Tuesday, September 2, 2014

India's foolish crush on Japan

Can Modi's reverence for all things Japanese produce the right blueprint for the nation's future?

But those who Look East for Asian Values now seek out China rather than Japan!

India's Prime Minister Narendra Modi, center, and Japanese Prime Minister Shinzo Abe, right, eat tea cakes during a tea ceremony at a tea hut of the Omotesenke, one of the main schools of Japanese tea ceremony, in Tokyo Monday, Sept. 1, 2014. Modi was on his official visit to Japan. (AP Photo/Yuya Shino, Pool)

Narendra Modi, India’s new prime minister, visited Japan twice during his long decade of ostracism by the West. He is one of only three people that Shinzo Abe follows on Twitter. Commentators have hailed Modi as "India’s Abe" because he seems as determined as the Japanese prime minister to boost national self-esteem through economic growth..

Japanese direct investment in India is rising; it may even help realize Modi’s grand, Japan-inspired vision of "smart cities" and bullet trains across India. But Modi has deeper reasons for bringing to his first major bilateral visit the intense ardor of a pilgrim approaching an ancient shrine..

Since the 19th century, Hindu nationalists have venerated Japan as the paradigmatic Asian society that preserves its traditional virtues while also developing industrial and military strength and inculcating patriotism among its citizens. Swami Vivekananda, an iconic Hindu thinker of the 19th century (also the only writer Modi seems to have extensively read) claimed after a visit that "if all our rich and educated men once go and see Japan, their eyes will be opened.".

Evidently, the Japanese had "taken everything from the Europeans, but they remain Japanese all the same" while in India, "the terrible mania of becoming Westernised has seized upon us like a plague.".

Modi ably channels Vivekananda in his praise for the Japanese traits of self-sacrificing nationalism. And he has not evolved a "Look East" policy just because U.K. and U.S. officials refused to meet with him and the U.S. denied him a visa after communal riots on his watch as chief minister of the state of Gujarat claimed more than 1,000 lives. Note that U.K. officials did not deny Modi a visa after the 2002 Gujarat riots. Modi seems sincere in his invocation of what Asia’s three outspoken leaders of the 1980s -- Singapore’s Lee Kuan Yew, Malaysia’s Mahathir Mohamad and Japan’s Shintaro Ishihara -- called "Asian Values.".

Lee typically argued that the only antidote to "the disruptive individualism of Western liberalism" was renewed stress on "individual subordination to the community." This coincides perfectly with the values cherished by the Rashtriya Swayamsevak Sangh (Modi’s ideological guide, and the parent outfit of Hindu nationalism). Not surprisingly, Modi’s recent Independence Day speech, which was widely hailed as "forward-looking and modern" was also, as the columnist Shekhar Gupta pointed out, "pure RSS" in its emphasis on "family values, morality, cleanliness, discipline and patriotism.".

But can Modi’s old-fashioned reverence for all things Japanese, from the tea ceremony to nuclear plants, produce the right blueprint for India’s future? After all, Japan today offers less instruction in world-conquering industrial growth and innovation than in the admirable art of "bending adversity" -- the title of a superb new book on Japan by David Pilling that Modi might find more up-to-date than Vivekananda’s musings..

The Japanese state’s striking early example of fostering internationally competitive local industries was closely followed by countries such as South Korea and Taiwan. Leaders of Malaysia and Indonesia eagerly sought Japanese investment in their economies, primarily to diversify their industrial bases..

The most avid of these Asian Japanophiles was Mahathir, the long-lasting prime minister of Malaysia and unabashed exponent of majoritarian nationalism. His own "Look East" policy was grounded in economic relations with Japan as well as racial and civilizational assertions of difference, and included an explicit anti-Western posture..

For a while, everything seemed to be going well. Then, in the 1990s the limits of Japanese developmentalism were exposed by the new age of globalization. So much of the Japanese economic miracle had been contingent on U.S. willingness during the Cold War to open its own markets to Japanese manufacturers while turning a blind eye to Japan’s blatantly protectionist trade policies and restrictions on capital movement..

Japan’s comparative advantage couldn’t last, and it didn't. The Asian financial crisis then went on to expose, among other things, the dangerous overreliance on foreign investment of countries like Malaysia. We haven’t heard much about Asian Values since then; those who Look East now seek out China rather than Japan..

Canceling talks with Pakistan, or rejecting the World Trade Organization deal reached at Bali, Modi could be projecting the India that can say no: He is more India’s Mahathir than India’s Abe. But it is hard not to suspect anachronism and naivete in Modi’s plan to model India’s economy on Japan’s postwar achievements of technical innovation and labor-intensive manufacturing..

The export-oriented economies of Japan and its Asian clients achieved their highest growth when most Chinese were still wearing drab Mao suits. The spirit of innovation long ago shifted from Sony to Apple; and Abenomics, the engine of a fresh national ascent to glory and power, is now running on empty..

Even Mahathir now thinks Japan made too many irrevocable mistakes, and has switched his affections to the Korea of Samsung and Hyundai. Arriving in Japan, Modi will no doubt find some good deals for India. But he will also find the beloved old shrine of Hindu nationalists deserted, the faithful long gone in search of other gods. .

By Pankaj Mishra Bloomberg


Modi-Abe intimacy brings scant comfort

The increasing intimacy between Tokyo and New Delhi will bring at most psychological comfort to the two countries.
Source: Global Times | 2014-9-2 0:53:01

Modi draws support from Japan

Japan and India agreed to step up economic and security cooperation as Indian PM seeks to revitalize the lagging domestic economy.
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Monday, September 1, 2014

In defence of Merdeka

Independence has been achieved, yet has to be constantly defended, continuously renewed and expanded as the process of de-colonisation is on-going and new threats arise.

THIS week marks the beginning of our 58th year of Independence. Much has been done to entrench sovereignty and independence on our land. But much more needs to be done.

Colonialism did a comprehensive uprooting of traditional systems and replanted them with new ways, methods and systems to produce a chaotic and confusing amalgam of people, social patterns and economic modes.

We are still shaking off the vestiges of that colonialism, whose shadows still fall large. We are still in the process of building independent policies, structures and systems

This is so in post-colonial developing countries in general. As the leaders of the Group of 77 and China stated in their summit held in Bolivia recently, the process of de-colonisation is incomplete and on-going, even decades af­ter the winning of Independence.

