Sunday, November 30, 2008


by B. Raman

( This is the text of a presentation made by me at a seminar on China at New Delhi on November 27,2008. This incorporates and updates some of my earlier views on the subject as expressed in articles written after the Tibetan uprising of March-April,2008, in China. The updating has been done in the light of subsequent developments -----B.Raman)

The Government of India adopted a two-pronged policy in relation to the outbreak of a revolt in Tibet and other Tibetan-inhabited areas of China in March,2008, in protest against the continued occupation of Tibet and other Tibetan-inhabited areas by China and the violation of the human rights of the Tibetans by the Chinese.

2. It prevented the Tibetan refugees in India from indulging in activities which might have resulted in acts of violence or disruption directed against Chinese nationals and interests in India and in dramatic acts such as their professed intention of crossing the border into Tibet. At the same time, it expressed its distress over the situation in Tibet and called for a dialogue so that the Tibetans didn't feel the need to take to acts of violence in their desperation.

3.A spokesman of the Ministry of External Affairs of the Government of India said on March 15, 2008: "We would hope that all those involved will work to improve the situation and remove the causes of such trouble in Tibet, which is an autonomous region of China, through dialogue and non-violent means."

4. This was the right approach--- expressing our moral support to the Tibetans in accordance with our national interests without identifying
ourselves with the attempts of anti-China activists in the West---particularly the US--- to exploit the continued alienation of the Tibetans and their desperation to create embarrassment for China.

5. Our aim should be not to embarrass and humiliate China, but to persuade it to change its policy on Tibet and reach a negotiated settlement with His Holiness through a sustained dialogue. India should play the role of a facilitator of such a dialogue. After the March-April ,2008, uprising in the Tibetan inhabited areas, India did well in expressing openly
its distress over the turn of events in Tibet and in expressing its interest in a dialogue and not a street confrontation between the Chinese
and the Tibetans.

6.India should consider one more step at this important point in the history of the Tibetan issue----- removing all informal restrictions on official and social interactions with the Dalai Lama and his advisers. Though not openly admitted, such informal restrictions exist. We saw it at the end of last year, when the Cabinet Secretary to the Government of India was reported to have advised all Ministers of the Cabinet of the Prime Minister, Dr. Manmohan Singh, not to attend a public reception for the Dalai Lama to felicitate him on the award of
the Congressional Medal of Honour to him in the US. After the uprising, there were reports in sections of the media that His Holiness was to make a courtesy call on Dr.Hamid Ansari, the Vice-President. This was strongly denied by the Government, presumably because the news had leaked out. What was the need for secrecy in this matter? What was the need for canceling any meeting with His Holiness just because the media had come to know about it? Why the reluctance to interact with him publicly?

7. Till now, our policy has been to make a clear distinction between the religious and political dimensions of our stand with regard to the
Dalai Lama. We have been saying that the courtesies and honour extended by us to the Dalai Lama and the Tibetan refugees is because of his stature as a highly respected Buddhist leader in the land where Buddhism was born, but it has no political significance and does not
imply our tacit support for his political views. We should now make it clear that we consider that the Dalai Lama is also an important
political figure in the eyes of the Tibetans and hence, his political views have to be considered in determining our policy on Tibet.

8. Expressing our moral support to the Dalai Lama and the Tibetans, without damaging our relations with the Chinese leadership and
people----that should be the objective of our policy.

9. There will be many landmines in the path of policy-making and implementation. As we fine-tune our policy and push it forward gradually,
there could be misperceptions and misinterpretations in China with not only negative impact on our relations with China, but also with renewed tensions across the border, particularly in the Arunachal Pradesh sector. We are seeing a possible reversion back to the period between the 1960s and the 1980s when the Chinese military was in the driving seat of policy-making on Tibet. It was during that period that we saw the military confrontation of 1962 and the subsequent tensions in Sino-Indian relations.

10.The Advisers of His Holiness attribute the failure of their eighth round of talks with the Chinese held at Beijing from October 30 to November 5,2008, and the post—Olympics hardening of the Chinese stand on Tibet to the fact that hardliners are back in the driving seat of policy-making on Tibet. Recent writings by supposedly non-Governmental Chinese strategic analysts in the Chinese language press and Chinese blogs analysed by Shri D.S.Rajan, who had worked for over 30 years as a China analyst in our intelligence community, are disturbing. ( ).They indicate that the official hardening of the attitude on Tibet has been accompanied by a surge in non-governmental rhetoric on relations with India, in the light of the continuing border dispute and India’s refusal to concede their demand on Arunachal Pradesh.

11.Some of these so-called non-Governmental experts are even talking of the possibility or feasibility of what they describe as a partial war to restore what they project as Chinese sovereignty over Arunachal Pradesh, which they call Southern Tibet. We should not dismiss such writings as non-governmental jingoism, which would have no impact on the cordial relations with China.

12.The post-Olympics hardening of the Chinese stand on Tibet has been reflected not only in their refusal to discuss the issue of autonomy with the advisers of His Holiness, but also in their repudiation of promises and commitments made in this regard by Deng Xiaoping on March 12,1979, during a meeting with Gyalo Thondup, the elder brother of the Dalai Lama, and reiterated subsequently by Li Peng, the then Prime Minister, on May 19, 1991. If they can so brazenly, without batting an eyelid, repudiate their solemn promises to discuss the issue of autonomy with the representatives of His Holiness, what is the guarantee that they will not similarly repudiate their commitments on Sikkim or their policy of peace and tranquility in the Arunachal Pradesh sector?

13. The confidence of the Chinese political leadership that they have pacified Tibet and its people once and for all has been badly shaken.
The revolt of March-April, 2008,showed that there has been no emotional integration between the Tibetans and the Han settlers in Tibet. The fear of the masses could once again distort the Chinese military mindset in Tibet. They would not admit that their policies towards the Tibetan people are responsible for the continuing alienation. Instead, they would see with greater conviction than in the past that the Dalai Lama and the Tibetan refugees
in India are the source of all their problems in Tibet and not their policies. The temptation to divert international attention away from Tibet
to Arunachal Pradesh and Dharamsala by engaging in military moves in the Arunachal Pradesh area would be strong.

14. Renewed cross-border military tensions----even Chinese incursions of a major nature--- in the Arunachal Pradesh sector if the Tibetan issue keeps bothering the Chinese and if India remains firm in its stand that Arunachal Pradesh is an integral part of India are a possibility to be factored into in our scenario-buiding and policy-making exercise.

15.The debate on Tibet, which started after the violent incidents of March-April, 2008, in the Tibetan inhabited areas has failed to distinguish between the "Tibetan card" and the 'Tibetan issue". Many in India and the West look upon the post-March developments as providing a "Tibetan card", which can be exploited against China for different strategic objectives.

16.Many in India want the Government to use the Tibetan card to correct the past policy mistakes relating to the totally unwise Indian action in recognising Tibet as an integral part of China without a quid pro quo from Beijing in the form of a recognition of Arunachal Pradesh as an integral part of India.

17. This will be an unsophisticated approach which could prove counter-productive. We should not give the impression that we are exploiting the spilling of Tibetan blood and the justified emotional outburst of Tibetan youth not for getting a better future for the Tibetans, but only to serve our own national interest. Nothing can be more unfortunate than such an mpression among the Tibetans.

18. We need policies and an approach in India as well as the West based on the conviction that the long-neglected Tibetan issue---meaning the observance of human rights and giving the Tibetans a genuine voice and genuine political opportunities and religious freedom in their own homeland-- has led to the present situation and that unless the grievances and anger of the Tibetan people are addressed in a satisfactory manner the problem is likely to continue. Our policies should be based on a genuine interest in the Tibetan people, their plight and their future and not on exploiting their uprising for serving our own national interest. We must keep the spotlight on the TIBETAN ISSUE and resist the temptation to use the Tibetan anger as a card for our national purposes.

19.Despite the widespread adverse reactions against China all over the world, the Chinese have not blinked and are unlikely to blink even if there are more violent incidents in Tibet. In their
apprehension, any weakening of their stand on Tibet could mark the beginning of their losing control over China's sensitive periphery consisting of Tibet, Xinjiang and Inner Mongolia.

20. A message, which comes out loud and clear , is that despite being away from Tibet for nearly 50 years now, the Dalai Lama continues to command the respect of the Tibetan people inside China. Chinese attempts to demonise him and project him as the problem have not succeeded. A vast majority of the Tibetan people in China continue to look up to him with undiminished reverence as their political and spiritual leader.

21.By solely relying on their security forces and on the Han settlers for strengthening their hold on the Tibetan-inhabited areas, the Chinese have created for themselves a situation similar to what the Soviets had created for themselves in the Baltic States. They forcibly incorporated them into the USSR and tried to change the demographic complexion of the States by settling a large number of Russians----many of them ex-servicemen-- in the Baltic States. They got caught in a vicious circle. The more the suppression, the more the people's anger. The more the people's anger, the more the suppression. The more the Russian settlers, the more the hatred for them. The more the hatred for them, the more the Russian settlers. Ultimately, the Soviets had to watch helplessly as the Baltic States threw off the Soviet yoke and re-gained their independence. Can a similar situation develop in the Tibetan-inhabited areas and in Xinjiang and Inner Mongolia? If it does, what should be India’s options? These questions need careful consideration.

22. China is waiting for the Dalai Lama to die so that it could nominate his successor. It is hoping and calculating that the death of His Holiness would mark the beginning of the end of the Tibetan issue. There ought to be a convergence between Indian and Tibetan interests in ensuring that even after his death, the Tibetan issue would not disappear from the attention of the world till a settlement on their future acceptable to the Tibetans is reached. The Tibetan issue should not be allowed to die with His Holiness.

23.How to help the Tibetans in keeping alive their cause and ultimately securing their goal of autonomy without our help leading to a confrontational situation with China on our border with that country? How to prepare ourselves for such a confrontation if it materialises despite our best efforts to avoid it? These are questions which need careful consideration.

