South China Sea breakthrough helps China, Vietnam build trust, boost cooperation

Chinese Premier Li Keqiang (R, front) meets with representatives of youth from both China and Vietnam at Vietnam National University in Hanoi, Vietnam, Oct. 15, 2013. (Xinhua/Liu Jiansheng)

The establishment of a bilateral work group to discuss joint maritime development was a "breakthrough" for China and Vietnam on their way to peacefully handle maritime disputes, analysts say.

During the talks with his Vietnamese counterpart Nguyen Tan Dung, Chinese Premier Li Keqiang urged the two sides to pursue substantive progress in their joint development in waters out of the mouth of the Beibu Bay, a semi-enclosed sea whose delimitation remains under negotiation between China and Vietnam, and accumulate experience for broader maritime cooperation.

Analysts said the establishment of the group sends a positive signal of the bilateral readiness for solving difficult problems through cooperation, and the two countries are taking a step-by-step approach in solving the disputes.

"Joint development in waters out of the mouth of the Beibu Bay is acceptable to both sides. The approach that the two countries are taking is to start with the easiest and then to the difficult," said Zhang Yunling, a researcher with the Chinese Academy of Social Sciences.

The relationship between China and Vietnam has been overshadowed by maritime frictions in the South China Sea, but the two countries have made efforts to maintain frequent high-level exchanges this year. Li's visit followed trips of the Vietnamese president, prime minister and deputy prime minister to China earlier this year.

The South China Sea issue involves several parties and the disputes between China and Vietnam are, in deed, bigger and more complicated, said Wu Shicun, president of the National Institute for South China Sea Studies (NISCSS).

"The agreement reached by China and Vietnam, undoubtedly, send a clear message to other claimants that putting aside bickering on sovereignty and sitting at the table for joint development is a pragmatic choice. The attempts to internationalize the South China Sea issue will result in the deterioration of bilateral ties and worsen the situation," Wu said.

The decision to establish the group was announced just two days after China and Brunei vowed in a statement to encourage closer joint exploration and exploitation of maritime oil and gas resources in the South China Sea.

In a pioneering move, China National Offshore Oil Corporation and Brunei National Petroleum Company Sendirian Berhad have inked a deal on establishing a joint venture on oil field services.

Considering that disputes between Beijing and Hanoi over the South China Sea have, from time to time, upset bilateral ties in recent years, the multiple results Li's visit to Vietnam achieved are clear evidence that the two neighbors are showing a greater political will to rise above their disputes and forge a mutually acceptable path of cooperation, said Qu Xing, president of the China Institute of International Studies.

Li returned to Beijing on Tuesday after attending the East Asia leaders meetings and paying official visits to Brunei, Thailand and Vietnam.

-  HANOI, Xinhua

Related:

South China Sea Conflict

A de-Americanized world needed !

SHUTDOWN. A view of a hall on Capitol Hill September 29, 2013 in Washington, DC. AFP/Brendan Smialowski

As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.

Emerging from the bloodshed of the Second World War as the world's most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.

With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.

Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.

Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.

Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.

As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.

Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized.

Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.

To that end, several corner stones should be laid to underpin a de-Americanized world.

For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.

Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.

Apart from that, the world's financial system also has to embrace some substantial reforms.

The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that they could better reflect the transformations of the global economic and political landscape.

What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.

Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.

And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse.

- By Xinhua Commentary writer Liu Chang 2013-10-13

Related posts:

• US mind-boggling politicians: stop rocking the boat...
• IMF, China, Japan warn USA's debts on default! Demistiying the US debt ceiling.

Related News:
 

'De-Americanised' world needed after US shutdown - New Straits Times

•	World Bank chief urges U.S. to break fiscal impasse
•	Obama meets Democratic senators to find fiscal deal
•	U.S. fiscal crisis: House explains why Republicans unwilling to pass budget bill
•	Obama reaches out to Republicans on ending fiscal logjam
•	U.S. fiscal policy uncertainties affect global economy: World Bank official

Winds of change blowing in Asia

>
The APEC and TPPA summits in Bali recently showed the winds of change are blowing in the region, symbolised by the US President’s absence but also reflecting the aptness or otherwise of policies.

THE winds of change are blowing, bringing shifts in perceived wisdom and the old order, especially in the Asian region.

The recent APEC summit and associated meetings in Bali were marked not so much by results but by perceptions.

In fact, the lack of results, rather than results, was the main story. This lack was not so much in the APEC itself, but in the Trans Pacific Partnership Agreement (TPPA).