That is a good reminder. In particular, the structures and levers of the global economy are still under the domination of the rich developed countries.

The former colonial masters may have let go of formal control of the colonies but they made sure to set up a system in which they could continue to control the important components of world finance, trade and economy.

For so many decades, even until now, the major economic and social trends and policies were set by the combination of the Interna­tional Monetary Fund, the World Bank and the Group of 7 rich countries.

These policies, made by institutions based in Washington, became widely known as the “Washington Consensus”. Countries that were indebted especially had to abide by the rules, which were often against their own interests.

Some countries, including Malaysia, were fortunate enough not to have been caught in the debt trap and thus escaped the Washington Consensus. We had a close shave during the Asian financial crisis in 1997-99, but unlike other Asian countries, we did not have to borrow from the IMF, and could devise our own policies from the crisis.

Many other developing countries (almost a hundred) that fell under the IMF-World Bank spell could not chart their own policies, had their economies shaped the wrong way and their development postponed. Independence was much constrained, often present only in name.

Malaysia has been able to shape and re-shape its own policies. If mistakes were made, they could and can be corrected.

Years after Merdeka, the economy was still under British domination. The plantations, tin mines, banks, wholesale trade, industry, were mainly in foreign hands. In 1970, 70% of the corporate assets were owned by foreigners.

A strategic policy was designed to reduce the foreign share while boosting the local share, and to restructure the participation of the various local communities in the economy. Society is still debating the effects and implications of that policy and its implementation.

However, there is appreciation that a successful part of the policies was the wresting back of control over the natural resource-based sectors and obtaining national benefits.

Malaysia has been one of the richest expor­ters of commodities. It helped make Britain rich during colonial times and its companies still dominated the sector long after Merdeka.

Through a series of policies over decades, Malaysia took back ownership of the biggest plantation and mining companies (through the famous “dawn raid” at the London stock market). It signed production and revenue-sharing agreements with the international oil companies.

These policies opened the road for more of the revenues from our important commodities to be retained locally. They also became major sources of government revenue that financed development projects.

Value was then added to the raw materials through processing, refining and manufactu­ring. Rubber exported as gloves and tyres, palm oil exported as cooking oil and wood ex­­ported as furniture bring more revenue and jobs to the country than if they were exported in raw forms as latex, crude palm oil and timber.

Research and development as well as marketing institutions were created to find more efficient ways to produce new uses for the processed materials and more markets. In contrast, those developing countries that fell under IMF-World bank policies were not able to provide state support for their agriculture.

When foreign manufacturing and services firms entered, they were told to set up as joint ventures with local companies, with limits on equity. This could facilitate benefit-sharing and participation in the economy for locals.

Yet Malaysia still became a favourite location for global investors.

In the years leading to the mid-1990s, external debt built up, the current account of the balance of payments went into high deficit, and the financial sector was liberalised, which made the country vulnerable to external shocks.

The 1997-99 crisis taught the lesson that excessive debt, a wide current account deficit and too much financial liberalisation can lead to a major crisis.

In the 2008-2010 global crisis, Malaysia had built up enough defences (especially foreign reserves and balance of payments surpluses) to be resilient.

Economic growth has recovered, but care has to be taken to address the significant budget deficit and increase in foreign debt.

On the global front, developing countries that were fed up with dependence on the IMF and World Bank and their lack of reforms have created their own institutions, such as the Chiangmai Initiative and the BRICS Bank.

The objectives are laudable. Developing countries that need finance either to avoid a debt crisis or to fund development program­mes should have alternative sources that hopefully will have less conditions or more appropriate conditions attached to their loans. It is another big step in de-colonisation.

Needless to say there is much more to be done to safeguard Independence and to move forward on independent development pathways.

If only the state could be prevented from taking policies that place conditions on foreign firms, investors and speculators, the world would be free for those global corporate and financial giants to maximise their profits.

But if global binding rules are established to create such a world, then big corporations would again rule the world, backed by their governments. Then the governments of the developing countries would be unable to protect their own citizens, and a new battle for independence would have to be waged again.

Better to preserve the independence we have, and expand it, than to whittle away the gains and then having to fight old battles anew.

A lesson is that Merdeka has been achieved, but should not be taken for granted. It has to be constantly defended, renewed continuously and expanded. To Malaysia and Malaysians, Happy 58th year of Merdeka!

- Global Trends by Martin Khor > Martin Khor is executive director of the South Centre based in Geneva. You can e-mail him at director@southcenter.org. The views expressed here are entirely his own. The Star/Asia News Network

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Sunday, August 31, 2014

Today our Malaysian National Day in pensive mood: Hate politics taking its toll!

Malaysian raise the Jalur Gemilang during the Amanat Merdeka deliver by Datuk Seri Najib Razak at MATIC..-- M. Azhar Arif/The Star

TODAY is our National Day but the mood in the country is pensive. This has been a year when the mood has been severely dampened by those who spew divisive remarks on a continuous basis.

TODAY is our National Day. I wish I could say that I woke up early to wave the Jalur Gemilang. And that my heart is bursting with pride because it is all pumped up with extra doses of patriotic fervour.

I do recall a time not too long ago when everyone was indeed eager to wave the flag. We even had little flags on our cars and there was a genuine spirit of patriotism. We needed no reminders that we are one as a nation.

Sad to say, the mood in my neighbourhood, and in the country overall, is pensive.

Please do not get me wrong. I am a patriot. And most of us, as citizens of this blessed land, do know what allegiance to the nation means. We not only love our nation but have full respect for the institutions that bind us together.

But on a day-to-day basis, this has been a year when the mood has been severely dampened by those who spew divisive remarks on a continuous basis.

From politicians who seek the limelight for all the wrong reasons to self-appointed champions of race and religion, these people have created an environment to embolden even the lesser-known individuals and instant NGOs to amplify their extremist views.

I dare say that I am more loyal than these people. Many of us wonder why they continue to find space in the media to arti­culate their outrageous views. The publicity given them by some media outlets is akin to providing oxygen to these dangerous elements.

A vibrant democracy should provide space for the healthy discourse of differing views and perspectives. We can certainly benefit by disagreeing without being disagreeable.

But hate politics does not deserve space.

