Tag Archives: China

Chinese President Arrives in U.S. Denies Hacking

Chinese President Xi Jinping arrived in Seattle on Tuesday. He is in the U.S. on a week-long visit that will include meetings with U.S. business leaders, a black-tie state dinner at the White House and an address at the United Nations.

His arrival was met by questions on subjects such as economic reform to cyber attacks, human rights and commercial theft.

Xi, delivered a keynote address to some 650 business executives and other guests in Seattle and touched on a many of the issues that have caused friction to U.S.-China ties.

“China will not manipulate its currency to boost exports and will never engage in commercial theft,” he said, adding his country will not discriminate against foreign businesses, will speed its market opening and make efforts to improve human rights.

“If China and the U.S. cooperate well, they can become a bedrock of global stability…,” Xi said. “Should they enter into conflict or confrontation, it would lead to disaster for both countries and the world at large.”

In an attempt to reassure high tech businesses Xi offered, “The Chinese government will not in whatever form engage in commercial theft, and hacking against government networks. These are crimes that must be punished in accordance with the law and relevant international treaties.”

The Pentagon said on Tuesday that a Chinese aircraft performed an unsafe maneuver during an air intercept of a U.S. spy plane off China’s northeast coast last week as a reminder of the potential hot points between the two countries.
Among the few agreements expected to result from the Obama-Xi summit has been a military-to-military confidence building step aimed at reducing the risk of aerial collisions between warplanes in areas including the South China Sea through agreeing on common rules of behavior.

Iran Asks China to Help in Middle East Crisis

Iran is asking China to come in and help resolve the unrest in the Middle East along with offering more opportunities for Chinese businesses once the sanctions against the nation are lifted under the agreement with the United States and six other world powers.

China has been pushing the United States to complete the deal with Iran and lift the sanctions that have been economically hampering Iran.

“China and Iran find mutual benefits in many areas,” Iranian Foreign Minister Mohammad Javad Zarif said.  “I agreed with [Chinese Foreign] Minister Wang Yi that we share similar views on regional issues, which should be solved in a political way. We would like to cooperate with China on issues in Yemen, Syria and the Middle East, seeking a political solution.”

China has long been opposed to the sanctions placed on Iran by the United States and European nations.  Wang told reporters he looks forward to the deal’s implementation because of the benefit to Chinese businesses and added he believes the two nations can work together for peace in their regions.

“We both agree that the unrest in West Asia and North Africa regions is not sustainable, it should be solved in a political way and we should seek a solution that can address the concerns of different parties,” Wang said.

Chinese Government Rapidly Using Foreign Currency to Prop Up Economy

The Chinese government has quietly been depleting their reserves of foreign currency in an attempt to prop up their stock markets and overall economy.

Government data released Monday showed the government used just under $100 billion in the last month, a record amount.  China still has $3.56 trillion in foreign currency at their disposal.

“[The outflows of capital] are unprecedented and have no comparison to any period in the past,” Nikolaos Panigirtzoglou, global market strategist at J.P. Morgan in London, told the Wall Street Journal. “There could potentially be even more over the coming year, as the market tries to gauge the extent of the devaluation of the Chinese currency.”

Many analysts say the use of the currency was inevitable after the central bank devalued the country’s currency twice in two days this month.

“Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity,” said Zhou Hao, senior economist at Commerzbank in Singapore, to Reuters.

The news of the government’s spending of foreign currency comes as the stock market took another significant fall Monday.  The Shanghai market closed down 2.5 percent in what traders there termed a “volatile day.”

The drop comes as China’s Central Bank Governor Zhou Xiaochuan told a meeting of economic leaders of the world’s top 20 economies that the Chinese market correction was almost over.  Chinese equity markets have fallen 40 percent since June.

China Showing Off Military Might

China is making a demonstration of its military might both through ocean maneuvers and a parade of new technology.

The first major flexing of China’s military muscle came during the incident of ships off the coast of Alaska during a visit by President Obama.  The ships entered US territorial waters for the first time, passing within 12 nautical miles of the Alaskan coast.

US military officials say the ships complied with international law despite their proximity to Alaska.

“They already had one of their icebreakers up in that area, and they weren’t that far away with an exercise, and they’ve already started their return transit,” Chief of Naval Operations Adm. Jonathan Greenert told Reuters.

Meanwhile, the military used the anniversary of the ending of World War II to display in a parade a missile that’s designed to take out an aircraft carrier.

The missile, called the Dongfeng DF-21D, is designed to enter space like an intercontinental ballistic missile but the warhead will detach and use radar to target a ship.

“The significance of that weapon is that its warhead, once it detaches from the launching vehicle, is able to slow its descent, turn on a radar seeker, and maneuver to engage a moving ship if it is in the radar “footprint” of the seeker,” Michael McDevitt, a retired United States rear admiral and analyst at CNA Strategic Studies, told the New York Times.

“This is unusual because normally ballistic, by definition, means that once fired, a weapon goes straight to where it was aimed. Heretofore, a ballistic missile with a conventional warhead would not be effective against a moving target because during the time of flight of the missile the target would have moved. The maneuvering warhead is Cold War technology, first introduced as I understand it with the Pershing II land-based missiles Reagan stationed in Europe.”

The missiles have a range of about 900 miles, meaning China could use them to keep American naval vessels out of the South China Sea in the event China attacks Taiwan.

International Monetary Fund Raising Alert over China Slowdowns

International Monetary Fund (IMF) leaders are warning the world to prepare for a massive slowdown in the Chinese economy.

“As the Chinese economy is adjusting to a new growth model, growth is slowing — but not sharply, and not unexpectedly,” Christine Lagarde, managing director of the International Monetary Fund, said Tuesday in Indonesia, according to prepared remarks. “Other emerging economies, including Indonesia, need to be vigilant to handle potential spillovers from China’s slowdown and tightening of global financial conditions.”