The leaders of TPPA countries met in a separate venue away from the APEC summit. The Indonesians were the host of APEC and not the TPPA, which they are not involved in, and were unhappy that the TPPA threatened to take away the limelight from the main event.

But that was the secondary story. The main news was that United States President Barrack Obama had to give a miss not only to his scheduled visits to Malaysia and Indonesia, but to the APEC summit itself.

This was damaging to the United States, symbolically and in practical terms. Obama could not be blamed personally, as everyone knows the problems he faces at home with the onset of the “government shutdown” and the looming debt-ceiling crisis.

The problem was deeper. Obama’s absence confirmed the already growing perception in the region and the world that there is a dysfunctional governance system in the United States, at least for the moment, and it is becoming a long moment.

Sympathy outside the United States lies with the President, a sympathy tinged with pity for a legitimate leader confronted with the fringe (but a powerful fringe) of the opposition party that refuses to accept his healthcare reform bill that has come into law, and which is willing to damage the operations of the administration and apparently even the country’s financial creditworthiness to achieve its ideological objective.

Every democratic country has its moments of clashes between governing and opposition parties, and sometimes it can paralyse the country until the crisis is resolved, one way or other.

But here we are talking about the United States, the world’s most powerful country, and the greatest advocate of democracy. What happens in the United States has ramifications for the rest of the world.

Suddenly the unthinkable becomes a reality – the partial government shutdown – and a possibility: a default on loans, with disastrous effects on the world economy.

The crisis emerging from the present configuration of the division of powers between executive and legislative wings of government – a major pillar of Western democracy – calls into question how stable that system really is and what can be done if the paralysis lasts more than just a passing moment.

The lack of clear results in the TPPA leaders’ meeting in Bali is partly attributed to the absence of Obama, since the President had been assigned the role of galvanising the other leaders to meet the aim of concluding the talks by year-end.

In the end the leaders’ statement merely said the negotiations are on track, but did not mention they would finish by December. The growing perceptions is that the TPPA talks are facing turbulence.

Obama’s absence cannot really be blamed for that. Instead, the TPPA meetings of ministers and then political leaders only confirmed what has been known in recent months, that the TPPA agenda has been overloaded with too many issues and by too many demands, especially by the United States, that are too extreme for other countries to simply accept.

According to reports, most of the TPPA countries cannot agree to the US demands on intellectual property that go far beyond the WTO rules.

Several countries have problems with various other issues, including environment, investment and competition.

Prime Minister Datuk Seri Najib Tun Razak was the most outspoken. At an APEC side event, he said the TPPA’s year-end timeline is not cast in stone and asked that more flexibilities be given to countries.

“We do have a few areas of great concern,” he said, adding: “As you go into areas of intellectual property , investor-state dispute settlement, government procurement, state-owned enterprises, environment and labour, you impinge on fundamentally the sovereign right of the country to make regulation and policy. That is a tricky part and that is why we ask for flexibility.”

These comments by the Prime Minister summarise succinctly the “agenda overload” problem in the TPPA negotiations.

The areas that are trumpeted by the United States as a set of 21st century issues that make the TPPA a trail-blazer may turn out not to be so first-class after all.

Instead, they make some politicians, officials and parliamentarians uncomfortable, and many public-interest NGOs and business representatives, very unhappy.

The APEC summit and the TPPA meetings in the sidelines gave the big perception that US leadership is in question if not in decline in the region and the big talk was the corresponding rise of China, whose President’s presence and performance was the reverse mirror image of Obama’s absence.

But it is not only the contrasts in relative presence and economic and political power that counts. In the end it is also the content of policies advocated and the willingness to be genuine partners, and not to make use of new pacts and treaties to benefit one’s own country or interests, at the expense of others.

Contributed by Global Trends Martin Khor
> The views expressed are entirely the writer’s own.

Related posts:
1. A PEC should lead a more open world economy & play a bigger role: Reform and Innovation are new drivers, Prisident Xi Said

2. China's assertiveness, confidence and trust, long history together with Asean 

3. US and China tussle for trade dominance at Apec summit  
4. An eventful week on the TPPA
5. TPP affecting health policies?

China's assertiveness, confidence and trust, long history together with Asean

China and South-East Asia have had a long history together, but they still need to work hard to consolidate confidence and trust.

Highlights: President Xi's Southeast Asia tour

RECENTLY, the Chinese Ambassador to Malaysia, Chai Xi, remarked that the visit of Chinese President Xi Jinping will lift the bilateral ties of the two nations to a higher level.

