The John Batchelor Show

Wednesday 19 February 2014

Air Date: 
February 19, 2014

Photo, above: Victoria Falls. Botswana yesterday decided to sever diplomatic relations with North Korea in response to the UN Commission recent report on hideous, ghoulish policies of the Kim Jong-eun regime.   See: Hour 2, Block B, Greg Scarlatoiu, Executive Director of Committee for Human Rights in North Korea. 


Co-hosts: Gordon Chang,, and Dr. David M. Livingston, The Space Show.

Hour One

Wednesday  18 February  2014 / Hour 1, Block A: Elizabeth Economy, author, By All Means Necessary: How China's Resource Quest Is Changing the World; C V Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations; in re: Kerry's Asia trip.  Also, Is China’s Resource Strategy Changing Radically?  “China’s leading think tank has outlined a revamped energy strategy,” Xinhua reports today, highlighting a long article published yesterday in People’s Daily. This comes on the heels of a wonderfully titled FT article – “China scythes grain self-sufficiency policy” – claiming that China has given up on its long-standing goal of producing its own food. Chinese resource strategy, it seems, is changing rapidly and radically.

But is it really? In a new book published last week, my colleague Elizabeth Economy and I tackle the full sweep of China’s resource quest, from energy and minerals to food and land. By All Means Necessary: How China’s Resource Quest is Changing the World explores the roots of Chinese strategy and its consequences for trade, investment, governance, politics, and security. Two themes that bear on this week’s news emerge: Chinese strategy has deep roots at home that make change slow to unfold – but, as China pursues its resource quest, it is indeed learning and changing.

Take the article by Li Wei outlining a new energy strategy. The first thing to note is that this is just one view, albeit from a powerful perch, that feeds into the usual messy process of formulating policy. Western reporting too often assumes that any publication from a prominent government or government-connected Chinese official is effectively law. That’s wrong: China may not have the open politics that the United States does, but there’s still a lot of diversity within the ranks, and any changes that are advocated are sure to be fought over before they’re pursued.

The reporting on grain self sufficiency – which is about a new policy rather than a mere study – reflects the slow-to-change nature of Chinese strategy in another way. The actual changes the FT reports are far less revolutionary than the paper’s headline suggests. Chinese leaders appear to remain fixed on self-sufficiency in grain – a goal that, we show in the book, goes back hundreds of years – but are adjusting the way they define that.  [more]

Wednesday  18 February  2014 / Hour 1, Block B: Cleo Paskal, Associate Fellow, Energy, Environment and Resources at Chatham House (Sydney) and author of Global Warring: How Environmental, Economic, and Political Crises Will Redraw the World Map, in re: China in the South Pacific. Tonga is in hte middle of global trade corridor, has a seabed rich in minerals, and votes on Pacific flora in the UN.  China discovered Tonga, sent hordes of people from Fujien - and crime promptly skyrocketed.  Took over 90% of the retail sector in ten years.  Bring in containers unverified; usu has materials for Chinese-run meth labs, and the like.  (The big meth lab was in Fiji; mfrg in Tonga; meth shipped to Australia.) Human trafficking:  a Chinese woman forced young girls into prostitution for Chinese expats; Chinese embassy was totally uncooperative. Court translator mistranslated the evidence.   Chinese people hire Tongans to torch competing Tonga businesses.  This is corroding Tongan society. Tonga is highly geostrategic, monitor North Pacific bases.   Can’t prove, but potentially a redundant defensive positions – a Spratleys  here. Isolate Australia and New Zealand even more. Whither Australia vis-à-vis China?  A powerful Aussie says "China and he US should share the Pacific" – rolling over and playing dead even before  the discussion.

The rise of China in the South Pacific While Australian and US officials are still given the South Pacific's floral welcomes, it's clear that China is now the region's most valued guest, writes Michael Brissenden.   According to one well-placed Australian official, "the Yanks are worried" about China's growing economic engagement in the South Pacific - a region that for the most part has until fairly recently been firmly in what would be called America's and certainly Australia's sphere of influence.

Australians are growing a bit concerned as well. In the week leading up to the release of the latest Defence white paper, Defence Minister Stephen Smith convened a meeting of regional South Pacific defence ministers in Tonga. It was the first time an Australian Defence minister had made an official visit to Tonga, and he sent a signal that Australia was back in the region.

