China Reform Monitor: No. 743

January 29:

Top members of President Barack Obama’s cabinet have commented on both China’s military threat in the Asia-Pacific region and the Taiwan issue. At a congressional hearing Secretary of Defense Robert Gates said China's all-round military modernization, especially the growth of its cyber warfare, anti-satellite capabilities, submarines, and ballistic missiles may pose threats to U.S. military operations and assistance to allies in the Pacific region. The U.S. military, however, is ready to handle any foreseeable military threat from China, he said. In response the official Zhongguo Tongxun She called Gates’ comments “belligerent.” Touching on the Taiwan issue, the new Secretary of State, Hillary Clinton, said that while respecting the one-China principle, the United States will continually support Taiwan's effort to expand its international space.

The Financial Times reports that at the international economic forum in Davos, China’s premier Wen Jiabao insisted that western countries had been negligent in their policies towards their financial institutions and promoted a culture of "low savings and high consumption,” which caused the global economic crisis. Wen refrained from criticizing the U.S. by name but made it clear that western policy mistakes were the key to the crisis. Wen argued that the crisis stemmed from factors such as "excessive expansion of financial institutions in blind pursuit of profit, and lack of self-discipline among financial institutions and rating agencies.” He highlighted "the failure of financial supervision and regulation to keep up with financial innovations which allowed the risks of financial derivatives to build and spread," and concluded that "developing countries should have greater say in international financial institutions [and] “establish a new world economic order that is just, equitable, sound and stable."

January 30:

In a phone call between President Barack Obama and China’s President Hu Jintao both agreed that to fight the world economic crisis they would work together to correct global trade imbalances and unclog credit markets, the White House said on Friday in comments carried by Reuters. "President Obama stressed the need to correct global trade imbalances as well as to stimulate global growth and get credit markets flowing," it said. China’s official Xinhua news agency said Hu told Obama that China firmly opposed trade protectionism and said Beijing would join Washington to address the topic at an economic summit in London in April. "The two presidents [also] agreed to work together on global issues, specifically mentioning North Korea, Iran, Afghanistan-Pakistan, counterterrorism, proliferation, and climate change. President Obama expressed appreciation for China's role as chair of the six-party talks and the two sides affirmed the importance of denuclearization of the Korean peninsula," the White House said. In addition, the U.S. side hopes Beijing will “influence the leadership in Khartoum to prevent further violence against the people of Darfur," a State Department spokesman said.

February 2:

Taiwan is speeding up the process on a Comprehensive Economic Cooperation Agreement (CECA) with the mainland and expects significant progress this year. Taiwan authorities want a faster process for talks with the mainland on a formal CECA mechanism for cross-strait institutional collaboration. Taipei is seeking to mitigate the impact of the financial crisis, take advantage of the trade-related benefits of the Beijing’s economic stimulus policy, and avoid being marginalized by mainland hawks. Instead, Taiwan’s authorities are seeking to seize on the momentum of regional economic integration and the prospect of normalized trade with China. Senior Taiwan government officials, Hong Kong’s official Zhongguo Tongxun She reports, are conducting a joint, four-part feasibility report.