I would like to put on record that like the majority of Malaysians, I am proud that we have come so far as a nation. In just over five decades, we have surely come a long way.

There were many naysayers when we achieved independence who did not give us much of a chance of making it. They predicted that the natives, as we were called, would end up fighting each other and the whole country would end up in chaos.

Well, they thought we would be like one of those countries in Central Africa which are forever locked in a civil war involving one ethnic group or another.

Malaysia has proven them wrong. Not only did we survive but we have progressed well and we remained intact too.

So what is it that disturbs me greatly this Merdeka?

Perhaps it is the sadness over the loss of the two Malaysia Airlines planes within the same year. The meaningless loss of innocent lives on board MH17 is so hard to bear even as we despair over the fate of MH370 where the plane has yet to be found.

It has been a horrible year indeed.

But it is also the never-ending, disturbing and offensive statements from extreme personalities. Many of us wonder why these people can get away with what they say. Shouldn’t they be charged with sedition or do they have powerful backers, as some have questioned?

Sadly, it is not just these politico-types but also ordinary Malaysians who post outrageous remarks on social media. They involve normal people, some of whom I thought I know well enough. But their inability to exercise some form of self-restraint and not add fuel to the fire is highly ­worrying.

No one is spared now. Thanks to social media, these people seem to believe that they can post and put up whatever comments they want without a second thought. They do not care if their sweeping comments affect the feelings of fellow Malaysians.

Everything seems to be fair game. While politicians are expected to take even the harshest criticisms in stride, there has always been an understanding that we do not undermine the various institutions that not only make Malaysia unique but also hold us together as a people.

Even the royalty has been targeted, and many of the remarks made are not only improper but outrightly seditious. It does not help that some politicians are leading by example. If they are in Thailand, they would be in jail now.

I am sure our founding fathers, if they were alive now, would have been shocked, if not saddened, by what they see of us today.

Yes, in terms of physical development and our standard of living, we have been a shining example. We have a huge middle class, unlike other neighbouring countries where the gap between the rich and poor is wide.

This is a country where people have no worries over the next meal although many are unfit because they eat too much. We spend huge sums of money to reduce weight and even bigger amounts to slim down.

We have also become a country of whiners. We complain over our high electricity bills but we want to sleep with the air-conditioners on, while wrapped up in our blankets. Of course, it is much easier to blame the government for increasing our electricity bills.

We should be glad that we have taken away preventive laws such as the Internal Security Act and the famous detention camp in Kamunting has closed down.

But, to some people, this seems to have opened the floodgates for unrestrained remarks, often laced with extreme racial elements, to flourish.

Many of us seem unable to articulate a point or a thought over an issue without dragging the racial element in.

Many of us also cannot draw the distinction between criticism and insult.

Some have become arrogant in their line of comment while some have become so thin-skinned and sensitive that they take offence easily, sometimes blowing up over a minor issue.

I grew up in Penang where places of worship were built next to each other. This is similar in many parts of the country too. We take pride in it. Now we have bureaucrats and politicians who tell us it’s not possible because it is sensitive.

Sensitive to who? The racially twisted bureaucrats and politicians themselves, perhaps? Real people have no issue with one another.

This is a multi-racial country even though the demographic landscape has changed drastically. A plural society is an asset, not a political liability. But we seem to have reached a point where many of us are frightened, not just shy, of upholding such values lest we be seen as going against our own community and religion.

Like it or not, there are certain realities that we, as Malaysians, must accept so we can be realistic in our expectations.

For a start, the Malays are the majority and they are Muslims. We must acknow­ledge and respect their deep reverence towards Islam, the race and the royalty.

But the Chinese and Indians are here to stay, so please stop these nonsensical pendatang remarks. Together with the many other races, and especially the original inhabitants of this land, we are all Malaysians.

We need to focus on real issues within our country, which include education, health, crime and a healthy business environment. Our priority must also be to ponder seriously on how to handle race relations, religious freedom and the sentiments of the people in Sabah and Sarawak who are an integral part of Malaysia.

We need to get our act right so we can compete efficiently as a member of the global community.

We should spend more time thinking, listening and reflecting instead of making silly remarks. We can help chart a better future for Malaysia. Then we will not only fly the flag on Merdeka Day but our heart will always beat as a Malaysian too, all the time.

By Wong Chun Wai On the beat -  The Star/Asia News Network > The views expressed are entirely the writer’s own..

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group's managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Evaluate enemies and friends

Illustration: Liu Rui/GTChina must evaluate friends and enemies 

Since 2013, China has been engaging in "major power" diplomacy. In the past, the term "major powers" referred to countries such as the US, Japan, Russia, the UK and Brazil, while now the major power is China itself.

The shift in China's diplomatic status means the country's diplomatic approaches face a new challenge: Does diplomacy have to distinguish between enemies and friends?

Before China's non-alignment policy was raised in the report to the 12th CPC National Congress in 1982, China's diplomacy distinguished between enemies and friends.

In the 1950s, based on the different social systems, China categorized other countries into imperialist states, capitalist states, nationalist states and socialist ones.

In the following two decades, these countries were divided into the superpowers, developed countries and developing ones, given the international status of different countries.

These two categorizations differ in standards, but reflected the then diplomatic notion of distinguishing between enemies and friends.

The report to the 12th CPC National Congress also said that "the Five Principles of Peaceful Coexistence are applicable to our relations with all countries, including socialist countries."

From then, China began to discard the "enemies-or-friends" concept and focus on economic cooperation with all the countries based on an equal footing.

There have been some variations in China's diplomacy, particularly in relation to how it categorized other countries after the Tiananmen incident in 1989.

One means adopted in 1997 classified the countries into neighboring, developing and developed ones. In 2002, the sequence was changed into developed, neighboring and developing countries.

Such categorization adds flexibility to diplomatic principles and, as some believed, fits the globalization era and discards the Cold War mentality that stuck to the old way of distinguishing between enemies and friends.

However, such categorization and sequence also have their flaws. When a principle is too flexible, its guiding role is weakened.

For instance, both Cambodia and the Philippines are China's neighboring countries and belong to developing countries, but the latter can sometimes pose diplomatic trouble for China.

Similarly, Russia and Japan belong to the same category, but we can enhance strategic cooperation with Russia while isolating Japan politically.