Saying that the Sino-Malaysian relationship has taken the lead when compared to the other members of Asean, Chai pointed out that China has become Malaysia’s biggest trading partner in the world, with the first seven months of this year recording a 14.9% increase in bilateral trade to US$59.72bil (RM190.6bil).

Indeed, Xi’s visit to Malaysia was historic not only because it was his first state visit to the region since assuming office, but also in the sense that it marks another step in the continuation of the long history that Malaysia has shared with China.

It is a history that can be traced back to the 15th century, when the famous Chinese explorer Admiral Zeng He of the Ming Dynasty landed on the port city of Malacca only to find a thriving community of Chinese traders that had long established ties with the local population here.

Fast forward to the 20th century, into the height of the Cold War, and we have an international environment that is mired in suspicion and misperception, with loyalties mostly split along clear ideological lines. South-East Asia was a particular hotbed, and there was a great fear that China would turn its attention to the young and small nations of the region and begin forcibly exerting its influence to bring them under its sphere of control.

And yet, amid all the paranoia and balancing among all the nations in South-East Asia, Malaysia had the foresight of Prime Minister Tun Abdul Razak Hussein, who clearly understood the gravity and inevitability of China’s peaceful rise when he pushed for Kuala Lumpur to be the first in the region to establish diplomatic relations and normalise ties with Beijing in 1974.

Those who express opinions implying that it is possible to shape the direction of regional security and development without including China display a worrying lack of understanding and appreciation of the lessons of history, particularly that of the region.

That China will fulfil its cyclical destiny and rise to take centre stage in Asia and become a major player in world affairs is no longer a question, but the character and nature of the rise will ultimately depend on how others might want to meet this rise halfway.

Successive Chinese leaderships have assured the rest of the world that their rise is a peaceful one, which does not seek to create ripples and waves in the international world order, and there is plenty of evidence to support that assertion.

China is in pursuit of rapid economic growth and expansion to lift its 1.3 billion-strong population into the developed world. In order to do this, China needs wide-ranging support from the global community and a stable and peaceful international environment.

But China’s growing assertiveness, especially in the South China Sea, may unfortunately send the wrong signals to certain parties, and this is especially the case if there is very little understanding as to why China feels the need to proceed in such a manner.

The complexities and nuances that surround China’s actions are likely to be lost if the nervousness and concerns of its regional neighbours are not promptly and clearly addressed.

Asean countries have high hopes as to how far the Chinese dream can trailblaze the growth of the region and provide the developmental slipstream for them to follow suit.

However, the region is, understandably, still wary as it bears fresh scars of at least two other dreams before this: one that carried the salvation of “the white man’s burden” from the West, and another that sought to build a “Greater East Asia Co-Prosperity Sphere” from the East (Japanese occupation).

Granted, the Chinese dream is categorically different from these expressions of imperialism cloaked in ideology, but one needs to understand the reasons why sovereignty is an overriding concern in the region and some react strongly to the movements of greater powers.

It should not be such a stretch for China, which bears the memory of the century of humiliation dealt by former European powers through their unequal treaties, to see that the concerns of its smaller regional neighbours run along similar lines.

China and South-East Asia have had a long history together, but they must also work hard at understanding each other better so that the confidence and trust that has been built over time, albeit interrupted by occasional incidents, can be strengthened, consolidated, and built upon extensively. Trust and understanding are not built overnight, but we are not mistaken to think that the process has been going on for quite some time now.

Networks of relationships have been stitched across the region for centuries, from the trading routes and migration patterns of yesteryear to the regional production networks and the financial and business networks of contemporary times. Part of the reason why South-East Asia has been developing rapidly has been attributed to the “bamboo networks”, the ethnic-based business networks built upon the hubs and spokes of the Chinese diaspora that intersperse the region, with firm roots in the local communities but sturdily connected to the regional landscape.

But while the “infrastructure” of trust has already been firmly built between China and South-East Asia in the form of these networks of ties, which some scholars refer to as the “invisible linkages” that hold us together, there needs to be a more concerted effort to bring about more interaction and discourse, which are the lifeblood of trust, to engage the various communities at multiple levels.

These connections and dealings must not only dwell exclusively on economic and security issues; although important and, some may even argue, central, there should also be some effort invested into exploring how the cultural and normative aspects of these relations can be worked upon and perhaps improved, presenting opportunities to further strengthen the trust and deepen the understanding between China and its smaller neighbours.