24.So long as the Tibetan issue is not resolved to the mutual satisfaction of the Chinese and the Tibetans and so long as the border dispute is not resolved to the mutual satisfaction of India and China, we cannot rule out another military confrontation imposed on us by China. The implementation of the projects already initiated by the Government for strengthening the infrastructure in the Arunachal Pradesh area and for giving our armed forces greater teeth to meet any Chinese miscalculation should be pushed ahead. Avoidance of unwise rhetoric, which may bring about a confrontation before we are ready for it, and a quiet determination and preparedness to face such a confrontation, if it is forced on us, should be the cornerstones of our policy. (27-11-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies.E-mail: )

Monday, November 24, 2008



( To be read in continuation of my article of November 3,2008, titled TIBET: 'STATUS QUO PLUS' AS AN OPTION? available at )

How trustworthy is China on Tibet? Do the words, promises and commitments of its leaders have any value? What are the options available to the Tibetan people in dealing with an economic power, which the international community is not prepared to displease because of the perceived dependence on Chinese co-operation for re-stabilising the global economy? Are the Tibetan people condemned to extinction, with neither India nor the West prepared to support their cause for autonomy? What after the Dalai Lama? Will his death also mean the death of the Tibetan cause?

2. These were the questions and concerns that were uppermost in the minds 560 prominent Tibetan personalities from the Tibetan diaspora in India and the rest of the world, who participated in a Special General Meeting convened by His Holiness the Dalai Lama at Dharamsala in Himachal Pradesh " to hold an extensive discussion and debate with regard to the Tibetan cause in the light of recent emergency events in Tibet and the international scenario."

3. His Holiness himself did not attend the meeting, which was held from November 17 to 22,2008.The meeting was held against the background of the ruthless crushing of the uprising in the Tibetan majority areas of China in March and April last by the Chinese People's Liberation Army (PLA) and the failure of the resumed dialogue between the Chinese authorities and the representatives of His Holiness to find a way forward for meeting the aspirations of the Tibetan people. The Chinese had agreed to the resumption of the dialogue earlier stalled by them under international pressure after the uprising. The two meetings held in China by visiting representatives of His Holiness made it apparent that the Chinese were merely buying time in order to prevent a boycott of the Olympics by world leaders.

4. Hopes that after the Olympics, the Chinese leaders would adopt a softer line on the future of Tibet have been belied. There was one meeting before the Olympics and one after the Olympics. The meeting held after the Olympics ( 8th round from October 30 to November 5, 2008) made it painfully clear that the Chinese stance has further hardened. During the seventh round of talks in Beijing on July 1 and 2, 2008, the Vice Chairman of the Chinese People’s Political Consultative Conference and the Minister of the Central United Front Work Department, Mr. Du Qinglin, invited suggestions from His Holiness for the stability and development of Tibet. The Executive Vice Minister of the Central United Front Work Department, Mr. Zhu Weiqun, further said they would like to hear the views of the Dalai Lama's representatives on the degree or form of autonomy they were seeking as well as on all aspects of regional autonomy within the scope of the Constitution of the People's Republic of China (PRC). In response to the Chinese request, the Dalai Lama's team, which, as before, consisted of Lodi Gyaltsen Gyari and Kelsang Gyaltsen submitted to their Chinese interlocutors during the 8th round a Memorandum outlining the position of His Holiness on the autonomy issue. To their surprise, the Chinese contemptuously rejected the Memo and refused to discuss the issue of autonomy. A summary of the Memo as released by the Tibetan delegation is annexed.

5.The hardening of the Chinese stance after the Olympics can be attributed to the following reasons:

Firstly, the manner in which France and other Western countries eased their pressure on the human rights issue after the Chinese people threatened to boycott Western goods made Beijing realise the power of the economic card which it now wields against the West.

Secondly, the economic melt-down in the West and its anxiety to secure Chinese co-operation and assistance for re-stabilising the global economy made it even more unlikely than in the past that the West would extend any concrete support to the Tibetan cause apart from pro forma lip sympathy.

Thirdly, speculation about health problems faced by the Dalai Lama made them feel that it was only a question of time before he disappeared from the scene and that once he is dead they can have a Dalai Lama of their choice nominated and sound the death-knell of the Tibetan cause.

6. The Tibetans have been shocked by the Chinese repudiation of a commiment made by Deng Xiao-ping on March 12,1979, that "apart from independence, all other issues can be discussed." He gave this solemn assurance during a meeting with Kasur Gyalo Thondup, the elder brother of His Holiness. While replying to a Japanese correspondent in Beijing on November 10,2008, Zhu Weiqun asserted that Deng had never made such a statement. He said: “ It is a falsehood made by Gyari and is a complete distortion of Deng Xiaoping’s statement.”

7. Taken aback by this denial which came on the eve of the Special General meeting, Gyalo Thondup addressed the international media, which had assembled at Dharamsala, on November 19,2008, to give his version. To quote him: “I am shocked to hear such a statement from the Chinese officials because it was myself to whom the late paramount leader, Deng Xiaoping, said, “except independence all other issues can be settled through discussions,”.Deng Xiaoping is no longer with us today. But to put the record straight I would like to clarify in front of international media that during my first visit to China in 1979 I met the paramount leader Deng Xiaoping on 12 March 1979. He told me “except independence all other issues can be settled through discussions.”

8. Juchen Thubten Namgyal, who also addressed the press conference, said: "I am totally surprised to learn that Mr Zhu Weiqun recently denied Deng Xiaoping’s statement. As a member of the first Tibetan exploratory mission, we met with Vice-premier Yang Jireng, who was also the head of the Central United Front Work Department and Nationality Affairs Commission and others on 29 April 1982. I sought confirmation from Yang Jireng whether Deng Xiaoping had made such a statement. He did not deny this fact.”

9. According to the advisers of His Holiness,on March 1,1979, Ulanfu, Minister for Nationality Affairs Commission, told Gyalo Thondup: “ The Dalai Lama and the Tibetans in exile are welcome to return to their home and contribute towards the development and progress of the nation. Suitable arrangements could be made for everyone upon their return. The Dalai Lama had not made contacts with the Soviet Union. Therefore, apart from independence, we can solve any problem."

10. The advisers of His Holiness pointed out that a record of statements made by former Chinese leaders and official documents authenticated the statement made by Deng and Ulanfu. In an interview with the Xinhua News agency on May 19,1991, China’s then Premier Li Peng said: “All matters except Tibetan independence could be discussed”. His statement was later emphasised in a newsletter released by the Embassy of the People’s Republic of China in Washington DC, regarding the “Questions concerning negotiations between the Central Government of China and the Dalai Lama.”

11. According to the advisers, during a state visit to China from May 18 to 23, 1992, the then Indian President R Venkataraman was told by Premier Li Peng that “ … we are willing to talk to him about anything except the issue of the so-called independence of Tibet.” A White Paper released by the Information office of the State Council of the PRC in September 1992 reiterated that “all matters except Tibetan independence can be discussed”.

12. Gyalo Thondup told the media: "Some hardliner communist officials, who hold high up position in the Chinese Government, treat Tibet as a personal belonging in their pocket and deliberately intend to scuttle the dialogue process to resolve the issue of Tibet.The Tibetan people will continue to demand their legitimate and reasonable rights as given to other minority nationalities entitled in the constitution of the People’s Republic of China.The legitimate rights of Tibetans are rights to freedom, thinking, speech, religion, travel, to promote and preserve Tibet’s culture. We must not lose faith and plead to the Chinese Government for our legitimate rights.As a Tibetan, I'm convinced that we must all live together. Therefore it is very important for the Tibetan people not to lose hope and to keep a good relationship with people in China. We are sandwiched between China and India, both very important countries. I was always critical with the Chinese face to face in Beijing, and now I'm desperate, that's why I told people in the Chinese Embassy in Delhi that there's no choice [but to talk]. We must face the reality that we have to deal with China. The people of China will eventually realize that what we are asking is legitimate.”

13.A commentary on Tibet disseminated by the official Xinhua news agency on November 21,2008, coinciding with the meeting, said: " Its purpose is to set up a 'half independent' or 'covertly independent' political entity controlled by the Dalai clique on one quarter of the Chinese territory.And when conditions are ripe, they will seek to realise 'complete Tibet independence'." Qin Gang, a spokesman of the Chinese Foreign Ministry, was quoted as saying as follows: "Our position on Tibet is clear and resolute. Any attempt to separate Tibet from China is doomed to fail.The so-called Tibetan government-in-exile is not recognised by any government in the world."

14. In the light of the Chinese repudiation of their past commitments and statements, the Special General Meeting discussed whether any useful purpose would be served by continuing with the dialogue with the Chinese and whether the time had not come to call off the dialogue with the Chinese officials, abandon the Middle Path of autonomy so far followed and start a full-fledged struggle for independence. This view is particularly shared by the younger Tibetans belonging to the Tibetan Youth Congress. A question posed by many during the discussions was: When the Chinese are not even prepared to discuss autonomy, what is the point in continuing the dialogue with them?

15. There was unanimity against accepting the status quo. The meeting reiterated its faith in the continuing leadership of His Holiness and decided to continue with the present objective of a Middle Path. It also stressed that the Tibetans would continue to adhere to non-violence. The relevant portions from the final summary of conclusions of the meeting are given below:

(a). "The Central Tibetan Administration is the sole and legitimate representative of the Tibetans in and outside Tibet, which the CTA has inherited from many centuries. This historical experience of the Tibetan people proves the baselessness of the recent rhetoric and propaganda of the Chinese Government, which says that His Holiness the Dalai Lama and the Central Tibetan Administration have no right to represent Tibet and the Tibetan people. The Tibetans in and outside Tibet strongly oppose such remarks."

