OBAMA AND HILARY LEAD THE EMPIRE IN UNDERHAND DIVIDE AND RULE BETWEEN ARAB WORLD, IRAN AND CHINA

China feels US-Iran fallout

By Peter Lee
Asia Times Online

The question of the day in Washington is will the People's
Republic of China veto further United Nations Security
Council sanctions against Iran over Tehran's nuclear
program?

Informed opinion says "no".

China has exercised its veto only six times in 30 years on
the council. In matters core to national priorities, like
punishing countries such as Guatemala and Macedonia for
their ties to the Republic of China (Taiwan) and protecting
the interests of Pakistan, it has acted alone.

However, on broader geopolitical issues, in recent years it
has vetoed resolutions only when joined by at least one
other Security Council member.

France and the United Kingdom are lined up solidly behind
the United States on Iran's nuclear program, which some say
is geared towards making a nuclear bomb, a charge Tehran
consistently dismisses.

Russia this year is interested in improving ties with the
US and Europe and has moved toward support of sanctions. No
Russian veto, no Chinese veto, says the conventional
wisdom.

On the other hand, chances of China voting for sanctions
are slim. A press report covering Chinese Foreign Minister
Yang Jiechi's visit to Paris at the beginning of February
says it all: "China Says Iran Sanctions Hinder Diplomacy."

Abstention is, therefore, China's most likely course.

Beijing's reaction might be expected to be a dismissive and
a resigned shrug: a symbolic vote, another toothless round
of sanctions, more political kabuki, and eventually
business as usual.

However, China's expected non-vote will be accompanied by
new feelings of unease and anger, reflecting Beijing's
growing suspicion that an important motivation for the Iran
sanctions, and the escalation of Iran tensions in general,
is Washington's desire to employ the issue as a wedge
against China.

In past years, China could regard US sanctions against
authoritarian regimes with a certain amount of complacency.
The George W Bush administration's heavy-handed approach
dismayed and divided natural allies of the US and drove its
targets deeper into China's embrace.

However, the Obama administration has decided to supplement
brute power with smart power. It apparently promotes
divisive international initiatives only when the splits in
international opinion and alliances are expected to go
America's way.

China first got a taste of the smart-power approach in
December at the Copenhagen climate summit. The US linked
the release of billions of dollars of climate adaptation
aid to vulnerable developing countries with China's
acceptance of a satisfactory transparency regime. Its
delegation passed the message to smaller nations that
China's intransigence was standing between them and
billions of dollars of much-needed assistance.

Despite the treaty debacle, the geopolitical results for
the Obama administration were encouraging. The European
Union sided with the US. According to an internal Chinese
report, a good number of Group of 77 nations were, for the
large part, influenced by the American position but did not
openly confront China. China cobbled together an alliance
with the emerging economies of Brazil and India and,
despite a concerted "blame China" effort by the US and the
UK, was able to limit the political damage.

However, it was a sobering experience for Chinese
diplomats. The report concluded "A conspiracy by developed
nations to divide the camp of developing nations [was] a
success."

Now, the Obama administration is picking on the regionally
and globally unpopular government of Iran, thereby exposing
China as the regime's lone international supporter of note.

The US has worked to bring the EU and Russia to its side.
The EU, at least, is now an enthusiastic ally. Relieved to
be dealing with a judicious and consultative American
president, it no longer sees the need to accommodate a
greater role for China on the world stage.

Russia has joined the American team (with sub voce
reservations), reportedly in response to the Obama
administration's concessions on shelving plans for a
missile defense shield in Eastern Europe.

The State Department has also worked with the Gulf states
to gain their support for a policy of putting Iran in its
place.

As far as the China issue is concerned, America's direct
solicitation of China's Security Council vote involved
Obama passing the word to President Hu Jintao that China's
interests would suffer if diplomatic pressure failed,
Israel attacked Iran's nuclear facilities, and the price of
oil went up.

It is unlikely that the Israel attack card was persuasive
to the Chinese leadership, and did little more than
convince them that Washington was using it as an excuse to
justify an extension of US influence in the Middle East.

A pre-emptive attack by Israel to nip Iran's nuclear
ambitions in the bud is unlikely.

Despite Tel Aviv's brave talk of its ability and
determination to launch a raid independent of US approval,
even a resounding success would probably only slow down the
program a few years while earning the undying enmity of the
Iranian people and the Muslim world toward Israel ... and
the United States, which would have to provide Israel with
flight privileges over Iraq to stage the attack.

American assertions that the Iranian nuclear program will
spark a ruinous arms race in the Gulf no doubt elicited
similar skepticism from China, with the unspoken
observation that, since most of those arms would be
supplied by the US and EU, the onus for (and profits of) an
arms race would probably fall to the West.

American efforts to wedge the Arab states away from China
are more likely to attract Beijing's attention and concern.

James Phillips of the Heritage Foundation spun US Secretary
of State Hillary Clinton's current trip to the Middle East:

Clinton will be looking to the Arabs to "act as a
counterweight [to Iran] on China and help unlock its
Security Council vote.

The US is hoping to use these discussions with the Arabs as
a way to encourage China to look at its long-term economic
interests," Phillips added. "The Arabs could let the
Chinese know that it will hurt them economically with the
Arab countries in the long run if China clings to this
pro-Iran position.

United States protestations that all this diplomatic
maneuvering directed at China is justified by the need to
exhibit international unity on Iran ring hollow.

Invocation of the Israeli attack and the Gulf states arms
race bogeymen notwithstanding, the primary justification
for the current spasm of concern over Iran's nascent
nuclear activities is the dreaded Western "impatience",
which appears very similar to the manufactured impatience
that sent the coalition of the willing charging into Iraq
in 2003.