In the following decade, the overall national strength of China will remain greater than that of all the other countries except the US. China has to shoulder more international responsibilities and maintain international order by providing public benefit, so as to maintain its own interests.

But if China doesn't distinguish between enemies and friends, it will find it difficult to do so.

Only when China is clear about which country it can hold responsible on certain occasions, or which country can enjoy more public benefits, can it make the right decision.

Any big country, when helping shape international order, will protect its friends rather than enemy countries. It will raise proposals beneficial for its partners rather than competitors, and provide public benefit for those playing by the rules rather than breaking the rules.

If we don't distinguish between enemies and friends, it will also be difficult for us to adopt the diplomatic principle of amity, sincerity, mutual benefit and inclusiveness.

For example, politically we can get close to Russia and Cambodia but not Japan's Abe government or the Philippines' Aquino III government, because otherwise the latter two may dare to adopt even more hostile policies toward China.

Diplomatically, we can stick to the principle of credibility only with countries that we have established diplomatic ties with, but not with those who don't admit China's sovereignty or support the so-called "Taiwan independence." Economically, China can take the initiative to help developing countries rather than the US which has already entered the developed phase.

To build up an international environment that best works for China's rejuvenation, China's categorization of foreign countries can be based on interests.

We can classify all the countries into friendly, cooperative, ordinary or conflicting ones.

To friendly countries, China should lend a helping hand; to cooperative ones, it can offer some preferential policies. We should work on an equal footing with ordinary countries, while taking countermeasures to conflicting ones.

The US is the only country that is more powerful than China. We may consider listing China's relationship with it in a single category as "a new type of major power relationship."

It is a relationship between a rising country and a dominant one, and as the US is more powerful than China, the two should stay equal and be mutually beneficial, which is more favorable to the US. Therefore, this also reflects tolerance of China's foreign policies.

Since the Opium Wars in the 19th century, China has accumulated rich diplomatic experience to counter countries stronger than itself. But in modern times, it lacks the experience of dealing with countries weaker than itself. It tests China's diplomatic wisdom as whether or not to distinguish between enemies and friends.

By Yan Xuetong Viewpoint, Source: Global Times Published: 2014-8-27 18:58:02
The author is director of the Institute of Modern International Relations, Tsinghua University. opinion@globaltimes.com.cn

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Saturday, August 30, 2014

China can weigh reconnaissance on US

China and the US started a two-day meeting at the Pentagon on Wednesday to negotiate a code of conduct on the high seas, in the wake of a Chinese fighter jet intercepting a US spy plane near the Hainan Island. Although the meeting was set up before this incident, it is believed the near-miss will make a difference during the negotiations.

Given the fact that Washington's determination to continue its short-range surveillance of China is as strong as China's commitment to drive US planes away, whether the 2001 mid-air collision could recur has become a Sword of Damocles above their heads.

The new strategic trajectory of Asia-Pacific, namely China is growing stronger and a containment circle drawn by the US and its allies is taking shape, is changing the mindsets of both sides to define specific conflicts. If the 2001 incident happened again, the possibility of an all-out crisis between both sides will increase.

China's rise is increasing the odds that China and the US are sliding into "mutual distrust." A feasible way to avoid such a crisis is that both sides should reduce the chances that their vessels and planes engage in confrontation in international seas and airspace.

As of now, the confrontations usually happen in Chinese coastal waters and air spaces. The US takes it for granted, but China feels its core interests are being challenged.

There are two ways to address this kind of disputes: Washington withdraws its surveillance to an extent that China can accept, or China develops its surveillance technology and starts military reconnaissance near US territories. The latter option has become increasingly possible as China's military technologies are advancing.

There is no doubt that Washington will find more evidence to prove that China and the US can only be adversaries, and it is possible that more conflicts will make both sides lose control of the situation. But China has no choice if Washington doesn't restrain itself.

It seems that both China and the US are willing to build a strategic mutual trust, but the communication mechanisms are not working well.

The US says it has no plan to contain China, and China also says it has no intention to drive US out of Asia. But the US wants to maintain its absolute superiority in strength, and China is sparing no effort to bridge the gap.

Thus, it is hard for Washington and Beijing to reach a consensus on this issue, and they have to get used to each other.

But Washington must note that making troubles on China's doorstep can only stir up China's determination to defend its legitimate interests. In this regard, the US is much less determined than China.

China can put up a tough stand against the US in this short-range surveillance matter, and develop its capability to conduct such surveillance to the US as soon as possible, as long as China will not threaten the national security of the US.

Source:Global Times Published: 2014-8-28 0:33:01


China military aircrafts flys monitering US Japan spy planes fighters over China Air Defense Zone

Reconnaissance damages trust

Unless the US gives up its surveillance missions against China it will be very difficult for the two countries to build the mutual trust needed for healthy bilateral relations.

Surveillance spoils military engagement

China cannot stop US reconnaissance, but can take countermeasures. If the US is sincere about building up a major power relationship with China, it should adopt a more restrained manner.

Medicines for ailing MAS: losses RM2bil, 6,000 job cuts, RM6bil capital injection a bailout?

New medicine for ailing MAS

FOR the first time ever, a government-linked company (GLC) will lay off workers and renegotiate contracts with suppliers and employees – a move that will obliterate the view that companies owned by the Government provide steady employment and are safe paymasters.

In its strongest action to rehabilitate the ailing Malaysia Airlines (MAS), the Government has given its undertaking to its investment arm, Khazanah Nasional Bhd, with the necessary legislation to bring the employees and suppliers to the negotiation table.

This is among the highlights of a 12-point plan unveiled by Khazanah yesterday to resuscitate MAS.

To recap, Khazanah, in a bid to save MAS, has proposed to take it private and delist it by year-end. It has a 69% equity in MAS and has offered to buy the remaining 31% in the airline at 27 sen a share.

A new Bill called the MAS Act will be tabled in Parliament before July next year to facilitate the migration of MAS’ existing operations into a new company (Newco), which will take over MAS’ operations on July 1 next year.

“The MAS Act is to facilitate the migration of the existing operations to a Newco. It is something that was proposed by the Government so that a new airline can take over. It will have a finite life,” Khazanah managing director Tan Sri Azman Mokhtar told the media yesterday.