(b)."Based on the suggestions received to this Special General Meeting from in and outside Tibet and after frank and candid discussions held by the delegates in regard to the future policy of Tibet, it came to an unanimous decision to straightly follow the guidance of His Holiness the Dalai Lama based on the prevailing situation from time to time. Majority decision was to continue the policy of Middle-Way-Approach. Besides that, looking at the Chinese Government's behavior in the past, views to stop sending envoys and to pursue complete independence or self-determination if no result comes out in the near future, were also strongly expressed."

(c)."The Middle-Way-Approach, independence or self-determination, whatever is pursued in the Tibetan struggle, we shall not deviate from the path of non-violence to achieve our aims."

(d)."His Holiness the Dalai Lama and the Central Tibetan Administration in an effort to resolve the Sino-Tibetan problem, by adopting the Middle-Way-Approach, a memorandum on genuine autonomy for the Tibetan people, within the framework of the constitution of the PRC, was recently presented to the Chinese Government. Leave alone giving positive response, the PRC Government rejected every single clause of the memorandum and accused the CTA of seeking independence, semi-independence or independence in disguised form. Therefore, the dialogue process did not produce any substantive result to the Sino-Tibetan problem and the whole responsibility of this failure is solely with the PRC government."

(e). "Because the PRC had alleged that they have evidence to prove that the recent unrest in Tibet had been 'triggered, instigated, planned and orchestrated' by the 'Dalai clique', His Holiness the Dalai Lama and the Central Tibetan Administration insisted that an international investigating body be allowed to travel to Tibet to verify the PRC's claims. And that delegates from China can also visit Dharamsala to investigate and validate their allegation. However, the PRC did not have the gumption to accept both these suggestions. Moreover, the PRC could not even bring forth one single evidence in support of their claims before the world audience. This has clearly pointed to the fact that demonstrations and protests in Tibet since March this year are because of the repressive policies adopted by the PRC towards Tibet and Tibetans since its occupation. Therefore, the PRC government should accept responsibilities for their mistakes."

(f)."This is to reiterate, through this Special General Meeting, that the cause of the Tibetan struggle is a struggle for the rights of Tibetans. It is a struggle against the wrong policies of the PRC towards Tibet and Tibetans. The Tibetan struggle is in no way against the Chinese people, as it is being portrayed by the PRC."

(g)."In order to destroy Tibetan Buddhism, the PRC instituted new regulations on measures for the recognition of incarnate lamas or 'Living Buddhas'. We totally oppose any interference by a Government which is avowedly atheist in spiritual affairs for political advantage. We strongly oppose the 'Patriotic Education' campaign that is being increasingly forced down in various monasteries in Tibet."

16. It is not clear whether His Holiness would take the initiative for another round of talks with the Chinese. The position seems to be that while the doors are open for more talks, the initiative has to come from the Chinese. It needs to be noted that the post-Olympics hardening of the Chinese stand on Tibet has been accompanied by what seems to be a post-Olympics hardening of the Chinese position on the Sino-Indian border talks during which the Chinese continue to insist on the transfer of at least Tawang in Arunachal Pradesh to China. It is understood that the Dalai Lama proposes to hold a meeting of the international well-wishers of the Tibetan cause to brief them on the deliberations of the Special General Meeting, which was restricted to Tibetans and seek their views. (24-11-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )



The Constitution of the PRC contains fundamental principles on autonomy and self-government whose objectives are compatible with the needs and aspirations of the Tibetans. Regional national autonomy is aimed at opposing both the oppression and the separation of nationalities by rejecting both Han chauvinism and local nationalism. It is intended to ensure the protection of the culture and the identity of minority nationalities by empowering them to become masters of their own affairs.

To a very considerable extent Tibetan needs can be met within the constitutional principles on autonomy. On several points, the Constitution gives significant discretionary powers to state organs in decision-making and on the operation of the system of autonomy. These discretionary powers can be exercised to facilitate genuine autonomy for Tibetans in ways that would respond to the uniqueness of the Tibetan situation. Given good will on both sides, outstanding problems can be resolved within the constitutional principles on autonomy. In this way national unity and stability and harmonious relations between the Tibetan and other nationalities will be established.


Tibetans have a rich and distinct history, culture and spiritual tradition all of which form valuable parts of the heritage of humanity. Not only do Tibetans wish to preserve their own heritage, which they cherish, but equally they wish to further develop their culture and spiritual life and knowledge in ways that are particularly suited to the needs and conditions of humanity in the 21st century.
As a part of the multi-national state of the PRC, Tibetans can benefit greatly from the rapid economic and scientific development the country is experiencing. While wanting to actively participate and contribute to this development, we want to ensure that this happens without the people losing their Tibetan identity, culture and core values and without putting the distinct and fragile environment of the Tibetan plateau, to which Tibetans are indigenous, at risk.

His Holiness the Dalai Lama’s commitment to seek a solution for the Tibetan people within the PRC is clear and unambiguous. This position is in full compliance and agreement with paramount leader Deng Xiaoping's statement in which he emphasised that except for independence all other issues could be resolved through dialogue. Whereas, we are committed, therefore, to fully respect the territorial integrity of the PRC, we expect the Central Government to recognise and fully respect the integrity of the Tibetan nationality and its right to exercise genuine autonomy within the PRC. We believe that this is the basis for resolving the differences between us and promoting unity, stability and harmony among nationalities.


Subject Matters of Self-government1) Language2) Culture3) Religion4) Education5) Environmental Protection6) Utilisation of Natural Resources7) Economic Development and Trade8) Public health9) Public Security10) Regulation on population migration11) Cultural, educational and religious exchanges with other countries


Tibetans belong to one minority nationality regardless of the current administrative divisions. The integrity of the Tibetan nationality must be respected. That is the spirit, the intent and the principle underlying the constitutional concept of national regional autonomy as well as the principle of equality of nationalities.

There is no dispute about the fact that Tibetans share the same language, culture, spiritual tradition, core values and customs, that they belong to the same ethnic group and that they have a strong sense of common identity. Tibetans share a common history and despite periods of political or administrative divisions, Tibetans continuously remained united by their religion, culture, education, language, way of life and by their unique high plateau environment.

The Tibetan nationality lives in one contiguous area on the Tibetan plateau, which they have inhabited for millennia and to which they are therefore indigenous. For purposes of the constitutional principles of national regional autonomy Tibetans in the PRC in fact live as a single nationality all over the Tibetan plateau.

In order for the Tibetan nationality to develop and flourish with its distinct identity, culture and spiritual tradition through the exercise of self-government on the above mentioned basic Tibetan needs, the entire community, comprising all the areas currently designated by the PRC as Tibetan autonomous areas, should be under one single administrative entity. The current administrative divisions, by which Tibetan communities are ruled and administered under different provinces and regions of the PRC, foments fragmentation, promotes unequal development, and weakens the ability of the Tibetan nationality to protect and promote its common cultural, spiritual and ethnic identity. Rather than respecting the integrity of the nationality, this policy promotes its fragmentation and disregards the spirit of autonomy.


The exercise of genuine autonomy would include the right of Tibetans to create their own regional government and government institutions and processes that are best suited to their needs and characteristics. It would require that the People’s Congress of the autonomous region have the power to legislate on all matters within the competencies of the region and that other organs of the autonomous government have the power to execute and administer decisions autonomously. Autonomy also entails representation and meaningful participation in national decision-making in the Central Government. Processes for effective consultation and close cooperation or joint decision-making between the Central Government and the regional government on areas of common interest also need to be in place for the autonomy to be effective.
A crucial element of genuine autonomy is the guarantee the Constitution or other laws provide that powers and responsibilities allocated to the autonomous region cannot be unilaterally abrogated or changed. This means that neither the Central Government nor the autonomous region’s government should be able, without the consent of the other, to change the basic features of the autonomy.
Implementation of genuine autonomy, for example, requires clear divisions of powers and responsibilities between the Central Government and the government of the autonomous region with respect to subject matter competency. Currently there is no such clarity and the scope of legislative powers of autonomous regions is both uncertain and severely restricted. Thus, whereas the Constitution intends to recognise the special need for autonomous regions to legislate on many matters that affect them, the requirements of Article 116 for prior approval at the highest level of the Central Government - by the Standing Committee of National People’s Congress (NPC) - inhibit the implementation of this principle of autonomy. In reality, it is only autonomous regional congresses that expressly require such approval, while the congresses of ordinary (not autonomous) provinces of the PRC do not need prior permission and merely report the passage of regulations to the Standing Committee of the NPC “for the record” (Article 100).

The exercise of autonomy is further subject to a considerable number of laws and regulations, according to Article 115 of the Constitution. Certain laws effectively restrict the autonomy of the autonomous region, while others are not always consistent with one another. The result is that the exact scope of the autonomy is unclear and is not fixed, since it is unilaterally changed with the enactment of laws and regulations at higher levels of the state, and even by changes in policy. There is also no adequate process for consultation or for settling differences that arise between the organs of the Central Government and of the regional government with respect to the scope and exercise of autonomy. In practice, the resulting uncertainty limits the initiative of regional authorities and impedes the exercise of genuine autonomy by Tibetans today.

Sunday, November 23, 2008



( These comments were sent by me in response to a query from a leading Washington DC-based think tank on Indian perceptions ofPresident-elect Barrack Obama)

There were initial concerns in India over the likely implications to India's national interests during an Obama Presidency. These concernsarose from the following factors:

(a). Obama's initial opposition in the Senate to the Indo-US civilian nuclear co-operation agreement, though he subsequently supported it.

(b). The reportedly active role played by Richard Holbroke and Madeleine Albright in advising him on foreign policy issues during the electioncampaign. Both were seen in India as advocates of a more intrusive role by the US in matters such as a settlement of the Kashmir issue andaddressing the Pakistani concerns over the increasing Indian presence in Afghanistan.

