Soft power goes hard: China’s economic interest in the Pacific comes with strings attached



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Red star rising: China has clear strategic designs on the Pacific Islands region.
Shutterstock

John Garrick, Charles Darwin University

China’s economic expansion into the Pacific Islands region raises critical questions for both the islands and Australia. What happens if infrastructure loans by Chinese banks and authorised state enterprises to vulnerable Pacific Island nations cannot be repaid? What consequences of default can be anticipated? Are there military dimensions?

The Pentagon has warned of the “potential military advantages” flowing from Chinese investments in other countries. China rejects this assertion. But if it does ever want access to foreign ports to support naval deployments in distant waters, it is laying the ground work to get it.

Belt and Road moves on the Pacific Islands

China’s grand plan to more closely link countries across Eurasia and the Indian Ocean through trade deals and infrastructure projects is known as the Silk Road Economic Belt and 21st Century Maritime Silk Road (“Belt and Road”). The plan includes Pacific pathways.



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Read more:
The Belt and Road Initiative: China’s vision for globalisation, Beijing-style


Along with Australia and New Zealand, seven Pacific Islands nations officially recognise the People’s Republic of China (PRC). Another six recognise the Republic of China (Taiwan). China’s strategy is both to counter Taiwan’s influence and further its own interests. It wants Pacific nations to support it in international forums. Vanuatu, for example, was the first country to support China’s claims to island territory in the South China Sea disputed with the Philippines.



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The number of Chinese companies operating in the Pacific region has greatly increased since Xi Jinping came to power in 2012. Trade between China and Pacific Island nations has ballooned to more than A$10 billion.

While its influence is still not as great as that of the US or even Australia, China’s growing investments cover mines, hydro-electricity projects, fishing, timber, real estate and services. Over the past decade it has also lavished the region with $US1.8 billion ($A2.4 billion) in foreign aid, including $US175,000 worth of quad bikes for Cook Island parliamentarians.

The soft power of money

China argues Chinese investment is “tactful” – that it helps developing nations build needed infrastructure with “no-strings-attached”. It contrasts this to Western aid models that require governance measures and other performance indicators to be in place in relation to aid funding.

But the credit Chinese state banks are extending to impoverished developing nations also looks a lot like a form of “debt colonialism”. The fear is that China is using the loans as leverage to expand its military footprint.




Read more:
Why China’s ‘debt-book diplomacy’ in the Pacific shouldn’t ring alarm bells just yet


The Chinese loans typically offer a period of grace before an interest rate of 2-3% over 15-20 years is imposed. In Tonga, for example, China deferred loan repayments for a period after the International Monetary Fund warned it was at risk of debt distress. Repayments started again in 2018, reportedly at a higher rate than before.

Sri Lankan lessons

If Tonga and other Pacific Island nations default, China can enforce contractual conditions as a pretext to advancing wider strategic aims.

This is precisely what happened in Sri Lanka.

The Sri Lankan government had high hopes for the Hambantota Port Development Project, built by China Harbour Engineering Company, one of Beijing’s largest state-owned enterprises, and mostly funded by the state-owned Export–Import Bank of China. When the port failed to generate anticipated revenues, the government ended up owing China at least $US3 billion with no means to pay.

The Chinese then demanded a Chinese company take a dominant equity share in the port. The Sri Lankan government was also forced of hand over 15,000 acres of land around the port for 99 years.

Now China owns an Indian Ocean port strategically placed on one of the busiest shipping routes in the world.

Pacific interests

China has clear military interests in the Pacific. In 2014 Xi Jinping personally visited Fiji to sign memorandums of understanding including for greater military cooperation.

Australian intelligence sources allege China has been secretly negotiating to build a military base in Vanuatu. Both nations deny this. Such a base would give China a foothold for operations to coerce Australia and outflank the US and its base on Guam.

China’s “soft power” is being better resourced to influence foreign nations.
Its moves in the Pacific means the geopolitics of the region are hardening up.




Read more:
Fears about China’s influence are a rerun of attitudes to Japan 80 years ago


Globally, China’s rise has profound implications for international law and trade.

China naturally prefers bilateral relationships to leverage its power and advance its interests. It has steered away from multilateral dispute resolution, especially since the South China Sea arbitration, which ruled unanimously in favour of the Philippines. It has simply ignored the verdict and gone ahead turning the disputed rocky shoals into military outposts.

If China can ignore the legitimate claims of the Philippines, it can ignore the rights of the smaller and more fragile Pacific Island nations. Its actions flag its challenge to the international order Australia has long championed – one based on rule of law and political and economic liberalism.

Its influence is unlikely to promote democratic principles. Those holding those principles dear need to help the Pacific Island nations resist the lure of soft-power “incentives” promised with no strings attached.

There are definitely strings attached.The Conversation

John Garrick, Senior Lecturer, Business Law, Charles Darwin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Vital Signs: Australia’s stubborn growth problems are moving at a geologic pace



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Unfortunately for the RBA, the health of the economy is not measured on the Geologic Time Scale.
Alfonso Silóniz/Flickr, CC BY-NC-ND

Richard Holden, UNSW

Vital Signs is a regular economic wrap from UNSW economics professor and Harvard PhD Richard Holden (@profholden). Vital Signs aims to contextualise weekly economic events and cut through the noise of the data affecting global economies.

