China poised to attain superpower status: US intelligence czar
Tue Feb 28, 1:52 PM ET
WASHINGTON (AFP) - The US Director of National Intelligence, John Negroponte, warned that China's steady military and economic expansion may ultimately lead to Beijing attaining superpower status on a par with the United States.
"Globalization is causing a shift of momentum and energy to greater Asia, where China has steadily expanding reach and may become a peer competitor to the United States at some point," Negroponte said at a hearing of the US Senate Armed Services Committee on global security threats.
"Consistent high rates of economic growth, driven by exploding foreign trade, have increased Beijing's political influence abroad and fueled a military modernization program that has steadily increased Beijing's force projection capabilities," the US intelligence czar said.
In the foreign policy domain, China is focused for now on other Asian nations "where Beijing hopes to make economic inroads to increase political influence and to prevent a backlash against its rise," said Negroponte.
But he suggested however that China's sphere of influence likely will broaden over time.
"Beijing also has expanded diplomatic and economic interaction with other major powers, especially Russia and the European Union, and begun to increase its presence in Africa and Latin America," he said.
On the military front, Negroponte noted that China is "vigorously" pursuing a modernization program of its weapons systems.
China's runaway economic expansion is slowed however by "a number of difficult economic and legal problems," including corruption, a faulty education system, and environmental degradation.
"Beijing's biggest challenge is to sustain growth, sufficient to keep unemployment and rural discontent from rising to destabilizing levels, and to maintain increases in living standards," said Negroponte.
"Indeed, China's rise may be hobbled by systemic problems and the Communist Party's resistance to demands for political participation that economic growth generates," he said.
"Beijing's determination to repress real or perceived challenges, from dispossessed peasants to religious organizations, could lead to serious instability at home and less effective policies abroad."
At the same hearing, the director of the Defense Intelligence Agency, Lieutenant General Michael Maples, said China's military wishlist includes efforts "to expand and modernize all categories of its ballistic missile forces, to increase survivability and war-fighting capabilities, to enhance their deterrence value and to overcome ballistic missile defenses."
Michael Hayden, the deputy director of national security, said China's military buildup may exceed what is needed to protect their own security, and may be designed to build the country's image at home and overseas.
"They have this perception, there's almost a momentum in Chinese thinking, that great powers -- and they clearly want to be viewed as a great power -- great powers need certain things.
"They're not necessarily tied to a specific military event, either proposed or expected, but simply become the trappings of -- I'll use the word -- their global legitimacy.
"It's one of the most fascinating aspects in looking at Chinese actions," Hayden added.
....this just in
Good article. Charles Smith will be on Coast to Coast AM this Thurs. I am sure he will have some info on recent developments with China.
No surprise to anybody, it is just further acknowledgement by High Ranking US Officials
on China's Potential Threat.
China's Expanding Shipyards Threaten Glut, Hyundai's Profit
March 1 (Bloomberg) -- China's shipbuilders plan to double production capacity by 2010, threatening a glut that may cut profits at Hyundai Heavy Industries Co., the world's biggest builder, and other South Korean yards.
Chinese shipmakers are undercutting competitors in South Korea and Japan as they bid to increase market share. Beijing- based China State Shipbuilding Corp.'s new shipyard on Changxing Island near Shanghai, which starts constructing oil tankers next year, will overtake Korea's Hyundai Heavy as the world's biggest when it's completed in 2015.
The rise of China's shipbuilding industry may cause today's near-record prices for vessels to fall as Changxing and other yards compete with Korean and Japanese rivals for business, investors including Song In Ho said.
``The speed of capacity increases in China is somewhat threatening to Korean shipbuilders,'' said Song, who counts Hyundai shares among the $413 million in assets he helps manage at Kyobo Investment Trust Management Co. in Seoul.
Chinese yards have 20 percent of global orders for ships measured by cargo capacity, according to London-based shipbroker Clarkson Plc. Hyundai and other South Korean builders have 35 percent and Japan's yards 32 percent. Shipyards outside Asia have less than 10 percent of global orders.
China's shipbuilders will double capacity in the next five years, state news agency Xinhua reported, citing Zhu Rujing, an analyst with the Beijing-based China Shipbuilding Economy Research Centre. As well as the Changxing project, new shipbuilding docks are planned at Bohai in northern China and Guangzhou in the South.