2. The fact that a large number of influential Americans of Indian origin had supported the Bush administration and that many ofthem---except Americans of Indian origin in Chicago--- had switched their support to Hillary Clinton during the primaries also influencedIndian perceptions of Obama.

3. These concerns are likely to be mitigated by reports that Obama is likely to nominate Hillary Clinton as his Secretary of State. She enjoysa positive image in the Indo-American community as well as in India. It is remembered that the Indo-American community played an activerole in her campaign to win the election to the Senate. They remained loyal to her during the entire primary campaign and switched theirsupport to Obama only after she had withdrawn from the race.

4. There were ups and downs in India's relations with the US during the presidency of Bill Clinton. During his first term he was viewed asinsensitive to India's interests and concerns. This perception got strengthened after his negative reaction to India's nuclear tests in 1998.The Kargil military conflict between India and Pakistan in 1999 saw a thawing of the cold vibrations, which had set in between India andthe US. What was seen as his support for India and his criticism of Pakistan for violating the Line of Control (LOC) in Jammu & Kashmir andthe active behind the scene role played by him in pressuring Pakistan to withdraw its troops from Indian territory in the Kargil areacontributed to a change in the Indian perceptions from negative to positive. This change was reflected in the extraordinarily warm welcomehe received during his visit to India in March 2000.

5. Despite this, the Clinton Administration, like other Democratic Administrations that preceded it, thought of India more tactically than strategically.-----more in terms of American business interests in catering to India's large middle class than in terms of the role which Indiacan and ought to play in the Asian---and ultimately global--- stage in the years to come.

6. It goes to the credit of President George Bush and his Secretary of State Condolleezza Rice that they started thinking of India morestrategically than tactically---- as an Asian power on par with China, as a power to be reckoned with and as a power with a tremendouspotential for playing a benign role on the world stage. The remarkable improvement in Indo-US relations under the inspiration of Bush andRice---- adequately reciprocated by Prime Minister Manmohan Singh--- has been a turning point in Indo-US relations since India becameindependent in 1947.

7. Will Obama continue with the Bush-Rice policy of dealing with India strategically and strengthening their relationship or will he revert tothe traditional tactical Democratic reflex? This was the question that bothered many Indian opinion-makers as they heard with concernspeculation about the likelihood of Holbroke or Albright becoming the Secretary of State. There is a sigh of relief over reports of thelikelihood of Hillary Clinton taking over as the Secretary of State. She has enjoyed positive vibrations with influential Indians andIndo-Americans. There is a confidence that Indo-US relations will be safe in her hands.One has to wait and see whether this belief proves tobe correct or mere wishful-thinking.

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )



(What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to the other countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel the negative consequences of the down-turn in the Chinese economy. Keeping this in view, we have been bringing out a periodic "Chinese Economy Monitor" based on open information. This is the fourth in the series---B. Raman)

2.China announced on November 9,2008, an economic stimulus programme amounting to US $586 billion to be spent over a period of two years. It described its aims as to bolster domestic demand and help avert a global recession. According to analysts, these figures seemed to include expected expenditute on already on-going projects for which money had already been set aside in the past as well as newly-planned expenditure on new projects to be launched in the coming two years. The announced sum represents about 16% of China's economic output last year, and is roughly equal to the total of all central and local government spending in 2006. New spending of even half that amount would be a substantial addition to the amounts already budgeted for during the current financial year. Most of the allocated amount is proposed to be spent on new housing, new infrastructure, agriculture, health care and social welfare. It also includes a tax deduction for capital spending by companies. China's stimulus package is substantially higher than that of the US ( US $ 168 billion), Japan (US $ 51.5 billion largely in the form of payouts to families and tax reliefs to business companies) and Germany (US $ 29.9 billion mainly tax reliefs and loans). The German package has a four-year duration as against two years in the case of China. The time period in the case of the US and Japan is not known. The Chinese contention is that the best way they could contribute to re-stabilising the global economy is by a substantial increase in expenditure in those sectors such as housing and infrastructure, which would create new jobs at home and, at the same time, maintain a high level of imports of raw materials and other items such as minerals and metals required for this purpose.

While the outlook for China's once-booming economy has rapidly worsened, the country remains comparatively well-placed to deal with a slowdown. The boom years have been well used by China to clean up its banking system, return state enterprises to profitability and shore up government finances. Now the state is putting its significant financial resources -- including a budget that for the moment is still in surplus -- into play to shore up the economy. China's financial system remains largely unscathed by the global credit squeeze, but prospects for the country's continued rapid growth have quickly deteriorated. Export orders from the U.S., Europe and Japan are weakening, causing factories around China to trim work forces or shut down entirely -- leading to unemployment that could undermine popular backing for the Government.Urban consumers are pulling back from China's housing market, causing new construction to collapse to its worst level in a decade. With construction weak, support for other key industries such as cement and steel has declined, and they are cutting output and canceling orders for raw materials -- moves that are being felt by commodities firms around the world. The downward spiral in confidence is likely to depress growth even further. China's leaders "realize this is really about sentiment and confidence, which needs a very fast and strong policy response," said Wang Qing, an economist with Morgan Stanley.Based on recent trends and without a policy response, China could have seen only a GDP growth rate of 5% to 6% next year, according to Mr. Wang. With the stimulus measures that include previous moves to cut interest rates and end caps on bank lending, he said China now has a good chance of achieving a growth rate of 8% to 9% in 2009.

Economists said China's new stimulus plan represents an even more dramatic policy response than China adopted in 1998 during the Asian financial crisis, when Beijing spent heavily to counter a similarly worrisome combination of an external financial crisis and a sharp domestic slowdown."As the global economic and financial crisis has become more severe in the last two months, China must take flexible and prudent macroeconomic policies to resist the negative impact of the international situation and deal with these complicated and ever-changing trends," the State Council said in its statement announcing the package. Another question is how quickly the effects of the stimulus package will be felt in the real economy. While the Government's statement urged local officials to rapidly put new money to work, some lag is unavoidable. And since infrastructure spending has already been growing by about 20% annually for the past couple of decades, there may be physical and logistical limitations to how much spending can be further accelerated.

The Government is presenting the program as an opportunity to do many things that would be worth doing anyway. These include helping companies upgrade to higher-tech equipment, improving irrigation in rural areas, raising pensions and social-security payments, and improving water and waste treatment in cities.

----- Extracted from an article by Andrew Batson in the "Wall Street Journal" of November 10,2008.


3.In its monetary policy report for the third quarter of the year ending on September 30,2008, the People's Bank of China, the country's central bank, said as follows: "Inflationary pressures had eased alongside falling commodity prices. The Bank will focus on preventing deflation in the short term. It will use open market operations to help increase liquidity and will ensure that adequate credit is available in the financial system to complement the Government's fiscal stimulus policies. Uncertainties in the domestic economy are increasing. The risk of an economic downturn is getting bigger. China's macro-economic controls are facing a more complicated and fast changing situation. Problems in the property sector could spread to other parts of the economy. Monetary policy should prevent deflation in the short term, but prevent inflation in the long run. The current stimulative policies should not sow the seeds of inflation down the road."

----- a Reuters despatch as carried by the "Wall Street Journal" of November 18,2008.


4.Describing the jobs situation as grim, Human Resources and Social Security Minister Yin Weimin told reporters on November 19,2008, that it could worsen from the impact of the unfolding global financial crisis. With company bankruptcies and a slowdown in production creating stresses in labour relations, he said, dealing with labour strife was now his Ministry's top concern. Shortly after unveiling the economic stimulus plan, China is now turning its attention to managing the more intractable social fallout from the downturn ---- growing discontent fuelled by rising unemployment. New measures aimed at easing labour disputes and job losses launched in recent days, coupled with calls from top security officials for the appropriate handling of protests, all point to the fact that maintaining social stability has become one of Beijing's most pressing tasks at hand. The policies range from setting up a fast-track system to nip labour disputes in the bud, providing financial aid to firms to help them retain workers, improving job search services for rural workers and clearing a backlog of sensitive court cases. 'The root cause of unhappiness is unemployment. Without a job it is hard to survive in China because of weak social protection,' said Professor Hu Xingdou, an expert in economics and China issues with the Beijing Institute of Technology. He added: "If leaders want to defuse tensions, they must solve the job problem."

Social Security Vice-Minister Zhang Xiaojian revealed on November 19,2008, that demand for workers in 84 cities across China in the third quarter of this year had fallen by 5.5 per cent - the first third-quarter drop in "many years".China's official urban unemployment rate was currently about 4 per cent, but could hit 4.5 per cent by the year-end. Next year, the rate could climb even higher, Zhang said.Yin identified October as the month when "employment in China began to show the impact of changes in the international economic situation".Up to then, he said, the "employment situation was basically stable". Looking at next year, he said the first quarter would be "more difficult" but expected a turnaround in the second quarter when the effects of the massive stimulus package would become evident.

Even before the current crisis, China's 24 million urban job-seekers outnumbered new jobs two to one. With even fewer jobs next year, the fierce competition among the country's university graduates, for instance, is set to intensify. The number of graduates will rise to 6.1 million next year, up from 5.59 million this year, said Zhang. Rising unemployment among China's 230 million rural labourers - about half of whom toil far from their hometowns - is also a major problem. The authorities are concerned that they could be the biggest source of unrest.

