TWO TIBETAN ANNIVERSARIES PASS OFF WITHOUT VIOLENCE

B.RAMAN

Two important and emotional ( for the Tibetans) anniversaries have passed off without any reports of violent incidents in theTibetan-inhabited areas of China. These were March 10 which was the 50th anniversary of the Tibetan uprising of 1959, which led to theflight of His Holiness the Dalai Lama to India, and March 14, which was the first anniversary of the violent uprising of last year.

2. There has been no major outbreak of violence this year due to the following reasons. Firstly, the heavy deployment of security forces bythe Chinese authorities in all the Tibetan-inhabited areas. Secondly, a greater sophistication exhibited by the security forces which avoidedover-reaction of the kind seen last year, which added to the anger of the Tibetan residents. Thirdly, the co-operation extended by theMaoist-led Government of Nepal by preventing the large number of Tibetan refugees in Nepal from extending any moral and material supportto their co-religionists in Tibet and helping the Chinese authorities in imposing a virtual iron curtain between the Tibet Autonomous Regionand the rest of the world.

3. The Chinese authorities have suspended all tourist traffic to the Tibet Autonomous Region and banned the visits of foreign journalists tothe region. The only foreign journalist allowed to visit the Region since February this year was N.Ram, the Editor-in-Chief of "The Hindu" of Chennai. However, some foreign journalists, including a correspondent of the "International Herald Tribune", managed to visit theTibetan-inhabited areas of Sichuan and reported on the prevailing atmosphere of resentment in those areas.

4. As a result of this iron curtain around the Tibet Autonomous Region, the only reports coming out of the Region and disseminated to theIndian public are the despatches of the Chinese State-owned Xinhua news agency carried by "The Hindu" without fail. Even the US-StateDepartment funded Radi Free Asia has been handicapped in getting authentic information from the Tibet Autonomous Region. As a result,practically all its broadcasts during this period were about developments in the Tibetan-inhabited areas of Sichuan and Qinghai.

5. There were many incidents of peaceful protests in the Sichuan and Qinghai provinces. These were in the form of processions and publicprayers by the local monks, distribution of anti-Chinese and pro-Dalai Lama leaflets and at least one incident of attempted self-immolation. . The Chinese did not interfere with such protests so long as they remained peaceful. Most of the widespread peaceful protests in theSichuan province were reported from Kardze, Lithang, and Nyagrong counties, all of which fall under the Kardze prefecture.Kardze, whichthe Tibetans call Kham, is the traditional homeland of the Khampas, who rose in revolt against the Chinese in the 1950s. They haveremained bitterly anti-Chinese and strong devotees of His Holiness even today. Last year, while the Chinese were able to quell the uprisingin the Tibetan Autonomous Region within a couple of weeks of its outbreak, the uprising in the Kardze area continued for about twomonths----with Khampas on horse-backs attacking isolated Chinese military posts. The Qinghai province is the birth-place of His Holiness.

6. The observance of these two emotional anniversaries coincided with the annual session of the National People's Congress (NPC) atBeijing from March 3 to 12,2009. Next to the state of the economy, the situation in Tibet received considerable attention. There were manybriefings for the media by Tibetan officials and representatives to the NPC session. President Hu Jintao participated in one of theinteractions in the margins of the NPC session during which he made observations on Tibet. Prime Minister Wen Jiabo also spoke on Tibetwhile briefing the media at the conclusion of the session.

7.Hu said on March 9,2009:"We must reinforce the solid Great Wall for combating separatism and safeguarding national unity, so that Tibet,now basically stable, will enjoy lasting peace and stability.The Tibet authorities should implement the central Government's policies onTibet, focus on development and stability issues, attain an economic great-leap-forward, safeguard national security and social stability,and keep improving people's living standard, in order for them to make new progress in the building of a unified, democratic, prosperous andharmonious socialistic new Tibet. Tibet must stick to the development road with Chinese characteristics and Tibetan features so as tostrengthen the material foundation for the building of a socialistic new Tibet. Tibet should vigorously advance the program of buildingsocialist new villages, develop industries with distinguished features and strengthen ecological and environmental protection. Tibet shouldembark on more projects that will directly result in the improvement of people's life and working conditions, particularly those of farmersand herdsmen.The Government must also give priority to addressing people's immediate needs, so that people of all ethnic groups in Tibetwill be able to share the fruit of development." He avoided any reference to His Holiness.

8.Wen said on March 13,2009:: "The central Government held three talks last year with the Dalai Lama's representatives in response to theirrequest. Such talks can continue as long as the Dalai Lama is sincere, otherwise no substantial results can be made.The Dalai Lama is nota simple religious figure, but a political exile.We have full evidence. The so-called government-in-exile situated in Dharamsala is a de facto,theocratic regime and this illegal government is under direct leadership of the Dalai Lama. He has been traveling around the world and isquite capable of misleading some political figures.Some Western countries are also trying to use him. We should not only listen to what hehas said but also look what he has done.The current stability and development of Tibet has demonstrated that the Chinese centralGovernment has carried out correct policies in the region.The situation in Tibet on the whole is stable. The Tibetan people hope to live andwork in peace and stability.Both China's Constitution and the Law on Ethnic Regional Autonomy safeguard the freedom and rights of peoplein Tibet, particularly in religious belief. The central Government has increased fiscal input to Tibet to accelerate the region's economicdevelopment and to improve the well-being of farmers and herdsmen. The Tibet Autonomous Region will continue following the opening-uppolicy for the sake of its own development."

9. The Dalai Lama and the radical Tibetan Youth Congress (TYC) issued two hard-hitting statements on March 10,2009. In his statement, HisHoliness said:"Quite apart from the current process of Sino-Tibetan dialogue having achieved no concrete results, there has been a brutalcrackdown on the Tibetan protests that have shaken the whole of Tibet since March last year. Therefore, in order to solicit public opinion asto what future course of action we should take, the Special Meeting of Tibetan exiles was convened in November 2008. Efforts were madeto collect suggestions, as far as possible, from the Tibetans in Tibet as well. The outcome of this whole process was that a majority ofTibetans strongly supported the continuation of the Middle-Way policy. Therefore, we are now pursuing this policy with greater confidenceand will continue our efforts towards achieving a meaningful national regional autonomy for all Tibetans. From time immemorial, the Tibetanand Chinese peoples have been neighbours. In future too, we will have to live together. Therefore, it is most important for us to co-exist infriendship with each other. Since the occupation of Tibet, Communist China has been publishing distorted propaganda about Tibet and itspeople. Consequently, there are, among the Chinese populace, very few people who have a true understanding about Tibet. It is, in fact, verydifficult for them to find the truth. There are also ultra-leftist Chinese leaders who have, since last March, been undertaking a hugepropaganda effort with the intention of setting the Tibetan and Chinese peoples apart and creating animosity between them. Sadly, as aresult, a negative impression of Tibetans has arisen in the minds of some of our Chinese brothers and sisters. Therefore, as I haverepeatedly appealed before, I would like once again to urge our Chinese brothers and sisters not to be swayed by such propaganda, but,instead, to try to discover the facts about Tibet impartially, so as to prevent divisions among us. Tibetans should also continue to work forfriendship with the Chinese people. Looking back on 50 years in exile, we have witnessed many ups and downs. However, the fact that theTibet issue is alive and the international community is taking growing interest in it is indeed an achievement. Seen from this perspective, Ihave no doubt that the justice of Tibet's cause will prevail, if we continue to tread the path of truth and non-violence."

10. While the international media,including leading Indian newspapers and TV channels, gave wide publicity to the Dalai Lama's statement,"The Hindu" of Chennai and the Maoist-controlled media of Nepal blacked it out. However, "The Hindu" carried brief extracts from theChinese rejoinder to the statement. The Chinese, through Xinhua, hit out very strongly at the statement. However, Wen, in his press briefing,did not comment on it.

