent to 31.9 trillion won from 32.2 trillion.

Hyundai reported big gains in sales volume in China and India in 2009 from the year before. It also said that profits in China soared while in India it made money after a loss the year before.

Hyundai, which along with affiliate Kia Motors Corp. forms one of the world's five biggest automotive groups, has seen its market share grow worldwide in recent years through an emphasis on quality and design.

Both companies have expanded aggressively overseas. Hyundai has factories in China, India, Turkey, the U.S. and the Czech Republic. Kia has plants in China and Slovakia and began production in the United States last year.

Shares in Hyundai Motor, which released results during afternoon trading, rose 4.1 percent to close at 113,500 won. The stock price tripled in 2009.

View Article on Forbes

CHINA & JAPAN: Banyan: Japan's love-bubbles for China

Jan 28th 2010

From The Economist print edition

Illustration by M. Morgenstern

Hatoyama's advances to China raise fundamental questions about regional security

WHAT our colleague, Charlemagne, calls “bubbles of optimism” over China have been popping in Western capitals, as China has taken a hard line against internal dissent, proven unhelpful in efforts to tackle both climate change and Iran’s growing nuclear threat, manipulated its currency and launched cyber- attacks on Western computer networks. China, muscling its way to global prominence, is not quite the partner the West had been cultivating. Striking, then, that in Japan the bubble of optimism, among the country’s new leaders, is only inflating.

Soon after the Democratic Party of Japan (DPJ) swept into office nearly five months ago, the prime minister, Yukio Hatoyama, unveiled a vision for an East Asian Community (EAC). For all that it was dreamy and disjointed, it had at its heart a rapprochement between Japan and China leading towards regional integration. Asia, Mr Hatoyama reaffirmed, was Japan’s “basic sphere of being”. As for integration, fraternity was to be the glue.

Then late last year the DPJ’s secretary-general, Ichiro Ozawa, travelled to Beijing at the head of a 639-strong mission, including 143 parliamentarians with whom a beaming President Hu Jintao took the trouble to be photographed, each in turn. Mr Hu doesn’t smile like that for Westerners. Back in Tokyo, Mr Hatoyama horrified sticklers for imperial protocol by insisting that Mr Hu’s heir-apparent, Xi Jinping, pay an impromptu call on Emperor Akihito. Now rumours suggest Mr Hatoyama may make a visit of remorse, the first by a Japanese prime minister, to Nanjing, site of a massacre by Japanese forces in 1937. In return (and at less political cost), Mr Hu may pay respects to the nuclear victims of Hiroshima. Japan under the DPJ seems to get on better with China than it does with its ally and security guarantor, the United States. Relations with the United States are strained over the relocation of a military base for American marines on Okinawa, leading to worries over the future of the two countries’ alliance, keystone to security in the western Pacific.

Economic logic argues for closer ties with China, which has already overtaken America as Japan’s biggest trading partner, and is about to overtake Japan’s economy to become the world’s second-biggest. After not one but arguably two “lost decades”, an ageing population cannot drive demand in Japan. It must hitch itself to the Chinese juggernaut. A strategic vision, too, lurks somewhere in the idea of an EAC. Mr Hatoyama has committed Japan to cutting greenhouse-gas emissions by a quarter by 2020. He thinks Japan can lead Asia towards a low-carbon future.

But contradictions lurk too. The idea makes a nod to China’s rise. Yet it assumes Japan’s rightful lead in proposing a new regional architecture, while impressing Japan’s technological prowess on China. The impulse is deeper-seated than Mr Hatoyama might admit.

The story of modern Japan is of the use of Western arms and technology to overturn China’s centuries-old regional dominance. China now intends to restore the natural order, and does not need directions from others, least of all Japan.

It has made only the minimum polite noises about an EAC. As for the green technology that Japan can share, both sides say it is a good thing but are infuriatingly sparing with the details. Besides, since the December summit in Copenhagen, China has hinted it might go its own way on climate change.

Popular Japanese attitudes towards China suffer from the same doublethink. In one recent poll, most of those questioned wanted a “warmer” political relationship with their big neighbour. But most also wanted the prime minister to visit Yasukuni, Tokyo’s militarist shrine, on remembrance day. That is one issue guaranteed to send China-Japan relations into the cooler. A sense of Japanese superiority over coarse, authoritarian China is also widespread. More than one Japanese professor has told Banyan that Japan is the true guardian of Chinese culture.