China's official jobless rate does not take into account these unregistered, highly mobile migrant workers. It would be much higher if they were included. Unemployment was most severe in China's southern manufacturing and export hub where thousands of labour-intensive firms which employ migrant labour have collapsed due to weakening external demand, said Yin. Already, there have been isolated protests by workers over unpaid wages at shuttered factories. But of increasing concern for the Chinese Communist Party is the widening scale of unrest and scope of issues that are fuelling public dissatisfaction. In recent weeks, taxi drivers upset over falling incomes have staged strikes in at least three Chinese cities, including Chongqing. Earlier last week, a two-day protest over home demolitions in Gansu province left more than 70 injured.
Yin denied that there were currently any "large-scale retrenchments" or mass movement of jobless migrant workers back to their hometowns, but admitted that the "situation was still developing".
----- Source:- The Straits Times of November 23,2008

5.Yin acknowledged that labor unrest was the Ministry's “top concern,” following recent protests from workers who have lost their jobs and are demanding back wages. According to him, the Government would try to curb labor unrest by solving half of disputes at the grassroots level. A fast-track system to deal with labor disputes will be put in place as well. Yin reiterated that the Government would help enterprises through the crisis to reduce unemployment. He pledged that his Ministry will ensure that employees receive wages due to them in situations where factory closures are inevitable. Industries will also be required to uphold their legal obligations. He added: “The global economic crisis is picking up speed and spreading from developed to developing countries and the effects are becoming more and more pronounced here. Our economy is facing a serious challenge.” \
---- Source Reuters of November 20,2008

6.China announced measures on November 20,2008, aimed at absorbing job losses and staving off civil unrest, amid rising concerns the economic crisis was fuelling long-simmering social tensions across the country.The policies cover a wide range of areas, such as raising compensation for farmers kicked off their land, helping laid-off workers, ensuring police handle protests correctly and clearing a backlog of sensitive court cases."The campaign will help to ease social conflicts, protect the people's legal interests and maintain social stability," Zhou Yongkang, China's top law enforcer, said in detailing the eight-month programme to clear the court cases.China's Communist Party has long been obsessed with social stability, concerned that any type of protest could escalate into a major challenge to its 59-year rule. With China's economy slowing, a series of high-profile protests have erupted recently over job losses and long-standing grievances over the many injustices in Chinese society such as powerful interests taking people's land. Public Security Minister Meng Jianzhu warned police chiefs they "should be aware of the challenge brought by the global financial crisis and try their best to maintain social stability", the official "China Daily" reported. Highlighting the concerns, thousands of people took to the streets this week in northwest China's Gansu province wielding axes, chains and other weapons to confront authorities over a typical "land grab" dispute.Meanwhile, tensions remain high in southern Guangdong province, China's manufacturing heartland, where thousands of manufacturing workers have gathered in recent weeks outside closed-down factories to demand unpaid wages.Social Security Minister Yin Weimin admitted that an expected spike in unemployment was a serious concern for the Government."We have called on all levels of the Human Resources and Social Security Ministry to place priority on the stabilisation of the employment situation as the top task that we must tackle," Yin told reporters.He announced a series of measures to try to stave off unemployment and to help those who have lost their jobs, particularly among the 230 million rural migrant workers who form the backbone of China's struggling export industry.Yin said measures included helping migrants find a job when they come to urban areas and providing extra training for those returning home. The Ministry of Land and Resources, meanwhile, announced it would increase compensation for farmers' land from 2009 "to guarantee the lawful rights of farmers whose land has been taken", in a statement on its website on November 20.Government-backed "land grabs" are a common occurrence in China and have sometimes fuelled violent protests as owners of the properties are forcibly moved away to make way for new developments.These issues were the backdrop to this week's two-day riot in Longnan, Gansu province, which left many people injured.The "land grab" issue was also being addressed as part of the campaign to clear the sensitive court cases announced by Zhou via the official Xinhua news agency.Six types of court cases were listed as priorities to be fast-tracked, including those linked to land disputes, others delayed due to local government interference and ones involving migrant worker payments, Xinhua reported.
---- Source: A despatch of the Agence France Presse (AFP), dated November 20,2008.


7. During October,2008, the import of crude oil increased by 28 per cent as compared to imports during October,2007, kerosene imports increased by 24 per cent and gasoline imports by 5 per cent. As against this, diesel imports declined by 46 per cent, LPG imports declined by 25 per cent, and fuel oil imports declined by 13 per cent. China's petroleum data often show big, unexplained short-term swings. Analysts, therefore, caution against making any assessment on the basis of figures for just one month. Diesel stockpiles appear to have steeply risen before the Olympics. Part of the steep drop in imports of diesel in October could have been the result of the excessive pre-Olympics build-up of stocks. China never publishes data on stocks held in respect of any of the items. However, analysts estimate that diesel stocks in the first nine months of 2008 were more than twice in the same period of 2007. The increase in the import of crude oil during October could indicate that the oil companies are taking advantage of the fall in crude prices to build up their stocks. The Government may also be doing so to build up its strategic reserves. Jiang Jiemin, the head of the China National Petroleum Corporation, has said in a statement put on its web site: " Demand for fuel has fallen sharply since September, pushing up stockpiles of unsold gasoline and diesel. As the global financial crisis and its impact on China's economy deepen, the company's business has also been significantly affected."
---From a report by David Winning and Shai Oster in the "Wall Street Journal" of November 18,2008.


8.Statistics from the Chinese Customs indicated that during the first nine months of this year, China's textiles and clothing exports touched $136.94 billion, a rise of 8.1% over the same period of 2007. But the growth rate is 11.9 percentage points lower than that of the corresponding period of last year.
------ Source, TV News Channels of November 20,2008.


9.The latest statistics issued by the China National Tourism Administration (CNTA) indicate that in September 2008, there were 1,883,300 international tourists to China, down by 15.10% compared to the same period of last year. This September, China achieved a total of US$ 3.142 billion in tourism foreign exchange earnings, a decrease of 11.36% year-on-year. From January to September this year, the number of international arrivals visiting China went down by 3.53% to 18,352,700; and China's total tourism foreign exchange earnings was US$29.828 billion, a decrease of 3.26% from the same period of last year. According to the analysis of CNTA, due to the series of serious natural disasters and "unexpected incidents" that took place in China this year, the Chinese tourism industry has been affected to a certain degree. Also, the global financial crisis has had an adverse impact on tourism
---- "China Hospitality News" of October 24,2008


My Comments: The Chinese banks and other financial institutions have not been facing any problems till now. The economy has started doing badly as compared to the past double digit growth rates due to a continuing decline in exports, which has particularly affected small and medium scale enterprises. However, it has been doing better than the economies of other countries. The decline in exports in an exports-dependent manufacturing sector has been leading to job losses, which are particularly affecting migrant labour from the rural areas, who had found jobs in the coastal areas. This has already started causing sporadic instances of social unrest. The introduction of economic reforms in China since 1978 was not accompanied by the introduction of appropriate labour reforms to ensure for the workers fair wages, timely payment of wages, protection against arbitrary dismissals and retrenchment and expeditious disposal of labour disputes in a manner that is viewed as fair by the workers. This could aggravate the social tensions at a time of economic decline. The Government has embarked on a two-pronged policy---- a fiscal stimulus package to dramatically step up expenditure on new infrastructure and other projects to create new jobs and modernisation of labour reforms and their strict enforcement. The Government's assessment is that the present decline will continue till June 30 next and even worsen. It is hoping that by then the benefits of the stimulus package will start flowing in and that the new US President Barrack Obama would have succeeded in reversing the melt-down in the US. If (it is a big IF) that happens, things could start looking up again from July. The Government is also embarking on a policy of restructuring the manufacturing sector in order to expand the domestic demand and decrease the present over-dependence on exports. If the Government makes its labour laws more labour friendly than foreign investor-friendly as they are now, China could to some extent lose its attraction to foreign investors as compared to India, which is viewed by many foreign investors as over-friendly to labour. However, the superior state of Chinese infrastructure, which is now sought to be improved even further, will continue to give an advantage to China as compared to India with the woeful state of its infrastructure. (23-11-08)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )

Friday, November 21, 2008




The policy of the Indian Navy in its operations against Somali pirates in the Gulf of Aden area can be characterised as one of active defenceof Indian shipping. That means, protection of Indian commercial ships and foreign ships with a large complement of Indian crew transitingthrough these waters and action in self-defence against pirate boats and ships, which threaten Indian lives and interests and threaten toattack Indian naval ships patrolling the seas in this area. The indications till now are that their role will not be extended to cover activeintervention to free already hijacked ships. If preventive measures fail, the responsibility for getting a hijacked ship released from thecustody of the pirates will be largely that of the company owning the ship.

2. Any active intervention role will require the presence of more ships with more specially-trained commandoes on board. Moreover, if theintervention attempt fails, there could be diplomatic and other complications. It has been reported that the Ministry of Shipping of theGovernment of India is keen that at least four ships of the Navy should be on anti-piracy patrol. The present policy seems to be to have oneship on rotation on permanent anti-piracy patrol. At the most, this may be increased to two if resources and circumstances permit. AdmiralSureesh Mehta, the Chief of the Naval Staff, told the media on November 20, 2008,that the Navy was also considering the option of an aerialrecce of the region. He has also been quoted as saying: "We are considering augmenting our efforts to keep the Indian traffic in the regionsafe.”

3. The Government of India has reasons to be gratified that the successful action of INS Tabar, the frigate presently on patrolling duty, insinking a suspected mothership of the pirates on November 18,2008, has been positively viewed by the countries of the region as well as bythose outside the region. It has also been uniformly hailed by private shipping companies using the Gulf of Aden. It is equally gratifying thatthe Government of Pakistan, which under Pervez Musharraf was opposed to any Indian role in maritime security in this region, has not so farreacted adversely to the proposed permanent presence of one or two Indian naval ships in the waters of this region.

4.Was the US consulted before India decided to deploy INS Tabar in the Gulf of Aden? An answer to this question is not available. It may berecalled that in the past the US had tried to have India's role in maritime security confined to the seas to the East of India. It was opposedto any Indian role in the seas to the West of India out of deference to the sensitivities and concerns of Pakistan.Now, it seems to bereconciled to India's role even if it had not actively encouraged it.

5.Pakistani sources, however, suspect that India would not have taken this initiative without an approving nod from the US and that the USwould not have given this nod without consulting the Government of Pakistan. If it ultimately turns out that the US did consult Pakistan andthat it did not object to the Indian role, this would mark a qualitative change for the better in the perceptions of the present PakistaniGovernment towards India.