The stated remedy for this impatience, the UN sanctions, is
unlikely to work.

Russia cares enough about its relationship with Tehran to
make sure anything that gets through the Security Council
will not be particularly catastrophic.

On February 11, Deputy Foreign Minister Andrey Ryabkov made
this memorable statement: "We do not think sanctions will
work, but we understand that it is impossible to get by
without them in certain circumstances."

With early reports that a massive government presence
marginalized Green Movement demonstrators on the February
11 anniversary of the Iranian revolution of 1979, regime
change in Iran is probably off the table, too.

Even if a new regime came to power, Iran's national
commitment to nuclear power - and the perceived nuclear
weapons threat to the region - would probably remain
unchanged.

By conventional geopolitical logic, China would seem to
have the right idea: more jaw-jaw and engagement or, as it
called for in a recent editorial, "patience, patience and
more patience."

But US policy seems to be moving in the opposite direction,
stoking the crisis instead of lowering the heat.

So what's China's takeaway from the Iran crisis?

Absent an immediate, credible threat of an Israeli attack
on Iran, the US is rushing the international community
toward "crushing sanctions" on Tehran that, if carried out,
would result in disruption of Iran's energy exports.

If this were to actually occur, the big loser in the Iran
crisis would be China.

As a Chinese analyst told Reuters: "Fully going with
Western expansion of sanctions on Iran so they restrict
Iran's energy exports would amount to disguised sanctions
against China, and China certainly won't agree," Wang Feng,
a researcher at the Chinese Academy of Social Sciences told
the Global Times, a Chinese newspaper published on
Thursday.

Reportedly, the US had advised China it would dispatch
Hillary Clinton to visit Iran's enemies in the Persian Gulf
and ensure that, if sanctions disrupted the supply of
Iranian oil, Saudi Arabia and its associates would ensure
that China's petroleum needs would continue to be met.

It is unlikely that China's vision of its energy security
involves relying on the US's good offices to deal with the
consequences of a US-imposed policy that it rejects and had
no voice in formulating.

In any case, the prospects for an oil-price Armageddon are
unlikely. Given free-market realities and the greed of oil
producers inside and outside the Gulf, the world would
suffer as much as China if Iranian crude disappeared from
the market.

For Beijing, the biggest concern is its perception that
Europe, Russia and the Gulf states are signing on to an
anti-Iran initiative that could impact China's interests in
such a major way without accommodating China's priorities.

From Beijing's point of view, China is the main superpower
stakeholder in the Iran crisis.

So it is asking why isn't it being consulted? Indeed, why
aren't its critical interests given priority, instead of
subjecting it to moonshine about an Israeli attack, an arms
race in the Gulf and lectures about its geopolitical
interests?

China is not a threat to the international order, but it is
its most independent and uncontrollable element. There are
growing signs of a shared consensus in the West that
reliance on China as a stabilizing financial, economic and
geopolitical factor must be reduced.

The past few years have been good to China's competitors
-especially India - and bad for China's allies - Pakistan
and Iran.

By accident or design, the Obama administration's decision
to heat up the Iran controversy has driven another wedge
between China and the US, the EU, the Gulf states and even
Russia.

The issue for China is whether the purpose of America's
Iran campaign is to isolate Iran ... or to isolate China?
This is a consequence of China's participation in the
security initiatives that the US chooses to organize to
protect and promote its own and loyal allies' interests.

China responded to the escalation of the Iran nuclear
crisis with a remarkable lead editorial in the Global
Times, the international affairs organ of People's Daily,
the government mouthpiece,.

The editorial, with the eye-catching title "Iran and the
West: Neither Should Think of Taking China Hostage",
painted China as the victim of the standoff. In an effort
to be even-handed, both Iran and the West are criticized
for their intransigence.

Nevertheless, both the West and Iran are unheeding at this
time. They both believe that only if they are unyielding,
then the other side will back off. This unenlightened
attitude even extends to their attitude toward China. Both
sides believe that all that's needed is to put pressure on
China, then China will, without considering its own
interests ... lower its head to them ... This thinking is
unrealistic.

The use of the loaded term, "lower its head", conjuring
images of the humiliating kowtow, instead of a more neutral
term such as "support one or the other" is an indication
that red lines are being drawn.

The fact that China's main worry is the West, and not Iran,
is unambiguously conveyed in the editorial's conclusion.

Recently in Western public opinion has been a call to use
the Iran issue to isolate China. This is extremely
superficial ... China is a big country and its interests
must be respected. China's dilemma must be sympathized
with. China's proposal opposing sanctions must be
understood. The big powers must cooperate and negotiate on
the Iran issue ...

China is a great country. If anyone seeks to compel her, to
injure her, they will certainly pay the price. Pretty
strong stuff.

The editorial is a clear indication that China considers
itself the target - or at least intended collateral damage
- in America's anti-Iran campaign. It makes the case that,
if the Obama administration sincerely cared about its
relationship with China, Washington would back off from the
sanctions campaign and allow negotiations to continue.

But that doesn't look like it's going to happen.

Sanctions will probably go ahead, with China either
abstaining or throwing in a tactical "yes" vote to postpone
an overt breach, and Washington will obtain another point
of leverage against China in the Persian Gulf.

If that happens, China will have to think about adjusting
to a new world situation in which the West seems less
interested in bargaining for its support or respecting its
interests.

Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.