This week: Interest rates remain on hold as the RBA talks up employment growth, green shoots remain in manufacturing, and China strikes back in the Trump-led trade war.


On Tuesday, the RBA left official interest rates unchanged at 1.50% for the 18th consecutive meeting, tying their all-time record. They will break that record next month when they do the same thing.

And the official statement by governor Philip Lowe sounded like it came from a guy who had gone from crossing his fingers to crossing his toes as well. For example:

“The Australian economy grew by 2.4 per cent over 2017. The Bank’s central forecast remains for faster growth in 2018.”

Um, why? The same macro model that got 2017 wrong is now going to get 2018 right?

Or this one:

“The unemployment rate has declined over the past year, but has been steady at around 5½ per cent over the past six months. The various forward-looking indicators continue to point to solid growth in employment in the period ahead, with a further gradual reduction in the unemployment rate expected.”

But a few months ago, those same forward-looking indicators were saying the plateau in the unemployment rate wouldn’t happen.

And finally (but only because I have space constraints):

“Notwithstanding the improving labour market, wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time.”

If “over time” is read analogous to “life in the Mesazoic Era evolved over time” then I suppose that may be right.

Unfortunately for the RBA, the health of the economy is not measured on the Geologic Time Scale. Stubbornly low inflation, persistently hopeless wage growth, and with the Australian population growing at 1.6% p.a., that 2.4% GDP growth number looks pretty weak. The real question is whether the RBA is not cutting rates because it thinks monetary policy is ineffective at this level, or because it’s scared of fuelling (further fuelling?) a (the?) housing price bubble.




Read more:
What economics has to say about housing bubbles


ABS data released Wednesday showed a drop in building approvals in February. Total dwelling approvals were down 6.2%, driven by a 16.4% drop in apartments, compared to a 1.9% rise in houses. For the 12 months to February 2018, that puts the total down 3.1%, again driven by a large (14.8%) drop in apartments and a rise (6.1%) in houses.

This is all evidence that demand – often from offshore – has dried up in one important sector of the market: apartments. It is still too early to know what the fallout will be, but this is exactly the kind of pattern one sees in property markets when the music has stopped.

The Australian Industry Group’s Performance of Manufacturing Index, released this week, hit a record high of 63.1 index points for March. Perhaps more importantly, the survey indicated that capacity utilisation was at a record high of 81.2%. This matters because it suggests stronger employment and wage growth in the sector.

On the other hand, manufacturing is about 6.5% of GDP, so even strong growth in the sector has a relatively modest overall effect. But, as they say in baseball, you can’t boo a home run.

US jobs figures continued to impress, with payroll processor ADP releasing figures Thursday Australian time that the economy added 241,000 jobs in March. The official figures from the BEA come out Friday US time, with market expectations at an addition of 185,000. So if the official figures line up with ADP, this will be further evidence of strong employment growth.

Trump trade war update

This week, China struck back, again. The Trump administration recently instituted roughly US$50 billion worth of tariffs on steel, cars, automotive and aircraft parts, consumer products like televisions, and other goods. Almost immediately, China responded with tariffs of a similar value on 106 types of American goods.




Read more:
America’s allies will bear the brunt of Trump’s trade protectionism


Those 106 types of goods include soybeans and others produced in the Trump heartland. This was a cleverly designed, targeted measure, designed to hurt Trump politically.

His response:

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That reveals his mercantilist view of trade: that it’s a zero-sum game rather than something that increases the size of the economic pie and makes both countries better off. But hey, maybe he has a big reading backlog and isn’t up to 1817, when David Ricardo pointed this out with his theory of “comparative advantage”.

The ConversationLet’s hope it does, and President Trump gets the message that he needs to knock this off. All he is doing is making America poorer. And the game theory of it is worse. Tariffs beget tariffs.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.

China’s economic power is actually a lot smaller than you think


Peter Robertson, University of Western Australia

China’s economic presence on world markets is actually much smaller than that of the United States of America and smaller than our key three asia-pacific allies combined.

In recent years, reports by financial institutions like the World Bank have claimed China is the world’s largest economy. China’s annual gross domestic product (GDP), when converted to United States dollars using purchasing power parity exchange rates is estimated to be worth around US$19 trillion, surpassing the USA’s GDP of US$17 trillion.


Read More: As China flexes its muscles in Antarctica, science is the best diplomatic tool on the frozen continent


China’s size is a good indicator of potential economic opportunities for Australia. But China’s rise is also creating a growing discomfort in how China will use its economic power. In both Washington and Canberra questions are being asked about how to our balance economic interests with these growing political and security concerns.

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As a large country China may insist on a greater acceptance of its own ideals and priorities as a condition of economic engagement. As a dictatorship, however, its ambitions are unclear and may not align well with Australia and other democratic countries in the region.

Likewise China’s assertiveness in the South China Sea has rekindled interest in security cooperation between the region’s largest democracies, Japan, India and Australia, as well as the United States through the Quadrilateral Security Dialogue.

The concerns raised are real, but are in some ways exaggerated. Specifically, the figure of US$19 trillion is an estimate based on a purchasing power parity exchange rate, which overstates China’s impact on world markets.