11. While the Chinese took strong note of the statement of His Holiness and ridiculed it, they chose to ignore the statement of the TYC,which had said: "TYC as a national movement with the goal of restoring Tibet’s independence is grounded on historical truth. The ChineseGovernment will not be able to distort this basic truth by propagating against TYC with attempts to label it as a terrorist group. Even underextreme pressure and obstacles directed at TYC by the Chinese Government, we will remain steadfast in our commitment to truth and in ourstruggle for complete independence. It is our promise that we will one day hoist the Tibetan national flag on top of the Potala Palace andour leader, His Holiness the Dalai Lama, will sit on his rightful throne."

12. The Chinese reacted strongly to resolutions on the Tibetan anniversaries moved in the US Congress and in the Europen Parliament.While not hesitating to criticise the Western countries for their interactions with the Dalai Lama, the Chinese have continued to follow apolicy of avoiding any criticism of the Government of India for the activities of His Holiness and his supporters from the Indian territory.While strongly countering the activities of His Holiness and his followers on the ground in the Tibetan-inhabited areas and in the international stage, they do not want this issue to become a bone of contention between India and China. (16-3-09)

(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: seventyone2@gmail.com )

ASIF ALI ZARDARI: WHAT A MESS!

B.RAMAN

No other leader of Pakistan has ever created such a huge political mess in such a short time as President Asif Ali Zardari has. What the lateZulfiquar Ali Bhutto took six years to destroy, Zardari has destroyed in six months as the President----- namely, the credibility of Pakistan asa State, its institutions and its unity as a country and as a people.

2. Z.A.Bhutto came to office after the defeat of Pakistan in its war with India in December 1971, with considerable goodwill not only in Pakistan, but also in India. He was the toast of the people of Pakistan and its army after he succeeded in persuading Indira Gandhi, the thenIndian Prime Minister, at the Shimla conference in July,1972, to release and return to Pakistan nearly 90,000 Pakistani prisoners of war, whohad surrendered to the Indian Army at Dhaka at the end of the war.

3. Thereafter, his arbitrary style of governance, his intolerance of opposition and a free media, his jealousy and suspicion of political rivals, his indifference to the grievances of the Balochs and the Pashtuns and his use of ruthless methods against his political opponents resultedin a no-holds-barred confrontation in the streets between him and his opponents. The Army under Gen.Zia-ul-Haq, who had been hand-pickedby Bhutto as the Chief of the Army Staff (COAS) superseding other capable officers senior to Zia because of Bhutto's confidence in Zia'spersonal loyalty to him, moved in to take over power. Zia set in motion the train of events, which led to the execution of Bhutto.

4. It took a little more than two years for the negative traits in Z.A.Bhutto to come to the fore and transform him into a possessed mandetermined to destroy himself. It has taken hardly a few weeks for the negative traits in Zardari to come to the fore----- the same arbitrarystyle of governance, the same intolerance of opposition and a free media, the same jealousy and suspicion of political rivals, the sameindifference to the grievances of the Balochs and the Pashtuns, the same use of ruthless methods against his political opponents, the sameinability to see the writing on the wall.

5. The writing on the wall is there for all to see------ ras-le-bol as the French, who came out in the streets in 1968 shouted. Meaning "fed up".Large sections of the Pakistani society are just fed up with him. But, he doesn't realise this.

6.The rest of the world was not as much concerned over what was happening in Pakistan in the 1970s as it is now. In the 1970s, whenZ.A.Bhutto was ruling, there was no jihadi terrorism, no Al Qaeda, no Taliban, no danger of jihadis getting hold of nuclear material. Only India,being the neighbour, was concerned over the mounting opposition to Z.A.Bhutto.

7. Today, Zardari is the President of a country, which is the spawning ground of all the jihadi terrorist groups of the world which pose athreat to international peace and security. His inability to focus on the fight against terrorism and his playing petty politics against hispolitical opponents at a time when a jihadi tsunami originating from the jihadi epicentre in the Federally-Administered Tribal Areas (FATA) isthreatening to sweep across the country is a matter of concern not just to India, but to the entire world.

8. Instead of realising the gravity of the situation confronting Pakistan as a result of his sins of commission and omission, he seemsdetermined to continue on his path of confrontation with the opposition forces led by Nawaz Sharif, former Prime Minister.Neither friendly,but firm warnings from the US and the UK nor reported expressions of concern by Gen.Ashfaq Pervez Kayani, the COAS, have had anyimpact on Zardari so far. Even if he is prepared to restore the Government headed by the Pakistan Muslim League *(Nawaz) in Punjab,which he removed so arbitrarily, he seems disinclined to make any other compromise in order to defuse the confrontational atmospherebuilding up in the country.

9.If the confrontation continues, will Gen.Kayani take over as Zia did in 1977? As of now, Kayani seems disinclined to take over. He hadseen for himself how unpopular was the military rule under Gen.Pervez Musharraf. He had also seen how he was hailed by the people ofPakistan when he ordered after taking over as the COAS, all army officers in civilian departments to return to the barracks. He knows that ifhe took over he would be seen as no different from Musharraf, Zia, Yahya Khan and Ayub Khan. According to reliable sources close to theArmy, he would like to go down in history, like Gen Abdul Waheed Kakkar and Gen.Jehangir Karamat did, as a well-liked General who couldhave taken over if he had wanted to, but refrained from doing so in the interest of the country.

10. At the same time,he is reported to have made clear to his political masters that he would be constrained to intervene if the confrontationis not defused and the security situation in Pakistan further deteriorates as a result of it.

11. Zardari and his advisers may succeed in thwarting the so-called Long March to Islamabad by the opposition, but this is unlikely to helphim in regaining his credibility and the country's goodwill which he seems to have lost.

12. This may please be read in continuation of my earlier article of February 28,2009, titled "Pakistan: Back to Being Pakistan" athttp://www.southasiaanalysis.org/papers31/paper3074.html

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-Mail: seventyone2@gmail.com )

CHINESE ECONOMY MONITOR---NOTE NO.6

B. Raman

(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 sixth in the series)

ASSESSMENT

China's manufacturing sector, which accounts for 43 per cent of its economy, continues to contract, but at a slower pace sinceDecember,2008, after reaching the lowest level in November,2008. While the Chinese authorities have noted with some satisfaction theslowing down of the contraction rate, unless the process of contraction is stopped and reversed, the economic situation marked byincreasing unemployment and decreasing commodity prices due to a fall in demand will continue to deteriorate. How soon the contractionwill stop and expansion will start again will depend on how soon the US and the European Union countries are able to set right theireconomies on which the Chinese manufacturing industries are dependent. In the estimate of the Chinese experts, a change for the better inthe situation is unlikely before the last quarter of this year.The Chinese authorities have been cautioning the people to be prepared for asevere foreign trade situation and a grave unemployment situation this year. There are two major areas of concern to the authorities.Firstly,the number of migrant workers from the rural areas in Central and Western China who have lost their jobs in the previously flourishingcoastal areas and gone back to their home towns and villages, which was earlier estimated at 10 million, has doubled since January,2009.Secondly, one million graduates, who passed out of the universities and other institutes of higher education in 2008, are still without jobs.They are expected to be joined by another 6.11 million graduates by the middle of this year. There is not much scope for finding them jobs inthe urban areas. The authorities are trying to persuade them to go back to the rural areas and work in farms or in the new infrastructureconstruction projects under the stimulus plans announced in November last or start their own small businesses with loans to be given bythe banks. These 7.11 million educated unemployed will be competing for jobs with the 20 million who have lost their jobs in the coastalareas. Apart from investments in the development of rural infrastructure and in projects which will benefit the people, the Government hasalso undertaken sector-wise plans for restructuring and modernising 10 pillar industries on which the manufacturing sector depends.Through various measures to reduce the hardships for the unemployed people and their families and through constant interactions withprovincial leaders and officials and the people, the Government has till now avoided any social unrest due to the increase in unemploymentand fall in earnings due to the decrease in commodity prices. It is to be seen whether it will continue to be able to do so till the economystarts looking up again. The Government has estimated that to prevent a further deterioration, a GDP growth rate of at least eight per cent isa must this year. Its policies and plans are meant to achieve this rate.