WEST WERE PLAYING DIRTY TRICKS AT COPENHAGEN, CHINESE LEAKED PAPER REVEALS

China's fears of rich nation 'climate conspiracy' at Copenhagen revealed

'Conspiracy to divide developing world' will make future talks harder, says leaked government report

The Guardian

Rich nations furthered their "conspiracy to divide the
developing world" at December's UN climate summit in
Copenhagen, while Canada "connived" and the EU acted "to
please the United States", according to an internal
document from a Chinese government thinktank obtained by
the Guardian.

The document, which was written in the immediate aftermath
of Copenhagen but has only now come to light, provides the
most candid insight yet into Chinese thinking on the
fraught summit.

"It was unprecedented for a conference negotiating process
to be so complicated, for the arguments to be so intense,
for the disputes to be so wide and for progress to be so
slow," notes the special report. "There was criticism and
praise from all sides, but future negotiations will be more
difficult."

The authors - all members of a government environmental
research institute - were not part of the Chinese
negotiating team, but their paper was commissioned by the
environment ministry and circulated internally to the
minister, vice-ministers and department chiefs in the days
after the conference. The ministry currently plays only a
marginal role in climate policy making but many of the
paper's observations were echoed by China's chief climate
negotiator, Xie Zhenhua, in a recent speech given at
Beijing University.

The authors were downbeat about the prospects for
international talks and China's position within them.
"China, which was in the conference spotlight, played an
active and constructive role, but was also under huge
international pressure. It is predictable that our country
will face a tougher challenge in future climate talks," it
says.

Analysing international reaction to Copenhagen, the paper
lists a selection of responses from the UN
secretary-general, the Chinese foreign minister, the
European commissioner, prominent NGOs and major media
organisations, including the Guardian. It was written
before the publication of the most strident criticisms of
China's tactics by Mark Lynas, climate change adviser to
the Maldives, and the UK climate and energy secretary, Ed
Miliband.

Contrary to those views, the paper argues that the primary
goal of China's negotiators was not to spoil the summit,
but to resist a deal from rich nations that would put an
unacceptable burden on China and other developing
countries.

In their evaluation of the outcome, the officials' top
point is that "the overall interests of developing
countries have been defended" by resisting a rich nation
"conspiracy" to abandon the Kyoto protocol, and with it the
legal distinction between rich nations that must cut carbon
emissions and developing nations for whom action is not
compulsory.

The internal report acknowledges that unity among China's
traditional allies in the developing world became harder to
maintain in Copenhagen. "A conspiracy by developed nations
to divide the camp of developing nations [was] a success,"
it said, citing the Small Island States' demand that the
Basic group of nations - Brazil, South Africa, India, China
- impose mandatory emission reductions.

The paper is scathing about the US-led "umbrella group",
which it says adopted a position of inaction. Canada, it
says, "was devoted to conniving" to convince the world that
its pledge of a 3% emissions reduction between 1990 and
2020 is significant, while having no intention of meeting
its Kyoto protocol target of 6%.

There are no comforting words for the European Union, which
used to pride itself on playing a leadership role in
climate talks. "Copenhagen was a setback for the EU", the
authors say, in part because Europe "suggested the
abandonment of the Kyoto protocol in order to please the
US." The ministry has not responded to the Guardian's
request for a comment on the leaked paper.

The authors note that the Copenhagen accord which emerged
from the summit was not legally binding and lacked a global
target for emissions. But it says that overall the accord
was a "step forward", noting progress on a consensus to
limit global warming within 2C, progress on the funding by
rich nations of climate change adaptation measures in
poorer nations and a "last minute" compromise by developing
nations on the verification of their carbon pledges.

Lynas, who was present at many of the key negotiating
sessions, said: "It's astonishing that this document
suggests the Chinese really believes the absurd conspiracy
theory that small island states were being played like
puppets by rich countries. The truth is that the small
island states and most vulnerable countries want China and
its allies to cut their emissions because without these
cuts they will not survive. Bluntly put, China is the
world's No1 emitter, and if China does not reduce its
emissions by at least half by mid-century, then countries
like the Maldives will go under."

He added: "I think these claims of conspiracy are just a
bullying tactic, to force more progressive developing
countries back into line in case they too start demanding
more serious action by China."

Speaking last month, China's chief climate negotiator, Xie
- who also serves as vice-minister of the National
Development and Reform commission which controls China's
climate policy - also referred to the pressure from small
island nations. "The rich nations were completely trying to
make conflict among developing countries," he said.

He also described the "international fight on climate
change" as a contest for economic development space and
stressed that the way forward for China was to put more
effort into building a low-carbon economy. "Countries with
low-carbon industries will have a developmental advantage,"
said Xie. "Some people believe this is a global competition
as significant as the space race in the cold war. "

The concluding section of the leaked document proposes a
series of constructive initiatives. In what appears to be a
bid by the environment ministry to play a greater role in
carrying out climate-related policy, the report suggests
amending air pollution control laws to include greenhouse
gas emissions.

The official US version about what happened at Copenhagen
is also harsh. Todd Stern, the state department climate
change envoy, said this week that the summit "a snarling,
aggravated, chaotic event." But America attributes the
difficulties to a central divide between those countries -
led by China - insisting rich countries bear the entire
burden of reducing greenhouse gas emissions and the
position held by the US that rapidly emerging countries
must also take action. Stern suggested the divide had not
been bridged. China, along with India, South Africa and
Brazil, had been "ambiguous" in its follow-up commitments
to the accord.

Tom Burke, the influential environmentalist and a founder
of E3G consultants, said: "There was indeed a lot of work
done to get developing nations to put pressure on China.
[But] it was not a conspiracy of any kind unfortunately as
Britain was acting entirely alone on this front. Neither
our EU allies nor the US mounted any kind of diplomatic
effort. Pretty well everyone in Copenhagen, not just the
developed countries, complained about China's blocking
tactics."

