JULY 2007

Cold Mountain

By Han Shan (Cold Mountain)

Here we languish, a bunch of poor scholars,
battered by extremes of hunger and cold.
Out of work, our only joy is poetry:
Scribble, scribble, we wear out our brains.
Who will read the works of such men?
On that point you can save your sighs.
We could inscribe our poems on biscuits
And the homeless dogs wouldn't deign to nibble

Hermits hide from mankind
Most go to the mountains to sleep
Where green vines wind through woods
And jade gorges echo unbroken
Higher and higher enraptured
On and on simply free
Free of what stains the world
Minds pure like the white lotus

If you are looking for a place to rest,
Cold Mountain is a good place to stay.
The breeze flowing through the dark pines
Sounds better the closer you come.
And under the trees a white-haired man
Mumbles over his Taoist texts.
Ten years now he hasn't gone home;
He has even forgotten the road he came by.

High on the mountain’s peak
Infinity in all directions!
The solitary moon looks down
From its midnight loft
Admires its reflection in the icy pond.
Shivering, I serenade the moon.

I climb the road to Cold Mountain,
The road to Cold Mountain that never ends.
The valleys are long and strewn with stones;
The streams broad and filled with thick grass.
Moss is slippery though no rain has fallen;
Pines sigh but it isn't the wind.
Who can break from the snares of the world
And sit with me among the white clouds?

Have I a body or have I none?
Am I who I am or am I not?
Pondering these questions,
I sit leaning against the cliff as the years go by,
Till the green grass grows between my feet
And the red dust settles on my head,
And the men of the world, thinking me dead,
Come with offerings of wine and fruit to lay by my corpse.

The place where I spend my days
Is farther away than I can tell.
Without a word the wild vines stir,
No fog, yet the bamboos are always dark.
Who do the valleys sob for?
Why do the mists huddle together?
At noon, sitting in my hut
I realize for the first time that the sun has risen.

Today I sat before the cliffs
Sat until the mist blew off
A rambling clear stream shore
A towering green ridge crest
Cloud's dawn shadows still
Moon's night light adrift
Body free of dust
Mind without a care.

People ask about Cold Mountain Way;
There's no Cold Mountain Road that goes straight through: By summer, lingering cold is not dispersed,
By fog, the risen sun is screened from view;
So how did one like me get onto it?
In our hearts, I'm not the same as you -
If in your heart you should become like me,
Then you can reach the center of it too.

Among a thousand clouds and ten thousand streams,
Here lives an idle man,
In the daytime wandering over green mountains
At night coming home to sleep by the cliff.
Swiftly the springs and autumns pass,
But my mind is at peace, free from dust or delusion
How pleasant to know I need nothing to lean on
To be still as the waters of the autumn river!

Thirty years ago I was born into the world.
A thousand, ten thousand miles I've roamed.
By rivers where the green grass grows thick,
Beyond the border where the red sands fly.
I brewed potions in a vain search for life everlasting,
I read books, I sang songs of history,
And today I've come home to Cold Mountain
To pillow my head on the stream and wash my ears.

You have seen the blossoms among the leaves;
tell me, how long will they stay?
Today they tremble before the hand that picks them;
tomorrow they wait someone's garden broom.
Wonderful is the bright heart of youth,
but with the years it grows old.
Is the world not like these flowers?
Ruddy faces, how can they last?

I spur my horse past the ruined city;
the ruined city, that wakes the traveler's thoughts:
ancient battlements, high and low;
old grave mounds, great and small.
Where the shadow of a single tumbleweed trembles
and the voice of the great trees clings forever,
I sigh over all these common bones --
No roll of the immortals bears their names.

When I see a fellow abusing others,
I think of a man with a basketful of water.
As fast as he can, he runs with it home,
but when he gets there, what's left in the basket?
When I see a man being abused by others,
I think of the leek growing in the garden.
Day after day men pull off the leaves,
but the heart it was born with remains the same.