MANUFACTURING SECTOR CONTINUES TO CONTRACT, BUT AT A SLOWER RATE

China's manufacturing contracted for a fifth month in December,2008.The CLSA China Purchasing Managers' Index stood at a seasonallyadjusted 41.2, compared with a record low of 40.9 in November, CLSA Asia-Pacific Markets said in an emailed statement. A reading below50 reflects a contraction.Manufacturers in industries from metals to toys are reducing production or closing down. The Aluminum Corp ofChina Ltd, the nation's biggest maker of the metal, and the Yunnan Tin Co, the world's largest producer of tin, cut output as prices fell. "Chinese manufacturing was very weak in December," said Eric Fishwick, head of economic research at CLSA in Singapore. "With fiveback-to-back PMIs signaling contraction, the manufacturing sector, which accounts for 43 per cent of the Chinese economy, is close totechnical recession."The output index fell to a record low of 38.6 in December,2008, from 39.2 in November, while the measure of neworders rose to 37 from 36.1. The index of export orders jumped to 33.6 from 28.2, CLSA said. "Chinese manufacturers reduced the size oftheir work forces at the fastest rate recorded by the series to date," the report said. An employment index tracked by CLSA has contractedfor five consecutive months to 45.2 in December.China's economic growth may have slipped to 5.5 per cent last quarter, the weakest pacein at least 15 years, according to Shanghai-based Industrial Bank Co.A drastic slowdown in industrial-output growth is mainly due tocompanies running down excess inventory, central bank Vice-Governor Yi Gang said on Dec 26, 2008. That process may continue until theend of the second quarter, Yi said.Exports fell for the first time in seven years in November, 2008, imports plunged and industrial outputgrew at the slowest pace in almost a decade. The CLSA index, started in 2004, is based on a survey of more than 400 manufacturingcompanies and tracks changes in output, orders, employment, inventories and prices.
---- Agency reports, January 3,2009. CLSA stands for Credit Lyonnais Securities Asia. According to a Dow Jones report of March 2,2009,the CLSA China Purchasing Managers Index rose to 45.1 in February from 42.2 in January.Since falling to a record low of 40.9 in November,the CLSA PMI has risen for three consecutive months, but remains below 50.0, indicating a continued manufacturing contraction. A PMIreading above 50.0 indicates expansion. "Manufacturing activity is still contracting, only at a more moderate pace than at the end of 2008,"said CLSA Head of Economic Research Eric Fishwick. He added: "Despite the bounce in credit data in January the impact on domesticmanufacturing orders so far seems modest: most of the improvement in the PMI new orders index reflects export orders."

URBAN UNEMPLOYMENT RATE WORSENS

2.The Ministry of Human Resources and Social Security (MOHRSS) said on January 19,2009, that China's urban unemployment rate was 4.2per cent at the end of 2008, up 0.2 percentage points year-on-year.As of December 31, 2008, there were 8.86 million urban residentsregistered as jobless, up 560,000 from the end of the third quarter, according to the Ministry spokesman Yin Chengji.Yin said that 11.13million urban jobs were created last year, 11 per cent above the Government target. The slight rise in the jobless rate reflected a slowingeconomy amid the global financial crisis, said Tang Min, Deputy Secretary of the China Development Research Foundation. "The figure looksall right, but the real situation could be much more serious, as migrant workers and newly graduated college students were not included inthe government count," he added. Yuan Gangming of the Center for China in the World Economy of the Tsinghua University described therate as a "sudden rise." He said the 2008 figure was a reversal of the recent years' declines. The urban jobless rate fell for five consecutiveyears, from a high of 4.3 per cent in 2003 to 4 per cent in 2007."The 4.2 per cent rate was already a sharp increase, given that widespreadjob cuts only surfaced in the second half of last year.The unemployment situation was grimmer than shown by the latest figure," he said,noting that migrant workers were not included in the count.Statistics from the MOHRSS showed that 10 million, or about 10 per cent of atotal of 130 million migrant workers, had returned to their rural homes jobless as of December. Starting in the second half of 2008,weakening foreign demand has hit companies in the coastal industrial belts where most migrant workers had been employed. TheGovernment will focus on jobs for college graduates, migrant rural workers and urban residents this year, said Yin.China aims to keep itsregistered jobless rate below 4.6 per cent and provide 9 million new urban jobs during 2009. Yuan estimated that the urban unemploymentfigure could worsen in the first half of this year.
----Xinhua, January 20,2009

20 MILLION JOBLESS IN RURAL CHINA

3.According to Chen Xiwen, who is in charge of rural planning, about 20 million rural migrants were now out of work -- more than thenumber announced in December,2008.This is an indication that the slowdown in the Chinese economy was intensifying. An average of sixto seven million people leave their rural homes every year to find jobs, on top of the 20 million jobless."According to these calculations,there will be fairly big pressure on employment for around 25 million rural residents," Chen said. The year 2009 could be the "toughest year"since the turn of the century for the development of the countryside, which has fallen behind as Chinese economic reforms have favouredthe cities.
--- AFP, February 2,2009

CONCERNS OVER RURAL SITUATION

4.A report issued jointly by the State Council and the Central Committee of the Communist Party of China on Februrary 1,2009, said:"Thedevelopment of agriculture and rural areas in 2009 is of special significance.The biggest potential for boosting domestic demand lies in ruralareas; the foundation for securing steady and relative fast economic growth is based upon agriculture; the toughest work of securing andimproving people's livelihoods stays with farmers." Vice-Premier Hui Liangyu said the same day during an inspection visit to the Anhuiprovince: "Facilitating farmers' employment is an acute and important task in present rural (endeavors).We must strengthen job training forrural labor, hire as many rural migrant workers as possible in construction work and new public-interest posts and proactively support ruralmigrant workers who have returned home to start businesses." The joint report urged central and local government departments to adoptmeasures to create jobs and increase rural incomes. Companies were asked to take on more social responsibilities by giving rural migrantworkers favorable employment treatment.Flexible employment policies and more training opportunities were suggested by the report.Meanwhile, local government departments should increase their investment to provide favorable tax and fee policies to those who lost jobsin cities and expect to find new work in their hometowns, the report said. Agriculture remains the weakest link in the Chinese economy,which has seen a widening gap between cities and the countryside. The document, the sixth of its kind to address rural problems, alsourged authorities to take resolute measures to avoid declining grain production and to ensure the steady expansion of agriculture and ruralstability.
-----Xinhua of February 2,2009

HONG KONG: BIGGEST EXPORTS DECLINE SINCE MARCH,1958

5.Hong Kong's exports by volume in December, 2008. declined by 12.8 per cent as compared to the figures for December,2007. They haddeclined by 7.1 per cent in November,2008, as compared to the figures for November,2007.Excluding Germany, exports to all of Hong Kong'smajor markets dropped, according to the Census and Statistics Department. The latest figures showed that exports to the United Statesdropped by 19.6 per cent by volume in December, 2008, while exports to the mainland slumped by 10.5 per cent. Exports to Japan and theUnited Kingdom fell by 10.2 and 12.5 per cent, respectively. Exports to Germany rose slightly by 1.9 per cent.
----- "Business Weekly of Shanghai Star" of February 17,2009

6.Hong Kong's exports declined by 21.8 per cent in January,2009, as compared to the figures for January,2008. They had declined by 11.4per cent in December,2008, as compared to the figures for December,2007. The Hong Kong Government announced on February 26,2009,that the territory is headed for its first full-year economic contraction since the Asian financial crisis of 1997-98.The export decline was thebiggest since March 1958. Imports fell by 27.1 per cent in January, 2009, as compared to the figures for January,2008. The trade surplusduring January,2009, amounted to US $930 million. John Tsang, the Financial Secretary of the Hong Kong Government, stated on February26,2009, that the city's economy will probably shrink by 2 to 3 per cent in 2009, after a 2.5 per cent expansion in 2008.The GrossDomestic Product contracted by 2.5 per cent in the fourth quarter of 2008 as compared to the fourth quarter of 2007.
---- Reuters as reported in the "China Daily " of February 27,2009.