CHINA CONTINUES TO RENATIONALISE; 'THE SECOND-COMING OF STATE OWNED ENTERPRISES'

What's yours is mine in China's coalfields

The Australian
January 25, 2010

NOWHERE is renationalisation more blatant than in the rich
coalfields of Shanxi.

Yet there's money lying beneath this unalluring mix. Loads
of it. Taiyuan is scattered with Bentley showrooms, Rolex
boutiques -- in fact, all the luxury brand names from New
York, London, Paris, Hong Kong and Shanghai. And the locals
like to talk about money.

"When a Shanxi businessman goes to Beijing to look for
houses, he doesn't just look at one apartment -- he looks
at the entire side of the building," a Shanxi executive
said in Taiyuan last week.

Most of the money has come from coal, the black gold that
fuels China's power stations and its steelmaking blast
furnaces, processing Australia's iron ore. Fortunes have
been built on the back of the province's mine workers, and
with their blood: there were 2631 deaths in China's coal
mining sector as a result of mine accidents last year, but
the figure was down by 20 per cent on 2008.

Shanxi is changing. Once home to thousands of small and
mid-sized mines and mining companies, now the government is
taking over again. Shanxi's coal sector is a high-profile
symbol of renationalisation: the second coming of
state-owned enterprises.

Tens of thousands of state-owned enterprises were pulled
apart in the 1980s to allow capitalism to develop. But now
the country's leadership is becalmed as it heads into its
last two years in power after years of only incremental
economic reform.

China's ruling politico-corporate complex has also been
emboldened by the opportunities of the global financial
crisis, which saw more than $US1.5 trillion pumped into the
economy, most into state-run companies.

The crisis has also been used to step up plans for
consolidation in eight key industries: the aim of this is
to have a smaller number of large companies which China
wants to be able to compete with large foreign
multinationals as well as expanding globally.

It's not just on a national level. In Shanxi, home to 30
million people, seven provincial coal miners have been
allocated a slice of the private sector at a bargain price.

In Shanxi close to 2000 small mines have been forceably
reclaimed, officially for efficiency, health and safety and
environmental concerns. These are real concerns: the
government attributes the fall in deaths to small mine
closures and says 70 per cent of fatalities are at small
mines. But one miner owner says he instituted the extra
safety and environmental controls but was still forced to
sell to the government at a loss of 5 million yuan
($833,000).

Businesses from the wealthy province of Zhejiang and its
famously rich capital Wenzhou are the biggest single source
of investment in Shanxi's coal sector.

"Wenzhou, one of the regions with the most active private
economy, has only 4.5 per cent GDP growth in the first half
of last year, far below national level," Xia Yeliang, a
professor at Beijing University, says.

"One of the reasons is Wenzhou's private entrepreneurs have
invested in about 600 coal mines in Shanxi with 200 billion
yuan, which face mergers now.

"It has severely hit Wenzhou's economy. The
renationalisation will have irrevocable impacts on China's
economy. It will have a profound negative effect on wealth
distribution and future development of China, and it must
be stopped now."

Lawyers claim their clients are getting only about 30 per
cent of the real value of the business in the forced sale
of coal mines. The provincial government has appointed its
own valuer, but lawyers have claimed this is against the
law. Mines are effectively being bought back for the price
of exploration licences handed out during the first decade
of the century and this does not take into account capital
spending and commercial contracts, says Zhang Yucheng, a
lawyer at national Chinese law firm Dacheng Law Office.

Last year China depended entirely on government funding to
achieve its 8.7 per cent growth. It was a tough year for
businesses in China -- recent government figures showed 20
per cent of small businesses went broke between November
and May and a further 20 per cent went close to collapse --
but China's state-owned enterprises got richer.

Last week the state press reported that China's SOEs were
expected to generate 750 billion yuan in profits and
achieve sales revenue of 12 trillion yuan in 2009.

In the first 11 months of 2009, the 131 SOEs under the
direct supervision of the State Assets Supervision and
Administration Commission (SASAC) posted 3.4 per cent
year-on-year growth in profits to 710.9 billion yuan on
revenues of 11.1 trillion yuan. "China will continue to
push ahead with the restructuring of its SOEs next year and
will encourage state-owned companies to pursue mergers and
acquisitions across different regions and countries," SASAC
director Lo Rongrong says. "We will also back private
enterprise investments in state-owned entities."

Initially, aggrieved mine owners, unaware of their legal
rights, were loath to take on the government. But now
China's biggest law firm, Dacheng, has taken on the case
for a group of mine owners.

"The Shanxi government has no right to handle the ownership
of private coal mines. It violates the Chinese
constitution, contract law and mineral resource law," Zhang
says.

"The transfer deal price should be assessed according to
market value."

The law firm is pushing for the appointment of an
independent arbiter to reassess the valuation of the mines
and says the Shanxi government has breached a number of
laws and regulations.

This is an interesting case in a country with no private
property rights.

sainsburychina@gmail.com - Michael Sainsbury

CHINESE GOVERNMENT CRACKS DOWN ON PROPERTY SPECULATION

China rolls out fresh measures for property market amid rising house prices



BEIJING, Jan. 10 (Xinhua) -- The General Office of the State Council, China's cabinet, Sunday issued a notice that required central governmental departments and local governments to strengthen management, stabilize market expectations and facilitate stable and sound development of the real estate market.

"With the recovery of the real estate market, such problems as excessively rising house prices have recently emerged in some cities, which call for great attention," said the notice.