The drawdown in Afghanistan now gives us the option, he argued, to shift our attention back to our "own backyard" - or, to use the word of the moment when it comes to  aspirational geopolitical shifts, it has allowed us to "pivot" back to the South Pacific. And it's clear that one of the biggest and most significant challenges that has occurred in the backyard in recent years has been the rise of China.  When it comes to defence and security in our region, China is always  [more]

Wednesday  18 February  2014 / Hour 1, Block C: Hotel Mars, episode n. Charles Lurio, The Lurio Report - News and Analysis of the ‘New Space’ Enterprise, in re: Google Lunar X-Prize – five of 18 teams remain in the race.  Funded for private-sector companies to build a robot that can meet certain requirements, finish by the end of 2015 (win $20 million?). Has to travel 500 meters on the Moon. Did the Chinese bot?  Probably not.  Astrobotic.  Soft landing on the Moon.

 US, Japan, Germany, and India, plus one.  If this works, it's a breakthrough. The advancement ere is the ability of private entrepreneurs to accomplish important space achievement. Core point: privately-dvpd systems can also work beyond low orbit That's a psychological change.  / Swiss space plane: tens of satellites (up to 250kg).  To be launched from a space plane atop an A300 craft, from the Canaries.  Dvpd by a Swiss university.  Also: take a satellite 10 cm on a side and experiment with it. Note: orbitals do not return.  . . .  Sixteen satellite, 28 toatl, delivered by Oracle Sciences; we'll see if they have a market. Others also looking to sell imaging.

Small constellation, ISS.

Wednesday  18 February  2014 / Hour 1, Block D: Sadanand Dhume, AEI & WSJ, in re: Making Up with Modi
The U.S. decision to reach out to prime ministerial candidate Narendra Modi makes sense. May be ne Indian PM.  Is de facto leader of oppo BJP party, an aggressive economic modernizer, strong defense, controversial anent Hindu-Muslim riots.  If  he wins, there'll be major economic changes: unapologetically pro-business. In foreign policy, he's an "old-fashioned nationalist" – more muscular defense of borders. Is Gujarati – province like the Ruhr, is industrialized, most modern part of India.   More outward-looking, slash red tape.  Congrss Party is at a historic low, losing parliamentary seats. Huge corruption scandal, and policy paralysis.  Both of these play into Modi's strengths: he's frugal, and a tough administrator.  No matter who becomes PM, this is a complex and diverse society – no one can be India's Putin. If he gets more than 200 seats, he'll have a strong govt in context of India's pluralism, of different regions' moving at different speeds.  Modi has shown an ability to take these lethargic bureaucrats and whipping them into action. China won’t much fancy him. US has had a fraught relationship with him. We revoked his diplomatic visit in 2005.  However, the US ambassador went to meet with him, to mend relations. 

We don't need just new China policies; we need a new China paradigm. 

Hour Two

Wednesday  18 February  2014 / Hour 2, Block A: Gordon Chang,,  in re:  shadow banks make a loan: borrows money from a bank then lends it to dodgy customers, recently, "trust companies" have been coal firms; starting to wobble, poses a potential systemic risk to the economy: if investors won't fund the firms, then defaults could ripple through the economy.  State bank deposit rates are low and unattractive, esp because of inflation. In shadow banking, can make 10% - but dangerous.  Frontier capitalism – the Chinese semi-command economy wouldn’t be expected to exist, but this is a needed workaround.  Senkakus and South China Sea: for the past year, US has not been treating with concern the Chinese aggression there.  Now, head of PACOM is being rewarded for saying that China poses a genuine threat to US security.  Question now is, what to do about China? . . . Last week, Chinese navy ships sailed through Indonesian islands – thousands of miles from China.  Chinese claims on Indonesian islands! If the US didn’t claim Midway, China would be there tomorrow and plant a flag.

Photo, below: "lion-whisperers" in Botswana.

Wednesday  18 February  2014 / Hour 2, Block B: Greg Scarlatoiu, Executive Director of Committee for Human Rights in North Korea, in re:  Drawings in UN report showing he sadism of the regime in North Korea. Fifteen years ago there were still deniers of the DPRK horror camps, Now we have confirmation that crimes against humanity have been and continue to be committed by North Korea; and China's "aiding and abetting" the crimes.  recommend that the UN Council submit the claims t the ICC (wont happen), but the price of unconditionally supporting a criminal regime will be high  . We want to see NGOs build and find on the findings, reaching out to govt and other NGOs, on  Botswana yesterday decided to sever dip relations with DPRK.    Workers Party of North Korea, and the state security apparatus, are "linked with" the crimes. 

 North Korea crimes evoke Nazi era, Kim may face charges: U.N. inquiry. North Korean security chiefs and possibly even Supreme Leader Kim Jong-un himself should face international justice for ordering systematic torture, starvation and killings comparable to Nazi-era atrocities, U.N. investigators said on Monday.