STIMULUS PLANS FOR TEN PILLAR INDUSTRIES

7.In a series of meetings held at Beijing from January 14 to February 25,2009, the State Council reviewed and approved, in principle, adjustment and stimulus plans for 10 major industries----- namely, automobile, iron and steel, textiles, equipment manufacturing,shipbuilding, electronics and information technology, petrochemicals, light industries, nonferrous metals and logistics. "The selection of these ten key industries was based on two points: the first one is the importance of the industries. These industries have atremendous impact on economic development since all of them are important pillar industries in the Chinese economy, main contributors tothe value of industry output and government revenue, key channels for employment, and are the main industries driving GDP growth. Thesecond point is that these industries have clear problems. Over the past several years, these industries have all demonstrated problemsincluding excessively rapid expansion of production capacity, oversupply, low-level and redundant construction, irrational product mixes,low-end products with heavy energy consumption and serious pollution. Due to a high reliance on exports, they have all been greatlyaffected by the global financial crisis," said David Daokui Li, Director of the Center for China in the World Economy (CCWE) at theTsinghuaUniversity, in an interview with the "People's Daily". The plan for the steel industry, for example, requires that high-energy-consuming andhigh-polluting production facilities are eliminated, and that projects that simply expand production capacity are not to be approved. Theplan for the electronics and information technology industry approves six projects and encourages private capital to enter this sector. Thisis done in the hope of realizing major breakthroughs in scientific and technological projects. Industry integration in textiles, iron and steel,equipment manufacturing and automobile enterprises was also encouraged in the stimulus plans. Some analysts say the plans' primarytargets are still to overcome current hardships. The policies of lowering the automobile purchase tax, "automobiles to the countryside,""home appliances to the countryside" and encouraging boat owners to exchange old boats for new ones underscore the new plans toexpand domestic demand. The policies supporting the establishment of export bases, increasing export credits and reducing export taxrebates, strengthen the idea of stabilizing China's share of the international market. In addition, the policies provide direct support to textileenterprises by raising the export tax rebate by 1 percentage point to encourage exports and secure 20 million jobs in the textiles industry.Efforts to maintain employment rates and boost people's livelihoods are noticeable. Li said: "The idea behind the industry plan policies has acertain degree of continuity from the past. They cannot be viewed simply as short-term economic policies hastily enacted to prevent theeconomy from sliding. The global financial crisis has prompted the Chinese Government to accelerate the introduction of industry stimulusplans, but their purpose and significance go beyond just meeting urgent needs." He further analyzed that the Chinese economy has alwaysbeen large but not strong for four main reasons. First, China's industries are short of core technology, occupy the low ranks of the industrychain, and have low added value. Second, high-energy consumption causes high pollution, which leads to serious energy waste. Third,serious low-level, redundant construction and surplus production make industries heavily dependent on the international market. Fourth,industry clustering remains low and the industry chain is incomplete."From the stimulus plans, we can see the government's highexpectation of industry upgrading and structure optimizing. This can be achieved through phasing out backward productivity, encouragingtechnical innovation, and merging and integration between enterprises. These efforts can help expand the Chinese economy in size andstrength."
----People's Daily Online of February 27,2009

SEVERE FOREIGN TRADE SITUATION FEARED

8.Speaking at a forum held on the sidelines of the 19th East China Fair at Shanghai on March 8,2009,Chinese Vice Minister for CommerceZhong Shan said that China would face a "severe" situation in foreign trade this year against the backdrop of the spreading global financialcrisis. "The financial crisis has not bottomed out yet, which may reduce the country's international trade markedly.In addition, tradeprotectionism of some countries might escalate. Therefore, China's foreign trade in 2009 will face a severe situation," he said. China's foreign trade topped 2.56 trillion U.S. dollars in value in 2008, but the year-on-year growth rate dropped below 20 per cent for thefirst time in seven years, according to the General Administration of Customs. The total value was up 17.8 per cent compared with 2007, butthe growth rate was down 5.7 percentage points. The trade surplus stood at 295.47 billion U.S. dollars, up 12.5 per cent, according to theadministration.
----Xinhua

FALLING COMMODITY PRICES

9.China's consumer price index (CPI), a main gauge of inflation, fell by 1.6 per cent in February 2009, the National Bureau of Statistics (NBS) announced on March 10,2009.This was the first monthly fall since December 2002, when prices decreased by 0.4 per cent. The producer price index (PPI), which measures inflation at the wholesale level, fell for the third straight month, dropping by 4.5 per centyear-on-year in February, 2009.The NBS said that the February figure did not represent a deflation problem in China, since money supply wasample because of the proactive fiscal policy and the relatively easy monetary policy. "We do face price downward pressure, but that cannotbe translated into a deflation problem," said Zhang Xiaoji, researcher with the Development Research Center of the State Council, agovernment think tank. Su Ning, Vice- Governor of the People's Bank of China (PBOC, the central bank), said on March 10,2009, that deflationwould not occur given the banks' ample liquidity. The NBS said falling international commodity prices, caused by the global economicdownturn, contributed to the domestic price fall. It added that the CPI in the first two months of 2009 dropped by 0.3 per cent from the sameperiod of 2008.The price declines "reflect how severely the economy was affected by the global financial crisis in the second half of lastyear," said Zuo Xiaolei, chief economist with Galaxy Securities. It would not be surprising if prices fell further in the next few months, asboth domestic and overseas demand had fallen since late last year, said Wang Xiaoguang, economist with the National Development andReform Commission. Also, he noted, there was a "commodity price bubble" early last year that persisted until mid-year. China spent yearsstriving to contain inflation and runaway economic growth. But as the global slump began to affect the world's third-largest economy, theGovernment shifted focus to fighting deflation and maintaining growth. Yi Gang, PBOC Vice- Governor, told Xinhua that the central bank hadsufficient tools to fight deflation. He noted the country had not confronted a typical deflationary period, which was characterized bycontracting loans and money supply, a recession and falling prices. To prevent deflation, real loan growth this year was expected to exceed5 trillion yuan (735.3 billion U.S. dollars), Su said while discussing the new price figures. China's money supply rose by 17.8 per cent and18.8 per cent in December, 2008, and January 2009, respectively. New loans hit a record of 1.6 trillion yuan in January, double theyear-earlier figure, and are expected to have grown further in February. Su told Xinhua that China still had plenty of room to maneuverusing monetary policy in the face of the global financial crisis. He said the benchmark deposit and loan interest rates had been reduced fivetimes since September and room for further adjustment was "smaller but still exists." There's also "much room for cutting banks' reserverequirement ratios," which had been reduced four times since September. Zhuang Jian, senior economist with the Asian DevelopmentBank's China resident mission, said declining prices could hurt corporate profit margins and reduce their desire to expand production.Thedeclines are "an indicator of falling confidence amid the economic slowdown," said Ai Hongde, president of the Dongbei University ofFinance and Economics. "The falling prices indicate some industries have excess production, while consumers are unwilling to spend atwill," he said. He suggested the Government should do more to boost personal spending, which should function along with the massiveinvestment plans. Deflationary pressure could ease in the second half of the year if consumption was boosted, he said.Falling pricesprovided an opportunity for the Government to further ease controls on commodity prices, especially those of farm produce.
-----Xinhua report of March 10,2009.

EDUCATED UNEMPLOYMENT WORRISOME

10.During a media briefing at Beijing on March 10,2009, on the sidelines of the current session of the National People's Congress (NPC), theHuman Resources and Social Security Minister Yin Weimin warned of a "grave" unemployment situation in China, but claimed that the Government's measures to boost employment have started showing "initial effect". The number of new workers stood at 690,000 and930,000 in January and February, 2009, as compared to 550,000 and 380,000 in November and December of last year. He said that theGovernment attached priority to helping college graduates find jobs this year. He mentioned a series of measures approved by the StateCouncil in February,2009, including encouraging college graduates to work in the rural areas, at grassroots urban communities, and insmaller enterprises, asking research institutions to recruit university graduates, and stepping up support for graduates starting up their ownbusinesses.He said that the State Council has scrapped residence restrictions in cities, except in the four municipalities of Beijing,Shanghai, Tianjin and Chongqing, to offer graduates broader access for jobs.About 6.11 million college students are due to graduate thisyear, and another one million who graduated last year are still looking for jobs.
------Xinhua of March 10,2009

FOURTH CONSECUTIVE MONTHLY FALL OF EXPORTS

11.The Chinese General Administration of Customs announced on March 11,2009, that China's exports decreased by 25.7 per cent inFebruary, 2009, as compared to the figures for February,2008. This was the fourth straight monthly fall as global demand shrank, it said.The exports contracted to US $64.90 billion in February.The imports decreased by 24.1 per cent as compared to the figures forFebruary,2008, to US $ 60.54 billion. The combined foreign trade declined by 24.9 per cent to US $ 125.44 billion as compared to the figuresfor February,2008. The trade surplus dropped to US $4.84 billion, less than one-seventh of the figure for January, 2009.
---- Xinhua News Agency release of March 11,2009.

