Lethal Illusion: China's bubble economy

China's latest aircraft carrier

Is it possible that Chinese government in its pursuit to overcome its economic competitors in Asia and the West has copied the same systematic mistakes that led to the economic meltdown of the past five years? The rapid rise of the Chinese has fuelled the imagination of economic speculators who have predicted the dominance of the Middle Kingdom in the next century. Indeed, the thriving Chinese economy is flexing its newfound muscles in both financial and military sectors. The Chinese military budget has seen double-digit increases for the past decade. However, the dramatic paranoid reaction to a feared "jasmine Revolution" on China's own soil betrays the Chinese government's external swagger, as well as a fear of its own population. The Washington Post reported that:

"At least 100 activists have been rounded up, and some have been charged with 'crimes' that could lead to multi-year prison sentences. Three lawyers who did nothing but peacefully attempt to hold China to its own laws - Tang Jitian, Teng Biao and Jiang Tianyong - have been 'disappeared' by security agents, who took them away about three weeks ago and have yet to charge them or disclose where they are being held. Equally lawless, even under Chinese law, is the continuing house arrest of Liu Xia, the wife of imprisoned Nobel Peace Prize winner Liu Xiaobo" (read more)

For 2011, the Chinese Government has recently announced a 12.7% increase in military spending which means the official spending of People's Liberation Army (PLA) currently stands at $91 billion. Yet, this huge amount revealed by the Chinese government does not reflect the actual military spending of the country. The full amount spent on the military that remains undeclared. The high degree of opaqueness and secrecy in military spending has caused fear and mistrust with regional neighbors, ensuing an arms race which has seen countries like Japan and Australia acquiring advanced military technology to balance the Chinese military might. In the words of a Southeast Asian country's defense attache in Beijing:

"[China] say thir strategy is peaceful development, but their military modernization, especially in the naval area, speaks another language." (read more)

In fact, the Chinese Navy's harassment of two Philippines patrol boats within Philippines waters which are believed to be rich in oil and gas deposits in March 2011 showed that the fears of China's regional neighbours are more real than imaginary (Wall Street Journal, March 2011).

Economists and bankers are warning that the glittering prosperity of China might be nothing more than an illusion. Apart from their high military spending, China's drive for modernity also consists of expanding their high-speed railway system and big ticket housing and commercial real estate construction projects that are largely empty do not benefit the Chinese people.

"Far from an economic powerhouse, China's economy remains a middleweight when its vast number of poor people is taken into account - the country's per capita GDP is only around US$4,500, 1/10th that of the U.S. As a share of the economy, household incomes have actually declined over the past decade. The problems will only get worse as China's massive population starts to age rapidly over the next decade. With almost nothing in the way of health insurance, welfare or a social safety net for retirement, Chinese feel pressure to save every penny that earn. At the same time, official policies that favour Chinese banks and exporters - namely artifically low interest rates, an undervalued yuan and cheap labour - come at the expense of household savers. Shanghai economist Andy Xie has cited local media reports that some 65 million urban homes reported zero electricity consumption over a six-month period, suggesting there are enough vacant homes in China to house 200 million people. China continues to build new steel mills, cement factories and aluminum smelters even though up to one-third of exisiting plants sit idle" (read more)

New construction, snapped up by speculators, stands empty in one of China's "ghost towns"

Critics of China's high-speed railway system that costs $274 billion have also pointed out that the high construction costs meant that high-speed rail tickets will have to be priced so high that they will be out of the reach of most Chinese. The huge budget set aside for the development of the high-speed railway system also provides Chinese officials ample opportunities to enrich themselves, given the high cottuption rate within the governing and patronage system. All these signs point to growth that is designed to awe the rest of the world but otherwise does not benefit the Chinese population. The dichotomy between the illusion of prosperity and the lack of real advancement of the Chinese people - including the burst if the economic bubble economy - may cause a serious crisis that may cause the rest of the world to feel the pain, as well.

Philippine Ambassador Willie Gaa receives Humanitarian Award from Asia America Initiative

On February 24, 2011 at the Philippine Embassy to the United States, outgoing Philippine Ambassador the Hon. Willie Gaa received a Certificate of Honor from the non-governmental organization Asia-America Initiative for outstanding Humanitarian Achievements during his diplomatic service in Washington

Between 2008 and 2011, Ambassador Gaa and the Philippine Embassy consular and military attaché office partnered with Asia-America Initiative to provide more than 50 million dollars of humanitarian medical and educational supplies which directly improved or saved the lives of more than 1.5 million indigent children in areas of severe poverty and armed conflict. Programs included emergency relief for refugees displaced by terrorism and war, victims of floods and other natural disasters, cancer victims and others suffering from rare diseases, health and nutritional support, clean water and a unique Gardens of Peace program as a form of conflict prevention.