“The Government will allow the transfer of the AOC (air operator’s certificate) and tax losses to the Newco.”

Apart from the establishment of a Newco to carry on the business of the existing airline, the plan calls for the conversion of some debt into equity and Khazanah injecting RM6bil more into the airline. Kumpulan Wang Persaraan (KWAP) agreed to swap its RM750mil existing perpetual sukuk with ordinary equity, meaning that it will eventually become shareholder in MAS.

Azman: 'The MAS Act is to facilitate the migration of the existing operations to a Newco'.

Of the RM6bil, a sum of RM1.4bil is for the privatisation of MAS, RM1.6bil for cost incurred in shutting down the existing company and a voluntary separation scheme to reduce the workforce by 6,000 and penalties for early termination of contracts with suppliers, and RM3bil for working capital for the Newco to take over the operations.

Since taking over MAS in 2001 from Tan Sri Tajudin Ramli, Khazanah has injected more than RM7bil into MAS, which Azman does not think would be recoverable.

However, he is confident that the RM6bil capital that will be pumped in can be recovered.

“We have done the financial modelling and are confident that the money can be recovered,” he said.

“Also, it is a conditional injection of funds, meaning that the money will only be available subject to the MAS management fulfilling the conditions set out in the recovery plan.”

Azman admits that renegotiating contracts with suppliers, leasing agents and converting debt to equity could have some effect on the credit ratings of MAS and other companies within the stable of the strategic investment fund.

However, he opines that the shedding of the workforce and the renegotiations of contracts is only to bring about a significant change in work practices and supply contracts.

“It would not be done arbitrarily. There is some bench-marking on the pricing of the contracts. The suppliers will be given an option to migrate to the Newco on new terms,” he said.

Azman is also confident that the new MAS will achieve profitability by the end of 2017. The new plan will also see net gearing reduced from 290% now to about 100% -125% eventually.

But not many share Azman’s sentiments, as MAS has undertaken half a dozen restructuring exercises over the past 13 years and yet remains in dire straits.

“I obviously do not share the same sentiments as Azman and am not as optimistic about seeing a profit in 2017. I don’t think the new plan goes far enough to resolve the structural problems within the airline. You can call it downsizing or rightsizing, and the plan may appear bold and courageous by slashing 6,000 jobs, but the question is: how much can you actually save from that?” Shukor Yusof, an analyst with Malaysia-based aviation consultancy Endau Analytics, asks.

He says, “The real issue in MAS the past decade is an ill-conceived strategy and financial mismanagement. That’s the key contributors to the losses, shareholder value destruction and the mess built up over the years. While I do agree that MAS is overstaffed, resulting in low productivity levels compared to Singapore Airlines (SIA) or Cathay Pacific, it is not a critical aspect of the overall picture. The losses registered over the years by the airline are not because the airline is overstaffed, but because it had a management which, unfortunately, had little understanding of the airline industry and was slow to adapt to the dynamics of the landscape of the industry,” Shukor says.

Route rationalisation 

MAS has been loss-making for the past 10 quarters, and the amount has ballooned since the two tragedies hit the airline within a space of four months since March this year. The first was on March 8 when a plane, MH370 en route to Beijing, disappeared.

The second was on July 17 when MH17, which was on the way from Amsterdam to Kuala Lumpur, was shot down while flying over Ukraine.

Even before the first airline tragedy on March 8, the airline was already losing close to RM1bil a year due to competition from low-cost carriers and Middle-Eastern full-service carriers (FSCs).

However, the losses exacerbated to RM2bil following the airline tragedies.

For the second quarter of 2014, MAS announced on Thursday an RM307mil net loss, bringing its first-half losses to RM750mil.


A lack of demand and the massive cancellations of flights has become a norm after the two incidents, and the policy to refund passengers after the MH17 mishap has further seen flight bookings going down. The airline’s strategy of pushing for loads at the expense of yields has also backfired. However, it has embarked on a new plan to drop fares to win back customers, a strategy which, however, does not guarantee high yields, which MAS needs.

MAS’ current yield of 20 sen per seat kilometre is lower than Cathay Pacific’s 24 sen and SIA’s 22.9 sen.

Azman says there are several conditions for the money to be injected into MAS.

Among them is route rationalisation, whereby the emphasis is on destinations that are within eight hours of flying time. The plan is also to bring short-haul cost within the 15% of the low-cost carrier competition, at parity with Middle-Eastern FSCs and below those of the regional FSC competition. The Newco will only focus on profitable routes and secure global connectivity via oneworld and other alliances, says Khazanah, adding that MAS will come up with a business plan and fleet requirements.

Maybank Investment Bank senior analyst Mohshin Aziz says that with one-third of the jobs going, the route network also needs to be reduced by one-third.

“We were hoping to get the details of the route cuts, but they were not forthcoming. We really believe MAS should terminate its long-haul routes, such as Frankfurt, Amsterdam, Paris, Istanbul and even Dubai as soon as possible.

“They need to reduce frequencies on their Australian routes to twice daily from thrice daily now, and terminate the Brisbane and Adelaide routes,” Mohshin says.

Since the network will be reconfigured, MAS will also have to reduce the number of aircraft it flies from its current fleet of 127 to bring down cost.

Khazanah says MAS needs to renew its focus on revenue management to increase unit revenue by 10% to 15%, and among other things, it needs to also unbundle ancillary products and services and revamp its loyalty programme.

Staff buy-in

A major part of the success of Khazanah’s new plan for MAS hinges on the support of the airline’s employees and their unions. Yesterday, Azman met representatives of the unions to tell them of the new plan, but will the unions support the plan?

A major part of the success of Khazanah's new plan for MAS hinges on the support of the airline's employees and their unions.

“It was a good and frank discussion. I think we were at pains to try and explain what would be happening. And explain that the vessel of the Newco will not be able to carry everybody,” Azman says.

Throughout the day, Khazanah officials and MAS senior team members had various briefing sessions with its employees.

For now, the ties are somewhat strained between the senior team and many of the unions and their members, with many worried about the selection process of who would be axed.

Under the new plan, MAS will undertake a voluntary separation scheme to reduce its workforce to 14,000, with the plan also involving reskilling, redeployment and job creation.