Profit at Hyundai, based in Ulsan, rose fivefold last year as it benefited from record orders and shipbuilding prices that have more than doubled since 2002. Daewoo Shipbuilding & Marine Engineering Co., the world's second-largest shipbuilder, said last month that its fourth-quarter profit more than tripled.
``The rise of the Chinese yards is definitely a risk factor for Korean shipbuilders,'' said Choi Chang Hoon, who helps manage about $1.1 billion at Woori Asset Management Co. in Seoul ``Competition is increasing.''
Frontline Ltd., the world's largest tanker company by capacity, may order four VLCCs from Changxing for $105 million each, London-based shipbroker Clarkson Plc said on Feb. 10. The price of a VLCC at a South Korean or Japanese yard is $123.5 million, the broker said.
``Shipyard capacity is well past the 1976 peak, with more on the way,'' Martin Stopford, Clarkson's head of research, who's speaking at the ShippingChina 2006 conference that starts in Shanghai this week, said on Dec. 12 ``Record shipyard capacity is a reminder that oversupply can be very painful.''
Shipyard prices have more than doubled since 2002 as rising demand for oil and other commodities increased orders for oil tankers and cargo ships. The global oil tanker fleet will grow 6.5 percent this year, according to Maritime Strategies International Ltd., a London-based consulting company, the fastest pace of growth since 1976.
To be sure, shipyard earnings may stay near today's highs for several years as yards complete current orders and before all China's planned dockyards come on line. Order books remain full at Hyundai, Daewoo and other South Korean shipbuilders until the beginning of 2009.
South Korean yards dominate the market for liquefied natural gas carriers, the most expensive and technically complicated type of cargo ship. China State Shipbuilding will complete the country's first LNG ship this year. Hyundai has orders for 17 of the gas tankers, which cost $215 million each, according to Clarkson.
``Korean yards can concentrate on high-end products like LNG carriers,'' Kyobo's Song said in a Feb. 24 interview. ``China's yards are coming from a fairly low productivity base.''
China didn't deliver its first VLCC until 2003, which was built at Dalian New Shipyard in northeast China for the National Iranian Tanker Co. Four VLCC orders were placed at Changxing last week by a Chinese tanker owner, shipbrokers said.
China's increase in shipbuilding capacity is driven by its need for imported commodities including oil and iron ore and its surging exports of electronics, clothes and other manufactured goods, carried on container ships.
China Shipping Container Lines Co. and China Ocean Shipping (Group) Co., the country's two biggest shipowners, said on Feb. 27 they carried 16 percent more cargo boxes in 2005 than a year before as exports to the U.S. and Europe increased.
China Ocean needs more vessels ``to meet China's oil imports'' and ``the huge demand for world shipping,'' China Ocean's Chief Executive Wei Jiafu said on Oct 31. China Ocean has ships under construction at Chinese yards as well as shipbuilders in South Korea and Japan.
To contact the reporter on this story:
Will Kennedy in Shanghai at email@example.com.
Last Updated: February 28, 2006 18:01 EST
I think a little sooner....
Someone needs to let them know that there's a huge demand and short supply of 7.62x39 ammo over here. If the Russians can't meet the demand, maybe the Chinese can.
Does that mean they will go to shit holes around the world and fight for freedom?
China drives new-build orders
(Gulf News Via Thomson Dialog NewsEdge)
China overtook Italy and France last year to become the world's fifth largest economy. Ahead in the race and firmly in its sights lie the UK, Germany, Japan and the US. It is fair to say that the current overtaking manoeuvre involves a re-jigging of the figures.
A census conducted by 10 million industry inspectors touring the country is expected to show that the Chinese economy is nearly 17 per cent understated. This will put China very much on the shoulder of Germany and ahead of the UK in the GDP stakes.
So China, as for the last few years, is the catalyst that provides the rationale for the extended lists of newbuilding orders.
LNG carriers comprise 90 per cent of the existing fleet, container ships 50 per cent, LPG 34 per cent while bulk carriers languish down at 19 per cent of existing tonnage, a figure normally considered high.