STEEL EXPORTS DECLINE STEEPLY

12.China's steel exports reached 1.56 million tons in February, 2009, down 62 per cent as compared to the figures for February,2008. Therewas an 18 per cent decrease as compared to the figures for January,2009. It was the lowest figure of steel exports in the last 52 months. Atthe same time, China imported steel amnounting to 1.09 million tonnes in February,2009, a drop of 14.7 per cent as compared to the figuresfor February,2008.
---"China Securities Journal" as reported in "China Daily " of March 11,2009.

( The writer is Additinal 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: seventyone2@gmail.com )

FRESH FRICTION IN SINO-US RELATIONS OVER "NAVAL ESPIONAGE", TIBET

B.RAMAN

Less than a month after the highly successful (from Beijing's point of view) visit by Mrs.Hillary Clinton, the US Secretary of State, to China,fresh friction has developed in the relations between the US and China following an incident of alleged spying by a US naval ship in Chinese waters in the South China Sea and the remarks made by a US spokesman and Nancy Pelosi, the Speaker of the US House of Representatives, on the occasion of the 50th anniversary of theTibetan uprising of 1959, which led to the flight of His Holiness the DalaiLama to India.

2. The friction over the naval incident arose following a complaint by the US Defence Department that on March 8,2009, five Chinese shipsmanoeuvred dangerously close to USS Impeccable ,an unarmed US Nnavy surveillance vessel, while it was on routine operations ininternational waters 75 miles (120 km) south of the Hainan island. A Pentagon statement said that five Chinese vessels -----a navalintelligence-gathering ship, a Bureau of Maritime Fisheries Patrol Vessel, a State Oceanographic Administration patrol vessel, and two smalltrawlers----- "aggressively manoeuvred" around the USS Impeccable "in an apparent co-ordinated effort to harass the US ocean surveillanceship". US officials complained that the incident followed days of "increasingly aggressive" acts by Chinese ships.

3. Strongly refuting the US allegations, Ma Zhaoxu, a spokesman of the Chinese Foreign Ministry, said on March10,2009, that the US shiphad violated international and Chinese laws. He described the Pentagon statement as "totally inaccurate". According to him, the US ship was conducting activities within the waters of its Special Economic Zone.Under international law, Chinese territorial waters extend to 12nautical miles (22km) off its coast and its Exclusive Economic Zone (EEZ) extends to 200 nautical miles.China views most of the SouthChina Sea as its territorial waters, but the Philippines, Vietnam, Malaysia, Brunei and Taiwan also lay claim to some of the islands there.TheUSS Impeccable is used to map the ocean floor with sonar. The information is used by the US Navy to steer its own submarines or trackthose of other nations.

4. The Chinese are very sensitive to any activity by US AIr Force planes and naval ships near the Hainan Island, where they have animportant submarine base. In April 2001, three months after George Bush had assumed office as the President, a US spy plane collidedmid-air with a Chinese fighter jet off Hainan, killing one Chinese pilot and forcing the American plane to make an emergency landing at aHainan air base. China released the 24-member crew after the US expressed regret.

5. The extent of the Chinese anger over the naval incident became evident from the way the Chinese authorities mobilised a number ofserving and retired officers of the Chinese Navy attending the current National People's Congress (NPC) session to deny the US version andto condemn alleged US naval espionage in Chinese waters.

6.Vice-Admiral Jin Mao, former Vice-Commander of the People's Liberation Army's (PLA) Navy, was quoted by the "China Daily" on March11,2009, as saying that the American vessel was not just a surveillance ship, but a spy ship. "What was the ship doing? Anyone with eyescan see, and our navy can see even more clearly.Go and ask the Americans, ask their embassy. Ask their officials what their ship was doingin Chinese waters. It's like a man with a criminal record wandering just outside the gate of a family home. When the host comes out to findout what he is doing there, the man complains that the host had violated his rights,"

7.The "China Daily" also quoted Rear-Admiral Zhang Deshun, Deputy Chief of Staff of the PLA's Navy, as corroborating that the US vesselwas a spy ship. The "Impeccable" carried a 2-km-long detection cable and its sheer presence threatened Chinese vessels in the country'smaritime territory, he said, and added that the US navy's surveillance near Chinese maritime territory had been consistent, but this time "itis too close".

8.According to the paper, Rear-Admiral Lin Yongqing, former Deputy Chief of Staff of the PLA's South China Sea Fleet, said the response ofChinese ships was "nothing wrong". "It's easy to tell (who's right and who's wrong). The Chinese ships were exercising their legal rights."Rear-Admiral Zhang Huachen, from the East China Sea Fleet, said that Beijing is "strongly against" Washington's military moves in China'sexclusive economic zone in the South China Sea and defended Chinese ships' activities there.

9. The friction and the expression of strong words over the naval incident were followed by the Chinese condemnation of remarks by USleaders and officials on the occasion of the 50th anniversary of the Tibetan uprising of 1959. Speaking at a function on Capitol Hill on March9,2009, to observe the 50th anniversary, Nancy Pelosi, the Speaker of the US House of Representatives, said: "Fifty years ago today, thepeople of Lhasa assembled together and called for the Chinese army to cease its repression and to leave Tibet. Today, we remember thatday and honour the many brave Tibetans who have sacrificed so dearly in their fight for freedom.Chief among them is His Holiness the DalaiLama, who was forced into exile in India. The welcoming of India of the Tibetan refugee community is a testament to the close ties betweenthe Indian and Tibetan people.It's a friendship rooted in a mutual admiration for the philosophy of non-violence as practiced by MahatmaGandhi and the Dalai Lama......For the last year, Tibet has been under martial law and the human rights situation continues to worsen.Sadly,there has been no progress in the discussions between the Chinese Government and representatives of the Dalai Lama. It is clear that theChinese Government has not won the hearts and minds of the Tibetan people, but rather, the Tibetan people have accumulated legitimategrievances from decades of repressive policies.They have been economically marginalized in their own land, imprisoned for peacefullyexpressing their views, and barred from practicing their religion without government interference.It's long past time for Beijing to makeprogress on a solution that respects the human rights of every Tibetan.The US Congress continues to be a bedrock of support for theTibetan people."

10. Pelosi thus made amends for the discreet silence observed by Mrs. Clinton on the Tibetan issue during her visit to Beijing. Her remarksalso made clear that unlike the Obama administration officials,the traditional supporters of His Holiness in the Congress are determined tomaintain pressure on China on the Tibetan issue. Apparently stung by criticism of Mrs.Clinton for her muted remarks on human rights issuesat Beijing, the State Department issued a statement on March 10, 2009, which, while pointing out that even His Holiness recognised Tibetas a part of China, said: "We are deeply concerned by the human rights situation in Tibetan areas.We urge China to reconsider its policies inTibet that have created tensions due to their harmful impact on Tibetan religion, culture, and livelihood.Substantive dialogue with the DalaiLama's representatives could lead to progress in bringing about solutions and can help achieve true and lasting stability in Tibet."

11. This statement was issued even as Yang Jiechi, the Chinese Foreign Minister, was in Washington DC at the invitation of Mrs.Clinton fortalks on the bilateral relations in continuation of Mrs.Clinton's talks in Beijing. Reacting vehemently to the statement of the US StateDepartment, Ma Zhaoxu, a spokesman of the Chinese Foreign Ministry, said in Beijing on March 11,2009 : "The United States, ignoring thefacts, has made unwarranted criticism of China on the issue of Tibet... We express our resolute opposition and strong dissatisfaction withthis.We ask the US side... to acknowledge that Tibet is a part of China and oppose Tibetan independence, avoid harming overall China-USrelations, and stop using the Tibet issue to interfere in China's internal affairs."