History wars, still far from resolved, point to the limits of rapprochement. So too do maritime disputes over territory. But a huge constraint is the fiscal one. Greying Japan is burdened with deflation, stagnant growth and a national debt close to 200% of GDP. Japan lacks the resources (and the will) for the kind of bold strategic moves, putting Japan at the heart of Asia, at which Mr Hatoyama and Mr Ozawa hint. Even a more autonomous security policy, out from under America’s wing, is almost a non-starter. Japan has cut its defence spending in recent years, to just 1% of GDP. It has grown more dependent on the United States, not less.

Behind China’s smile

This is where strains over the alliance really matter for the security of the whole region, not least because of Taiwan. On January 24th the Okinawan township picked, after painful years of talks, by the United States and Japan’s previous government as the destination for the relocated marine base elected a mayor resolutely opposed to the move. Popular concerns about the “occupation mentality” of American forces are valid. But Mr Hatoyama, according to colleagues, was sleepwalking when he reopened the issue. Now he cannot go back. Local politics and national security are on a collision course. Mr Hatoyama has said he will decide over the base by May. But moving it anywhere else in Japan will face local resistance too.

As Yoichi Funabashi, editor of Asahi Shimbun puts it, if the new administration bungles relations with Washington, it will look diplomatically inept at a time when power relations in Asia are shifting fast. That might spell the end of the hapless Mr Hatoyama. So it is hardly cynical to assume that one aim behind China’s outbreak of smiling is to drive a wedge between a slightly clueless Japan and its longstanding protector. After all, Japan would be its base were America to come to Taiwan’s rescue in the event of a mainland attack.

View Article on The Economist

JAPAN: Teachers lose suit for compensation over national flag, anthem issue

Jan 27 10:02 PM US/Eastern

(AP) - TOKYO, Jan. 28 (Kyodo)

The Tokyo High Court rejected on Thursday a demand for compensation by former teachers who argued that they were refused post-retirement reemployment because they had remained seated during the singing of "Kimigayo" national anthem at school ceremonies despite their school principals' orders.

The appellate court ruling overturned the February 2008 decision by the Tokyo District Court that awarded a total of around 27.5 million yen in compensation to 12 former teachers and a clerk at public high schools run by the Tokyo metropolitan government.

Presiding Judge Tatsuki Inada of the high court said the orders to stand up and sing the anthem in front of the Hinomaru national flag "were not intended to command them to engage in acts that may straightforwardly deny the plaintiffs' perception of history and do not necessarily violate Article 19 of the Constitution that establishes freedom of thought and conscience."

The ruling largely followed the lines of a Supreme Court precedent issued in February 2007 on a similar case.

On the decision by the metropolitan government to reject them post- retirement reemployment as part-time instructors, the judge said the local government acted within its discretion because "the plaintiffs had no option but to be rated lowly since they violated orders from superiors and were reprimanded."

The lower court ruled in February 2008 that the metropolitan education board overstepped and abused its discretion by attaching exaggerated importance to their disobedience of the orders while failing to factor in other aspects such as their service records.

The plaintiffs were seeking around 5.6 million yen in compensation per person from the local government.

Several lawsuits have been filed over the notice to principals, mainly by disciplined teachers, seeking nullification of the disciplinary measures and arguing the notice is unconstitutional.

The Tokyo District Court ruled in September 2006 that the education board cannot force teachers to sing the anthem in front of the Hinomaru flag or reprimand them for refusing to do so as such practices infringe on the Constitution. The ruling is being appealed at the Tokyo High Court.

But the Supreme Court rejected an argument by a music teacher in February 2007 that a principal's order to accompany the singing of "Kimigayo" on the piano is unconstitutional, saying the order "does not mean denial of the plaintiff's view of history and the world, and cannot be said to violate freedom of thought and conscience under the Constitution's Article 19."

View Article on Breitbart

CHINA: China in Central Asia: Riches in the near abroad

Jan 28th 2010

From The Economist

The West’s recession spurs China’s hunt for energy supplies in its own backyard

DURING his first visit to Kazakhstan in 1996, Jiang Zemin was reportedly amused to learn that his Central Asian neighbour, the ninth-largest country in the world by land mass, had a population of only around 15m. “You probably all know each other,” China’s then president is said to have quipped to his hosts. With its population of 1.3 billion, China naturally thinks on a grand scale. This is what the five countries of Central Asia—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan—both admire and fear. Like Russia, looking to its own far east, they worry about Chinese expansionism.

But for most of the 18 years since the Soviet Union’s break-up, China has taken a back seat in the fierce competition between Russia and America for influence in this resource-rich region. In 2009, with the energy needs of its burgeoning economy continually growing, it woke up to new opportunities in its western backyard.

Booming China had not exactly been neglecting Central Asia, but its priorities had lain elsewhere. Since the global financial crisis left Russia and America struggling with their budgets, China has loosened its purse strings to offer Central Asia a helping hand. Its money has been welcome. From a Central Asian point-of-view, Chinese credit offers an additional advantage over the Western kind: it comes with no annoying political strictures.