It listed 11 specific measures which should be taken in five aspects -- increasing supply of low-cost houses for low-income families and common residential houses, encouraging reasonable house buying while restraining purchases for speculation and investment, strengthening real estate project loan risk management and market supervision, speeding up construction of housing projects for low-income households, and specifying responsibilities of local governments.

On increasing supply of low-cost houses for low-income families and increasing supply of common residential houses, the notice said efforts should be made to construct more smaller-sized low- and medium-pricing apartments while increasing land supply for residential housing projects.

According to the notice, governments at all levels should act to push property developers to quicken project development and sales of finished projects.

The notice also said cities nationwide, especially those with high house prices and excessively rising house prices, should step up efforts to build more affordable or low-rent housing projects for low and medium income families.

To increase land supply for residential housing projects, the notice required city governments nationwide to lay out as soon as possible the residential housing construction plan for 2010-2012, which should be specific on each year's construction scale of smaller-sized low- and medium-pricing houses, low-rent houses and affordable houses for low and medium income families.

On encouraging reasonable house buying while restraining purchases for speculation and investment, the notice said financial institutions should continue encouraging first-time ordinary home buying while strictly carrying out mortgage loan policies on second-time home purchasing.

It said the down payment requirement for those families applying to buy a second or more houses backed with loans should be no less than 40 percent, and the mortgage rates should be strictly settled on the basis of loan risks.

On strengthening property project loan risk management and market supervision, the notice said financial institutions should not grant loans to any developers failing to meet the minimum amount of capital needed to jumpstart a new commercial property.

It also asked the People's Bank of China and the China Banking Regulatory Commission to enhance supervision on property credit among commercial financial institutions.

Efforts should also be made to strengthen monitoring of capital flow and trans-boundary investment and financing activities so as to prevent credit from entering the real estate sector illegally and stop overseas speculative funds from jeopardizing China's property market, it said.

The notice also asked the Ministry of Housing and Urban-Rural Development and other departments to take more measures to crack down on property developers that hoarded land or houses for more profits, and on real estate brokerage which conducted price deception or spread rumors to jack up house prices.

The taxation authority should thoroughly investigate tax fraud cases by property developers and severely punish those violators, while the State-owned Assets Supervision and Administration Commission should further regulate investment activities by major state-owned enterprises in the property market, according to the notice.

On speeding up construction of residential housing projects for low-income households, the notice said governments at all levels should strive to help solve the housing problem of 15.4 million low-income urban households by the end of 2012.

It urged local governments to make more efforts on the renovation of "shanty towns" and increase low-rent houses and affordable houses to low-income families.

On the fifth and final aspect, the notice said more work needed to be done to improve the working mechanism in which provincial governments should assume general responsibility in stabilizing property market and solving the housing problem for low-income families while city-level governments should take the responsibility of implementing specific measures.

Local governments should annul any rules in the property market that were in conflict with the macro-control policies adopted by the central government, it said.

The lengthy notice came after house prices in 70 large and medium-sized Chinese cities rose 5.7 percent year-on-year in November 2009, continuing an escalation which has triggered fresh concerns over property speculation and property bubble in the country.

The November rise, which was 1.8 percentage points higher than the jump in October, was the ninth straight monthly increase of house prices in the survey of real estate across major Chinese cities.

China's property market received a blow and began to fall in late 2008 after the global financial crisis crippled China's once-essential exports and the economy as a whole.

But a series of favorable measures, a credit boom and speculative investment in 2009 had led to a quick recovery of China's property market and price hikes, which started around March 2009.

Statistics from Goldman Sachs showed that over the past six years, housing price hikes had outpaced income rises by 30 percentage points in Shanghai and 80 percentage points in Beijing.

In Beijing, the housing price of per square meter is as much as a resident's seven months' salary on average.

Chinese Premier Wen Jiabao told Xinhua in an interview on Dec. 27 that the government would use taxes and mortgage rates to stabilize house prices and take measures to clamp down on house speculation.

Starting Jan. 1 this year, the government started to reimpose a sales tax on homes sold within five years of their purchase, after cutting the period to two years in January of 2009 to boost the then falling property market.

ARTICLE ARGUES: 'US CANNOT FIGHT CHINA WITHOUT OCCUPYING YEMEN'

Obama's Yemeni odyssey targets China
By M K Bhadrakumar

Asia Times

A year ago, Yemeni President Ali Abdallah Saleh made the
startling revelation that his country's security forces
apprehended a group of Islamists linked to the Israeli
intelligence forces. "A terrorist cell was apprehended and
will be referred to the courts for its links with the
Israeli intelligence services," he promised.

Saleh added, "You will hear about the trial proceedings."
Nothing was ever heard and the trail went cold. Welcome to
the magical land of Yemen, where in the womb of time the
Arabian Nights were played out.

Combine Yemen with the mystique of Islam, Osama bin Laden,
al-Qaeda and the Israeli intelligence and you get a heady
mix. The head of the US Central Command, General David
Petraeus, dropped in at the capital, Sana'a, on Saturday
and vowed to Saleh increased American aid to fight
al-Qaeda. United States President Barack Obama promptly
echoed Petraeus' promise, assuring that the US would step
up intelligence-sharing and training of Yemeni forces and
perhaps carry out joint attacks against militants in the
region.

Another Afghanistan?

Many accounts say that Obama, who is
widely regarded as a gifted and intelligent politician, is
blundering into a catastrophic mistake by starting another
war that could turn out to be as bloody and chaotic and
unwinnable as Iraq and Afghanistan. Yes, on the face of it,
Obama does seem erratic. The parallels with Afghanistan are
striking. There has been an attempt to destroy a US plane
by a Nigerian student who says he received training in
Yemen. And America wants to go to war.