6. It is, at the same time, intriguing that the US has not hailed the successful action of INS Tabar as enthusiastically as one would haveexpected it. Official US comments on what is perceived by private shipping companies as the weak response of the US-led coalition to thesurge in piracy in this region have emphasised caution in dealing with the piracy. According to a despatch of the Agence France Presse(AFP), Geoff Morrell, a media spokesperson of the Pentagon, told pressmen in Washington DC on November 19,2008, that a militaryapproach was not the answer to a surge in piracy off the Horn of Africa and said that the shipping companies should do more on their ownto protect their vessels. "You could have all the navies in the world having all their ships out there, you know, it's not going to ever solve thisproblem," he said, and added: "It requires a holistic approach from the international community at sea, ashore, with governance, witheconomic development."

7. According to the AFP, Morrell said that at least 18 ships are currently being held for ransom by Somali pirates, along with 330 crewmembers taken hostage. This year there have been 95 attempted ship seizures by pirates in the Gulf of Aden, 39 of them successful.Notonly has the incidence of piracy increased, but pirates are going farther out in the high seas. He then said: "Trust me, this subject is beingdealt with at the highest levels of this Government.It is a real concern. And we are constantly evaluating what the best approach is.I'm justtrying to get you to think beyond the notion of, 'The answer is strictly kinetics. We've got to board more ships. We've got to fire on morepirates.'

8. Commenting on the hijacking of a Saudi oil supertanker, another Pentagon spokesperson Dana Perino said: "The White House saidPresident George W. Bush had been briefed about the seizure of the Saudi supertanker. Ensuring the safety and well being of the crew is ofparamount importance in preventing or dealing with issues of piracy.And the goal would be to try to help get this ship to safety, secure thecrew, and then work with our international partners to try to alleviate the piracy problem. Washington is working with other members of theSecurity Council right now to work out how to more effectively fight against piracy.It's a very complicated issue. There's a lot ofinternational laws that factor into these efforts."

9. According to the AFP report, Morrell urged that the UN Security Council should vote a resolution that authorizes anti-piracy activities. Hesaid that commercial shipping companies also should stick to safer sea lanes away from shore and invest in protective measures, includingtechnical devices and armed guards."The shipping companies also have an obligation to secure their ships to prevent incidents such thatwe've been seeing at alarming rates over the past several months," he added.

10.The State Department convened a high level group of officials to examine the issue, but Sean McCormack, a spokesperson of the Department, called piracy "an international problem" that the US was not going to solve alone.

11. Do the guarded comments of the Pentagon and the State Department and the absence of appreciative references to the action of INSTabar in US Governmental circles indicate a discomfort over India's unilateral and proactive role? Such guarded comments, however, arenot new. In the past too, the US attitude to its anti-piracy role in the Horn of Africa region lacked clarity and a readiness to act.Caution indealing with the increasing problem of piracy in the Horn of Africa area has been a defining characteristic of the US policy and this is one ofthe reasons which had contributed to the surge in piracy.

12.After launching its military action against Al Qaeda and the Taliban in Afghanistan under Operation Enduring Freedom on October 7,2001,the US took the initiative in setting up a joint naval task force called the Combined Task Force (CTF) 150, with headquarters in Djibouti. ThePakistani Navy was invited to be a member of this Task Force. Musharraf agreed to the Pakistani Navy joining it on condition that the IndianNavy would be kept out. The Task Force is commanded by naval officers from different member countries by rotation. It is presentlycommanded by Commodore Per Bigum Christensen of Denmark. It conducts Maritime Security Operations (MSO) in the Gulf of Aden, the Gulfof Oman, the Arabian Sea, the Red Sea and the Indian Ocean.

13.According to a US Navy website, "the MSO help develop security in the maritime environment, which promotes stability and globalprosperity. These operations complement the counterterrorism and security efforts of regional nations and seek to disrupt violentextremists’ use of the maritime environment as a venue for attack or to transport personnel, weapons or other material." Since its inception,its focus was mainly on anti-smuggling and anti-infiltration tasks----meaning preventing the smuggling and pentration of men and materialto Al Qaeda and the Taliban in Afghanistan and to Al Qaeda in Iraq. Counter-piracy was given a low priority.

14.On August 22,2008, the Task Force established a Maritime Security Patrol Area (MSPA) in support of the International MaritimeOrganization's (IMO) call for international assistance to discourage attacks on commercial vessels transiting the Gulf of Aden. According tostatements issued by the US Navy, the MSPA is a geographic area in the Gulf of Aden utilized by Combined Maritime Forces to focus theirefforts against destabilizing activities. These activities include, but are not limited to: criminal activities, drug smuggling operations thatsupport terrorist and violent extremist organizations and human smuggling. Coalition forces patrol the MSPA, which is not marked or definedby visual navigational means, on a routine basis.Vice-Admiral Bill Gortney, Commander, Combined Maritime Forces, was quoted as saying:"Coalition maritime efforts will give the IMO time to work international efforts that will ultimately lead to a long-term solution." He said thatthe shipping industry must consider hiring security teams for their vessels.

15.Even after the setting-up of the MSPA, the US response to the surge in piracy has been cautious. It has been trying to discourage anyundue expectations from the shipping companies that this probably presaged a more robust role by the US Navy against Somali piracy. Theonly Navies, which have so far shown a readiness to play a robust role are those of France, the UK and India. The reasons for the continuedUS caution are not clear.

16. India's decision to send INS Tabar to the Gulf of Aden to protect Indian shipping was triggered off by the hijacking of a Japanese shipwith largely Indian crew and the emotional criticism by the families of the crew of the seeming Government inaction. It was a tactical movetaken in a hurry without much thought being given to the development of a strategic martime security architecture in the region to protectthe region against piracy as well as maritime terrorism, in concert with other affected countries. The development of such a mechanismneeds attention.

17. The Chinese are as much worried over piracy in this region as we are.A Chinese fishing vessel with a 26-member crew, 17 of themChinese, was hijacked recently by Somali pirates. It is not known whether the vessel is still in the custody of the pirates or has beenreleased. Our support for any Chinese role in a multilateral maritime security mechanism should be made conditional on their supportingIndia's permanent membership of the UN Security Council. (21-11-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )

Thursday, November 6, 2008



(From November 5,2008, President-elect Barrack Obama started receiving from the Director National Intelligence (DNI) a daily brief on thestate of the world the previous day called the President's Daily Brief (PDB). A background note on the PDB carried by the BBC online onNovember 6,2008, is annexed. The CIA would do well to incorporate the following in its PDB to Obama)

There is amazement ---- and confusion--- in India over reports that one of the first acts of the President will be to appoint Bill Clinton as hisSpecial Envoy on the Kashmir issue to facilitate a settlement between India and Pakistan

2.Well-informed sources in India say that if the President-elect wants to severely damage the developing Indo-US relations he could nothave thought of a better idea than to meddle in Kashmir. So many Americans----Presidents, Presidents-elect and defeatedPresidential-aspirants---- thought they could help in finding a solution to the Kashmir issue and burnt their fingers and damaged Indo-USrelations.

3. This started from Adlai Stevenson, who after losing the election to Gen.Dwight Eisenhower, proceeded to Srinagar ostensibly for ahouseboat holiday on the Dal Lake and tried to meddle in the affairs of the State by suggesting to Sheikh Abdullah, the then Chief Minister ofJammu & Kashmir, that he should seek independence and promised that the US would support him. When the Indian Intelligence Bureauinformed Jawaharlal Nehru, the then Prime Minister, of Stevenson's secret discussions with Abdullah, he sacked Abdullah. Adlai Stevensonbecame persona non grata with the Indian political class and public.

4. When Clinton became the President in 1993 he could not resist the temptation to have a go at settling the Kashmir issue. He chose as hissecret emissary not a distinguished American, but an old college mate of his called Robin Raphael, who was posted as a junior diplomat inthe US Embassy in New Delhi. Her American colleagues in New Delhi used to allege that after Clinton took office, she used to go aroundprojecting herself as if she was a trusted adviser to Clinton, who took her into the State Department.

5. Our Indian sources say that she had two "achievements" to her discredit. She instigated the formation of the Hurriyat , a hotch-potch ofanti-New Delhi Kashmiri personalities, which added to the existing mess. She also encouraged the formation of the Taliban in 1994 with thehelp of her close personal friends Benazir Bhutto, the then Prime Minister, and Asif Ali Zardari, the present President of Pakistan. She evenmet Mullah Mohammad Omar, who subsequently designated himself as the Amir of the Taliban, secretly and sought his help for a project ofthe Unocal for a gas pipeline from Turkmenistan to Pakistan via the Herat area of Afghanistan.

6. According to the sources, her misadventures in Kashmir further damaged Indo-US relations and her godmothering the Taliban inexorablyset in motion the train of events that led to Osama bin Laden shifting from Khartoum to Jalalabad in 1996 and launching from Afghanistanthe terrorist strikes outside the US Embassies in Nairobi and Dar-es-Salaam in August 1998, the attack on USS Cole off Aden inOctober,2000, and the 9/11 terrorist strikes in the US homeland.

7. Our Indian sources say that in the history of Indo-American relations since India became independent in 1947, there have been moreinstances of meddling by Democrats than by Republicans. They feel that Democrats seem to think that they understand sub-continentalaffairs better than anybody in the US and find it difficult to resist the urge to meddle. According to them, that is why Indian security agenciesfeel uncomfortable when the White House has a Democrat as incumbent. They say that if one draws a graph of terrorism in J&K, one wouldfind that it tends to go up when a Democrat is the President.

8.At a time when India and Pakistan are on the road to slowly mending their bilateral relations, Indians are amazed that the President-electoblivious of the past misadventures of the US in the sub-continent should be thinkig of one more. (6-11-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStrudies, Chennai. E-mail: )


Eyes only: Obama's spy briefing

By Adam Brookes BBC News, Washington

The President's Daily Brief (PDB) occupies a fabled place in American politics.
It is an ultra-secret compilation of the latest intelligence presented to the President every morning.