In June, for example, China agreed to lend Turkmenistan $4 billion to develop its largest gasfield, South Yolotan, close to the Afghan border. This was part of a 30-year deal that should eventually bring China 40 billion cubic metres of gas each year. The same month Hu Jintao, Jiang Zemin’s successor, announced a loan of $10 billion loan to the Shanghai Co-operation Organisation (SCO), a security forum grouping China, Russia and four Central Asian countries, to shore up members faltering in the global downturn. In November China’s largest oil-and-gas provider, jointly with Kazakhstan’s oil-and-gas firm, bought MangistauMunaiGas, a big oil producer in Kazakhstan. In exchange, China had lent the country $10 billion earlier last year.

In December Mr Hu and the leaders of three Central Asian countries gathered at the Saman-Depe gasfield in eastern Turkmenistan for a moment of crowning symbolism. The four men turned a tap to inaugurate a 1,833km (1,139-mile) gas pipeline, running through Uzbekistan and Kazakhstan into China’s far-western region of Xinjiang. For China, the new line forms part of a global effort to secure energy supplies for its rapidly growing economy. For Turkmenistan, it is a chance to reduce dependence on Russian demand.

A few days before the event, Vladimir Putin, Russia’s prime minister, said that Russia could be comfortable with Turkmenistan’s gas flowing eastward. But many Russian commentators bemoaned the loss of strategic ground to China.

Views about China are divided in Kazakhstan too. Late last year the president, Nursultan Nazarbayev, announced that China wanted to lease 1m hectares (2.5m acres) of farmland in Kazakhstan. In Almaty, Kazakh nationalists marched in protest at encroaching Chinese influence. Even the weak opposition briefly sprang to life. Similarly, last July China’s suppression of Xinjiang’s rioting Uighurs, whom Kazakhs consider brethren, raised tempers.

Dossym Satpayev, a political analyst, says that many protesters believe China’s vast population makes it inevitable immigrants will start moving to places such as Kazakhstan. Had dwindling Russia made the request for a land-lease, he says, the reaction would not have been so strong.

China may have taken its time before beginning to pursue its interests in Central Asia, but it seems determined to do so with vigour and for the long term. Mr Satpayev believes that within the next ten years it will come to dominate Central Asia’s political, economic and military spheres, mainly through the SCO. Its main rival will be less affluent Russia, whose historic dominance has left it with the habit of trying to boss former Soviet republics. America, Europe and other powers will become less important. China’s leaders have managed to advance far beyond the largely ceremonial co-operation of “friendship treaties”, without resorting to Russian tactics. As Mr Satpayev has it, “China doesn’t only buy loyalty with documents, but with money given at a low percentage.”

View Article on The Economist

JAPAN: JAL dumps alliance with American Airlines in favor of Delta, SkyTeam

January 28, 2010

(Mainichi Japan)

Japan Airlines (JAL) decided Wednesday to dump its partnership with American Airlines and its Oneworld alliance in favor of Delta and the SkyTeam group of carriers.

American together with a private equity firm had offered to invest $1.4 billion in JAL and strengthen cooperation between the two airlines, but JAL judged an alliance with Delta -- the world's largest airline -- would produce greater benefits.

The partnership with Delta will be officially announced by new JAL Chairman Kazuo Inamori on Monday.

To solidify the new alliance, JAL intends to apply to the Japanese and U.S. governments for antitrust immunity. The airline is also examining strengthening its international network with new routes from Narita International Airport to Detroit -- the hub for Northwest Airlines, acquired by Delta last year -- and from Haneda Airport to Amsterdam's Schiphol, SkyTeam partner KLM's home airport.

Delta and JAL cover many of the same routes, allowing the two airlines to better efficiency through schedule and fare collaboration. According to estimates by the state-backed Enterprise Turnaround Initiative Corp. of Japan (ETIC) -- overseeing JAL's restructuring process -- if JAL obtains antitrust immunity, the benefits of the Delta partnership could rise to some 17.2 billion yen. Even if the JAL-Delta deal does not receive immunity, the new partnership will result in benefits of around 9.2 billion yen -- still a significant jump from the 5.4 billion yen realized through the alliance with American.

Delta had previously offered a total $1.02 billion in financial support to JAL, including $500 million in new investment. As the leader in rebuilding the airline, however, ETIC apparently inclined to the belief that foreign financing was unnecessary for recovery, and elected to restrict any involvement with Delta to business collaboration.

Click here for the original Japanese story

View Article in The Mainichi Daily News