This is because the purchasing power parity exchange rate tells us how much money you need in China to be as well off as you are in the US. It is a measure of how big China’s GDP would be if costs of living were the same as the US.

This can be useful, but it is not an indicator of China’s footprint in the world economy.


Read more: Australia is hedging its bets on China with the latest Foreign Policy White Paper


A reasonable measure of a country’s economic footprint on the world economy is how much it could potentially change demand or supply on world markets.

When countries export they have to accept payment based on market exchange rates. Likewise when countries import they must pay in foreign currency based on market exchange rates. This means that to compare China’s market size with the US, we need to convert China’s GDP, measured through China’s currency renminbi, to US dollars, using market exchange rates.

China’s GDP measured at market exchange rates, however, is only US$9 trillion – almost half that of the US.

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This means that the impact China’s economy can potentially have on the world economy is really only about half as much as the US.

The difference in values arises for the same reason that tourists find that their money often goes much further in developing countries. That is if you convert your US dollars to renminbi, you will find that you can purchase a lot more in China than the US, especially in non traded goods and services such as haircuts or street food.

The purchasing power parity exchange rate is the rate that tells you how much you need in China to be just as well off – for example to buy the same basket of goods. It’s very useful rate for tourists and is great way to compare standards of living across countries.


Read More: China’s growing footprint on the globe threatens to trample the natural world


But it’s not a measure of how much you can actually buy. In order to measure the potential influence of China’s economy, it is buying and selling power that matters.

The same line of reasoning also effects how we should think about the asia-pacific partnership of regional democracies. The combined GDP of India, Japan and Australia, measured at purchasing power parity rates is smaller than China.

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But at market exchange rates their combined market size exceeds that of China. This is because just as purchasing power parity exchange rates make China seem too big, they make Japan seem small relative to its real buying and selling power on world markets.

The collective GDP of Japan, Australia, India and the United States represents a market that is around three times larger than China.

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These differences are quite significant and they are important because they affect the way we think about the value of economic opportunities and our security alliances. When interpreted appropriately China is a large country. But it still has a long way to go before it can match the sheer economic weight of the US.

The ConversationSo while China is very important, the market size of regional democracies should not be underestimated.

Peter Robertson, Professor, University of Western Australia

This article was originally published on The Conversation. Read the original article.

Government budget update saved by higher than expected economic figures


Saul Eslake, University of Tasmania

The 2017-18 Mid-Year Economic and Fiscal Outlook (MYEFO) is another reminder – if one is needed – that the relationship between the budget and the economy runs in both directions. While we mostly ask the question, “how will the budget affect the economy?”, this update shows the economy can also have (and has often had) a significant impact on the the budget.

The highlights of this year’s MYEFO, as far as the government is concerned, are the A$9.3 billion improvement in the underlying cash balance over the four years to 2020-21 (compared with what had been forecast in the May budget), and the consequential A$11 billion reduction in the forecast peak in net debt (from A$366 billion to A$355 billion) in that year.

These improvements are the result of revisions to economic assumptions and other so-called “parameter variations” since the budget, which in total have improved the four-year bottom line by more than A$11 billion. The biggest of these came from reductions in payments to people with disabilities, students, single parents and age pensioners (totalling A$4.6 billion over four years) due to lower-than-expected recipient numbers.


Read more: Budget update shaves growth and wage forecasts but is brighter about the deficit


Personal income tax cuts seem possible

There is no additional detail in MYEFO regarding the government’s foreshadowed personal income tax cuts ahead of the next election. But if the forecast surplus for 2020-21 of A$10.2 billion is credible, then there’s arguably some scope for the government to fund personal income tax cuts beginning in that year.

Although the cost of more significant tax cuts would escalate substantially over the medium term, there is actually more scope for these cuts than generally realised (provided the government succeeds in keeping growth in spending under control).

That’s because the projected moderate surpluses, averaging about 0.5% of GDP out to 2027-28, incorporate an arbitrary assumption that taxation revenue will be capped at 23.9% of GDP. If that assumption wasn’t made, the projected surpluses would rise to 1.6% of GDP by 2027-28.

In dollar terms that would imply a surplus of around A$55 billion, compared with one of around A$15 billion if the surplus were only 0.5% of GDP. Over the period 2021-22 to 2027-28, relaxing the assumption that tax revenues are capped at 23.9% of GDP results in almost A$90 billion of additional budget surpluses. This is over and above what is projected with that “tax cap” in place.

Presumably, some of those “additional surpluses” are absorbed, in the government’s internal figuring, by the promised phased reduction in the company tax rate for businesses turning over more than A$50 million per annum by 2025-26 – which according to the last publicly available estimate would reduce revenues by some A$65 billion over ten years.

However, that would still leave a considerable amount “left over” to pay for personal income tax cuts, and allow the government to continue to project surpluses of around 0.5% of GDP out to the second half of the next decade.

That’s assuming, of course, that we are able to clock up 36 years of uninterrupted economic growth, and that all the other projections come to pass, including for a return to more “normal” rates of wages growth.