The trouble with the Chinese stock market and manufacturing slowdowns has impacted more than just the major U.S. stock markets.  Oil prices have tumbled; commodities markets such as copper have also been falling significantly because of the downturn in production.

Asia has been predicted by the IMF at the start of the year to drive world economies but they are now backing off from that position.  They are calling for “moderate” growth while admitting the growth “pace is turning out slower than expected.”

The U.S. says they’re watching to make sure the Chinese government is not attempting to manipulate their currency or stock market in an attempt to maintain a global economic leadership position.

“We are going to hold them accountable,” Treasury Secretary Jacob Lew told CNBC.

Chinese Warships Operate Near Alaskan Coast for First Time

Five Chinese naval vessels have been spotted operating in the Bering Sea off the Alaskan coast for the first time.

The Wall Street Journal confirmed Pentagon officials saying they haven’t seen the Chinese navy act in this manner until now.

“The officials said they have been aware in recent days that three Chinese combat ships, a replenishment vessel and an amphibious ship were in the vicinity after observing them moving toward the Aleutian Islands, which are split between U.S. and Russian control,” the Journal stated the officials confirmed.

“They said the Chinese ships were still in the area, but declined to specify when the vessels were first spotted or how far they were from the coast of Alaska, where President Barack Obama is winding up a three-day visit.”

“This would be a first in the vicinity of the Aleutian Islands. I don’t think we’d characterize anything they’re doing as threatening,” an unnamed defense official told the Washington Free Beacon.

Analysts speculate this is another attempt by China to assert their influence beyond their region.  China’s leader will be in Washington this month to meet with President Obama and the action could be an attempt to show strength before the meetings.

Markets Begin September in Nose Dive

The stock markets ended one of the worst months in three years by starting September in a nose dive.

The Dow Jones Industrial Average fell almost 470 points and ended at 16,058.  The drop of just over 2.8% was the single worst opening day for a month in the market since March 2009.  The Dow has fallen 12.5% from the all-time high in May.

The Standard & Poor’s 500 also had their worst first day of trading since March 2009, falling almost 3 percent to 1,913.  Only three stocks in the index showed gains on the day:  Cablevision, American Airlines and a chemical company, Sigma-Aldrich.

The NASDAQ had its worst opening day of a month trading since October 2011.  It’s now 2% lower for the year.

Most analysts attributed the stock fall to continuing fears about the Chinese economy and volatility in the Chinese stock market.  Two major reports from China today showed significant slowing in the country’s manufacturing.

Many of the American stocks that took heavy hits in today’s trading have strong connections to China such as Apple and Qualcomm.

However, the U.S. gauge for manufacturing also turned in a dismal result Tuesday.  The ISM manufacturing index fell to its lowest level since May 2013.

U.S. Considering Sanctions Against Russia, China for Cyberattacks

U.S. officials are looking at imposing sanctions against Russia and China for cyberattacks on the government’s servers.

The officials, who spoke to Reuters on the condition of anonymity, said no final decision has been made because the sanctions could cause strain in relations between the countries.  The Chinese president is scheduled to visit the U.S. this month.

Chinese and Russian hackers have accessed secure databases to steal information about military members and intelligence personnel and Russian hackers monitored the emails of state department officials for several months last fall.

Chinese hackers are believed to have caused the breach at the Office of Personnel Management (OPM) earlier this year.

“Frustration has been growing for years about cyber economic espionage and then the scale of the OPM attack was the straw that broke the camel’s back,” said a former senior administration official.

Chinese officials responded to the anonymous claims by saying they are firmly against cybercrime.

“The Chinese government staunchly upholds cyber security, firmly opposes and combats all forms of cyber attacks in accordance with law,” Chinese Embassy spokesman Zhu Haiquan said in a statement.

Zhu added he doesn’t want U.S. officials to engage in “groundless speculation.”

Chinese Government Suspected of Stock Market Manipulation

After two days of massive losses that triggered worldwide economic downturns, the rally of the Chinese stock market is leading investors and analysts to suspect government manipulation of the market.

The Shanghai Composite Index has been in free-fall over the last three months.  The index fell 11.8% in August.  A five-session selloff drove the Chinese market so low that markets around the world tumbled in response.

Then suddenly Thursday, the Chinese market jumped 5%.

And again Friday.

Investors began to suspect government intervention in the market, with the government quietly buying up stocks with newly printed money from the Chinese Central Bank.  The Chinese government is promoting a big celebration for the 70th anniversary of World War II next week and analysts believe they wanted investors in a good mood ahead of the events.

The market is closed September 3-4 for a national holiday.

“If the government sustains buying there are terribly negative consequences, such as impact to [People’s Bank of China’s] credibility and yuan credibility…Any bank can create money out of thin air, which is why confidence is so important,” David Cui, a strategist for Bank of America Merrill Lynch, told Marketwatch. “So if they keep printing money to buy high valued stocks, it will damage yuan credibility.”

“What’s happening is an act of desperation by China and it starts dragging down other countries with it,” said Bill Stoops, chief investment officer with Dragon Capital, told the L.A. Times. ”China’s police state economic model is falling apart.”

Sinkhole Swallows Five People in China

A sinkhole opened under a bus stop in Harbin, China, pulling five people into the hole.

Bystanders helped the victims who fell 10 feet into the hole.  The victims suffered mostly minor injuries to the feet, legs, arms and shoulders.

Video of the incident was captured by the closed circuit camera of a nearby noodle shop showing one of the victims hanging on to pipes to avoid falling into the hole.  The bus stop sign also fell.

Chinese officials say they do not know the cause of the sinkhole.