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---"Focused Coverage Informed Perspectives"--- Thu, Oct 23, 1997 editionHang Seng brings markets tumbling
and the end is not here
Also in this edition . . .
1: sober reasons for not putting your money into Hong Kong
2: US reserves right to sell arms to Taiwan
3: getting into the mind of Pol Pot
4: FEER article investigates unsustainable pension system in China
5: consumer prices probably safe, while energy prices face pressure
6: currency depreciation likely to increase trade surplus
7: satellite project will be used for defense and strategic purposes
8: effort to freeze budget for nuke plant defeated
9: degrees obtained on the mainland to be accredited
10: two Taiwan firms to build for Sikorsky S-92
TOP STORIES
Markets: Hang Seng brings them tumbling down
( Asian Market Drop ) National Public Radio has a Real Audio excerpt from its Morning Edition show. Host Bob Edwards speaks with Jonathen Fenby, editor of the South China Morning Post. Mr Fenby discusses the recent economic crisis hitting the region, noting it will likely last for another few weeks. He describes the stock-market crisis as a market returning to 'reality' after months of exuberant optimism concerning the handover in June. But he also is careful to explain that the crisis has been long in coming. For Asia's banking sector has been in disarray, handing out lone to questionable projects; government investments in large and expensive projects are also a problem. When asked how Asia will look once the markets settle, he said Asia would look more like a two-tier system. On the bottom tier would be Thailand and such countries whose economies and political systems are in need of fixing. Hong Kong, he said, has a transparent banking system and sound economic fundamentals, and thus was expected to recover.( No Plans to Intervene in HK Stock Market -- Chinese Official ) Beijing said today it had no plans to interfere in the market.
See also Inside China Hong Kong Market Claws Back From Free Fall.
( Malaysia's Economic Ills Endanger a Strong-Willed Politician ) As Malaysia's economy stumbles, a profile on its leader, Prime Minister Mahathir. The New York Times reports.
Investments: sober reasons for not putting your money into Hong Kong
( 'The Case Against Hong Kong' ) For a sober appraisal of the Hong Kong market and why you should not invest there, read this Review article.
(Note: the Far Eastern Economic Review on-line service is free, but requires that users register with them and login, and therefore first-time users should first introduce themselves on the FEER registration page.)
Taiwan: US reserves right to sell arms to Taiwan
( White House vow on Taiwan arms sales ) Jeff Bader, head of Asian affairs on President Bill Clinton's National Security Council, said Washington was committed to the 'one China' policy and encouraged exchanges across the Taiwan straits, but he said the administration reserves its right to continue selling arms to Taiwan. He said the United States would not sign a so-called fourth communique during next week's summit with Jiang Zemin. Speaking at a press conference, Mr. Bader said the summit would be a difficult one for the administration as a number of issues will be raised on human rights, arms sales, and so on. The administration is looking for long-term improvements in the relationship, he said, and did not expect quick-fixes. President Clinton has been receiving extensive briefings and considers the summit to be of high importance, he said.
Cambodia: getting into the mind of Pol Pot
( EXCLUSIVE: Pol Pot Shows No Remorse For Cambodian Holocaust, Review Reports ) The Far Eastern Economic Review will devote the cover of its next issue to Pol Pot and his exclusive interview with Review correspondent Nate Thayer. In the two-hour long interview Pol Pot showed no remorse for his genocidal reign. Thayer said in an interview with NPR's All Things considered this afternoon, Pol Pot appears almost as a sympathetic character, a grandfather type who is on his last legs and wants to clear his name. Currently held under arrest by his former Khmer Rouge compatriots, the dying leader was sentecned by his followers for instigating 'crimes against humanity.' But in the interview Pol Pot said he he saved Cambodia from certain destruction at the hands of the Vietnamese, says Thayer, and openly admits ordering assassinations. He denies that the so-called killing fields occurred, something to which Khmer Rouge officials now admit, albeit at a scale much lower than what the international community believes. . . .Thayer notes that Pol pot is but one man in thousands who particiapted in the genocide. Army officers, politicians and others are now working for the present government.