Economic indicators in MYEFO

Treasury has revised downwards its forecast for economic growth in the current financial year, from 2.75% to 2.5%. A large part of this revision comes from stronger growth in public spending, which is now forecast to rise by 4% in real terms in 2017-18, up from 2.5% at the time of the May budget.

This reflects faster growth in both government spending (on the NDIS) and investment (NBN and state government infrastructure investment). The forecast for business investment has also been upgraded, from flat at budget time to growth of 2%, the result of both stronger growth in non-mining business investment and a smaller decline in mining investment.

This is largely the result of a downward revision to the forecast for growth in household consumption spending which has been lowered from 2.75% to 2.25%: and this carries over into a 0.25 percentage point reduction in the forecast for 2018-19, to 2.75%. Even these require a further decline in the household saving rate.

The forecast for dwelling investment spending has turned around from 1.5% growth to a decline of 1.5%, with the “softening in dwelling investment occuring slightly earlier than expected”.

Longer term, the government is still anticipating that economic growth will average 3% per annum from 2018-19 through 2023-24, by which time all the “spare capacity” in the labour market will have been absorbed. That is, the unemployment rate will be down to 5% and underemployment (workers not being able to get enough hours at work) returned to more normal levels.

The ConversationThe longer-term projections also assume that wages growth accelerates significantly from 2019-20. This represents the greatest risk to the goverment’s promise of a return to surplus by 2020-21.

Saul Eslake, Vice-Chancellor’s Fellow, University of Tasmania

This article was originally published on The Conversation. Read the original article.

At APEC, Donald Trump and Xi Jinping revealed different ideas of Asia’s economic future



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Prime Minister Malcolm Turnbull (front left) joins other world leaders for the APEC summit in Danang, Vietnam.
AAP/pool

Nick Bisley, La Trobe University

Donald Trump has just attended his first APEC leaders’ summit following bilateral state visits to Japan, South Korea, China and Vietnam. After the NATO summit and G20 earlier in the year, in which he displayed his inexperience and lack of affinity for multilateralism, many feared the worst.

But the comfortable rapport he established with leaders like Japanese Prime Minister Shinzo Abe, Chinese President Xi Jinping and South Korean President Moon Jae-in, as well as the less formal structures of APEC, meant there was no repeat of the northern hemisphere summer.

APEC was established in 1989 with the leaders’ summit added in 1994, with an ambition to drive economic co-operation and in particular trade liberalisation across the region. While it has been modestly successful in the unglamorous area of trade facilitation – involving largely regulatory streamlining to make the business of international trade smooth – as a co-operative framework it has not achieved any major outcomes.

So when looking at APEC, the real interest is not on the grouping’s economic policy process, but what occurs on the platform that the leaders’ summit provides, as its convening power remains impressive. What did we see in 2017?

Once again, APEC was a forum for discussing a non-APEC trade agreement. The TPP had regularly figured in previous meetings, and this time the 11 remaining members met to try to craft an agreement without the US. Canadian Prime Minister Justin Trudeau failed to attend one of the meetings, but it does appear that the 11 have salvaged some kind of a deal.

A string of meetings occurred on the sidelines. Of greatest interest was Trump’s conclave with Russian President Vladimir Putin, mostly focused on relationship-building, particularly important given the slate of new leaders in the club. New Zealand Prime Minister Jacinda Ardern, Moon, Hong Kong’s chief executive Carrie Lam and Taiwanese President Tsai Ing-wen were all making their debut.

Despite the evidently warm personal relationship that Trump has developed with Xi, the smiles and diplomatic tourism in Beijing are the pleasant facade of what has become a more overt competition for influence in the region. At the 2017 iteration of the meeting Gareth Evans famously described as “four adjectives in search of meaning”, this was plainly in sight.

At keynote speeches to the APEC CEO summit, Xi and Trump laid out their views on the region’s future. Trump’s speech was the second setpiece, following Rex Tillerson’s speech at CSIS in October, which outlined a belated US strategy to the region. The US aims to sustain a “free and open Indo-Pacific”, and Trump’s focus at APEC was on the economic dimension.

Continuing the themes raised in his UN General Assembly speech of September in which Trump declared he expected all countries to pursue their own interests first, he continued his walk away from core principles of its economic engagement of the region. In the past it had pursued large scale multilateral agreements, initially chasing a big free-trade agreement of the Asia Pacific, and more recently the TPP.

Trump said very plainly that there would be no more big agreements, and only bilateral deals based on strict and fairly narrow ideas of reciprocity. The other notable element was a direct statement that the US would no longer put up with predatory practices of other countries, such as IP theft, subsidies and not-enforced trade rules. While he did not name China as his main concern, he didn’t need to.

Trump’s effort to reconcile US rhetorical commitment to an open economic order in the region with his mercantilism stood in contrast to Xi’s approach. Xi painted a picture that seemed much more in keeping with the longer-run trends in Asia’s economic order.

Xi repeated the promise made at Davos that China was committed to economic openness. More specifically, he said China would seek to make economic globalisation more open, inclusive and balanced.

Interestingly, he said China would uphold regional multilateralism as the best means to advance the region’s common interests that were “interlocked”. He also presented the “Belt and Road Initiative” as an open mechanism that would help advance regional connectivity and even, somewhat surprisingly, described it in fairly economically liberal terms.