Cold Cliff's remoteness
Is what I love
No one travels this way
Clouds lie around on the peaks
A lone gibbon howls on the ridge
What else do I cherish?
It's good to grow old content
Cold and heat change my
Appearance;the pearl
Of my mind stays safe

Cold Mountain is a house
Without beams or walls.
The six doors left and right are open
The hall is blue sky.
The rooms all vacant and vague
The east wall beats on the west wall
At the center nothing.
Borrowers don't bother me
In the cold I build a little fire
When I'm hungry I boil up some greens.
I've got no use for the kulak
With his big barn and pasture --
He just sets up a prison for himself.
Once in he can't get out.
Think it over --
You know it might happen to you.

China-driven commodities boom turning former debtor countries into creditors

From: "Sino Economics" <> Date: Tue, 24 Apr 2007 20:29:34 -0700

The baton passes to China

By Walter T Molano

China's ascent is occurring faster than anyone imagined. The first-quarter gross domestic product (GDP) growth rate of 11.1% year on year was a surprise for many, but not for all. China is on fire, marking the fourth consecutive year of double-digit expansion.

The Chinese economy is inflating to a size that is commensurate with its proportion of the global population. Given that China has about 22% of the world's population, the economy can easily double before reaching equilibrium.

This expansion can manifest in one, some or all of the following ways: growth, inflation, or currency appreciation. Given that the government is allowing the yuan to appreciate gradually and the inflation rate is low, most of the expansion is going to occur on the growth side. Therefore, we should not be too surprised by the torrential pace of economic activity.

Fortunately, the global impact of the Chinese revival has been positive. Global trade grew 15% year on year in 2006, reaching US$11.76 trillion. China led the way, increasing exports 27% year on year. Imports jumped 25% year on year, boosting the demand for commodities and industrial products. Copper imports surged 60% year on year at the beginning of 2007, after experiencing a slump at the end of 2006.

Overall, China's copper demand is expected to rise 8% year on year to 4.2 million tonnes. However, the Chinese are importing more than raw materials. In fact, Chinese exports fell to third place in 2006, after Germany retook the second position. The growing needs for machinery, industrial products, consumer goods and luxury items are forcing the United States, Germany and Japan to increase their embarkations toward China.

Indeed, China is now Japan's largest trading partner, representing 17% of exports. China was the destination of less than 4% of Japanese exports in 1990. Interestingly enough, Japan is becoming less of an important trading partner for the Chinese. In 1990, Japan represented 17% of total exports. Today, the figure is only 11%.

China's inclusion into the World Trade Organization, its move into higher-value-added sectors, and its integration into the global marketplace have allowed it to diversify its trade partners. This is the reason the Japanese are adopting a more conciliatory approach with the Chinese. Prime Minister Shinzo Abe recently visited China, marking the first Japanese state visit there in five years. It is also the reason the Japanese are not allowing their currency to appreciate against the US dollar. It is not so much that they don't want to lose competitiveness against the Americans. It's that they do not want it to lose market share in China - where the currency happens to be closely linked to the dollar.

The ascendancy of China is a good thing for many emerging-market countries. Brazil is one of the main beneficiaries. The burgeoning exports to China are pushing up Brazil's international reserves. At the end of last year, analysts speculated that Brazil's international reserves could hit the $130 billion mark by the end of 2007. International reserves were $113 billion at the end of February, and they will probably crest through the $130 billion mark by the end of the first semester. Other commodity producers, such as Argentina, Russia, Peru, Kazakhstan and Chile, are also thriving. This is creating an emerging-market boom that is unparalleled, but it is not a fad.

Some numbers are alarming. The Shanghai stock market was up 235% over the past year and a half. The Shenzhen market was up 289% during the same period. The Shenzhen market trades at a multiple of 60, Shanghai 38 and the Dow 17. Nevertheless, the Chinese market underwent a great deal of deregulation over the past two years, witnessed a tidal wave of new issues and ended a five-year slump. Given the growth potential that lies ahead, valuations may not be as lofty as some argue. Unfortunately, a shakeout may be inevitable.