But ship oversupply is generally ringing fewer alarm bells than expected because the problem of port congestion will absorb some of the surplus capacity, combined with longer-haul cargoes which alter the ton/mile equation. But the whole shipping edifice seems to be balanced in unstable equilibrium. For example it is difficult to see how Western Europe's sub 2 per cent GDP growth this year is sustaining container traffic increases of over 10 per cent.
The year of the giant container ship is upon us. The largest acknowledged boxships are the MSC vessels such as the 2005-built MSC Pamela of about 9,500 TEU with a speed of 25 knots.
Maersk Line is reported to have ordered a series of 15,500 TEU giants from its own Odense shipyard. Enlargement of the Bremerhaven turning basin, which is Maersk's hub port in Germany, to accept giant container ships has already begun.
In the bulk shipping department, the latest global steel production figures provide an interesting pointer to the future. These show an overall growth in 2005 of 6.2 per cent. This does not at first sight appear to be bad news. That is until it is broken down regionally. The EU-25 is down nearly 4 per cent. North America as a whole is down 5 per cent with US steel-making shrinking by more than 6 per cent.
In comparison, China's steel production is up 26 per cent and India by nearly 15 per cent. Prices have fallen sharply within China from a peak in March. Domestic prices are more than $200 a tonne lower than in Europe or the US. For the first nine months of 2005, its exports have increased sharply to 15.8 million tonnes, which is some 83 per cent up, year on year, causing some concerns abroad.
It is its stated intention that China will remain a net importer of steel in the short term. It is the longer term which will cause difficulties, for how long is the short-term?
The country is on course to produce 340 million tonnes of steel in 2005 compared with 273 million tonnes in 2004. Just this increase is almost as much as the US produces annually. So the competition is well underway.
So far there is no competition for supplies of iron ore or coking coal for the manufacture of steel; suppliers have made tremendous strides in expanding their export facilities. In the last ten years Australia for example, has increased ore exports from 127 million to 246 million tonnes per annum. But soon there will be worldwide competition for oil. After product shortages in the summer, the Chinese government instructed domestic oil companies to increase stocks to 15 days demand.
They had allowed stocks to get as low as three days in some provinces. It also suspended the 11 per cent export rebate, such suspension designed to stop product exports. But even though the country was drawing down on stocks, the tanker market and the crude and product movements to China continued to expand.
Opec foresees oil demand increasing from an average of 83.3 million barrels per day in 2005 to 84.8 million bpd in 2006. A quarter of this increase is attributed to China.
But China is already taking oil cargoes from the West's traditional suppliers rather than the closest provider. In week 48 for example, one VLCC was fixed from the Baltic, five from the Caribbean and one from Bahamas, all for discharge either in China or into Singapore for refining or for transshipment into smaller vessels or both.
These longer voyages point to an increase in ton/miles and tanker volumes spread a little thinner. So despite that fairly long order book for new oil tankers, currently about 25 per cent, one may well cancel out the other.
In the clean product market, damage from hurricanes Katrina and Rita served to underline the lack of refinery capacity in the US. The European refiners stepped into the supply breach and kept motor spirit, jet fuel, gasoil and naphtha flowing across the Atlantic.
But there is a lack of will in the US to expand existing refineries, or to build new ones. The Bush administration has suggested government land in remote areas be released for such development, but so far there are no reports of US refiners taking up the offer.
Refinery expansion east of Suez is now serving two purposes.
It satisfies China's growing need for refined products and provides the US with a ready supply. It is also advantageous to the shipping industry. Increasingly, large numbers of Aframax tankers are being deployed in the clean product's trade, thus reinforcing the trend for longer-haul hydrocarbon transport.
So what does this year offer in shipping terms? Oil tankers should continue to do well. Dry bulk shipping will struggle as new vessels continue to roll down the slipways. But there is surely a big question mark over the containership market.
The writer is a shipbroker and marine consultant with more than 40 years of experience in the tanker and dry cargo markets.
The year of the giant container ship is upon us. The largest acknowledged boxships are the MSC vessels such as the 2005-built MSC Pamela of about 9,500 TEU with a speed of 25 knots. Maersk Line is reported to have ordered a series of 15,500 TEU giants from its own Odense shipyard.