Wednesday, July 6, 2011

Caucus Brief: Asia Needs A Larger U.S. Defense Budget

ASIA NEEDS A LARGER U.S. DEFENSE BUDGET.  An op-ed in the WSJ argues that American naval power maintains the stability and free navigation that allow trade to flourish in Asia, and that cuts to the U.S. defense budget could have significant implications for the region.  From the piece: "China's military rise is changing the balance of power in its neighborhood.  While Washington debates how to cut America's military, China continues to spend generously on defense…The equation budget cutters should ponder is that China's aggressive build-up plus American defense cuts equals Asian instability.  That instability could have far-reaching consequences.  America's military has ensured peace and stability in the region, made the seas safe for trade and transit, provided Asians with the political space to prosper, and guaranteed that no hostile power would again use the Pacific as an avenue for an attack on American soil." 

The U.S., European Union and Mexico has won a victory over China at the World Trade Organization (WTO) as the WTO found that China has illegally constrained its export of raw materials like those used in the production of steel and chemical manufacturing.  U.S. Trade Representative Ron Kirk's statement in response to the WTO decision: "China's extensive use of export restraints for protectionist economic gains is deeply troubling.  China's policies provide substantial competitive advantages for downstream Chinese industries at the expense of non-Chinese users of these materials." 

CHINA'S LOCAL DEBT MAY BE MUCH BIGGER THAN THOUGHT.  According to the rating agency Moody's, China's local government debt may be $540 billion larger than auditors estimated.  This could put Chinese banks on the hook for deeper losses that could threaten their credit ratings.  Additionally, according to the NYT, there is concern that China's local government debt could slow China's economic growth and set off a wave of loan defaults hobbling its banking system. 

CHINA'S TICKING DEBT BOMB.'s-ticking-debt-bomb/ 

CISCO FACES LAWSUITS, CRITICISM OVER PAST CHINA ACTIVITIES.  Cisco Systems Inc. has defended its activities in China at congressional hearings in 2006 and 2008 that focused on the role its networking gear may have played in China's Golden Shield firewall.  Now Cisco faces two lawsuits that accuse the company of complicity in helping the Chinese government censor the internet and track down political dissidents. 

REPRESS OR REFORM: BEIJING'S CHOICE.  An op-ed in the WSJ argues that while there is no evidence of national movement taking shape in China, the central government has reacted with intense repression that could further provoke discontent.  Now China is moving towards a choice of instituting reform or attempting more intense repression.  From the piece: "If these strands of discontent strengthen and converge, and are met with violent repression, is there danger that more incidents would be provoked and a downward spiral of violence created?  Or is it possible for the central government move to adjust policies and practices that provoke protest?" 

TAIWAN'S ADVANCEMENT IN STEALTH TECHNOLOGY.  According to DefenseNews, Taiwan has developed a radar-absorbent material that was used on a Navy 50-ton Seagull-class missile boat during a successful test. 

PHILIPPINES REPEATS REQUEST FOR U.S. MILITARY HARDWAREThe Philippines repeated requests for the U.S. to provide the island nation with modern military hardware.  This most recent focuses long-range patrol aircraft and other hardware that can help the Philippines defend its disputed territorial claims in the South China Sea.  The Philippine Defense Secretary Voltaire Gazmin, voiced his hope to receive the first pieces of equipment within the year.  It is still unclear how the island nation can afford to buy this new hardware. 


NEW RARE EARTHS DISCOVERY CHALLENGES CHINESE MARKET DOMINANCE.  Japanese researchers have discovered an enormous deposit of rare earth minerals in the Pacific Ocean floor.  Geologists estimate that the deposit includes 100 billion tons of rare elements.  The minerals were found in international waters and, according to BBC analysts, could challenge China's rare earths dominance.  At present, China produces 97% of the world's rare earths.  These minerals are used in the production of everything from iPods to weapons technology.                

The Caucus Brief is a daily publication for Members of Congress and Hill Staffers on China news and information compiled by the office of Congressman Randy Forbes, Founder of the Congressional China Caucus.  Email with tips, comments, or to subscribe/unsubscribe.

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