The Review will not post the entire article on-line out of copyright concerns, but a press release hints at what awaits those who have access to the printed edition. When our issue arrives, we'll try to highlight some of the details from this remarkable story. But readers are encouraged to subscribe to the weekly magazine.
(Note: the Far Eastern Economic Review on-line service is free, but requires that users register with them and login, and therefore first-time users should first introduce themselves on the FEER registration page.)See also ( Pol Pot, in Interview, Is Unapologetic About Mass Killings )
(Note: the New York Times on-line edition is free, but requires that users register a name and password, and therefore first-time users should first introduce themselves on the Times registration page.)
Pensions: FEER article investigates unsustainable pension system in China
( ECONOMIES: The Burden of Age ) The Review's Matt Forney investigates a serious problem bedeviling retirees in China: an unsustainable pension system.China is in a slow-motion race against time. Its one-child policy creates a "1-2-4 phenomenon"--one child, two parents, four grandparents. Whereas workers outnumber retirees tenfold today, the ratio will plummet to three-to-one by 2050 (see chart). Without a pension system that compels workers to save for their leisure years, working grandchildren--and their employers--will have to dole out enormous sums to retirees.
Looking at various schemes around the country, Forney reports about cash-strapped municipalities unable to meet their obligations; regulations set up by Beijing which hamper investments in local funds; and so on.
(Note: the Far Eastern Economic Review on-line service is free, but requires that users register with them and login, and therefore first-time users should first introduce themselves on the FEER registration page.){Section ("Taiwan Desk")) {TopicComment ("Economy:", "consumer prices probably safe, while energy prices face pressure")} (Source: China Post) The Taiwan dollar's current depreciation (against the US dollar) should have little impact on local consumer prices, the Cabinet's Directorate General of Budget, Accounting and Statistics (DGBAS) said.
Although the New Taiwan dollar has slipped about 10 percent against the US dollar in 1997, it has appreciated 9.3 percent against the yen and 13.3 percent against the mark. Since some 30 percent of Taiwan's imports come from Japan and Germany, the NT dollar's appreciation against these currencies should have a cushioning effect on the consumer price index, officials said.
However, several import-dependent industries on the resource-scarce Taiwan--energy, and electrical manufacturing in particular --face pressure to raise prices to reflect rising costs. Chinese Petroleum Corp. (CPC) indicated on Monday it may raise local gasoline prices in early November. A senior CPC official estimated the NT dollar's seven-percent slide between Friday and Tuesday would cost the company at least NT$800 million (US$26.5 million) in additional October crude import costs.
Government and private economists said a 10 percent rise in petrol prices would cause the consumer price index to jump by about 0.43 percentage points in the month it takes effect. The government, calculating that the NT dollar has slid 10.2 percent in value against the US dollar in 1997, says it expects little inflationary impact on consumer prices.
See also http://www.chinatimes.com/papers/ctimes/focus/86102309.htm
(Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article)
Trade: currency depreciation likely to increase trade surplus
The New Taiwan dollar's depreciation in recent weeks may result in Taiwan reaching a record high trade surplus with the United States, according to the US Department of Commerce.The newest statistics released by the Commerce Department show that Taiwan posted a trade surplus of US$7.87 billion with the United States in the first eight months of this year, making it America's sixth-largest source of trade surplus after Japan, mainland China, Germany, Canada and Mexico.
The figure reflects a 9.1 percent increase over the same period of 1996 and a sharp contrast to the sluggish performance by the other three Asian dragon economies--Hong Kong, Singapore and South Korea. The Commerce Department attributed Taiwan's increased trade gap with America to the economic recovery in both countries, which it said has led to strong demand in the United States and booming exports by Taiwan.