In this respect, the idea of moderation as espoused by Malaysian Prime Minister Datuk Seri Najib Tun Razak and reiterated by him in his recent address to the United Nations General Assembly, may lend itself as a starting point in the search for mutualities of interest. This framework of moderation calls for the exercise of restraint and the creation of a discursive environment that allows for a multiplicity of voices to come together and collectively work towards solutions, defusing tensions and avoiding conflict.

This notion is perhaps compatible to the Chinese Dream; as China aspires for peaceful development with Chinese characteristics towards a moderately prosperous society, Malaysia and the rest of South-East Asia pursue their own goal of development that holds fast to moderate principles, so that their race towards becoming fully developed nations does not sacrifice their identities, traditions and culture, and sovereignty, the very things that make them what they are.

The idea of building a truly authentic East Asian community can begin with this very simple but powerful idea, and as Malaysia looks forward to assuming the chairmanship of Asean in 2015, it also looks to further strengthen ties between China, itself and the region through the values and principle of moderation.

Contributed by  Tan Sri Razali Ismail
> Tan Sri Razali Ismail is Chairman of Global Movement of Moderates Foundation (GMM). The GMM is an initiative of Prime Minister Datuk Seri Najib Tun Razak that calls for combating the scourge of extremism in five broad areas – peaceful co-existence, democracy and rule of law, finance, education and conflict resolution. The views expressed are entirely the writer’s own

Related posts:

1. US and China tussle for trade dominance at Apec summit 

2. APEC should lead a more open world economy & play a bigger role; Reform and innovation are new drivers: President Xi said   

3. Malaysia and China set trade target of RM511bil,usher new era of strategic partnership

4. Malaysia grand welcome for China president

5. Chinese President Xi Jinping visiting Malaysia and Indonesia to witness signing of pacts

MaGIC, Malaysian Global Innovation and Creative Centre to spur entrepreneurship?

MORE COLLABORATION: Najib (right) answering questions during a session at the launching and gathering of 1Malaysia Entrepreneurship Programme (1MET) participants on the sidelines of 4th GES 2013 at Kuala Lumpur Convention Centre. Najib, together with United States Secretary of State John Kerry, spent about 20 minutes talking to about 5,000 1MET participants 



KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak has announced the establishment of the Malaysian Global Innovation and Creative Centre or MaGIC in Cyberjaya to encourage entrepreneurship among Malaysians.

He said in his speech at the Global Entrepreneurship Summit 2013 that the centre would be a “one-stop shop” for entrepreneurs in getting financing from banks or venture capitalists and also to serve as incubators for developing start-ups.

The centre would also help prospective entrepreneurs with intellectual property registration and facilities for training, coaching and mentoring, Najib added.

“Ideas and opportunities cannot travel through a vacuum - they must be born in an open, market-driven environment that welcomes them, nurtures them, (and) allows them to flourish and spread.

“Creating an eco-system in which ideas can be realised is one of the pre-conditions for success,” he said.

Najib also noted that Governments should play an active role in supporting research, irrespective of whether it had an immediate commercial application or not, and not hesitate to work closely with industry to promote innovation.

“Germany’s Fraunhofer Institute’s joint applied research ventures between business and the state provide one model for successful co-operation across the traditional sector divide,” he said.

In relation to this, he also suggested that higher learning institutions devote more time and funding to spin-offs, which can bridge the gap between research and commercialisation.

One-stop support centre for innovation in Cyberjaya

By Teh Eng Hock - The Star

KUALA LUMPUR: A one-stop centre to support companies involved in creative multimedia, research and development, outsourcing and data management will be set up in Cyberjaya.

Prime Minister Datuk Seri Najib Tun Razak said the Malaysian Global Innovation and Creative Centre (MaGIC) was part of the Govern-ment’s latest effort to enhance entrepreneurship.

“The centre will be a one-stop shop for entrepreneurs, with everything from getting financing from banks or venture capital to incubators for developing start-ups, from intellectual property registration to facilities for training, coaching and mentoring,” he said.

“Malaysia will also be hosting the 5th Global Social Business Summit next month,” he said at the launch of the Global Entrepreneurship Summit (GES) yesterday.

Najib said he was looking forward to receiving creative solutions from the Global Startup Youth programme, which is part of the GES.

The programme pairs some 500 young people with 100 mentors to look into some of the world’s most pressing problems, he said.

Later, Najib launched the 1Malaysia Entrepreneurship (1MET) programme, which will help to accelerate the growth of 5,000 young entrepreneurs annually.