Yemen, too, is a land of wonderfully beautiful rugged
mountains that could be a guerilla paradise. Yemenis are a
hospitable lot, like Afghan tribesmen, but as Irish
journalist Patrick Cockurn recollects, while they are
generous to passing strangers, they "deem the laws of
hospitality to lapse when the stranger leaves their tribal
territory, at which time he becomes 'a good back to shoot
at'." Surely, there is romance in the air - almost like in
the Hindu Kush. Fiercely nationalistic, almost every Yemeni
has a gun. Yemen is also, like Afghanistan, a land of
conflicting authorities, and with foreign intervention, a
little civil war is waiting to flare up.

Is Obama so incredibly forgetful of his own December 1
speech outlining his Afghan strategy that he violated his
own canons? Certainly not. Obama is a smart man. The
intervention in Yemen will go down as one of the smartest
moves that he ever made for perpetuating the US's global
hegemony. It is America's answer to China's surge.

A cursory look at the map of region will show that Yemen is
one of the most strategic lands adjoining waters of the
Persian Gulf and the Arabian Peninsula. It flanks Saudi
Arabia and Oman, which are vital American protectorates. In
effect, Uncle Sam is "marking territory" - like a dog on a
lamppost. Russia has been toying with the idea of reopening
its Soviet-era base in Aden. Well, the US has pipped Moscow
in the race.

The US has signaled that the odyssey doesn't end with
Yemen. It is also moving into Somalia and Kenya. With that,
the US establishes its military presence in an entire
unbroken stretch of real estate all along the Indian
Ocean's western rim. Chinese officials have of late spoken
of their need to establish a naval base in the region. The
US has now foreclosed China's options. The only country
with a coastline that is available for China to set up a
naval base in the region will be Iran. All other countries
have a Western military presence.

The American intervention in Yemen is not going to be on
the pattern of Iraq and Afghanistan. Obama will ensure he
doesn't receive any body bags of American servicemen
serving in Yemen. That is what the American public expects
from him. He will only deploy drone aircraft and special
forces and "focus on providing intelligence and training to
help Yemen counter al-Qaeda militants", according to the US
military. Obama's main core objective will be to establish
an enduring military presence in Yemen. This serves many
purposes.

A new great game begins First, the US move has to be viewed
against the historic backdrop of the Shi'ite awakening in
the region. The Shi'ites (mostly of the Zaidi group) have
been traditionally suppressed in Yemen. Shi'ite uprisings
have been a recurring theme in Yemen's history. There has
been a deliberate attempt to minimize the percentage of
Shi'ites in Yemen, but they could be anywhere up to 45%.

More importantly, in the northern part of the country, they
constitute the majority. What bothers the US and moderate
Sunni Arab states - and Israel - is that the Believing
Youth Organization led by Hussein Badr al-Houthi, which is
entrenched in northern Yemen, is modeled after Hezbollah in
Lebanon in all respects - politically, economically,
socially and culturally.

Yemenis are an intelligent people and are famous in the
Arabian Peninsula for their democratic temperament. The
Yemeni Shi'ite empowerment on a Hezbollah-model would have
far-reaching regional implications. Next-door Oman, which
is a key American base, is predominantly Shi'ite. Even more
sensitive is the likelihood of the dangerous idea of
Shi'ite empowerment spreading to Saudi Arabia's highly
restive Shi'ite regions adjoining Yemen, which on top of it
all, also happen to be the reservoir of the country's
fabulous oil wealth.

Saudi Arabia is entering a highly sensitive phase of
political transition as a new generation is set to take
over the leadership in Riyadh, and the palace intrigues and
fault lines within the royal family are likely to get
exacerbated. To put it mildly, given the vast scale of
institutionalized Shi'ite persecution in Saudi Arabia by
the Wahhabi establishment, Shi'ite empowerment is a
veritable minefield that Riyadh is petrified about at this
juncture. Its threshold of patience is wearing thin, as the
recent uncharacteristic resort to military power against
the north Yemeni Shi'ite communities bordering Saudi Arabia
testifies.

The US faces a classic dilemma. It is all right for Obama
to highlight the need of reform in Muslim societies - as he
did eloquently in his Cairo speech last June. But
democratization in the Yemeni context - ironically, in the
Arab context - would involve Shi'ite empowerment. After the
searing experience in Iraq, Washington is literally perched
like a cat on a hot tin roof. It would much rather be
aligned with the repressive, autocratic government of Saleh
than let the genie of reform out of the bottle in the oil
rich-region in which it has profound interests.

Obama has an erudite mind and he is not unaware that what
Yemen desperately needs is reform, but he simply doesn't
want to think about it. The paradox he faces is that with
all its imperfections, Iran happens to be the only
"democratic" system operating in that entire region.

Iran's shadow over the Yemeni Shi'ite consciousness worries
the US to no end. Simply put, in the ideological struggle
going on in the region, Obama finds himself with the
ultra-conservative and brutally autocratic oligarchies that
constitute the ruling class in the region. Conceivably, he
isn't finding it easy. If his own memoirs are to be
believed, there could be times when the vague recollections
of his childhood in Indonesia and his precious memories of
his own mother, who from all accounts was a free-wheeling
intellectual and humanist, must be stalking him in the
White House corridors.

Israel moves in But Obama is first and foremost a realist.
Emotions and personal beliefs drain away and strategic
considerations weigh uppermost when he works in the Oval
Office. With the military presence in Yemen, the US has
tightened the cordon around Iran. In the event of a
military attack on Iran, Yemen could be put to use as a
springboard by the Israelis. These are weighty
considerations for Obama.