The investigators told Kim in a letter they were advising the United Nations to refer North Korea to the International Criminal Court (ICC), to make sure any culprits "including possibly yourself" were held accountable.   The unprecedented public rebuke and warning to a head of state by a U.N. inquiry is likely to further antagonize Kim and complicate efforts to persuade him to rein in his isolated country's nuclear weapons program and belligerent confrontations with South Korea and the West.   North Korea "categorically and totally" rejected the accusations set out in a 372-page report, saying they were based on material faked by hostile forces backed by . . . [more]

Wednesday  18 February  2014 / Hour 2, Block C: David Feith, editorial page writer for The Wall Street Journal Asia in Hong Kong; in re:  David Feith: Taipei's Trade Epiphany Newfound enthusiasm for a regional trade deal prompts new openness to foreigners.

The Trans-Pacific Partnership and Taiwan, which is taking welcome initial steps of reform toward cutting trade barriers and being able to accede to TPP. (Japan, already a TPP member, also wants to pursue overdue domestic reforms thanks to the deal.) 

/ Taiwan isn’t now participating in the TPP, wants to join, Good symbol of the positive force for liberalization TPP can be, Taiwan's is an export-led economy, but not focused on cutting red tape at home or high-quality external trade. TPP s a major opportunity to reform its [structure].  Taiwan is increasingly dependent on trade with Mainland and this is vulnerable.  TPP is therefore important not only for Taiwanese economic security, but for geopolitical security The Obama Administration has not advanced the TPP well. For the moment, China is approaching Taiwan more with honey than vinegar.  TW's largest dipl ally is Burkina Faso, but has signed major agreements with Singapore and ______.  For he moment, Asia doesn’t figure very high on political maps of Washington characters, who haven’t managed to connect trade with security. Amazing.  Taipei has regularly been shunted aside by Mainland. Ma Ying-jeou.  A trade-policy speech at Brookings, a stemwinder, on TPP.

Wednesday  18 February  2014 / Hour 2, Block D:   Joseph Sternberg, WSJ Asia editorial board, in re: The people running China's stock market have degrees from the best universities in the world Stock market doesn't work because the leadership is obsessed with control "I don’t think they get this capitalism thing."  The function of a stock market isn’t to keep trades rich and busy in the City of London it’s to move capital around an economy and reward effective enterprises.  Can't reform the stock market unless you reform the banks; can't reform the banks unless you reform the party; and the Party won’t allow a diminution of control. The market regulators know what's wrong; they're constrained by [dreadful] regulations. Forbidding IPOs means that there's no funding for ne companies. Private equity worldwide is reluctant to enter now. Chinese govt is self-destroying; just imitate, copy and steal.  Economics 101. 

Taking Stock of China's Reforms  Beijing is still far too reluctant to allow its equity market to function normally.

If China's leaders are as serious as they say they are about economic reform, the country's stunted financial system will be at the top of their priorities list. So it's worth checking in on the stock market to see how President Xi Jinping's economic program is going. Answer: not well.

Fixing the broken process for reviewing and approving initial public stock offerings deserves its place among 300 items on Mr. Xi's to-do list released after last year's Communist Party Plenum. The banks increasingly are in financial distress, burdened by hundreds of billions of dollars in potentially unproductive lending, and entrepreneurial private-sector companies need new sources of cash. The stock market should be such a source.  [more]

Hour Three

Wednesday  18 February  2014 / Hour 3, Block A: McKay Coppins, Buzzfeed, in re:  profile of Donald Trump that just went up this morning.  [more]  . . .  I saw Mr Trump the day befoe he piece was published; he asked. "Is it good or bad?"  I said, "I think you'll like it." His reaction has been forceful and deeply displeased.  he wasn’t the right kind of attention from the political class.  He doesn’t talk about political players; he mostly talks about himself.  Mar a Lago, 200 servers, anything he wants – is he depressed or bored? Lonely? He desperately wants validation constantly. He's not an idiot; he'd like respect from people he's not paying.  Forbes says he's worth $3.5 billion – he may have gamed Forbes.  He did clear over $60 million for the last season of The Apprentice.

http://www.buzzfeed [dot] com/mckaycoppins/36-hours-on-the-fake-campaign-trail-with-donald-trump

Wednesday  18 February 2014 / Hour 3, Block B:  Sid Perkins, Science magazine, in re: EARTH

ScienceShot: What Killed Larsen B?

Antarctic ice shelf collapse in 2002 likely triggered by stresses of lake drainage


National Geographic News : possibly being able to predict the heights of volcanic ash plumes 


ScienceShot: Fastest Mountain Erosion on Record

Soil accumulating in New Zealand mountains four times faster than anywhere else.