“There seems to be a renewed effort to harmonise now so that Khazanah’s vision of rebuilding a national icon will succeed. But at a glance, the plan is wishy-washy and they are not able to give us details. We are worried as to who will decide on who stays and who leaves. We also do not want the existing team to decide, as there would be no professionalism, only partiality,’’ said a source.

Khazanah says the process of transfer migration and separation will be conducted with “utmost care, fairness and due process”.

A Khazanah official added that “the decision on who stays and who leaves will be done by the Newco”.

“The search for a new chief executive officer (CEO) for the Newco has begun and we are looking at both Malaysian leadership talent and global aviation specialists, basically for the CEO (post),” Azman says.

“Hopefully they will hire the best in the industry and not just anyone for the hot seat. It should be someone with entrepreneurial spirit and expertise to drive profits,’’ says an expert.

The current group CEO Ahmad Jauhari Yahya will leave MAS in June next year.

The plan to set up a Newco is also seen as a way to weaken MAS’ vociferous unions, although an expert says that the Newco could also set up new unions, provided there are no conditions attached to the Newco’s staff appointment letters.

Would minority shareholders sell out?

The biggest challenge Khazanah will face is whether it can get enough minority shareholders and institutional funds to vote in favour of its plan to privatise MAS at an EGM to be called in the coming weeks.

It needs 100% acceptance to take MAS private, and then there will be grounds for the Act to be established.

Khazanah cannot vote at the EGM, given the fact that it is an interested party and institutional shareholders only hold less than a 4% equity in MAS.

Now that there is a serious plan to resuscitate MAS, it is possible that some minorities may want to hold back and not sell their shares. Not only will MAS be profitable by 2017, but there is also a plan to relist the Newco in 2018-2020.

“There will be some minorities who will give up their shares, as holding MAS has been one painful episode. But there are yet others who may see that there is going to be creation of value in the future. So, why sell and miss out on future growth?” opined a source.

However, if Khazanah fails to get 100% equity in MAS, then the entire revival plan will be off.

By B.K. Sidhu The Star/Asia News Network

Radical plan to revive MAS

Khazanah Nasional Bhd has unveiled a radical plan to revive the ailing Malaysia Airlines that calls for job cuts, a capital injection of up to RM6bil and creation of a new company (Newco) to carry the airline business.

To facilitate the migration of the existing business to Newco, the Government will table a new law in Parliament called the MAS Act.

Khazanah managing director Tan Sri Azman Mokhtar said that the new legislation would have a finite life and was needed to facilitate the migration of the existing business to Newco.

In a move to ensure that Newco has a leaner workforce and cleaner balance sheet to compete effectively in a tough operating environment, Khazanah wants to see job cuts of 30% from the existing MAS workforce of 20,000 employees.

It is one of the many conditions Khazanah has imposed on the management of MAS if it were to inject more funds into the ailing airline.


“In our opinion, we think that Newco with its business model will require a workforce of about 14,000. A net reduction of 30% is an across-the-board number,” said Azman at a media briefing yesterday.

The job cuts also affect the top leadership of MAS, which comprises a team of 500 staff called the Extended Leadership Team (ELT). Most of them were holding senior positions with long service.

Azman said the current chief executive officer (CEO) of MAS, Ahmad Jauhari Yahya, has indicated his wish to leave.

In commending the MAS CEO for having led the airline during its toughest period, Azman said Ahmad Jauhari would remain in place until the transition.

“We have embarked on a global search for a new CEO and have engaged an international firm to undertake the task,” he said.

Some of the other conditions of the 12-point plan mapped by Khazanah for the recovery of MAS include the relocation of the airline’s existing headquarters in Subang to the KL International Airport and Khazanah owning 100% of MAS.

Towards this end, Khazanah is undertaking a privatisation of MAS at 27 sen per share.

Azman clarified that Khazanah had engaged a consultancy to undertake a review of MAS on Feb 26 this year, before the first airline tragedy on March 8.

“The review came about after the Government was concerned about the financial and general state of affairs in MAS,” he said.

On March 8, a MAS aircraft en route to Beijing went missing and further exacerbated the airline’s losses.

The Cabinet approved MAS’ proposal on Wednesday and yesterday the various stakeholders, which are mainly the unions, existing airline management and some key directors, were summoned for a briefing.

The management and union have been told to work together to decide the shedding of the workforce, he said.

The MAS Act is expected to arm Khazanah with the necessary bite to carry out the radical measures, especially in negotiating the new contracts and collective agreements of the unions.

“The Act would allow for the Air Operators Certificate (AOC) to be transferred from the existing MAS to Newco and the assets and liabilities,” said Azman.

By July 1 next year, Newco is expected to take off.

Azman said that employees who were not absorbed into Newco would be offered a retrenchment scheme or given an option to be absorbed into a scheme for re-training.

Towards this end, Khazanah is working with three business process outsourcing firms that have vacancies for 3,500.

Azman said Khazanah explored several options in coming up with the plan.

“Putting in more money into MAS would not save MAS. So we felt that enabling MAS to start on a clean slate and putting in new money into Newco provided it met the conditions stated was the best option,” he said. - The Star

Related articles:

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Many workers will be affected, says union
Not so friendly skies for other airlines, too
MCA Youth calls for concerted effort to help MAS
RM6bil is not a bailout, says Najib 
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Friday, August 29, 2014

What makes us Malaysian? Happy Mereka!

I always get excited when I meet fellow Malaysians, whether at work or during social functions. - Lee Yee Thian

Our sense of belonging is strong, despite living miles away from our homeland.

BACK home in Malaysia, “Chinese” is one of the options in the race column, while in China, it refers to a nationality.

It took me awhile to get used to not nodding when I was asked if I am a Chinese.

“I’m a Malaysian,” I would answer, and get a bewildered look from the inquirers.

“Oh, so you are a Malay? But you look exactly like us. And your command of Mandarin is so good,” was their usual reply.

I would then launch into a lengthy explanation of how I am ethnically Chinese but a Malaysian national, and “Malay” refers to the largest ethnic group in Malaysia and not the people of Malaysia.

I would add that I can read and write Mandarin because I attended Chinese vernacular school, but I could tell they were confused.

“Were you born in China? How old were you when you left for Malaysia?”

“No, I was born in Malaysia. I’m a third-generation Malaysian Chinese.”