To be clear, Xi’s speech was a declaration of what China would do – whether it actually follows through is an open question. Nonetheless, Xi presented a China that would lead an open and inclusive economic order, in some ways as a defender of the status quo. Trump, in contrast, seemed to break with that tradition. Trump’s economic nationalism was on display, and he encouraged others to follow his lead.

Quite where this leaves the region is unclear. We still have to wait to see whether the two speeches of the “free and open Indo-Pacific” becomes an actual strategy. US policy remains hindered by a lack of resourcing in key branches of government.

The ConversationEqually, we have to wait to see what China will actually do. But make no mistake, at APEC 2017, the region’s two biggest powers presented clearly different visions of the region’s economic future.

Nick Bisley, Executive Director of La Trobe Asia and Professor of International Relations, La Trobe University

This article was originally published on The Conversation. Read the original article.

The G20’s economic leadership deficit


Adam Triggs, Australian National University

Few have heard of the Baltic Dry Index. It measures the demand for bulk shipping carriers, used for international trade. It usually attracts little attention. But nine years ago this index had the undivided attention of the 20 most powerful leaders in the world.

It was when the global financial system was on a precipice. Stock markets were crashing. Credit markets were freezing. Rolling failures across financial institutions were shattering confidence. Unable to wait for monthly trade data, the Baltic Dry Index showed in real-time what many leaders feared: global trade and commerce were grinding to a halt.

Leaders faced the real prospect of another Great Depression. But they were determined not to make the mistakes of the past. They resisted a return to protectionism. They slashed interest rates and buttressed the International Monetary Fund and development banks. Over the next three years, they implemented US$5 trillion of co-ordinated fiscal stimulus, the largest in history.

That leadership is needed again today. The risks leaders face at the latest G20 meeting in Hamburg, Germany, might not be as serious as those the leaders who met in Washington faced back in 2008. But the risks are present, and leaders are disengaging with the G20’s ever-expanding agenda. They are more likely to use the G20 for cheap political point scoring than for advancing co-operation on critical global challenges.

Australia can play a role in helping the G20 to deliver this leadership.

Economic challenges

Protectionist measures are on the rise. Protectionist rhetoric is rising faster. The World Trade Organisation shows that the stock of trade-restrictive measures is growing, up 8.5% in the 12 months to May 2017 alone.

The G20’s growth agenda from 2014 is in tatters. The G20 committed to make G20 GDP 2.1% bigger by 2018. Instead, the International Monetary Fund forecasts it to fall short by almost 6%.

A strong, effective G20 is manifestly in the interests of the global community, but particularly of Australia. Three-quarters of our merchandise trade is with G20 countries. Our banks rely on them for wholesale funding. Our tourism sector relies on them for two-thirds of our tourists. Our universities rely on them for the vast majority of their students.

Critically, the G20 is an opportunity for Australia to have a say in how global governance will be shaped in the years ahead and to be a regional champion for Asia.

Through in-depth interviews with over 40 central bank governors, ministers and officials from G20 countries, my research suggests there are practical things the G20 could do to increase its relevance. Importantly, participants see Australia as a developed economy, closely integrated in Asia and which promotes the values of the open, rules-based international order. This makes Australia well placed to push for pragmatic changes to improve the G20 process, particularly having hosted the 2014 meeting.

My interviewees warned that the G20’s agenda is too heavily dictated by the host country. In 2011, when France hosted the meeting, President Nicolas Sarkozy asked UK Prime Minister David Cameron to produce a report on reforming global governance. This instantly elevated the issue and saw substantial involvement from other leaders. Australia should push for allowing more leaders to champion the issues important to them, rather than leaving it all to the host country.

Participants similarly suggested that the G20’s peer-review process is too weak. This is the process through which countries review and give advice on each other’s policies. It’s critical to the G20’s ability to generate peer pressure, which is how a non-binding forum influences policies.

But participants saw this process as being a “tick and flick” exercise, isolated to junior officials in G20 working groups. Australia should advocate to change this, elevating the peer-review process to the level of ministers, governors and leaders. This will allow the people who have political capital to raise substantive points with one another.

For the G20 to demonstrate global leadership, participants suggest that it needs a genuine agenda for growth, with a stronger focus on making growth more inclusive. The OECD has some suggestions for this, such as investment in infrastructure, education and microeconomic reforms that lift workforce participation and create new opportunities for quality investment. The IMF shows that GDP gains can be 25% larger if structural reforms like this are co-ordinated between countries.

Participants also wanted progress on trade but warned that reaching agreement has been difficult. Recent research suggests the G20 should seek to promote consistency between the plethora of global, regional and bilateral trade agreements and develop a framework for how they can be scaled up into a global, WTO-led agreement.

The research shows that countries benefit most when trade liberalisation happens globally, but the “noodle bowl” of existing trade agreements is a nightmare for exporters to navigate. Australia, as a strong advocate for free trade, is well placed to show leadership on this issue.

Outcomes on trade are also vital for inclusive growth. Research shows that the poor can afford 63% more goods and services because of free trade, more than twice the benefit that flows to the rich.