Wednesday  18 February  2014 / Hour 3, Block C: Mary Anastasia O'Grady, Wall Street Journal, in re:   Venezuela Turns Ugly  As shortages and protests grow, Maduro follows the Cuban model.

Wednesday  18 February  2014 / Hour 3, Block D:   Robert Zimmerman,, in re: The trial of the century.  Michael Mann doesn’t like people calling him a fraud for torturing and manipulating the climate data to create the false illusion that the climate is warming. Therefore, he's trying to shut down any criticism or analysis of his very poorly done science by using the power of government to enforce his will.

Two quotations from the article that are of interest:  Here is the point at which we need a little primer on libel laws, which hinge on the differentiation between facts and opinion. It is libel to maliciously fabricate facts about someone. (It is not libel to erroneously report a false fact, so long as you did so with good faith reason to believe that it was true, though you are required to issue a correction.) But you are free to give whatever evaluation of the facts you like, including a negative evaluation of another person’s ideas, thinking method, and character. It is legal for me, for example, to say that Michael Mann is a liar, if I don’t believe that his erroneous scientific conclusions are the product of honest error. It is also legal for me to say that he is a coward and a liar, for hiding behind libel laws in an attempt to suppress criticism.

These are all reasons that the lawsuit should have been summarily thrown out. It goes beyond the legitimate scope of libel and defamation laws and constitutes an attempt to suppress opinions that are considered politically correct.

And this:  In other words, Steyn’s evaluation of Mann’s scientific claims can be legally suppressed because Steyn dares to question the conclusions of established scientific institutions connected to the government. On this basis, the DC Superior Court arrives at the preposterous conclusion that it is a violation of Mann’s rights to “question his intellect and reasoning.” That’s an awfully nice prerogative to be granted by government: an exemption against any challenge to your reasoning.

I said before that I don’t know how the rest of us sceptics escaped being sued along with Steyn. Now we know. Mann is attempting to establish a precedent for climate censorship. If he wins this suit, then we’re all targets.

And global warming activists like Mann call me a “denier”?

Hour Four

Wednesday  18 February  2014 / Hour 4, Block A: Sohrab Ahmari
, WSJ, in re: The Shame of Princeton  Honoring a 9/11 conspiracy theorist who also blames Jews for the Boston Marathon attacks

Wednesday  18 February  2014 / Hour 4, Block B:   Dan Indiviglio, Reuters Breakingviews columnist, in re:  Return to U.S. workforce of old a mixed blessing.   The recent decline in the U.S. jobless rate to 6.7 percent is flattered by low labor participation. A return to the 2006 level of workforce involvement would mean 8 million more job-seekers and unemployment running over 11 percent. But as a Breakingviews calculator ( http://link.reuters [dot] com/vaq66v ) shows, that dramatically overstates the scale of the problem.  [more]

Wednesday  18 February  2014 / Hour 4, Block C: Mark Oppenheimer, NYT, in re:  A Conflict of Faith: Devoted to Jewish Observance, but at Odds with ...   A Conflict of Faith: Devoted to Jewish Observance, but at Odds with Israel.

Wednesday  18 February  2014 / Hour 4, Block D:   Simon Constable, WSJ, in re: But if it meant banks avoided risky bets expecting the government to save them, then that might not be such a bad thing. Of course, just because Scotland could effectively keep the pound, doesn’t mean it should. That’s a bigger question.  (Original post here.)

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Andrew Collier, Managing Director of Orient Capital Research in Hong Kong, in re:    China Averts Mega Trust Loan Default; How Risky Are Trusts   The $500 million trust loan originated by China Credit Trust Co., one of the nation’s largest trust companies, has been grabbing headline news lately, for potentially becoming the first large default by a trust company in China.

The parties involved seem to have found a solution. The trust company said it found some “entity” who would foot the bill and the trust’s investors can at least get their original investments back.

China’s trust sector has been one of the fastest growing non-bank credits there. As of the third quarter of 2013, overall trust assets reached about RMB 10 trillion, or about 9% of overall credit there, up from RMB 2 trillion at the end of 2009, CEIC data show.

Given the rapid growth of trust loans, and that they have an average maturity of two years, we should expect more trusts to become due each quarter – and default and repayment risks are set to rise.  The question is: how risky are trusts in China? Do they pose systematic risk that could melt down China’s banking system?  The short answer is, unlikely.

“A trust in China is not a bank. In fact, it is a financial institution with a license from the China Banking Regulatory Commission to package financial products. Thus, it does not itself hold the bulk of the assets, but merely acts as a conduit,” said Andrew Collier, Managing Director at Hong Kong-based Orient Capital Research. As a result, “if a trust investment goes sour, investors can usually try to . . .  [more]

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