“Please dream big. Be audacious. Dream of the improbable.

“The future is exciting. The future is today. The future is right now,” he told a cheering crowd.

During a question and answer session, Najib was asked if there would be a special allocation for the 1Met programme.

“Yes, the answer is yes. I will announce it in the coming Budget 2014. I can announce it today, but that will be letting the cat out of the bag,” he said.

Najib also said that entrepreneurs and businessmen should not be afraid or discouraged by failure, but instead use the experience to spur themselves to success.

“In a culture defined by a freewheeling and audacious capitalism, in a country like the United States, which draws on a history of both liberty and plenty, a failed business gambit is seen as useful experience. Failure is not a death sentence.

“Other countries have different traditions, but the principle of encouraging people to attempt the improbable, without the undue fear of failure, can be more widely adopted,” he said.

Kerry: US seeks to train 500,000 entrepreneurs globally

KUALA LUMPUR: The United States will enter into a partnership to train 500,000 entrepreneurs from Malaysia and around the world.

US Secretary of State John Kerry, who announced this, said the State Department would collaborate with Up Global over the next few years in 1,000 cities including Kuala Lumpur.

It will provide a full-spectrum support structure for entrepreneurs, focusing on every aspect of the entrepreneurial journey, from pre-idea through high growth stages.

Up Global is an organisation working with the US State Department with the aim of establishing entrepreneurship programmes around the world by 2016.

“The US will also take part in a mentor programme to facilitate entrepreneurship,” Kerry said at the 4th Global Entrepreneurship Summit (GES) here yesterday.

President Barack Obama had launched the GES in Washington DC in 2010 to connect entrepreneurs, banks, venture capitalists, investors and others to catalyse partnerships, encourage growth and strengthen ties.

Kerry was representing Obama who cancelled his visit to Malaysia citing the government shutdown in the United States.

Calling Malaysia a negara hebat (great nation), the chief US diplomat highlighted the country’s success in generating entrepreneurs in a multicultural setting, singling out Cyberjaya and prominent entrepreneurs Jimmy Choo and Tony Fernandes as among its success stories.

“This nation has given the world visionary business people like Jimmy Choo, who made his first pair of shoes at the age of 11.

“By the time he was in his 20s, his designs were being worn on sidewalks and catwalks from Los Angeles to London.

“And Tony Fernandes, long before he started hosting The Apprentice Asia, started the budget airline AirAsia,’’ Kerry said.

In a video address shown to the audience, Obama expressed his desire to make up for his absence and visit Malaysia soon.

“I had really hoped to be with you in person. Unfortunately, recent events in Washington made that impossible,” he said.

The president paid tribute to Malaysia, calling it “a dynamic economy, engine for regional prosperity and a country that’s increasingly connected to the global economy”.

“Likewise, Malaysia’s diversity, tolerance and progress can be a model to countries around the world,’’ he added.

Sources: The Star/Asia News Network

US mind-boggling politicians: stop rocking the boat, China Daily said

Furloughed federal employees, along with their family members, protest the government shutdown outside the US Capitol in Washington DC, USA, 08 October 2013. The federal shutdown in the US is in its second week - EPA Photo.

The prospect of dimmer global growth predicted by the International Monetary Fund should make it a matter of urgency for US politicians to stop manufacturing crises.

Five years after the start of the global financial meltdown triggered by the bankruptcy of Lehman Brothers, it is pitiful that the US is now putting the fragile global recovery under renewed threat with its mind-boggling political infighting.

The IMF on Tuesday cut its global growth forecast to 2.9 percent this year and 3.6 percent for next year. This year's growth forecast is 0.3 percentage points lower, and next year's 0.2 percentage points down, than the July projection.

Indeed, the growth slowdown in major emerging economies, as the Washington-based global lender identified, will contribute to a global growth fall in the coming years. Both cyclical and structural problems in these economies are demanding immediate and bold reforms to make growth more sustainable.

However, when financial ministers and central bankers gather in Washington later this week to discuss global growth issues, they will be lucky if their attention is not too distracted by the US government shutdown.

The inconvenience caused by the shutdown may be the least of their worries. The elephant in the room, the once inconceivable notion of the US defaulting on its debt and ensuing dollar upheavals will have to be acknowledged.

As the world's largest economy and the home of the global reserve currency, the US surely has the wherewithal to fund its government and avoid a catastrophic default by raising its self-imposed debt ceiling.