But talk is cheap. It’s easy to commit to reforms but only half of G20 commitments are being implemented.
Australia should push for a serious accountability framework to monitor implementation and identify the countries that fall short.

The ConversationA weakening of the G20 is a weakening of Australia’s international influence. Few countries have a greater incentive to put solutions on the table.

Adam Triggs, Research fellow, Australian National University

This article was originally published on The Conversation. Read the original article.

The need for speed: Why broadband network upgrades are critical to economic growth


Gigaom

Much like the debate over whether raising the US federal debt ceiling is the right choice for the country, the networking industry all too regularly engages in a debate about whether the need for faster data connections is real. The significant role of broadband as an economic driver deserves to be elevated to a similar level of attention as progress and innovation are stifled when network capacity is constrained, which doesn’t bode well for consumers, businesses, research communities and the economy on the whole.

High-speed, high-capacity networks are critical to our future because they power the world’s Internet and digital economy. For the most part, networks based on 100G technology have become mainstream to address current demands – and this represents a giant leap forward from traditional network architectures and scale. However, it won’t be long before we need to go beyond 100G and even 400G and start to build…

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Religious Conversion Worst Form of ‘Intolerance,’ Bhutan PM Says


Propagation of religion is allowable – but not seeking conversions, top politician says.

THIMPHU, Bhutan, April 13 (CDN) — In the Kingdom of Bhutan, where Christianity is still awaiting legal recognition, Christians have the right to proclaim their faith but must not use coercion or claim religious superiority to seek conversions, the country’s prime minister told Compass in an exclusive interview.

“I view conversions very negatively, because conversion is the worst form of intolerance,” Jigmi Yoser Thinley said in his office in the capital of the predominantly Buddhist nation.

Christian leaders in Bhutan have told Compass that they enjoy certain freedoms to practice their faith in private homes, but, because of a prohibition against church buildings and other restrictions, they were not sure if proclamation of their faith – included in international human rights codes – was allowed in Bhutan.

Prime Minister Thinley, who as head of the ruling party is the most influential political chief in the country, said propagation of one’s faith is allowed, but he made it clear that he views attempts to convert others with extreme suspicion.

“The first premise [of seeking conversion] is that you believe that your religion is the right religion, and the religion of the convertee is wrong – what he believes in is wrong, what he practices is wrong, that your religion is superior and that you have this responsibility to promote your way of life, your way of thinking, your way of worship,” Thinley said. “It’s the worst form of intolerance. And it divides families and societies.”

Bhutan’s constitution does not restrict the right to convert or proselytize, but some Non-Governmental Organizations have said the government effectively limits this right by restricting construction of non-Buddhist worship buildings and celebration of some non-Buddhist festivals, according to the U.S. Department of State’s 2010 International Religious Freedom Report.

It adds that Bhutan’s National Security Act (NSA) further limits proclamation of one’s faith by prohibiting “words either spoken or written, or by other means whatsoever, that promote or attempt to promote, on grounds of religion, race, language, caste, or community, or on any other ground whatsoever, feelings of enmity or hatred between different religious, racial, or language groups or castes and communities.” Violation of the NSA is punishable by up to three years’ imprisonment, though whether
any cases have been prosecuted is unknown, according to the State Department report.

Bhutan’s first democratic prime minister after about a century of absolute monarchy, Thinley completed three years in office last Thursday (April 7). While he affirmed that it is allowable for Christians to proclaim their faith – a practice commanded by Christ, with followers agreeing that it is the Holy Spirit, not man, that “converts” people – Thinley made his suspicions about Christians’ motives manifest.

“Any kind of proselytization that involves economic and material incentives [is wrong],” he said. “Many people are being converted on hospital beds in their weakest and most vulnerable moments. And these people are whispering in their ears that ‘there is no hope for you. The only way that you can survive is if you accept this particular religion.’ That is wrong.”

Thinley’s suspicions include the belief that Christians offer material incentives to convert.

“Going to the poor and saying, ‘Look, your religion doesn’t provide for this life, our religion provides for this life as well as the future,’ is wrong. And that is the basis for proselytization.”

Christian pastors in Thimphu told Compass that the perception that Bhutan’s Christians use money to convert the poor was flawed.

The pastors, requesting anonymity, said they prayed for healing of the sick because they felt they were not allowed to preach tenets of Christianity directly. Many of those who experience healing – almost all who are prayed for, they claimed – do read the Bible and then believe in Jesus’ teachings.

Asked if a person can convert if she or he believed in Christianity, the prime minister replied, “[There is] freedom of choice, yes.”

In his interview with Compass, Thinley felt compelled to defend Buddhism against assertions that citizens worship idols.

“To say that, ‘Your religion is wrong, worshiping idols is wrong,’ who worships idols?” he said. “We don’t worship idols. Those are just representations and manifestations that help you to focus.”

Leader of the royalist Druk Phuensum Tshogpa party, Thinley is regarded as a sincere politician who is trusted by Bhutan’s small Christian minority. He became the prime minister in April 2008 following the first democratic election after Bhutan’s fourth king, Jigme Singye Wangchuck, abdicated power in 2006 to pave the way toward democracy.

Until Bhutan became a constitutional monarchy in 2008, the practice of Christianity was believed to be banned in the country. The constitution now grants the right to freedom of thought, conscience and religion to all citizens. It also states that the king is the protector of all religions.