And then came the inevitable question: “Where do you feel you belong?”

I grew up singing Negaraku every Monday during school assemblies.

I learned how to draw our national flag when I was in Year One. Next to the crescent, I traced the outline of a 50 sen coin and then carefully drew 14 spikes around the circle.

And until today, I can still hum the tune of Sejahtera Malaysia, a patriotic song that was aired years ago on RTM.

When we say we are Malaysians, we say it with a tinge of pride.

In addition to Malay, English and Mandarin, most Malaysian Chinese here can also understand one or more Chinese dialects.

It is a fact that draws the admiration of many locals.

I asked a few Malaysians in Beijing what makes them Malaysian.

Lee Yee Thian, who has been abroad in the United Kingdom and then China since 2000, said our multicultural background was instrumental in helping him to adapt to living in a foreign country.

The sense of belonging is strong, despite living miles away from our homeland.

“I always get excited when I meet fellow Malaysians, whether at work or during social functions,” the 37-year-old chartered surveyor said.

“We speak freely with our Malaysian accent and pepper our sentences with slang that only Malaysians understand.”

Wesley Tan of Wav Music Production said it was the vast opportunities in the entertainment industry in China that drew him to the Chinese capital 10 years ago.

“The market is huge with endless possibilities to grow and expand,” he said.

“We have to admit that we could not do as much in Malaysia, but it does not make me any less patriotic. I grew up in Malaysia and it will always be my home.”

The advantage of Malaysians, Tan said, is our ability to create products that appeal to an international target audience, with our tolerance and diverse background.

With Beijing being a fast-paced metropolis, the quality of life has plenty of room for improvement.

Air pollution and food safety aside, trust between people is thinning. Tan said he misses the courteous and caring ways of Malaysians.

“My parents-in-law, who are Chinese nationals, were so surprised that Malaysian drivers would actually pause to give way to opposite traffic during their visit to Kuala Lumpur,” he said.

The little gestures, such as placing one’s left hand on one’s right forearm when receiving or offering something, speak volumes about Malaysians’ pleasant disposition.

I couldn’t agree more.

Two weeks ago, I made a brief return to Malaysia. When waiting for my family to pick me up at the Kuala Lumpur International Airport, a Malay girl next to me kindly shared a packet of buah jeruk (pickled fruits) with me. In return, I offered her my chocolates.

We did not exchange names during our brief encounter; only smiles and snacks, but in that moment, I knew I was home.

Happy Merdeka.

Check-in China by Tho Xin Yi The Star/Asia News Network

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Wednesday, August 27, 2014

Clive Palmer's racist 'bastards' hurts Australian more than Chinese!!

Clive Palmer - Australian mining mogul and member of parliament

Clive Palmer's tirade cannot be ignored

Clive Palmer, an Australian legislator and mining magnate, delivered a scathing harangue in a TV program on Monday, referring to the Chinese government as "bastards," who "shoot their own people" and want to usurp control of Australia. He called Chinese resources companies "mongrels," which send workers to destroy the wage system and take over Australian ports and plunder minerals for free.

This is the most vicious attack by one of the Australian elite in recent months.

Not long ago, Foreign Minister Julie Bishop and Prime Minister Tony Abbott also made bitter remarks against China without any reason, which was quite astonishing. Now Palmer's "bastards" ravings have intensified this.

On Tuesday, several government ministers and opposition parties in Australia damned Palmer's comments - a rare unanimous move - as an attack on Australia's biggest trading partner. However, China has already fallen victim to this foul war of words.

People can imagine what would come next if a Chinese politician or business tycoon made such unscrupulous remarks by calling a whole country "bastard." This person will be doomed. But in Australia, Palmer will probably not bear too much cost for his nonsense.

China cannot let him off, or show petty kindness just because the Australian government has condemned him. China must be aware that Palmer's rampant rascality serves as a symbol that Australian society has an unfriendly attitude toward China.

China should consider imposing sanctions on Palmer and his companies, cutting off all business contacts with him and forbidding him and his senior executives into China. The sanctions could also be given to any Australian companies which have business dealings with Palmer's. China must let those prancing provocateurs know how much of a price they pay when they deliberately rile us.

Australian society has been aware that Palmer crossed the red line too far and his remarks, along with those of Bishop and Abbott, pose a direct threat to Australian-Sino relations. Canberra is waiting for China's reactions, from which they can assess the tenacity of Chinese diplomacy.

If China generously accepts the condemnations against Palmer by Australian public opinion without taking solid action to punish him, this risks giving Australians the impression that China has too much good will to bother toning it down. On the contrary, Palmer could be the last straw for worsening Sino-Australian relations. How we respond will be a turning point for Australia's understanding of China.

Palmer should be damned as the culprit. Because of him, China must teach Canberra a lesson for sabotaging a bilateral relationship. Australia has picked sides and embraced the US and Japan, but in the meantime, it keeps racking up economic profits from China. This situation is making it a radical "double-dealer" among all the nations which have relationships with China.

Business with Australia should continue, but this country must be marginalized in China's global strategy. Canberra boasts about itself having so-called strategic values, most of which, however, are created out of its own delusions.

Hooligan politics is being employed by the Australian government to deal with China. But China shouldn't care too much about it, or it will only shock us once again.

Australia is a remote business partner, and a place where the Chinese can take a trip and learn some English. These basic understandings should be the starting points for China to re-orientate Sino-Australian relations.

Source:Global Times Published: 2014-8-20

Racism against China hurts Australia

When I studied at the University of Sydney in 2009 for a master's degree in media, I was surprised by the interest ordinary Australians had in China. Not only was China the topic for class discussions every week, one of my lecturers also told me during an after-class chat that she was sending her son to learn fencing in Shanghai in the upcoming summer holiday as China had emerged as an ideal place for his training. Later, my supervisor at a local magazine where I had a month's internship told me his son was studying Chinese at Beijing University of Languages and Culture, as he believed the language advantage would help his son find a job in Australia which was forging an increasingly closer bond with China.

He assigned me to write an article about how small and medium companies run by Australian-Chinese were faring and whether their connections with China actually helped their businesses. During my interviews, I was amazed that a rising number of Australian-Chinese were actually making a decent living out of exporting Australian products to China.