And later on Thursday, Barack Obama will start to receive the PDB as president-elect.

Every evening, reports over the years tell us, the PDB is roughed out by intelligence officials.

Its contents tend towards the very topical:

The latest signals intercepts from the National Security Agency in Fort Meade, Maryland

The latest human intelligence relayed to the CIA's case officers by their agents, or to the operatives of the Defense Intelligence Agency

Satellite images garnered by the National Geospatial Intelligence Agency in Bethesda

Perhaps most importantly, the PDB sums up the conclusions about the state of the world as reached by analysts from across some 16 USintelligence agencies.
Dynamic process

The President could not possibly absorb the sum of the information gathered by the huge American intelligence apparatus.

FBI information indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks

The PDB must synthesise and distil key conclusions from a mass of data.
So the PDB is a highly selective document. And it must be written very carefully.

Intelligence staff continue to work on it overnight, as fresh reporting comes in.

In the morning the final version is reviewed by the Director for National Intelligence (DNI), or one of his staff.

The current DNI, Mike McConnell, likes to take the PDB to the White House and present it to the President, sources say.

He takes with him staff members who are specialists and can answer questions the President might have.

"It's a dynamic process," says Thomas Blanton, Director of the National Security Archive at George Washington University.

"The President hears what the intelligence people want him to know, and the intelligence people learn what the president is interested in."

There are only a few PDBs - or portions of them - in the public domain. And those are mostly associated with highly controversial topics. George Bush (C) may have passed over PDB warnings of al-Qaeda threats

Here is an extract from a 1998 PDB given to President Clinton. It is often used to illustrate that the US clearly understood the al-Qaedathreat years before President George W Bush took office:

"SUBJECT: Bin Laden Preparing to Hijack US Aircraft and Other Attacks

"Reporting [-] suggests Bin Laden and his allies are preparing for attacks in the US, including an aircraft hijacking to obtain the release ofShaykh 'Umar 'Abd al-Rahman, Ramzi Yousef, and Muhammad Sadiq 'Awda.

"One source quoted a senior member of the Gama'at al-Islamiyya (IG) saying that, as of late October, the IG had completed planning for anoperation in the US on behalf of Bin Laden, but that the operation was on hold.

"A senior Bin Laden operative from Saudi Arabia was to visit IG counterparts in the US soon thereafter to discuss options-perhaps includingan aircraft hijacking."

There is a lot of detail here, and references to individual items of HUMINT (human intelligence), though President Clinton was renowned for his love of just that.

But note the caveats: reports do not "tell", they merely "suggest".

Perhaps the most infamous PDB also concerns al-Qaeda. It went to President Bush on 6 August, 2001 - just over a month before the 11September attacks on New York and Washington.

It contained the headline: "Bin Ladin determined to strike in the US".

It reads: "FBI information indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other typesof attacks."

Extraordinarily prescient? Or vague and unhelpful?

The Silberman-Robb report on US intelligence capabilities of 2005 found "deficiencies" in the PDB. Its authors were scathing. The dailyreports seemed to be "selling" intelligence - in order to keep its customers, or at least the First Customer, interested

They alleged that the format of the Brief and the way in which it was delivered helped inflate the sense of the threat posed by Iraq.

The "river of intelligence that flowed from the CIA to top policy makers over long periods of time" through the PDB was "misleading", said thereport.

"The PDBs… with their attention-grabbing headlines and drumbeat of repetition, left an impression of many corroborating reports where infact there were very few sources", it read.

"The daily reports seemed to be "selling" intelligence - in order to keep its customers, or at least the First Customer, interested."

Since then, there have been changes.

The PDB now looks less like a newsletter, sources say. It may include graphics and photographs.

Gone are those pithy headlines. And it is written in a way to reflect uncertainty or disagreement within the intelligence agencies.

So what might Barack Obama's first PDB have in it?

Well, it is not hard to imagine that there would be an evaluation of Russia's intentions regarding the positioning of its missiles, givenPresident Medvedev's recent belligerent statements.

The latest from the Afghan-Pakistan border, intercepts and photographs from drones which reveal what militants are where, and the plans US intelligence has to target them, perhaps.

And did US warplanes really kill 37 civilians at a wedding party, as the Afghan government alleges?

And plenty more - that we will never know.

Tuesday, November 4, 2008



The Presidential campaign is over. The transition drill has begun. Senator Barrack Obama will take over as the President only on January 20 next, but his immense work as the President-elect would have already begun from the moment he left the dais after making the victory speech to his followers and supporters.

2.The Americans call it the period of transition. It is during this period that the President-elect chooses his team of Cabinet members and senior officials, decides on his policy priorities and works out his goals during the first 100 days of his administration and thereafter. Those, who would constitute the hard core of his transition team, would start co-ordinating with the outgoing Bush administration.

3. Senior officials of the US Secret Service, which protects the President and the Vice-President, would have already called on him and set in place the arrangements for his security. Other officials of the Bush Administration would be calling on him and his close advisers to keep them briefed on the actions of the outgoing administration.

4. He will be the President of the US only from January 20, but he will be already entitled from November 5 to a regular briefing by the Director of the Central Intelligence Agency (CIA) and the Director, National Intelligence (DNI) on important developments in the world. The outgoing administration would not take any major decision or initiative or action without keeping him in the picture.

5. Speculation as to who could be his Cabinet members and other senior advisers had already started days before the elections in anticipation of a certain victory by him. In an article on October 26,2008, the “Independent” of the UK put its bet on the following as his possible Cabinet members:

Secretary of State: John Kerry (Senator from Massachusetts), Richard Holbrooke (former UN Ambassador), Bill Richardson (Governor of New Mexico, former UN Ambassador)

Secretary of Defence: Robert Gates (current Pentagon chief), Retd. General Wesley Clark (2004 Democratic Presidential candidate), Chuck Hagel (outgoing Republican Senator from Nebraska)

Treasury Secretary: Laura Tyson (former economic adviser to President Clinton), Timothy Geithner (President, New York Fed), Paul Volcker (former Federal Reserve Chairman)

National Security Adviser: Susan Rice (Obama's top foreign policy adviser), Retd. General Anthony Zinni (former C-in-C, Central Command), Samantha Power (former Obama foreign policy adviser)

Others: Colin Powell, possible foreign policy special envoy/troubleshooter; Hillary Clinton, health care czarina.

6.There could be surprises because he will have a political debt to pay to those who supported him and they may want some of their nominees to be accommodated.

7.India will have no special reasons to be concerned over the possibility of any of the persons mentioned by “Independent” joining the Cabinet, except possibly Holbrooke, whose taking-over as the Secretary of State could lead to a re-hyphenation of Indo-Pakistan relations, bringing back the hyphen, which had been removed by President George Bush and his Secretary of State Condolleeza Rice.

8.Another person of concern to India would be Madeleine Albright, who was Secretary of State under Bill Clinton. Though “Independent” did not mention her, she was reportedly a member of the inner circle which was advising Obama on foreign policy matters during the campaign.

9.India will also put a question mark on Colin Powell, who was particularly not well disposed towards India during the first term of Bush when Powell was the Secretary of State. It was only after he was replaced by Rice as the Secretary of State that Indo-US relations really started moving forward with many initiatives to acknowledge the importance of India as a major power on par with China. Concerns over Pakistani sensitivities ceased to be an inhibiting factor in US policy-making with regard to India. Zinni is an unknown quantity in India. He has many friends in Pakistan’s Armed Forces.

10.It is still 10 weeks before Obama takes over as the President. One does not know how the economies of the US and the rest of the world would move during this period. Till now, the US and the rest of the world have been seeing only the impact of the melt-down on the moneyed class---- banks, stock markets, business companies, people who have the money to dabble in the stock markets and to keep deposits in banks. The world is yet to see the impact on the common man, who is worried only about his day-to-day living and not about stock markets, mutual funds and banks. The impact on the common man would become evident by the time Obama takes over as the President.

11. The common people in the US and the rest of the world will be watching how he deals with the impact on their lives. Understandably, apart from rhetorical statements, Obama was sparse in his policy pronouncements on the economic crisis. His evasion was understandable because he had to take care that any unwise remarks by him did not add to the prevailing nervousness in the market. The economy would occupy a major part of his attention during his first few weeks in office.

12. His pronouncements on India and Pakistan, which were music to the ears of people in India in the initial months of the campaign, became jarring during the closing days of the campaign. In the initial months of his campaign, he praised India and supported the initiatives taken by the Bush administration in relation to India. He was very critical of Pakistan’s inadequate co-operation with the US in the war against Al Qaeda. He also criticized the Bush Administration for giving to Pakistan weapons, which it could use only against India and not against Al Qaeda, under the pretext of strengthening its counter-terrorism capability. He hardly spoke of Indo-Pakistan issues.

13.But as the campaign reached its culmination, he started speaking of the Kashmir issue in a language, which reminded one of the language of the past from the officials of the Clinton Administration. Obama’s entourage and Gen. David H.Petraeus, former Commander of the Multi-National Force in Iraq, who took over as the Commander of the US Central Command on October 31 and is presently on a visit to Pakistan and Afghanistan, have one thing in common---- they listen a lot to the assessments and recommendations of Ahmed Rashid, the Pakistani analyst, who has written extensively on the Taliban and the war against terrorism. In fact, Petraeus has reportedly nominated Ahmed Rashid and Shuja Nawaz, the author of the recently published book on the Pakistan Army called “Crossed Swords”, as members of a brains trust to advise him on a new strategy towards Afghanistan and Pakistan.