Thus far, the Religious Organisations Act of 2007 has recognized only Buddhist and Hindu organizations. As a result, no church building or Christian bookstore has been allowed in the country, nor can Christians engage in social work. Christianity in Bhutan remains confined to the homes of local believers, where they meet for collective worship on Sundays.

Asked if a Christian federation should be registered by the government to allow Christians to function with legal recognition, Thinley said, “Yes, definitely.”

The country’s agency regulating religious organizations under the 2007 act, locally known as the Chhoedey Lhentshog, is expected to make a decision on whether it could register a Christian federation representing all Christians. The authority is looking into provisions in the law to see if there is a scope for a non-Buddhist and non-Hindu organization to be registered. (See http://www.compassdirect.com, “Official Recognition Eludes Christian Groups in Bhutan,” Feb. 1.)

On whether the Religious Organisations Act could be amended if it is determined that it does not allow legal recognition of a Christian federation, the prime minister said, “If the majority view and support prevails in the country, the law will change.”

Thinley added that he was partially raised as a Christian.

“I am part Christian, too,” he said. “I read the Bible, occasionally of course. I come from a traditional [Christian] school and attended church every day except for Saturdays for nine years.”

A tiny nation in the Himalayas between India and China, Bhutan has a population of 708,484 people, of which roughly 75 percent are Buddhist, according to Operation World. Christians are estimated to be between 6,000 to nearly 15,000 (the latter figure would put Christians at more than 2 percent of the population), mostly from the south. Hindus, mainly ethnic Nepalese, constitute around 22 percent of the population and have a majority in the south.

 

Religious ‘Competition’

Bhutan’s opposition leader, Lyonpo Tshering Togbay, was equally disapproving of religious conversion.

“I am for propagation of spiritual values or anything that allows people to be good human beings,” he told Compass. “[But] we cannot have competition among religions in Bhutan.”

He said, however, that Christians must be given rights equal to those of Hindus and Buddhists.

“Our constitution guarantees the right to freedom of practice – full stop, no conditions,” he said. “But now, as a small nation state, there are some realities. Christianity is a lot more evangelistic than Hinduism or Buddhism.”

Togbay said there are Christians who are tolerant and compassionate of other peoples, cultures and religions, but “there are Christians also who go through life on war footing to save every soul. That’s their calling, and it’s good for them, except that in Bhutan we do not have the numbers to accommodate such zeal.”

Being a small nation between India and China, Bhutan’s perceived geopolitical vulnerability leads authorities to seek to pre-empt any religious, social or political unrest. With no economic or military might, Bhutan seeks to assert and celebrate its sovereignty through its distinctive culture, which is based on Buddhism, authorities say.

Togbay voiced his concern on perceived threats to Bhutan’s Buddhist culture.

“I studied in a Christian school, and I have lived in the West, and I have been approached by the Jehovah’s Witness – in a subway, in an elevator, in a restaurant in the U.S. and Switzerland. I am not saying they are bad. But I would be a fool if I was not concerned about that in Bhutan,” he said. “There are other things I am personally concerned about. Religions in Bhutan must live in harmony. Too often I have come across people who seek a convert, pointing to statues of our deities and saying
that idol worship is evil worship. That is not good for the security of our country, the harmony of our country and the pursuit of happiness.”

The premise of the Chhoedey Lhentshog, the agency regulating religious organizations, he said, “is that all the different schools of Buddhism and all the different religions see eye to eye with mutual respect and mutual understanding. If that objective is not met, it does not make sense to be part of that.”

It remains unclear what the legal rights of Christians are, as there is no interaction between the Christians and the government. Christian sources in Bhutan said they were open to dialogue with the government in order to remove “misunderstandings” and “distrust.”

“Thankfully, our political leadership is sincere and trustworthy,” said one Christian leader.

Asserting that Christians enjoy the right to worship in Bhutan, Prime Minister Thinley said authorities have not interfered with any worship services.

“There are more Christian activities taking place on a daily basis than Hindu and Buddhist activities,” he added.

Report from Compass Direct News
http://www.compassdirect.org

Burma’s Ethnic Christians Fear Bleak Future after Election


Military hostilities against insurgents may result in Christian casualties and persecution.

CHIANG MAI, Thailand, October 22 (CDN) — With Burma’s first election in over 20 years just two weeks away, Christians in ethnic minority states fear that afterward the military regime will try to “cleanse” the areas of Christianity, sources said.

The Burmese junta is showing restraint to woo voters in favor of its proxy party, the Union Solidarity and Development Party (USDP), but it is expected to launch a military offensive on insurgents in ethnic minority states after the Nov. 7 election, Burma watchers warned.

When Burma Army personnel attack, they do not discriminate between insurgents and unarmed residents, said a representative of the pro-democracy Free Burma Rangers relief aid group in Chiang Mai, close to the Thai-Burma border. There is a large Christian population in Burma’s Kachin, Karen and Karenni states along the border that falls under the military’s target zone. Most of the slightly more than 2 million Christians in Burma (also called Myanmar) reside along the country’s border with Thailand, China and India.