12. Is this a temporary friction, which will not have any impact on the positive signs of close co-operation, which had emerged afterMrs.Clinton's visit or will it cause a fresh set-back? Both the countries are interested in working jointly in dealing with the economic crisisand in improving the strategic partnership between the two. At the same time, by taking a strong line on the two issues even at the risk ofthis causing a set-back to the newly-emerging bonhomie, China has sought to make it clear that its interest in close relations with the USwould not mean a dilution of what it regards as its principled stand on issues of vital interest to China such as its rights in the South ChinaSea and the Tibetan and the Taiwanese issues. (11-3-09)

(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: seventyone2@gmail.com )

OBAMA: GOOD-BYE TO DALAI LAMA & AUNG SAN SUU KYI, HAIL HU JINTAO

B.RAMAN

"There is a common interest in the US as well as in China in maintaining and strengthening the present economic linkages without lettingthem be damaged seriously by what a Chinese analyst has called the tumours in the otherwise healthy organism of Sino-US relations whichkeep appearing from time to time such as the Taiwan, the proliferation, the Tibet and the National Missile Defence (NMD) issues. Thepolitical leaderships and the business class in the two countries would see to it that these tumours do not become malignant. One saw thatduring the Clinton Administration and one would see that during the Bush Administration too. After the present phase of rhetoric andconfrontation, moderation would again set in at Washington as well as in Beijing. It would be unwise and short-sighted for India to think thatthe present confrontation would last for long and that it could strategically take advantage of it."

2.So I wrote on May 14,2001, in an article titled SINO-US RELATIONS: THE ECONOMIC ASPECT available at http://www.southasiaanalysis.org/papers3/paper241.html . That article was triggered off by a surge in US rhetoric in relation to China afterPresident George Bush assumed office on January 20,2001.

3. There has been no surge in US rhetoric vis-a-vis China after Barack Obama assumed office on January 20,2009. On the contrary, the focusof his advisers has been on identifying and expanding the mutual comfort features in the bilateral relations rather than on those features,which tended to cause friction in the past. The references from Washington DC to human rights issues---- whether they be in relation toTibet, Myanmar or the Chinese role in the Sudan--- have been muted. Mrs.Hillary Clinton, the Secretary of State, hardly mentioned them inpublic during her visit to Beijing from February 20 to 22,2009. She attended a Church service at Beijing apparently to underline continuingUS interest in the question of religious freedom in China, but avoided any comments on allegations that the Chinese authorities, whilewelcoming her visit to a church, took care to prevent any Christian dissenters from having interactions with her at the church. The normalexpressions of concern over China's military spending too were equally muted.

4. The focus was on the role which the US and China could play in jointly halting the unrelenting slide-down in the global economy and howthe two economies could sink together if they don't swim together. She underlined in benign words the increasing mutual dependence ofthe two economies----- with the Chinese dependence on the US consumers for a quick recovery of its exports-dependent manufacturingsector and with the US dependence on continued Chinese purchases of US Treasury Bonds to provide the cash flow to fund Obama'sstimulus packages.

5. The transformation of the US perceptions of the mutual economic dependence is remarkable if only one recalls that in the 1990s whenher husband, Bill Clinton, was the President, US policy-makers and many Congressmen lost no opportunity to express their concerns overthe increasing trade surplus in favour of China and over the national security implications of the Chinese cash flow for investment in the USTreasury Bonds and in US stocks. The advisers of Obama do not articulate these concerns. On the contrary, the concern now is, not that theChinese are buying the US Treasury Bonds, but that they are showing signs of slowing down their purchase because of their own economicdifficulties.

6. Mrs. Clinton did not hesitate to openly express the hope on more than one occasion that the Chinese would continue to invest in thebonds. Speaking at the US Embassy in Beijing on February 22,2009,shortly before her departure from China, she said: "By continuing tosupport American Treasury instruments, the Chinese are recognizing our interconnection.It would not be in China's interest if we wereunable to get our economy moving.We are truly going to rise or fall together. We are in the same boat and, thankfully, we are rowing in thesame direction." Responding to her comments separately , Yang Jiechi, the Chinese Foreign Minister, said that China wanted its foreignexchange reserves - the world's largest at $1.95 trillion - invested safely, with good value and liquidity. He said that future decisions onusing them would be based on those principles, but added that China wanted to continue to work with the US.

7. Mrs. Clinton's open acknowledgement of the benign aspects of the increasing economic inter-dependence between the two countrieswas music to the ears of the Chinese. The Chinese policy-makers chose to interpret it as indicating that the Obama administration did notview China as a potential adversary, but it viewed it as a potential partner. Mrs.Clinton said that she felt during her discussions in Beijing it was like the beginning of "a new era" of bilateral relations characterized by "positive cooperation". Addressing a joint press conference onFebruary 21,2009, Mrs.Clinton and Yang said that the two countries would build a "double-track" strategic and economic dialoguemechanism to discuss concerns of either politics or the economy. She added that she and Treasury Secretary Timothy Geithner would beinvolved in it. According to her, a decision on this was expected to be announced when Obama and Hu meet at the G20 summit in Londonin April. She also said that the US and China would build "an important partnership" to develop clean energy technologies and speed up thetransition to low carbon economies.

8. As I had been pointing out in the past, whereas Mao Zedong believed that power grew out of the barrel of the gun, Deng Xiaoping believedthat power also grew out of the money purse. Money speaks as eloquently as the gun, if not more eloquently. The bulging Chinese purse ata time when the rest of the world is facing a cash flow problem spoke repeatedly during Mrs.Clinton's visit. Good-bye to the Dalai Lama andAung San Suu Kyi, Hail Hu Jintao----- that is the message from the Obama administration .

9.A spokesman of the Chinese Foreign Ministry announced in Bejing on March 7,2009, that Yang Jiechi would pay a working visit to the US from March 9 to 13, 2009, as a guest of Hillary Clinton. The spokesman added that the two sides would exchange views on the growth ofSino-US relations in what he described as the new phase and on regional and global issues of common concern.

10.The visit comes less than a month after the visit to Beijing by Mrs. Clinton, which has given immense satisfaction to Chinesepolicy-makers as marking the beginning of the process of the US coming to terms with the reality of a four-polar world----with the US, China,the Europen Union and the developing world constituting the four poles of the new world order as seen by China. In the Chinese perception,India's place in this four-polar world is as an important member of the developing world but not as a power by itself on par with the US andChina. Japan has no prominent place in this new world order. China projects itself as a developing country despite its galloping economyand huge foreign exchange reserves. At the same time, it views itself as a newly-emerged world power on par with the US and the EU.

11.This Chinese perception of itself and the world became evident in the articles and commentaries of Chinese analysts on the strategicsignificance of the US economic melt-down and of the US dependence on China for preventing an economic collapse. An article by the"People's Daily" of February 23,2009, said: "China has grown to be a new heavyweight player and stepped into the limelight on the worldstage. And its role in salvaging the plummeting world economy from hitting bottom looms large and active, as the U.S. Secretary of StateHillary Clinton said during her just wrapped-up Asian tour, 'the U.S. appreciates the continued Chinese confidence in the U.S treasuries.' Ifthe Cold War was 'a tug of war' between East and West, and a showcase of hard power, what we have today, for the first time in history, is aglobal, multicivilizational and multipolar competition, and a display of smart power. To be the winner, one has to seek more cooperationrather than confrontation."

12. The two defining characteristics of the Obama administration are opportunism and pragmatism. Its main priorities for some time to comewill be restoring the economic health, preventing another 9/11 in the US homeland by going after Al Qaeda's sanctuaries in Pakistan's tribalbelt and any kind of peace in Afghanistan which would avert a Vietnam type disastrous withdrawal of the US forces from Afghanistan. Forachieving these objectives, the US relations with China and Pakistan would have greater importance for Obama than its relations withIndia.