The fact is that no one is in control as a Yemeni
authority. It is a cakewalk for the formidable Israeli
intelligence to carve out a niche in Yemen - just as it did
in northern Iraq under somewhat comparable circumstances.

Islamism doesn't deter Israel at all. Saleh couldn't have
been far off the mark when he alleged last year that
Israeli intelligence had been exposed as having kept links
with Yemeni Islamists. The point is, Yemeni Islamists are a
highly fragmented lot and no one is sure who owes what sort
of allegiance to whom. Israeli intelligence operates
marvelously in such twilight zones when the horizon is
lacerated with the blood of the vanishing sun.

Israel will find a toehold in Yemen to be a god-sent gift
insofar as it registers its presence in the Arabian
Peninsula. This is a dream come true for Israel, whose
effectiveness as a regional power has always been seriously
handicapped by its lack of access to the Persian Gulf
region. The overarching US military presence helps Israel
politically to consolidate its Yemeni chapter. Without
doubt, Petraeus is moving on Yemen in tandem with Israel
(and Britain). But the "pro-West" Arab states with their
rentier mentality have no choice except to remain as mute
spectators on the sidelines.

Some among them may actually acquiesce with the Israeli
security presence in the region as a safer bet than the
spread of the dangerous ideas of Shi'ite empowerment
emanating out of Iran, Iraq and Hezbollah. Also, at some
stage, Israeli intelligence will begin to infiltrate the
extremist Sunni outfits in Yemen, which are commonly known
as affiliates of al-Qaeda. That is, if it hasn't done that
already. Any such link makes Israel an invaluable ally for
the US in its fight against al-Qaeda. In sum, infinite
possibilities exist in the paradigm that is taking shape in
the Muslim world abutting into the strategic Persian Gulf.

It's all about China

Most important, however, for US global
strategies will be the massive gain of control of the port
of Aden in Yemen. Britain can vouchsafe that Aden is the
gateway to Asia. Control of Aden and the Malacca Strait
will put the US in an unassailable position in the "great
game" of the Indian Ocean. The sea lanes of the Indian
Ocean are literally the jugular veins of China's economy.
By controlling them, Washington sends a strong message to
Beijing that any notions by the latter that the US is a
declining power in Asia would be nothing more than an
extravagant indulgence in fantasy.

In the Indian Ocean region, China is increasingly coming
under pressure. India is a natural ally of the US in the
Indian Ocean region. Both disfavor any significant Chinese
naval presence. India is mediating a rapprochement between
Washington and Colombo that would help roll back Chinese
influence in Sri Lanka. The US has taken a u-turn in its
Myanmar policy and is engaging the regime there with the
primary intent of eroding China's influence with the
military rulers. The Chinese strategy aimed at
strengthening influence in Sri Lanka and Myanmar so as to
open a new transportation route towards the Middle East,
the Persian Gulf and Africa, where it has begun contesting
traditional Western economic dominance.

China is keen to whittle down its dependence on the Malacca
Strait for its commerce with Europe and West Asia. The US,
on the contrary, is determined that China remains
vulnerable to the choke point between Indonesia and
Malaysia.

An engrossing struggle is breaking out. The US is unhappy
with China's efforts to reach the warm waters of the
Persian Gulf through the Central Asian region and Pakistan.
Slowly but steadily, Washington is tightening the noose
around the neck of the Pakistani elites - civilian and
military - and forcing them to make a strategic choice
between the US and China. This will put those elites in an
unenviable dilemma. Like their Indian counterparts, they
are inherently "pro-Western" (even when they are
"anti-American") and if the Chinese connection is important
for Islamabad, that is primarily because it balances
perceived Indian hegemony.

The existential questions with which the Pakistani elites
are grappling are apparent. They are seeking answers from
Obama. Can Obama maintain a balanced relationship vis-a-vis
Pakistan and India? Or, will Obama lapse back to the George
W Bush era strategy of building up India as the pre-eminent
power in the Indian Ocean under whose shadow Pakistan will
have to learn to live?


US-India-Israel axis

On the other hand, the Indian elites
are in no compromising mood. Delhi was on a roll during the
Bush days. Now, after the initial misgivings about Obama's
political philosophy, Delhi is concluding that he is all
but a clone of his illustrious predecessor as regards the
broad contours of the US's global strategy - of which
containment of China is a core template.

The comfort level is palpably rising in Delhi with regard
to the Obama presidency. Delhi takes the surge of the
Israeli lobby in Washington as the litmus test for the
Obama presidency. The surge suits Delhi, since the Jewish
lobby was always a helpful ally in cultivating influence in
the US Congress, media and the rabble-rousing think-tankers
as well as successive administrations. And all this is
happening at a time when the India-Israel security
relationship is gaining greater momentum.

United States Defense Secretary Robert Gates is due to
visit Delhi in the coming days. The Obama administration is
reportedly adopting an increasingly accommodative attitude
toward India's longstanding quest for "dual-use" technology
from the US. If so, a massive avenue of military
cooperation is about to open between the two countries,
which will make India a serious challenger to China's
growing military prowess. It is a win-win situation as the
great Indian arms bazaar offers highly lucrative business
for American companies.

Clearly, a cozy three-way US-Israel-India alliance provides
the underpinning for all the maneuvering that is going on.
It will have significance for the security of the Indian
Ocean, the Persian Gulf and the Arabian Peninsula. Last
year, India formalized a naval presence in Oman.