The military seems to be preparing its air force for an offensive, said Aung Zaw, editor of the Chiang Mai-based magazine Irrawaddy, which covers Burma. The Burmese Air Force (BAF) bought 50 Mi-24 helicopters and 12 Mi-2 armored transport helicopters from Russia in September, added Zaw, a Buddhist.

Irrawaddy reported that the BAF had procured combat-equipped helicopters for the first time in its history. Air strikes will be conducted “most likely in Burma’s ethnic areas, where dozens of armed groups still exert control,” the magazine reported, quoting BAF sources.

“Armed conflicts between ethnic armies and the military can flare up any time,” said Zaw. “However, to boost the morale of its personnel, the military is expected to attack smaller ethnic groups first, and then the more powerful ones.”

Seven states of Burma have armed and unarmed groups demanding independence or autonomy from the regime: Shan, Karenni (also known as Kayah), Karen, Mon, Chin, Kachin, and Arakan (also Rakhine).

The junta has designated many areas in this region as “Black Zones” – entirely controlled by armed ethnic groups – and “Brown Zones,” where the military has partial control, said the source from FBR, which provides relief to internally displaced people in states across the Thai-Burma border.

“There are many unarmed Christian residents in these zones where Burmese military personnel attack and kill anyone on sight,” the source said.

A Karen state native in Chiang Mai who identified himself only as Pastor Joseph, who fled Burma as a child, referred to the junta’s clandestine campaign to wipe out Christians from the country. At least four years ago a secret memo circulated in Karen state, “Program to Destroy the Christian Religion in Burma,” that carried “point by point instructions on how to drive Christians out of the state,” reported the British daily Telegraph on Jan. 21, 2007.

“The text, which opens with the line, ‘There shall be no home where the Christian religion is practiced,’ calls for anyone caught evangelizing to be imprisoned,” the Telegraph reported. “It advises: ‘The Christian religion is very gentle – identify and utilize its weakness.’”

Persecution of Christians in Burma “is part of a wider campaign by the regime, also targeted at ethnic minority tribes, to create a uniform society in which the race and language is Burmese and the only accepted religion is Buddhism,” the daily noted.

The junta perceives all Christians in ethnic minority states as insurgents, according to the FBR. Three months ago, Burma Army’s Light Infantry Battalions 370 and 361 attacked a Christian village in Karen state, according to the FBR. In Tha Dah Der village on July 23, army personnel burned all houses, one of the state’s biggest churches – which was also a school – and all livestock and cattle, reported the FBR.

More than 900 people fled to save their lives.

 

Vague Religious Freedom

The Burmese regime projects that close to 70 percent of the country’s population is ethnic Burman. Ethnic minorities dispute the claim, saying the figure is inflated to make a case for Burman Buddhist nationalism.

The new constitution, which will come into force with the first session of parliament after the election, was passed through a referendum in May 2008 that was allegedly rigged. It provides for religious freedom but also empowers the military to curb it under various pretexts.

Article 34 states, “Every citizen is equally entitled to freedom of conscience and the right to freely profess and practice religion subject to public order, morality or health and to the other provisions of this Constitution.” Article 360 (a), however, says this freedom “shall not include any economic, financial, political or other secular activities that may be associated with religious practice,” apparently to bar religious groups from any lobbying or advocacy.

Further, Article 360 (b) goes on to say that the freedom “shall not debar the Union from enacting law for the purpose of public welfare and reform.”

Adds Article 364: “The abuse of religion for political purposes is forbidden. Moreover, any act which is intended or is likely to promote feelings of hatred, enmity or discord between racial or religious communities or sects is contrary to this Constitution. A law may be promulgated to punish such activity.”

Furthermore, Article 382 empowers “the Defense Forces personnel or members of the armed forces responsible to carry out peace and security” to “restrict or revoke” fundamental rights.

The Burmese junta is expected to remain at the helm of affairs after the election. The 2008 constitution reserves one-fourth of all seats in national as well as regional assemblies for military personnel.

A majority of people in Burma are not happy with the military’s USDP party, and military generals are expected to twist the results in its favor, said Htet Aung, chief election reporter at Irrawaddy.

Khonumtung News Group, an independent Burmese agency, reported on Oct. 2 that most educated young Burmese from Chin state were “disgusted” with the planned election, “which they believe to be a sham and not likely to be free and fair.”

They “are crossing the border to Mizoram in the northeast state of India from Chin state and Sagaing division to avoid participating,” Khonumtung reported. “On a regular basis at least five to 10 youths are crossing the border daily to avoid voting. If they stay in Burma, they will be coerced to cast votes.”

There is “utter confusion” among people, and they do not know if they should vote or not, said Aung of Irrawaddy. While the second largest party, the National Unity Party, is pro-military, there are few pro-democracy and ethnic minority parties.

“Many of the pro-democracy and ethnic minority candidates have little or no experience in politics,” Aung said. “All those who had some experience have been in jail as political prisoners for years.”

In some ethnic minority states, the USDP might face an embarrassing defeat. And this can deepen the military’s hostility towards minorities, including Christians, after the election, added Aung.

For now, an uneasy calm prevails in the Thai-Burma border region where most ethnic Christians live.

Report from Compass Direct News