13. It should not, therefore, be a matter of surprise that India figures less and less in the short and medium-term strategic calculations of theObama administration. The only interest of the Obama Administration in India will be in ensuring that it does not take any military actionagainst Pakistan for its continued sponsorship and use of terrorism against India.

14. The Obama Administration is not going to be interested in building up India as a counter to China. In continuing to develop the USA'smilitary-military relationship with India to which the Pentagon continues to attach importance, it will avoid features which could causeconcern to China just as the Kevin Rudd Government in Australia is doing.

15. All India can expect from the Obama Administration is soothing words from time to time to tickle India's vanity. Nothing more. After theeuphoria created by the policies of the Bush Administration among policy-makers and in the community of wishful-thinkers in New Delhieuphemistically called strategic thinkers, we are in for a mood correction. (10-3-09)

(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: seventyone2@gmail.com )

CHINESE STEP UP VIGILANCE IN TIBETAN-INHABITED AREAS

B.RAMAN

The Chinese security authorities have stepped up vigilance in Tibet and other Tibetan-inhabited areas of China to prevent a repeat of lastyear's outbreak of violence coinciding with the Tibetan New Year and three sensitive anniversaries.

2. The Tibetan New Year's Day called Losar, which fell on February 25, was observed in large parts of the Tibetan-inhabited areas as a dayof mourning. Normally, the celebrations and religious functions in connection with the Losar continue for a fortnight. In response toappeals by Tibetan monks and youth in China as well as in the diaspora abroad, the entire fortnight is being observed as a period ofmourning. The response to the call for mourning has been widespread, but there have been no major incidents of violence so far. The periodof mourning has been marked by processions of monks to local Government offices to present petitions to the officials on the grievances ofthe Tibetans. Apart from one incident of attempted self-immolation by a 24-year-old Tibetan monk reported from the Sichuan province, noother major incident has been reported.

3. The Chinese officials have avoided any actions of a provocative nature. They have not prevented the processions so long as they werepeaceful and did not refuse to accept the petitions. However, they prevented any pictures of His Holiness the Dalai Lama being carried.They have been visiting the monasteries after the processions are over in order to enquire about the leaders of the processions. In someinstances, the leaders were taken to the police stations for questioning.

4. The Chinese have discouraged the local Han Chinese settlers in the Tibetan areas from organising counter-demonstrations against thepro-Dalai Lama monks and youth. It was such counter-demonstrations by the Han Chinese settlers in Lhasa, which led to widespread violence last year with attacks on shops and other property owned by the Hans. While the Chinese authorities have been organisingState-sponsored Losar celebrations, they have refrained from forcing unwilling Tibetans to join them. The more sophisticated approachfollowed by the Chinese security auhorities this year as compared to the aggressive prevention techniques used by them last year hashelped in preventing any violence so far.

5. However, the Chinese are keeping their fingers crossed as to what could happen on March 10, which is the 50th anniversary of theescape of the Dalai Lama to India, on March 14, which is the first anniversary of the outbreak of violence last year, and on March 28 onwhich the Chinese are planning to hold big celebrations to mark the 50th anniversary of the abolition of serfdom, which, according to them,marked the end of the rule of the Dalai Lama and the introduction of people's democracy in the Tibetan areas. They are comparing theproclamation of 1959 ending serfdom to Abraham Lincoln's proclamation in the US ending slavery. The Chinese apprehend that pro-Dalai Lama elements might try to indulge in acts of violence on March 28 too.

6. Learning lessons from the consequences of their ham-handed handling of the pro-Dalai Lama demonstrations of last year, the Chinese,while stepping up security precautions and temporarily suspending the issue of permits to journalists to visit the Tibetan areas, haveavoided any over-demonisation of His Holiness. They have kept up their criticism of the Dalai Lama to ridiculing his ideas of a Greater Tibetand autonomy for Tibet. At the same time, they have refrained from projecting him and the members of the Tibetan Youth Congress (TYC) asterrorists as they did last year. Because of the impending Olympics in Beijing, the Chinese were more nervous last year and tended toover-react. This year, instances of over-reaction have been absent so far. Though worried, they seek to give the impression of being morerelaxed this year than they were last year.

7. While not ruling out isolated incidents of violence during March, they have expressed their confidence that there will be no repeat of thekind of violent incidents of a widespread nature seen last year. Reports received so far speak of indications of some unrest in the Tibetanareas of Sichuan, but Tibet itself has been quiet. Even the kind of processions seen in different parts of Sichuan during Losar have not beenseen in Tibet till now. The Maoist Government headed by Prime Minister Prachanda in Kathmandu has been co-operating with the Chinesein preventing Tibetan youth from Nepal and India from infiltrating into Tibet to instigate anti-Chinese demonstrations. It is learnt fromreliable Nepalese sources that the Prachanda Government has allowed the Chinese intelligence to increase its presence in Nepal in order tokeep a stricter surveillance on the local Tibetan community as well as Tibetans from India and the West visiting Nepal.

8. Simultaneously with stepping up vigilance in the Tibetan areas, the Chinese have also mounted a vigorous publicity and propagandadrive coinciding with the current session of the National People's Congress (NPC) to highlight the progress made by the Tibetans since theend of the rule of the Dalai Lama. Tibetan members of the NPC as well as Tibetan Government and party officials attending the NPC havebeen holding daily press briefings on the situation in the Tibetan areas. During these briefings, they have been highlighting the damagesuffered by the Tibetan economy as a result of the incidents of last year, in an apparent attempt to wean the people away from supporting His Holiness.

9.Lhasa Mayor Doje Cezhug told a media briefing in Beijing that the economy of Tibet enjoyed a fast growth in 2007 and early 2008,but theviolent riots of last year denied the autonomous region a good chance of development. The local economy, mainly driven by tourism, was"severely hurt" by the March riots of last year, he said, and added that Lhasa received 1.35 million tourists in 2008, down half from theprevious year, and the tourism income dropped by 58.66 percent to 1.17 billion yuan (about 172 million U.S. dollars). "We were also facedwith other difficulties such as halt of factory production and investment outflow and shrink because of investors' panic after the riots." He said that the city had taken a series of measures to restore normal economic and social order, including reinforcing social public securityand promoting tourism by tax cut and tax exemption policies. He accused the Dalai Lama's followers of sabotaging the develoment of Tibet.

10. Interestingly, in all these briefings, the Tibetan officials supporting Beijing referred to only Tibet and refrained from any observations onthe unrest in other Tibetan-inhabited areas outside Tibet. An impression was sought to be given that the trouble faced by the Chinese wasmainly in Tibet because of the activities of the Tibetan youth and monks from the diaspora and that the Tibetans in other Chinese provincesoutside Tibet, which the Dalai Lama claims as belonging to Tibet, refrained from supporting His Holiness. But the fact of the matter is thatthe pro-Dalai Lama demonstrations lasted longer in the Tibetan areas of Sichuan last year than in Tibet and this year, there have been moredemonstrations in Sichuan than in Tibet.

11. The Chinese also released on March 2,2009, a White Paper on the progress made by Tibet since the end of the Dalai Lama's rule. TheChinese have also undertaken a campaign to refute allegations emanating from the Tibetan diaspora abroad that many of those arrested inconnection with the disturbances of last year have been sentenced to death or life imprisonment.Qiangba Puncog, chairman of the Tibetan Government, told a media briefing in Beijing that only 76 of the 953 people detained for their involvement in last year's Lhasa riots receivedprison sentences, and that the rest were all released. He also said that those who were convicted received sentences ranging from lessthan five years to life.Most of those jailed were found guilty of theft, robbery, arson, disrupting public services or attacking governmentagencies, Puncog said. Only a few were convicted of "endangering national security". He did not specify whether anyone was sentenced todeath. However, independent enquiries indicate that while a number of Uighur separatists in the Xinjiang autonomous region weresentenced to death, the death sentence has not been used against Tibetan dissenters.