Nevertheless, the baton is passing to China. It is now setting the tempo for the global economic orchestra. The transformation is still in the early stages. China will soon move into higher-value-added sectors, such as automobiles, aerospace and pharmaceuticals. A larger swatch of the population has to be incorporated into the new economy. That means that sunny skies lie ahead for most emerging-market countries as they help feed the ravenous needs of the new rising superpower.

(Copyright 2007 Walter T Molano, The Emerging Market Adviser.) US current-account deficit drives liquidity boom - Henry C. K. Liu

Chinese Firm Wins Bid For Building Largest Hydropower Station In Nigeria
From: "Sino Economics" <>
Date: Mon, 9 Apr 2007 21:24:41 -0700

YICHANG, April 3 (Bernama) -- China Gezhouba Group Corporation (CGGC), the main constructor of the Three Gorges project, has won a contract to build the 2600 Megawatt (Mw) Mambilla plateau hydropower station in Nigeria, the group announced on Monday.

The US$1.46 billion project is the largest hydroelectric power station Chinese companies have ever built in Africa, according to the group, which is based in Yichang city of central China's Hubei Province.

"The group has the world's advanced dam building and river closure technology. Despite environmental challenges in Africa and a complex geological structure, we are confident we can build a Nigerian 'Three Gorges' that will benefit the African people," Xinhua quoted CGGC President Yang Jixue as saying.

Yang met visiting Nigerian President Olusegun Obasanjo in 2005 and introduced his company. Obasanjo wrote on his business card: Welcome to Nigeria, the Mambilla Station is waiting for you, Yang said.

The dam is being designed and construction is expected to last six years and nine months, according to the Nigerian federal government.

The Mambilla station is part of Nigeria's National Integrated Power Plants (NIPP). The Nigerian government has pumped US$2.5 billion into the NIPP project to strengthen power transmission infrastructure and the distribution network.

The Chinese government agreed to build the hydroelectric power station after China and Nigeria signed big deals at the Beijing Summit of the second China-Africa Forum in 2006.

PetroChina Shares Jump After Bohai Bay Oil Discovery

From: "Sino Economics" <> Date: Mon, 7 May 2007 18:15:04 -0700
By Michele Batchelor

May 4 (Bloomberg) -- Shares of PetroChina Co., the nation's top oil producer, surged after the company announced China's biggest discovery in half a century.

The stock climbed 14 percent, pushing the market value to HK$1.82 trillion ($233 billion) and overtaking OAO Gazprom and BP Plc to become the world's No. 3 oil company after Exxon Mobil Corp. and Royal Dutch Shell Plc. The deposit in Bohai Bay has about 7.5 billion barrels of oil equivalent, according to Beijing-based PetroChina's statement yesterday.

China has stepped up oil exploration to meet increased demand in the world's fastest-growing major economy and reduce reliance on imports. PetroChina, Asia's most valuable company, expects to outspend Exxon and Shell this year as it drills deeper and further offshore to make up for declining output at Daqing, China's biggest and oldest field.

``The potential net asset value boost from the Jidong discovery is too big to ignore,'' said Gordon Kwan, research director of China oil and gas at CLSA Ltd. in Hong Kong. Subject to ``stringent U.S. Securities and Exchange Commission reserves classification, the discovery size could exceed sibling rival Cnooc's entire reserve base.'' Kwan advised clients to buy the stock ``aggressively.'' ...

Additional exploration may yield proven oil reserves of 3.3 billion barrels of oil, boosting PetroChina's net asset value by 15 percent, Kwan said. Cnooc Ltd., China's biggest offshore oil producer, has total reserves of 2.5 billion of oil, he said

``Certainly in Bohai Bay, nothing like that has been found there for 30 years or so,'' said David Johnson, a Hong Kong- based analyst at Macquarie Securities Ltd. ``In world terms, it is very large and one of the biggest oil finds for the last 20 or 30 years.'' He has a neutral rating on PetroChina shares. ...

China's new freighter economics

Published: May 1, 2007
From: "Sino Economics" <> Date: Sat, 5 May 2007 12:50:49 -0700

LONDON: The cost of shipping coal and iron ore is about to decline as the supply of cargo vessels overwhelms demand.

Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Compagnie Maritime Belge, the world's largest commodities-shipping line, and Golden Ocean Group, run by John Fredriksen, the Norwegian billionaire.

"We're going to see the largest deliveries to the fleet that's ever been recorded," said Philip Rogers, 58, the head of research at Galbraith's, the London-based ship broker, who has been assessing the freight markets for 30 years.

Chinese shipyards are building enough carriers to haul 48 million tons in the next five years, equal to 15 percent of the country's annual iron ore imports, according to Galbraith's. The new ships are 26 percent bigger than the merchant fleet produced by the United States after the bombing of Pearl Harbor in 1941.

Lower costs may benefit China's Baoshan Iron & Steel, Arcelor Mittal of Luxembourg, the world's biggest steel producer, and other companies that hire ships to carry grain, coal, ore and similar goods.

Commodities-shipping rates have soared 41 percent this year and ended last week at a record 6,230 on the Baltic Exchange, a 263-year-old institution that traces its roots to a London coffeehouse. Clarkson, the world's largest ship broker, and the hedge funds M2M Management, headed by a former chartering executive at BHP Billiton, and Castalia Fund Management are already anticipating a drop in costs.

"It has to fall," said Steve Rodley, the joint managing director at M2M Management in London. "It's hard to see rates sustaining where they are today beyond the summer."

Rates may begin to decline next month, when cargo vessels become available as port officials in Newcastle, Australia, clear one of the worst-ever traffic jams. A revival in iron ore trade between India and China that has reduced the length of voyages will free more freighters.

The cost of renting the biggest ships, known as capesize carriers, climbed 73 percent in six months to a record $106,289 a day on April 27, enabling owners to pay for a $78 million ship in a little more than two years.

Diana Shipping, which paid a record $110 million for a capesize carrier in March, agreed to daily rental rates for the ship of $52,000 every day for more than four years with BHP Billiton, the world's biggest mining company. Diana will earn revenue of at least $75 million. BHP Billiton has an option to extend the contract for 13 more months.

Futures contracts, called forward freight agreements, are traded privately and cleared by Imarex NOS ASA in Oslo and LCH.Clearnet in London. They signal that rates will decline to $42,200 by 2009, the biggest drop since 2001.

A record 74 vessels are stuck off Newcastle, the world's largest coal port, waiting for congestion at the terminal to clear and a chance to load. The delays began last year after the terminal scrapped a quota system that restricted when shippers could take on cargoes. The quota was reinstated this month, and delays will start to ease around mid-May, said Vivek Srivastava, an analyst at Maritime Strategies International in London.

India may add to the supply of vessels. The country is considering revising a plan to impose a tax on iron ore imports, Hindu Business Line reported April 26. The original proposal prompted Chinese steel makers to boycott iron ore from India last month in favor of countries as far away as Brazil, tying up vessels on longer trips. Iron ore makes up about 25 percent of the world's bulk freight.

"When fleet utilization reaches 92 to 93 percent, you see rates going up exponentially," said Torstein Bomann-Larsen, a freight-derivatives broker at Imarex NOS ASA in Oslo. "And fleet utilization is 97 to 98 percent, so it's extreme. If congestion eases by 20 percent, rates could come down fast."

Chinese shipbuilders had more customers for commodity carriers than those in Japan in the first quarter, according to Clarkson. Shipyards in China attracted orders for 98 vessels with a combined carrying capacity of 8.7 million tons.

"The Chinese have added the equivalent steel making capacity of Japan and Korea in five years, and that can't continue," said Martin Stopford, the head of research at Clarkson. "It leaves you with a problem if and when steel slows down."

Steel demand is being buoyed by the Chinese economy and may not slacken anytime soon, said Andreas Vergottis, a fund manager at Tufton Oceanic, the world's biggest shipping hedge fund. Tufton may spend $200 million to buy vessels for the first time.