14.Ahmed Rashid has been arguing for some months now that the Pakistan Army cannot be expected to co-operate wholeheartedly with the US Armed Forces in the war against Al Qaeda and the Taliban unless there is a forward movement in settling the Kashmir issue and India is pressured to cut down its presence in Afghanistan. There were not many takers for his arguments in the Bush Administration. But they have already started influencing the thinking of many who are close to Obama.

15.Will he exercise pressure on India on the Kashmir issue and its role in Afghanistan after he takes over or will he let his pre-election remarks remain without follow up action? This is a question which should worry Indian policy-makers.

16.Obama’s policy towards China is also likely to be different from that of the Bush Administration. He will continue to strengthen the US’ strategic relations with India, the foundations for which were laid by Bush and Rice, but the sensitivities of China and Pakistan could once again become inhibiting factors in determining the pace and extent of the relationship. He is unlikely to subscribe to the wisdom of building up India as a counter to China. That was the unstated wisdom behind the policies of the Bush Administration towards India.

17.Obama was supportive of the Indo-US Civilian nuclear co-operation Agreement. Many of the non-governmental experts, who were critical of the agreement, have a greater audience for their views in the Democratic Party than in the Republican Party. They would try to see that the Hyde Act is observed in letter and spirit in the implementation of the agreement. If their views prevail, one could see a slow-down in Indo-US co-operation in nuclear matters.

18.Under Bush, Indo-US relations developed like never before because he was a great admirer of India and was convinced of the need to encourage the emergence of India as a major Asian power on par with China. Obama has so far not given any indication of a similar admiration and conviction.

19.Barring John F.Kennedy, other Democratic Presidents were not very positive towards India. They always thought of India tactically and not strategically. Many major initiatives towards India came from Republican Presidents, who held office after Richard Nixon, whose dislike of India---- and particularly Indira Gandhi--- was well-known. There was a new page in Indo-US relations under Bush. This was facilitated by the decline in the influence of some Washington-based think tanks and their academics on policy-making. With the return of a Democrat to the White House, these old academic warriors are already coming out of their eight-year-long hibernation and will try to influence the new President in his thinking and policies. Their views are no different from those of the like of Ahmed Rashid.

20.We should not hesitate to make it clear to the new administration that while we are as keen as before to strengthen our strategic relations with the US, this cannot be at the expense of our vital national interests in matters like Kashmir and Afghanistan. (5-11-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )



( What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to theother countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel thenegative consequences of the down-turn in the Chinese economy. Keeping this in view, we have been bringing out a periodic "ChineseEconomy Monitor" based on open information. This is the third in the series---B. Raman)


Summing up the discussions at the Asia-Europe Meeting Summit held in Beijing, Prime Minister Wen Jiabao told the media on October 24,2008, as follows: "We will discuss with world leaders on measures to cope with the financial crisis in a pragmatic and cooperative manner.Ithink what we should do to cope with the crisis can be summarized as confidence, cooperation and responsibility.We are very glad to seethat many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and moreneeds to be done.The stability of financial market is key to stabilizing the whole economy. The first important message that the two-daysummit has conveyed is firm confidence, and I think confidence is the source of power to overcome difficulties."
---- Source Xinhua

2.Liu He, Deputy Director of the Office of the Central Leading Group on Finance and Economy Work, told the "China Daily" on October24,2008, as follows: "The worsening global economic situation makes it difficult for China to predict its growth for next year.How fastChina's economy will grow next year is uncertain. To a large extent, the rate will be decided by the external situation.This year, GDP isestimated to grow at 9.4 or 9.5 per cent, down from 10.6 per cent last year.However, the impact of the current financial turbulence on oureconomy is much less than in the rest of the world. China can use the downturn as an opportunity to restructure its economy, which hasrelied heavily on government investment, foreign trade and low-cost technology over the past years. When the economy is experiencing fastgrowth, companies are unwilling to upgrade their technologies.The slowdown gives such firms the opportunity to enhance their competitiveedge through better technologies."
----Source "China Daily"


3.China's trade in electronic and information products increased during the first eight months of 2008, but the growth rate of both exportsand imports decreased.Electronic and information products constitute the largest single item in terms of value in China's exportbasket.About two-thirds of the exports come from wholly foreign -owned manufacturing units in China----mainly from Japan, South Korea,Hong Kong and Taiwan--- 16 per cent from joint ventures and the remaining 18 per cent from wholly Chinese-owned companies. Theseproducts include mobile phones, fax machines, TV sets, computers, digital cameras and the like.During the first eight months of this year,the total value of the exports of these items was about US $ 338.62 billion , an increase of 22.53 per cent as compared to thecorresponding period of 2007. The growth rate during the same period in 2007 as compared to 2006 was 24.53 per cent. Thus, the exportgrowth rate decreased by two per centage points, but it is still high. China imported $ 246.81 billion worth of electronic and informationproducts from January to August, up 15.45 per cent as compared to the corresponding period of 2007. However, the growth rate was five per cent lower than last year. The imports include whole products imported for sale to the Chinese consumers as well as parts imported forassembly and re-export.Trade surplus of electronic and information products increased by 46.7 per cent to US $91.81 billion , accountingfor 60.4 percent of China's total trade surplus. China exported $4.12 billion worth of software in the first five months of 2008, up 45 percent over the corresponding period of 2007.Software exports surged from $720 million in 2001 to $10.24 billion in 2007. (My comments: Thetotal value of India's software exports is around US $ 40 billion per annum.)
-------Source: Xinhua


4.The People's Bank of China, which is China's central bank, reported on October 13,2008, that the country's foreign exchange reservessurged to 1.9056 trillion U.S. dollars through September. The figure was up by 32.92 per cent as compared to the first nine months of 2007.Foreign exchange reserves grew by 47.7 per cent during the first nine months of 2007 as compared to the corresponding period of 2006.Thus, the growth rate has dropped by 14.8 per cent.China overtook Japan to become the world's largest holder of forex reserves inFebruary 2006. Till June,2008, the foreign exchange reserves were growing by 35.73 per cent. This came down to 32.92 per cent bySeptember-end,2008. During the first three quarters of 2008, China's trade surplus decreased by 2.6 per cent year-on-year to 180.9 billionU.S. dollars. There was a flow of 377.3 billion U.S. dollars to the forex reserves in the first three quarters. In September, the reserve build-upexpanded by 21.4 billion U.S. dollars, compared with rises of 36 billion U.S. dollars and 39 billion U.S. dollars in July and August, respectively.The monthly increase was averaged at 41.9 billion U.S. dollars in the first nine months, still higher than an average 38.5 billion U.S. dollarsrecorded last year. The average monthly increase for the third quarter alone was 32 billion U.S. dollars, and higher than marketexpectations. The country's trade surplus had been expanding by more than 27 billion U.S. dollars each month in the third quarter, whichalso overran market expectations. Tan Yaling, a China International Economic Relations Society economist, said the growth in forexreserves also indicated a growing interest in yuan assets as a haven for investment amid the global turmoil. "Under the current financialcrisis that originated in the United States and with the euro also softening, China's yuan-denominated assets appear relatively safer andcreated an influx of foreign investment, which also contributed to the growth in the third quarter." Zhang Bin, a Chinese Academy of SocialSciences researcher, said the U.S. financial crisis had a limited impact on the country's huge forex reserves, as the forex supervisor haddiversified the holdings so as to avert some risks. Through September, the M2 -- a broad measure of money supply, which covers cash incirculation plus all deposits -- grew by 15.29 per cent from a year ago to 45.29 trillion yuan (6.7 trillion U.S. dollars). The M2 growth was 0.71percentage points lower than the previous month. The figure had fallen for the fourth consecutive month as the government's tighteningmeasures started to take hold. Tightening policies, including several interest rate hikes, since the end of last year, adopted to fight soaringinflation and overheating risks, however, had recently been replaced by two rate cuts in less than a month. Such moves were taken to boostthe domestic economy amid worries over the deepening global financial crisis. Through September, the narrow measure of money supply,M1, was up 9.43 percent to 15.57 trillion yuan, again lower than the 11.48 percent rise in August.The central bank report also claimed thatthe country's financial system remained stable. Outstanding local currency loans expanded 14.48 percent to 29.65 trillion yuan. The growthwas 0.19 percentage points higher than the previous month. Outstanding loans in foreign currencies, however, rose 30.86 percent to 269.2billion U.S. dollars, compared with a gain of 37.84 percent in August. The report said local-currency deposits were up 18.79 percent to 45.49trillion yuan, while foreign-currency deposits grew 9.37 percent to 174.2 billion U.S. dollars. Local-currency transactions on the inter-bankmarket reached 9.49 trillion yuan last month. Average daily transactions were 451.9 billion yuan, up 17 percent year on year.
---- Source Xinhua


5.My comments: While the toy industry is in a state of serious crisis due to a steep fall in demands from the US, the electronic and information products industries, which contribute nearly 60 per cent of China's trade surplus, continue to do well. There has been a declinein orders as compared to 2007, but not very high. However, if this decline expands in the coming months, that could add to the difficultiesfaced. The foreign exchange reserves continue to bulge despite a slight drop in trade surplus.The fall in the flow of reserves due to a slightdrop in trade surplus has been compensated by a flow of money from foreign investors, who prefer yuan-denominated assets to US dollar and Euro denominated ones.One does not know how much of China's foreign exchange reserves has been invested in the US Treasury bonds. If these bonds lose in value as a result of the melt-down in the US, that could aggravate the difficulties. The Chinese leaders and officials are projecting a picture of confidence that they will be able to keep their economy stable. Whether their confidence is justified or not would beevident only by January. Presently, the electronic and information products and textiles industries are doing well on the basis of the exportorders received before the melt-down started in the West. What inpact the melt-down has on post-September orders would be evident onlyby January. The present Chinese worry is over the spectre of unemployment as the export orders come down. How healthy is their banking system? An answer to this question is not yet available.

(The writer is Additional Secretary(retired), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. He is also associated with the Chennai Centre For China Studies. )