All-in-all, terrorism experts are counting the trees and
missing the wood when they analyze the US foray into Yemen
in the limited terms of hunting down al-Qaeda. The hard
reality is that Obama, whose main plank used to be
"change", has careened away and increasingly defaults to
the global strategies of the Bush era. The freshness of the
Obama magic is dissipating. Traces of the "revisionism" in
his foreign policy orientation are beginning to surface. We
can see them already with regard to Iran, Afghanistan, the
Middle East and the Israel-Palestine problem, Central Asia
and towards China and Russia.

Arguably, this sort of "return of the native" by Obama was
inevitable. For one thing, he is but a creature of his
circumstances. As someone put it brilliantly, Obama's
presidency is like driving a train rather than a car: a
train cannot be "steered", the driver can at best set its
speed, but ultimately, it must run on its tracks.

Besides, history has no instances of a declining world
power meekly accepting its destiny and walking into the
sunset. The US cannot give up on its global dominance
without putting up a real fight. And the reality of all
such momentous struggles is that they cannot be fought
piece-meal. You cannot fight China without occupying Yemen.

Ambassador M K Bhadrakumar was a career diplomat in the
Indian Foreign Service. His assignments included the Soviet
Union, South Korea, Sri Lanka, Germany, Afghanistan,
Pakistan, Uzbekistan, Kuwait and Turkey.

VOICE OF BRITISH FINANCIAL ELITE: US ARE LOSING THE FREE WORLD

America is losing the free world

By Gideon Rachman

4 Jan, 2010, FT

Ever since 1945, the US has regarded itself as the leader of the “free world”. But the Obama administration is facing an unexpected and unwelcome development in global politics. Four of the biggest and most strategically important democracies in the developing world – Brazil, India, South Africa and Turkey – are increasingly at odds with American foreign policy. Rather than siding with the US on the big international issues, they are just as likely to line up with authoritarian powers such as China and Iran.

The US has been slow to pick up on this development, perhaps because it seems so surprising and unnatural. Most Americans assume that fellow democracies will share their values and opinions on international affairs. During the last presidential election campaign, John McCain, the Republican candidate, called for the formation of a global alliance of democracies to push back against authoritarian powers. Some of President Barack Obama’s senior advisers have also written enthusiastically about an international league of democracies.

But the assumption that the world’s democracies will naturally stick together is proving unfounded. The latest example came during the Copenhagen climate summit. On the last day of the talks, the Americans tried to fix up one-to-one meetings between Mr Obama and the leaders of South Africa, Brazil and India – but failed each time. The Indians even said that their prime minister, Manmohan Singh, had already left for the airport.

So Mr Obama must have felt something of a chump when he arrived for a last-minute meeting with Wen Jiabao, the Chinese prime minister, only to find him already deep in negotiations with the leaders of none other than Brazil, South Africa and India. Symbolically, the leaders had to squeeze up to make space for the American president around the table.

There was more than symbolism at work. In Copenhagen, Brazil, South Africa and India decided that their status as developing nations was more important than their status as democracies. Like the Chinese, they argued that it is fundamentally unjust to cap the greenhouse gas emissions of poor countries at a lower level than the emissions of the US or the European Union; all the more so since the industrialised west is responsible for the great bulk of the carbon dioxide already in the atmosphere.

Revealingly, both Brazilian and Chinese leaders have made the same pointed joke – likening the US to a rich man who, after gorging himself at a banquet, then invites the neighbours in for coffee and asks them to split the bill.

If climate change were an isolated example, it might be dismissed as an important but anomalous issue that is almost designed to split countries along rich-poor lines. But, in fact, if you look at Brazil, South Africa, India and Turkey – the four most important democracies in Latin America, Africa, Asia and the greater Middle East – it is clear that none of them can be counted as a reliable ally of the US, or of a broader “community of democracies”.

In the past year, President Luiz Inácio Lula da Silva of Brazil has cut a lucrative oil deal with China, spoken warmly of Hugo Chávez, president of Venezuela, and congratulated Mahmoud Ahmadi-Nejad on his “victory” in the Iranian presidential election, while welcoming him on a state visit to Brazil.

During a two-year stint on the United Nations Security Council from 2006, the South Africans routinely joined China and Russia in blocking resolutions on human rights and protecting authoritarian regimes such as Zimbabwe, Uzbekistan and Iran.

Turkey, once regarded as a crucial American ally in the cold war and then trumpeted as the only example of a secular, pro-western, Muslim democracy, is also no longer a reliable partner for the west. Ever since the US-led invasion of Iraq, opinion polls there have shown very high levels of anti-Americanism. The mildly Islamist AKP government has engaged with America’s regional enemies – including Hamas, Hizbollah and Iran – and alarmed the Americans by taking an increasingly hostile attitude to Israel.

India’s leaders do seem to cherish the idea that they have a “special relationship” with the US. But even the Indians regularly line up against the Americans on a range of international issues, from climate change to the Doha round of trade negotiations and the pursuit of sanctions against Iran or Burma.

So what is going on? The answer is that Brazil, South Africa, Turkey and India are all countries whose identities as democracies are now being balanced – or even trumped – by their identities as developing nations that are not part of the white, rich, western world. All four countries have ruling parties that see themselves as champions of social justice at home and a more equitable global order overseas. Brazil’s Workers’ party, India’s Congress party, Turkey’s AKP and South Africa’s African National Congress have all adapted to globalisation – but they all retain traces of the old suspicions of global capitalism and of the US.

Mr Obama is seen as a huge improvement on George W. Bush – but he is still an American president. As emerging global powers and developing nations, Brazil, India, South Africa and Turkey may often feel they have more in common with a rising China than with the democratic US.

CHINESE MILITIAWOMEN AT 60th ANNIVERSARY PARADE: 'WOMEN HOLD UP HALF OF THE SKY'