Attack on Ethiopian Oil Field Highlights Political Perils of Pursuing Resources Abroad

By Edward Cody

Washington Post Foreign Service

Thursday, April 26, 2007; A24

BEIJING, April 25 -- An attack that killed nine Chinese oil workers in Ethiopia's desolate Ogaden Desert has provided a bloody reminder that <> China's worldwide pursuit of raw materials has taken it into some rough neighborhoods -- and that goodwill proclamations may not be enough to avoid getting caught up in local conflicts.

Exposure to the military and political struggles that convulse Africa is one of the prices this fast-developing country is paying for its growing power and profile on the world stage. It is a new sensation for most Chinese, who are used to considering their country an economic actor that, unlike traditional powers, avoids interference in the domestic affairs of other nations.

The nine Chinese were among 74 people reported killed shortly after dawn Tuesday in the desert of eastern Ethiopia. In addition, Chinese authorities said, seven Chinese oil technicians were kidnapped by the ethnic Somali rebels who launched the raid. The captives joined a growing list. Already this year, 16 Chinese oil workers have been kidnapped in Nigeria and a Chinese engineer was killed and another injured in Kenya.

The questions facing President Hu Jintao's government Wednesday were twofold: how to better protect the 4 million Chinese working abroad, and how to preserve the growing value of Chinese investments in places such as Ethiopia, where governments face instability.

"China now faces the dilemma of any country that undertakes an active foreign policy, particularly one with a foreign policy in no small part based on the acquisition of resources," said an analysis by Stratfor, a security consulting firm based in Austin. "It must now decide how much to get involved in other countries' internal security issues."

He Wenping, head of Africa studies at the Chinese Academy of Social Sciences, said safety issues were becoming increasingly important as the number of Chinese working abroad multiplies. He suggested to Beijing's Global Times newspaper Wednesday that Chinese companies evaluate the security situation before starting a project abroad.

This is a sensitive political issue here. The Chinese public seems increasingly to demand that compatriots abroad be taken care of, even as the government expresses a determination to avoid involvement in local conflicts. Moreover, the urge to prop up endangered governments to preserve Chinese investments would go against its long tradition of noninterference. ...

Pirates and trade are behind China's defence build-up

Michael Backman
From: "Sino Economics" <>
May 9, 2007 Defence-buildup/2007/05/08/1178390303470.html

US NAVAL commander Rear-Admiral James Kelly said in Canberra last week that China was building up its submarine and warship capacity to help protect its sea lanes, including those with Australia.

At last we hear some comments on China from a senior American military figure that make sense. China is not out to threaten US military dominance. It doesn't routinely compare itself with the US in the way that the US compares itself with China militarily. China has its own reasons for its militarisation, and as Kelly observed, they relate to trade.

China announced a 17.8 per cent increase in its military spending for this year. That was after a 14.7 per cent increase last year, a 12.6 per cent increase in 2005, an 11.6 per cent increase in 2004, a 9.6 per cent increase in 2003 and a 17.6 per cent increase in 2002. On the face of it, these increases seem enormous. But because of its rapid economic growth, China needs to spend massively on defence just to keep its defence budget at a constant proportion of gross domestic product. These increases are in excess of GDP growth, but not wildly so.

Even with these increases, China's declared spending on its military is relatively low compared with the US. China says it spent $US30 billion in 2005, but the US spent $US400 billion, and Japan spent about $US47 billion. Currently, China does not even have an aircraft carrier in service, unlike the US, Britain, Russia, Italy, Brazil and even Thailand.

At the same time as spending more on defence, China has been cutting military personnel. It claims to have demobilised 200,000 personnel from 2003 to 2006. But it still has the world's largest military, with 2.3 million active personnel. The cuts don't reflect a desire to be less militarised; they reflect China's greater use of sophisticated defence technology.

Between 2001 and 2004, China is known to have spent $US10.4 billion importing weapons systems. Clearly, China is moving from a defensive capability to an attack capability. But is this unusual?

Throughout history, the foreign and military policies of the major powers have been determined by the need to protect commodities supplies. As Chicago-based economist David Hale argues in a paper on China's naval build-up, British foreign policy in the late 19th and early 20th centuries was shaped by the desire for commodities security.