However, when news came earlier this month that China's Wanda Group had bought the famous Jewel Project on Australia's Gold Coast and planned to invest $900 million developing it into a luxury resort, I did not even raise my eyebrows. I also laughed it off when an Australian friend in Sydney sent an e-mail informing me that Chinese developers are also reshaping and rejuvenating Parramatta, a suburban city on the western edge of the city.

True, the depth and breadth of China-Australia ties have grown immensely since 2009 when I first set foot in the biggest country in the Southern hemisphere. Apart from lucrative trade, exchanges between the two peoples have also expanded rapidly.

More and more Chinese people have easier access to Australian products. Australia has become a popular destination for Chinese tourists and for Chinese students seeking education overseas.

With the rising presence of Chinese in Australia, there are reports of how Chinese buyers are ratcheting up property prices in major Australian cities, Sydney in particular.

To me, it is a natural trend toward a win-win outcome if more people from both China and Australia are visiting each other's country and doing business with each other in accordance with law and international practice.

Unfortunately, some in Australia seem not to agree with me. Some even harbor animosity to Australian-bound Chinese people or Chinese investments. There have been several incidents since last year in which Chinese passengers on Sydney trains were the targets of insults.

If these unhappy scenes are just the wrongdoings of some biased Australians, the TV rant against China staged by Australian billionaire-turned politician Clive Palmer last week reflects the ugly undercurrents of racism against Chinese and China beneath the rosy picture of China-Australia interaction.

On Tuesday, Palmer, obviously under huge pressure from the strong condemnation he had received from people in both China and Australia, apologized to the Chinese embassy in Canberra for calling the Chinese government "bastards" and "mongrels" in a media interview.

In a written statement, Palmer said, "I most sincerely apologize for any insult to the Chinese people caused by any of the language I used during my appearance on the ABC television program Q&A."

It is important that the mining tycoon's repentance is heart-felt, and the Australian society truly learns a bitter lesson from undesirable scenarios such as Palmer's TV outburst.

Racism and discrimination against outsiders could easily erode the credibility of a multicultural society such as Australia's, as well as ruin the very foundation of good feelings between Chinese and Australians, which is bedrock for healthy China-Australia cooperation

By Wang Hui (China Daily)/Asia News Network

Clive Palmer apologizes for 'bastards' comment 

 - Insults opportunity for Abbott to change course: community leader

Australian mining mogul and member of parliament Clive Palmer has apologized for calling Chinese people "bastards" in a recent TV interview, following wide-spread condemnation from both China and his home country.

Palmer, who was elected as senator last year and is leader of the Palmer United Party (PUP), made the apology in a letter to Ma Zhaoxu, Chinese Ambassador to Australia.

The letter, which was signed by Palmer on Monday, was released late on Monday.

"I regret any hurt or anguish such comments may have caused any party and I look forward to greater understanding for peace and cooperation in the future," he said, referring to comments he made in a live TV interview on August 18.

During the interview, Palmer said he didn't mind "standing up against the Chinese bastards," and claimed that the Chinese government wants to "take over our ports and get our resources for free."

In a statement posted on the embassy's website Tuesday, Ma stressed that the Chinese people are never to be insulted. "Any remarks attacking or slandering China will not gain support and are doomed to failure," he wrote.

The billionaire's slandering of China drew immediate protest from Chinese government last week. Australia's Prime Minister Tony Abbott also denounced the comments as "over the top, shrill and wrong."

On Tuesday morning, around 200 members of the Chinese community in Australia braved downpours to protest against Palmer's remarks outside Parliament House in Canberra.

"We have been in close contact with Palmer since last week, pressuring him to apologize. Learning that our request for Tuesday's protest was approved by police authorities, Palmer finally softened his stance and released the apology late Monday," said Qian Qiguo, head of the Australian Action Committee for Peace and Justice Incorporated, a group formed by members of the Australian Chinese community.

Palmer had defended himself last week saying his comments were directed at a Chinese company with whom he is locked in a legal dispute.

In the Monday apology, he said, "In keeping an open mind, I now come to the realization that what I said on Q&A was an insult to Chinese people everywhere and I wish to assure them they have my most genuine and sincere apology."

Qian told the Global Times the Chinese community was not satisfied with such remarks in the letter, and demanded Palmer to drop whole paragraph. "At 3:30 pm on Tuesday, Palmer finally sent us a second letter, which took out the unnecessary remarks, and the new edition was also sent to the Chinese ambassador," he said, claiming it a victory.

According to the Sydney Morning Herald, Australia's Foreign Minister Julie Bishop Tuesday welcomed Palmer's apology, but said it should have come earlier. She also called on Palmer's fellow PUP Senator Jacqui Lambie to "reflect on her words" after Lambie had also lashed out at Beijing.

Last week, while supporting Palmer, Lambie said Australia must build missile systems and defense shields to prepare for an invasion from China even if it costs $60 billion a year, reported The Australian.

As of press time, Lambie didn't respond to a Global Times' e-mail inquiry over her comments on Palmer's apology and whether she will apologize for her words.

Qian said the Chinese community had also contacted Lambie and the PUP, and was assured that she wouldn't make such provocative comments in the future.

Han Feng, a deputy director of the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences, told the Global Times that the new party is trying to promote its visibility through its senators' strong rhetoric. But Palmer's "irresponsible and reckless" comments on China have clearly backfired.

China is Australia's biggest trade partner and about 1 million Chinese are living in the nation.

Palmer's slandering of China raised doubts whether Australian politicians' opinions toward China would fuel anti-China emotions in the country.

A video recently posted online shows an Australian woman racially abusing Asian-looking passengers on a train and demanding them to go back to China. The video triggered uproar on Chinese social media.

Qian said some people who held extremist anti-Asian and racial sentiments emerged years ago, but they are not the mainstream in Australia.

"Abbott and Bishop made some unfriendly remarks on China when they first came to office, but their immediate condemnations of Palmer this time offered an opportunity for them to correct their position," he said.

Han also noted that the Abbott administration's policy toward China has seen constant adjustments over the past year. "However, it is still concerned about a potential turbulence in the region if the US role is undermined … Canberra hopes that the US could keep its presence to safeguard the existing order. Therefore it is working with the US and Japan to prevent any 'China threat.'"

By Yang Jingjie Source:Global Times Published: 2014-8-27

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