See also http://www.chinatimes.com/papers/commerce/focus/86102301.htm
(Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article)
Space: satellite project will be used for defense and strategic purposes
National Science Council Chairman Liu Chao-shiuan yesterday said No. 3 satellite launch project being planned by the council will be partly utilized for defense and strategic purposes.The ROCSAT3 project, scheduled to be executed in 2003 as eight small satellites, will be launched in sequence into orbit. Liu said military utilizations will only be part of the designated functions of the satellites in the project. The military had reportedly considered joining in the country's satellite development project at the outset, as the National Science Council began to plan the No. 1 and No. 2 satellite, or the ROCSAT1 and ROCSAT2, five to six years ago.
But the military never really got involved in the project for reasons said to be related to sensitive defense concerns. Taiwan's first two satellites will be launched by the US Liu said the council had considered developing its own delivery technology but the idea was not accepted by the US because the technology is related to that of the Intercontinental Ballistic Missile (ICBM).
See also http://www.chinatimes.com/papers/ctimes/social/86102301.htm
(Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article)
Nuclear: effort to freeze budget for nuke plant defeated
Opposition lawmakers yesterday again failed to convince the legislature to freeze the budget for the controversial fourth nuclear power plant.The state-run Taiwan Power Co., the sole power supplier on the island, has three nuclear power plants in operation and plans to build a fourth one at an estimated cost of US$6.4 billion. The Legislative Yuan voted in October 1996 in favor of the power plant amid a storm of protests by anti-nuclear activists and local residents.
Opposition Democratic Progressive Party lawmaker Yu Ling-ya (Kaohsiung County) proposed the shelving of the NT$72 million budget earmarked for the controversial project for the 1998 fiscal year. But her proposal was voted down 12-16 due to opposition from Kuomintang lawmakers. Anti-nuclear activists will hold a protest march on Sunday. Activists estimated some 10,000 people would join the march.
See also http://www.chinatimes.com/papers/ctimes/taiwan/86102312.htm
(Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article)
Education: degrees obtained on the mainland to be accredited
Taiwan's educational authorities yesterday announced that degrees earned by local students in many mainland Chinese colleges and universities will now be accredited.The measure will grant recognition to thousands of Taiwanese now studying in the mainland and could trigger an exodus of local students across the Taiwan Strait. It could also lead to student exchanges between schools. The government here will recognize degrees from mainland China's top universities and colleges. Departments dealing with ideology or politics, however, are excluded. The government estimates that between 3,000 and 4,000
Taiwan students are clandestinely studying in mainland China. Reportedly among them is a son of Hsu Hsin-liang, the leader of the island's major opposition party, which advocates Taiwan independence. Hsu's son is enrolled in Beijing University, said the United Evening News. Some students may choose to study in the mainland to establish contacts for future cross-strait business enterprises.
See also ( Students Allowed to Go to China )
http://www.chinatimes.com/papers/ctimes/taiwan/86102309.htm
(Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article)
Aviation: two Taiwan firms to build for Sikorsky S-92
According to reports from the Central News agency and China Post, two Taiwan companies have struck deals to produce parts for US-based Sikorsky Helicopter Corp. Taiwan-based Taiyeh Industrial Company, a leading manufacturer of motorbike and automobile parts in Taiwan has signed a deal with "Luminator Aircraft Products Co. of the United States to jointly produce lighting systems for S-92 helicopters to be made in Taiwan and other Asian countries, according sources from the Industrial Development Bureau (IDB)." Taiyeh also does extensive business on the mainland, operating manufacturing plants there.According to the China Post, "Under the agreement, Taiyih will invest NT$100 million (US$3.3 million) in the joint venture for the production of various lights for S-92 helicopters, including search, landing, glare shield, utility and thunderstorm lights, while Luminator will transfer its production know-how to Taiyih. . . "
Meanwhile, Taiwan's Aerospace Industry Development Corp. (AIDC) has signed a cooperative agreement with Sikorsky. The two will jointly develop an advanced cockpit section for the mid-sized transport helicopter, S-92. Under the agreement the two will also jointly investigate the "booming aerospace spare parts market in the Asian- Pacific region," writes the Post.
"The market of S-92s will reach 700 units in the next 20 years worldwide, with Taiyih enjoying a sales share of US$200 million by the year 2002, according to Sikorsky estimates."