He says Britain nearly took the side of the Confederates during the American Civil War, because of the size of its cotton imports from the American south. Britain went to war in South Africa against the Boers largely to control that country's gold. And after oil replaced coal as the fuel for the Royal Navy, Britain greatly expanded its role in the Middle East.

The US similarly went to war in the Gulf after Iraq invaded Kuwait in 1990 and then invaded Iraq in 2003, in part to reduce its reliance on Saudi oil.

China's booming economy means that it has a voracious appetite for raw materials, much of which needs to be imported. And this means that it has plenty of incentive to have the capability to keep its sea lanes open.

Most of China's trade goes through the Malacca Straits, the slither of ocean between Indonesia's Sumatra and the Malaysian peninsula, and also the Bay of Bengal. Both have more pirate activity than anywhere else. There were 118 incidences of recorded pirate attacks in the area last year, compared with 50 for the rest of the world.

China is upgrading its submarines. The Romeo and Ming class conventionally powered submarines are being augmented or replaced by the more capable Song class submarines that are produced in China, and Kilo class submarines China has acquired from Russia. Its small force of nuclear-powered submarines is being upgraded. The old Han class submarines are being replaced by the indigenously produced Type 093-class SSN.

Three new classes of Chinese-made destroyers are being brought into commission; the Luyang I, the Luyang II and the Luhau will enable a single ship to provide anti-aircraft defence not just for itself but for a formation of ships. China is also considering building its own aircraft carrier.

China is also emerging as the world's most important builder of merchant shipping. It will overtake South Korea by 2015 to become the world's biggest producer of all classes of ships, by which time it will have no less than 21 dry docks. As it is, the shipping arms of South Korea's Daewoo and Samsung have set up shipbuilding facilities in China to save costs.

India is beefing up its naval capabilities too. But it's doing so largely because China is. It is developing its own aircraft carrier that will be capable of operating a fleet of 30 aircraft, including naval light combat aircraft and Sea Harrier aircraft. India is also working on its own nuclear submarine.

It announced last year that a naval base would be established on its east coast, near Visakhapatnam. The base is expected to berth two aircraft carriers, support ships and submarines. Part of the rationale for the new base is to counter China's emerging naval power in the Bay of Bengal. And like China, India is very dependent on the Malacca Straits. About half its international goods trade passes through the straits.

In many respects it is more advanced than China, particularly when it comes to sea power. But it's China that attracts all the attention.


China's uranium demand to rise 4-6 times by 2020

From: "Sino Economics" <> Date: Thu, 17 May 2007 20:46:07 -0700

China's uranium demand for nuclear power to rise 4-6 times by 2020

05.17.07, 7:34 AM ET

BEIJING (XFN-ASIA) - China's uranium demand is expected to grow 4-6 times by 2020, as the country increases its annual installed nuclear power capacity to 40 mln kilowatts from 9 mln at present, a government official said.

Cao Shudong, nuclear power department director at the Commission of Science Technology and Industry for National Defence, told reporters on the sidelines of an industry conference that China now has nine operating one mln KW nuclear power generators, each consuming more than 30 tons of uranium every year.

The government plans to set up a joint stock company to manage uranium imports, said Cao.

State-owned China National Nuclear Corp is currently the sole provider of the nuclear raw material, he said.

'China would build three one million capacity nuclear power generators each year over the next 15 years in a bid to achieve the 40 mln kw target,'Cao said.

'Nuclear fuel supply can be secured to feed the expanding nuclear generators,' he noted.

Earlier last month, the Commission of Science Technology and Industry for National Defense announced that China will build strategic reserves of uranium and set up a commercial reserve system as part of its bid to develop the nuclear industry.

China will also seek uranium resources overseas, it said.

In February, China National Nuclear Corp signed a strategic cooperation agreement with Sinosteel Corp to jointly invest in and explore overseas for uranium resources. The deal follows a similar agreement signed with conglomerate CITIC Group.

China aims to boost its nuclear power sector to avoid power shortages. In 2006 it generated just 1.92 pct of its total energy needs from nuclear plants but is hoping to boost that to 4 pct by 2020. Russian scientists develop high-energy pulse generators

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