Yet the astonishing failure of the US Congress to put national needs before their partisan interests has sparked fears among investors and governments around the world that maybe it is time to think about the unthinkable.

That may explain why the biggest US creditors, China and Japan, have expressed concern over developments in Washington which could affect their several-trillion-dollar investments in US Treasury bonds.

US politicians can discuss, bicker and argue over government spending and economic growth. Kicking cans is one thing, but throwing caution to the wind is not a course of action worthy of the world's leading economy.

-  China Daily

Related posts:
Time for crucial fiscal reforms: Malaysia Budget 2014 
USA government shutdown !

IMF, China, Japan warn USA's debts on default! Demystifying the US debt ceiling

UNITED States (U.S.) President Barack Obama Tuesday declared that he was willing to negotiate with Republicans in passing at least a short-term budget that opens up the government at current funding levels.

But Obama, during a media briefing Tuesday, said his offer to negotiate with Republicans on the issues would “absolutely” stand if Congress passes even short-term clean spending and debt ceiling bills.

However, he declared that “the only thing that I will say is, we’re not going to pay ransom for” America paying its bills.

This came as it was revealed yesterday that there are no talks going on at any level to resolve differences over the government shutdown and the debt ceiling deadline.

But Washington’s march toward self-inflicted financial calamity is setting off alarm bells around the world as general bewilderment turns into genuine concern over a possible default by the world’s lone superpower.

The International Monetary Fund (IMF) as well as China and Japan – which hold a combined $2.4 trillion in U.S. debt – have called for a quick resolution to the crisis and expressed worries over the economic consequences of a default.

Meanwhile, Obama said U.S. credit-worthiness will be affected if markets see that “we’re not paying all our bills on time.”

Noting that he missed a major conference in Asia this week because of the government shutdown issues, said the president said: “whenever we do these things, it hurts our credibility around the world. Makes it look like we don’t have our act together.”

He warned that if Congress doesn’t raise the debt ceiling, “every American could see their 401Ks and home values fall,” and the country would see a “very significant risk” of a deep recession.

Obama said that Congress has to vote to raise the debt ceiling as soon as it votes to reopen the government. Failing to raise the debt ceiling “would be dramatically worse” than a government shutdown, he said.

He criticised House Republican tactics in dealing with the government shutdown and a debt ceiling increase. “Let’s lift these threats from our families and our businesses and let’s get down to work,” he told reporters yesterday.

Obama spoke after Republicans reportedly offered a new approach yesterday to resolve the U.S. fiscal standoff, proposing creation of a bipartisan panel to work on deficit reduction and find ways to end the government shutdown and make recommendations on a debt-limit increase.

The proposal, which was quickly dismissed by Democrats, came as House of Representatives Speaker John Boehner and President Barack Obama spoke by telephone shortly after Boehner adopted a slightly more conciliatory tone in comments to reporters.

“There are no boundaries here. There’s nothing on the table, there’s nothing off the table,” Boehner said after a meeting with House Republicans, making no mention of his recent demands to delay parts of Obama’s healthcare law in return for approving funds to end the government shutdown.

In the first official response by China, Vice Finance Minister Zhu Guangyao said that a solution must be found quickly in order to “ensure the safety of Chinese investments” and provide stability for economies around the globe.

“We ask that the United States earnestly take steps to resolve in a timely way the political issues around the debt ceiling and prevent a debt default,” he said. “This is the United States’ responsibility.”

The International Monetary Fund (IMF) has trimmed its forecast for global economic growth at the same time as lifting its UK growth projection.

It now expects global growth of 2.9% this year, a cut of 0.3% from July’s estimate. In 2014 it expects global growth of 3.6%, down 0.2%.

It cited weakness in emerging economies for the cut.

But it warns that the political standoff over raising the US government’s borrowing limit, if it results in the US defaulting on its debt payments, “could seriously damage the global economy”.

It expects growth of 1.6% in the US this year and 2.6% next year, down 0.1% and 0.2% from its July forecast.

Economists have predicted that a default would do great harm to economies around the world.
Obama recounted to reporters his telephone discussion yesterday morning with House Speaker John Boehner:

He was happy to eventually talk with Republicans about issues they care about, but that “shouldn’t require threats of a government shutdown” or economic chaos over the heads of the American people.

Yesterday, there were news conferences and a high-level phone call between Obama and the House Speaker, but no immediate sign of progress on reopening the government a week into a partial shutdown or reaching a deal to avoid the first-ever U.S. default next week.