Asia-America Initiative President Albert Santoli and Board Member Ms. Bing Cardenas Branigin presented the award to Ambassador Gaa. “The relationship between AAI and Ambassador Gaa and his staff, representing the Philippine government and people, demonstrates the highly effective service that can result from a partnership between non-profit organizations and altruistic public servants, “Mr. Santoli stated. “We will miss Ambassador Gaa’s presence in Washington, but will always consider him and his staff to be close friends and exemplary professional partners who helped make a difference by improving countless lives. We will always be grateful.”

Operation Sulu Rescue: Perceptions of an Intern

For five weeks, all has been still. Though kept occupied by our tasks researching current social, economic, medical, and natural developments in the Philippines and in the broader Southeast-Asian sphere, the interns in the Washington, D.C. office have not been laboring at a frantic pace. Until now.

Though floodwaters have since receded following torrents of rain earlier this month, the southern-most Filipino provincial island chain of Sulu has an extremely long road to full recovery. The concern of the locals is no longer drowning, but that of an unseen rising tide nonetheless. Though precautions may be made, there is no guarantee against contraction. Without access to adequate sanitation, mosquito netting and repellant, and water-purification equipment, mosquito-borne endemics such as malaria and dengue fever as well as cholera, dysentery, and typhoid fever, may take root and decimate the indigenous population.

Unique to each illness is an underlying culprit, spread by means independent of their human hosts. Female mosquitoes deposit eggs into pools of non-moving water, which then hatch into larvae, remain dormant as pupae, and within a time span of about one week hatch and emerge as adult mosquitoes. At some point a parasitic protist of the genus Plasmodium infects the adult mosquito, and may then be transmitted to a human, causing malaria. The mosquito may also insert its proboscis into a person who has a serotype of the Dengue fever virus, and then transmit the virus to other people. Cholera, dysentery, and typhoid fever are all caused by the bacteria Vibrio cholerae, of the genus Shigella, or Salmonella enterica, respectively, spread by the consumption of contaminated water, food, or direct contraction via bodily fluids. Such maladies are increasingly difficult to avoid after flooding because proper sanitation and hygiene practices literally cannot be enacted—the rising waters had carried with them human and animal waste and rubbish, polluting everything in their path. Wells were filled with sewage or runoff from what was once on the ground, and small tributaries were simmering pools of floating refuse. And as the floodwaters evaporated or were drained, left behind were literally millions of areas of stagnant water, from old tires to puddles—the breeding ground for female mosquitoes.

Imperative to the effort of disease-prevention is immediate action by the local people to stifle the spread before it becomes an epidemic. But with their clean water infrastructure contaminated, the only sources of fuel to burn and boil water wet, and homes destroyed, we at Asia America Initiative sought to do as much as we could in order to assist our Filipino brethren before diseases carved their niche and began to take their toll on the hapless men, women, and children of Sulu. AmeriCares of Stamford, Connecticut was contacted with regards to an endeavor entitled ‘Operation Sulu Rescue’, an emergency intervention of hygiene kits (soap, toothbrushes and toothpaste, shampoo, and towels), pails, dry blankets, plastic sheets for temporary shelters, and water purification tablets to not only thwart the spread of disease, but also to bring a sense of normality to those who lost everything.

Our contact in the Philippines, Rohaniza Sumndad-Usman, had sent us the following statistics:

Total Families Affected: 4,816 (approximately 24,247)

Number of Deaths: 6

Number of Injured: 147

Destroyed Homes: 3

Partially-Damaged Homes: 1,454

At first AAI planned to ship the roughly five pallets of emergency supplies by air, but the 9,000-mile trip would be prohibitively expensive with AAI’s pitiful operating budget. Thus, it was decided that said supplies would be purchased in the Philippines with a donation from AmeriCares, supplemented with an input of capital from an amount that was set-aside for just such an emergency from a 2010 grant, courtesy of the government of Norway. The medical and sanitation supplies would then be transported by boat and by land caravan to their ultimate destinations, the counties of Jolo and Patikul.

As of 15:00 EST, we have sent a request but are awaiting an approval of our funding request from AmeriCares.

Thank you to all of those who have contributed and who are considering donating to the ongoing work of Asia America Initiative.