12.Puncog said that the Tibetan Administration had applied for the deployment of more security forces. But he said that this was notbecause of last year's riots but was based on the region's real needs. "Tibet covers a large area and more people are traveling in and out ofthe region. The current deployment of police and border defense forces is simply not enough," he said.Kang Jinzhong, the politicalcommissar of the armed police force in Tibet, said that the deployment of armed police in Tibet was a normal practice, and claimed thatthere has been no "sudden increase" in their numbers in Tibet since last year's riots. Puncog said that Tibet always welcomed foreignreporters, but they should work "in a just and objective way". (7-3-09)

(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: seventyone2@gmail.com )

NEED FOR URGENT RELOOK AT OUR PHYSICAL SECURITY

INTERNATIONAL TERRORISM MONITOR---PAPER NO.503
B.RAMAN

In our preoccupation with what is happening and what could happen in Pakistan, we should not overlook the urgent need for having arelook at our physical security architecture in sensitive establishments such as the nuclear establishments, oil refineries, gas productioninfrastructure, road, rail and air transport, critical information infrastructure etc. As I have emphasised repeatedly in the past, physicalsecurity is the most important component of counter-terrorism. If it is strong, a terrorist attack can be thwarted even if the intelligenceagencies fail. If it is weak, even the best of intelligence may not be able to thwart a terrorist attack. In both India and Pakistan, we have aweak culture of physical security. The main reason why the US has been able thus far to prevent a repeat of 9/11 is the strengthening of thephysical security apparatus by the newly-created Department of Homeland Security.

2. What happened at Mumbai, Kabul and Lahore---namely, commando-style surprise attacks by small groups of well-trained terroristswielding lethal hand-held weapons--- could happen again in India.We should not think that only Pakistan is vulnerable to such attacks.Wetoo are vulnerable as demonstrated so tragically at Mumbai. Our security architecture may not be as bad as that of Pakistan, but Mumbaiclearly showed that it is not as good as it should be.

3. There is an urgent need for two actions. Firstly, an audit of the physical security measures at all sensitive establishments----whether runby the Government or the private sector ---- in order to determine whether any physical security enhancements are called for.There is a needfor dividing all sensitive establishments into two categories-----those where a single-layer of physical security would be enough and thosewhere a double or multiple-layer of physical security would be necessary . The idea of a double or multiple-layer of physical security is thateven if the terrorists manage to beat the outside gate or perimeter security, they will not have a free run of the establishment due to asecond or more layers of armed physical security. To counter determined terrorists such as those one saw at Mumbai, Kabul and Lahore asingle-layer of physical security may not be sufficient in sensitive establishments.

4. The second action required is to have a relook at our consequence management capabilities to deal with a situation should, despiterevamped physical security, the terrorists manage to have access to sensitive establishments. The consequence management drill shouldtake into account various issues such as control over media coverage, prevention of panic, minimisation of damage and lethality etc. It isimportant to associate the consequence management set-ups of the States with this exercise because it is ultimately they who would actas the protector of first resort through their consequence management capabilities till there is intervention by the consequencemanagement community of the Govt. of India.

5. In Mumbai, the terrorists succeeded so dramatically because they targeted private establishments with no physical security measuresexcept some anti-explosive capability. Since the security guards of these establishments were unarmed, they were helpless before theterrorists wielding sophisticated hand-held weapons. Once the terrorists managed to gain access to these establishments and take themunder their control, the special intervention forces of the Govt. of India such as the National Security Guards (NSGs) found themselvesunable to act fast enough without causing too many loss of lives.

6. Situated as we are in the sub-continental region where terrorism will continue to be a fact of life at least for another 10 years or more andkeeping in view our ambition of emerging as a major economic power, we just cannot afford to take up the stand that the physical securityof the private sector is its responsibility and that the Government's role will be limited to issuing periodic advisories regarding likely threats.The Government has to play a more proactive role in encouraging and helping at least establishments of a strategic nature such as thoseassociated with the tourism industry, the information technology companies etc in improving their physical security.They already havesome capability for checks for explosives, but the methods used by them are primitive and do not take into account dangers from suicidebombers and vehicle-borne suicide terrorists.

7. Their weakest capability----which is almost non-existent--- is in facing a commando-style surprise attack by small groups of terrorists withmodern hand-held weapons. The only way of thwarting them is by having well-armed and well-trained guards. Do the present laws allow theemployment of such guards? If not, should the laws be modified to permit them to employ such well-armed guards? Who is going tosupervise their training and keep them under control to prevent the arms issued to them finding their way into the hands of terrorists?These are questions, which need urgent attention.

8. From the point of view of the physical security architecture. the distinction between the public and the private sector is disappearing.Many private companies are already in the fields of oil refining and gas exploration, production and transport. An increasing number ofairports is now privately managed. We intend allowing private companies into the field of nuclear power production. The Governmentcannot evade the responsibility for ensuring that such private establishments have a high level of physical security. There is a need for ajoint task force consisting of the representatives of the intelligence and security agencies and professional organisations of privateindustries such as the FICCI (Federation of Chambers of Commerce and Industries), the CII ( the Confederation of Indian Industries) etc aswell as representatives of foreign business organisations to go into the question of physical security enhancements for privateestablishments of strategic significance.

9. Practically all major private establishments----Indian as well as foreign--- have their own physical security set-up. It is important for seniorintelligence and security officials at the State and Central levels to regularly interact with them to exchange threat and vulnerability perceptions and ideas as to how to strengthen physical security.

10. In an important article titled "The Coming Swarm" in the "New York Times" of February 15,2009, which should be required reading for allour physical security experts, John Acquilla, who teaches in the special operations program at the Naval Postgraduate School at Montereyin California, wrote as follows: "It seems that a new “Mumbai model” of swarming, smaller-scale terrorist violence is emerging. The basicconcept is that hitting several targets at once, even with just a few fighters at each site, can cause fits for elite counterterrorist forces thatare often manpower-heavy, far away and organized to deal with only one crisis at a time. This approach certainly worked in Mumbai. TheIndian security forces, many of which had to be flown in from New Delhi, simply had little ability to strike back at more than one site at atime. While it’s true that the assaults in Kabul seem to be echoes of Mumbai, the fact is that Al Qaeda and its affiliates have been usingthese sorts of swarm tactics for several years...... How are swarms to be countered? The simplest way is to create many more units able torespond to simultaneous, small-scale attacks and spread them around the country. This means jettisoning the idea of overwhelming force infavor of small units that are not “elite” but rather “good enough” to tangle with terrorist teams. In dealing with swarms, economizing onforce is essential. ....For the defense of American cities against terrorist swarms, the key would be to use local police officers as the firstline of defense instead of relying on the military. The first step would be to create lots of small counterterrorism posts throughout urbanareas instead of keeping police officers in large, centralized precinct houses. This is consistent with existing notions of community-basedpolicing...... At the federal level, we should stop thinking in terms of moving thousands of troops across the country and instead distributesmall response units far more widely. Cities, states and Washington should work out clear rules in advance for using military forces in acounterterrorist role, to avoid any bickering or delay during a crisis. Reserve and National Guard units should train and field many more unitsable to take on small teams of terrorist gunmen and bombers. Think of them as latter-day Minutemen.Saudi Arabia, Tunisia, Turkey andYemen all responded to Qaeda attacks with similar “packetizing” initiatives involving the police and armed forces; and while that hasn’teliminated swarm attacks, the terrorists have been far less effective and many lives have been saved."

11.Jihadi terrorism in India outside Jammu & Kashmir is essentially an urban phenomenon. We cannot use against it the techniques learntby us in dealing with the insurgency in the North-East and with Maoist terrorism in Central India, which is essentially a rural phenomenon.We need a different system of response, which is comprehensive enough to cover all likely targets of strategic significane----whether in the Government or private sector.

12. Even if we do not create an independent Ministry of Internal Security,we should create a separate Department of Physical Security in theMinistry of Home Affairs, which is, inter alia, responsible for counter-terrorism, to act as the nodal agency for all physical security measureson the pattern of the Department of Homeland Security of the US. This newly-created department should interact continuously with its UScounterpart to pick its brains and profit from its expertise and experience. (7-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. E-mail: seventyone2@gmail.com )