Obama called Boehner yesterday morning, and the White House then announced the president would make a statement and take some questions from reporters at 2 p.m. ET.

Earlier, Boehner demanded that Obama and Democrats negotiate with Republicans on steps needed to end the shutdown that began on October 1 and raise the nation’s debt ceiling before the deadline for default on October 17.

“Americans expect us to work out our differences, but refusing to negotiate is an untenable position,” Boehner said, adding that Obama and Senate Majority Leader Harry Reid are “putting our country on a pretty dangerous path” by rejecting GOP calls for talks

- The Guardian

Demystifying the US debt ceiling: 5 things you should know

As the US government is about to hit its so-called debt ceiling of $16.7 trillion on Oct. 17, the frightening prospect of the world’s biggest economy running out of cash is dominating headlines around the globe.

So, in an effort to shine some light on what exactly the debt ceiling means to all of us, Business RT spoke to leading Moscow financial expert Chris Weafer, a senior partner at Macro-Advisory.com.

1  What exactly is the “debt ceiling?”
 
The US debt ceiling has existed for almost a century, and describes the maximum amount of money the US can legally borrow. The country introduced the legislative limit on its debt back in 1917, and since then it has stipulated the affordable amount of national debt that can be issued by the US Treasury. As of September 25, the US Treasury reported federal government debt at just shy of $16.7 trillion
($16,699,396,000,000.00, to be exact) in its daily statement, a figure which has been reported for 130 days straight. This is about $25 billion shy of the precise legal limit – $16,699,421,095,673.60. When the US approaches this debt limit, it can take some “extraordinary measures” to buy some time before Congress agrees to raise the ceiling. In its entire history, the US has so far never reached the point of default, where Treasury can’t pay its debt obligations.

2  Who holds the US debt?
 

The US owes about two-thirds of its debt to US-based creditors, with almost 66 percent of the country’s debt held domestically. US individuals and financial institutions hold around 31.7 percent of US Treasuries, with the US central bank, the Federal Reserve, which holds some 12 percent of the debt. Foreign creditors, including China and Japan, own an estimated 34 percent of total US government debt. These two 'big lender' countries have recently urged the US to take decisive steps to avoid a default.

3 What does the US borrow the money for?
 
In the US, often referred to as a 'big-spending' country, both individuals and the government have habitually spent more than they earn, pushing the economy deeper into debt.

“Just like any ordinary individual, the choice is either to cut back on spending or to borrow money to bridge the gap,” Weafer says.

In 2012, 22 percent of total government expenditures went to social security (means-tested payments to the poor and unemployed), while 21 percent was spent on healthcare, again mostly for poor Americans who cannot afford private health insurance. The third largest expenditure item is defense at 19 percent. In recent decades, the US defense bill has ballooned, mainly due to costly wars in Iraq, Afghanistan and elsewhere. The so-called War on Terror has also added greatly to the debt burden, while the Department of Homeland Security, created after the September 11, 2001, attacks on the US, has cost taxpayers more than a cumulative $800 billion.

The biggest contributory factor to the fast-growing debt mountain in recent years, however, has been the economic crisis that began in 2008. Apart from hundreds of billions of dollars paid out to rescue failing Wall Street banks that had made too many toxic loans, the US government has also paid out large amounts on vital social programs to aid the growing 'army of the unemployed'. Coupled with the Bush-era tax cuts to the rich and big business, lower average incomes and greater unemployment have hit government tax revenues hard, sending federal government debt sky-high.

4  Why can’t they simply print more dollars and pay their debt?
 

No economy in the world can simply turn on its printing presses and create as much cash as it wishes, as this would make its currency worthless.

“If the amount of currency in issue is not sensibly related to the strength of the economy, then foreign trade partners will … devalue the currency quickly,” Weafer explains. “If you have one asset and income source which allows you to issue one dollar, and then you print one more dollar, everybody else will see what you have done and will value your one dollar at only 50 cents. Some countries have done that in the past, but in those cases people soon had to use suitcases just to carry enough currency to buy a loaf of bread.”
 
Under the Bretton Woods financial system, established in 1944, the amount of currency in circulation was linked to gold reserves. But in 1971, the US abandoned this system and started to include a number of other economic factors, based on a recognized ability to service debt and prevent inflation, and maintain orderly trade with the rest of the world.

5 How would a US default affect people around the world, on a macro and personal level?
 
If the US defaulted, then the world’s financial system “would start to freeze up,” Weafer says. “Banks would pull back from risk and lending. The US economy would slide towards recession and the global economy would quickly be affected.” A prolonged US default would lead to job losses everywhere and much tougher borrowing conditions for companies and individuals, he adds.

“A short period of default would also have a bad effect in that it would hurt confidence in the world’s financial system,” he says. “Bankers and investors would assume that a short-term fix in the US would mean it would only be a matter of time before the same issue arises again in 2014. The resulting caution would make life that much tougher for all of us.”
 
- RT news

Related post:
 USA government shutdown !

US and China tussle for trade dominance at Apec summit

United States stepped up efforts to reinforce its economic might in the Asia-Pacific at a regional leaders’ summit in Indonesia on Tuesday, amid warnings from an increasingly bold China.


US Secretary of State John Kerry. Photo: EPA 

The two-day Asia-Pacific Economic Co-operation (Apec) event at a five-star resort on the tropical island of Bali is aimed at breaking down trade barriers among all 21 member economies, but rival agendas by the world powers have overshadowed the talks.

Filling in for US President Barack Obama, Secretary of State John Kerry has lobbied for the quick signing of a mega free trade pact grouping 12 Apec nations but not China and summit host Indonesia.

“We need modern rules for a changing road, rules that keep pace with the speed of today’s markets,” Kerry said in a speech on the sidelines of the summit on Monday that was in large part a hard-sell for the planned Trans-Pacific Partnership.

China's President Xi Jinping, Photo: AFP

Kerry was set to meet the leaders of the 11 other nations involved in the TPP on Tuesday afternoon in a bid to hit an against-the-odds deadline set by Obama for a deal by the end of this year.

The United States has championed the TPP as setting “gold standards” to deal with complex changes to the 21st-century economy, such as how to police cloud computing and patents.

But China and even some developing nations included in the TPP have expressed concern that it will set down trade rules primarily benefiting the richest countries and most powerful firms.

“China will commit itself to building a trans-Pacific regional cooperation framework that benefits all parties,” Chinese President Xi Jinping said in a speech following Kerry at the Apec business forum

“We should enhance coordination... deepen regional integration and avoid the spaghetti bowl effect so as to build closer partnerships across the Pacific.

China will commit itself to building a trans-Pacific regional cooperation framework that benefits all parties -China's President Xi Jinping

Xi’s comments were interpreted in China’s state-run media on Tuesday as direct criticism of the TPP.

“The Trans-Pacific Partnership, featuring confidential talks and the highest free trade standard beyond mere lower tariffs, is widely considered a new step for the US to dominate the economy in the Asia-Pacific region,” the China Daily newspaper said in a front-page report on Xi’s speech.

Indonesia also signalled its irritation at the huge focus on TPP at the Apec summit, shunting the planned meeting on Tuesday afternoon of the 12 nations involved to a hotel outside the official venue.

“We mind actually, and one of the reasons, at the very least, is we don’t want any coverage that will overshadow APEC,” an Indonesian government official said, when asked about why the TPP countries had been told to meet outside.

Meanwhile, China and Indonesia are involved in plans for a rival free trade pact involving 16 countries around the region and being spearheaded by the Association of Southeast Asian Nations.

Negotiations for that pact are expected to be discussed at an East Asia Summit in Brunei this week.

One of the biggest issues at Apec has been the absence of Obama, who had to cancel an Asian tour that would have also taken him to Brunei, Malaysia and the Philippines because of the week-long US government shutdown.

Obama and the Democrats are engaged in a potentially catastrophic battle of nerves with the Republicans over the president’s health care law, which could lead to an unprecedented US default.

Obama’s decision not to come to Asia has reinforced sentiments that his high-profile diplomatic, economic and military focus on the region, known as the “pivot”, is in tatters.

Kerry has been forced at Apec to repeatedly insist that the Asia-Pacific remains a top priority.

“I want to emphasise that there is nothing that will shake the commitment of the rebalance to Asia that President Obama is leading,” Kerry told the business forum on Monday.

Meanwhile, Xi filled the Obama vacuum with high-profile state visits to Jakarta and Kuala Lumpur ahead of Apec.

He then used the Apec business event to outline a Chinese vision for the region of a “united and prosperous” family.

Sources: AFP

Related - Phony Relationship 



Related posts: 

USA government shutdown ! 

APEC should lead a more open world economy & play a bigger role; Reform and innovation are new drivers: President Xi said   

Malaysia and China set trade target of RM511bil, usher new era of strategic partnership

Malaysia grand welcome for China president

Chinese President Xi Jinping visiting Malaysia and Indonesia