North Korea
tests ignition for missile that could reach US
AFP, SEOUL
Wednesday, Sep 17, 2008, Page 1
North Korea has carried out an engine ignition test for a missile believed to be
capable of reaching the US west coast, a South Korean newspaper said yesterday.
Quoting intelligence sources, Chosun Ilbo reported that the engine was presumed
to be for the Taepodong-2 missile with a range of 6,700km.
It said the test was conducted at a missile launch site being developed on the
west coast whose existence was publicly reported last week.
“A US spy satellite, KH-12, spotted that rocket engine tests took place at
Tongchang-ri this year,” one source told Chosun, adding the site was near
completion.
Another source told the paper the North had sporadically conducted engine tests
in a continuing attempt to develop long-range missiles since its failed
test-firing of a Taepodong-2 in July 2006.
The North has another site at Musudan-ri on the east coast that was used to
launch a Taepodong-1 missile in 1998 over Japan. The Taepodong-2 was launched
there in 2006 but the US said it failed after about 40 seconds.
It is not known if the North has the technical capacity to fit an atomic warhead
to a missile.
Chosun said work began several years ago on the new site on the west coast in
North Pyongan Province opposite China and it would be completed next year.
Defense Minister Lee Sang-hee told parliament on Thursday that Seoul was closely
watching the new missile launch site, which was 80 percent completed.
John Pike, director of research group GlobalSecurity.Org, told US reporters last
week the new site was designed to support a significant flight test program.
“It is significant because it indicates an intention to develop a capability of
developing a reliable ICBM [intercontinental ballistic missile],” Pike said.
Pike said the new site was much larger and more elaborate than Musudan-ri.
“It is set up to do a launch three or four times a year, rather than every
decade,” he said.
He said the main launch pad on the west coast appeared a year or two away from
completion.
Legislators
call for Chinese food boycott
By Rich Chang
STAFF REPORTER
Wednesday, Sep 17, 2008, Page 1
Democratic Progressive Party (DPP) legislators called for a boycott of Chinese
food products after a Chinese company sold toxic milk powder to Taiwan.
DPP Legislator Twu Shiing-jer suggested all products that are not made in China
be marked “China-free.”
DPP Legislator Pan Meng-an (潘孟安) said his caucus would propose an amendment to
the Commodity Labeling Law (商品標示法) requiring all products to mark the country of
origin in prominent places.
Pan suggested product labels describe the “place of origin of main ingredients”
and “final country or territory of processing.”
Pan said that before the recent incident, Chinese companies have exported
various unsafe products to the country, including Puer tea contaminated with
pesticides and shellfish containing chemicals that might cause cancer.
He said EU statistics show that more than 80 percent of unsafe products imported
to EU countries last year were from China.
Pan said that unsafe Chinese products had become “enemies of the world” and that
during this year’s US Democratic primary, the two candidates both advocated
boycotts of unsafe Chinese goods.
Meanwhile, Pan said, President Ma Ying-jeou (馬英九) has been allowing more and
more Chinese goods to enter the country without serious checks.
Ma: The de-Taiwanifier
British playwright George Bernard Shaw was once purportedly told by a beautiful
lady: “Sir, imagine if we two got married — our children would get my looks and
your brains.” To which, Shaw replied: “Yes, but what if they got my looks and
your brains?”
That appears to be what Taiwan is getting from its president: the worst of both
worlds.
A Taiwanese president by definition is expected to resolutely defend the
nation’s sovereignty. He must also be deliberate yet tentative as if stepping on
thin ice when it comes to rapprochement with China.
Instead President Ma Ying-jeou (馬英九) is giving Taiwan little more than
trivialization of its sovereignty and outright de-Taiwanification — both in
terms of its name and strength.
Only the presence of clandestine arrangements with China could rationally
explain why Ma would make only a half-hearted attempt at “bringing the 23
million Taiwanese” to participate in the UN’s peripheral organizations and then
characterize Beijing’s brush-off of the attempt as an “unintentional slip.”
Meanwhile, the Ma administration was forced to deny reports of comments American
Institute in Taiwan Chairman Raymond Burghardt allegedly made to him during his
visit to the US. Burghardt is reported to have told Ma to not hint that China
holds sovereignty over Taiwan and instead insist that China not be allowed to
determine whether Taiwan can participate in international activities. The
rebuttal was similar to his previous denial that he asked Washington to postpone
arms procurement processing.
Ma appears to be trying to convince Beijing that Taiwan will be part of China
eventually and that, in the current domestic and international atmosphere, he is
doing all he can. One example is his recent description of Taiwan as a “region”
instead of a nation, a proclamation that, if allowed to stand, could quickly
lead the discourse on the status of Taiwan down a steep and slippery slope.
But Washington is reminding Ma that the significant contribution the US has made
to Taiwan’s ability to maintain its sovereignty has in no measure diminished
even if Ma, the presumptive symbol of Taiwan’s sovereignty, has shirked his
responsibility to uphold it.
Going far beyond what’s necessary for mollifying international fear of
cross-strait conflicts, Ma’s string of unabashed pro-China policies is causing
fresh unease in both Washington and Tokyo.
Beijing hasn’t forgotten that the only path for China to annex Taiwan is through
war.
Ma’s political capital can only carry him so far toward unification. All Ma can
manage now is de facto unification via Taiwan’s open border for Chinese, but he
can’t formally deliver Taiwan to Beijing without a nod from the US. That nod
couldn’t possibly be forthcoming considering the potential adverse strategic
impact on Japan.
Taiwan’s deterrence capability is declining rapidly and its psychological
defense is nearly non-existent following the truce between the Chinese Communist
Party and the Chinese Nationalist Party (KMT). These only serve to stoke
Beijing’s adventurous instincts. A severe economic downturn or political turmoil
in China could still mark the launch of China’s military invasion of Taiwan.
Ma, if left unchecked to pursue his unification dream, could cost Taiwanese
their sovereignty, democracy and prosperity and cast them into the jaws of war —
the worst of both worlds indeed.
HUANG JEI-HSUAN
Los Angeles, California
US’ sneeze
brings Taiwan’s cold
Jeff Wu 吳芳銘
Wednesday, Sep 17, 2008, Page 8
The TAIEX has suffered a heavy negative impact from the weakened US economy,
lackluster company statements and the withdrawal of overseas capital from Asian
markets. Having tumbled past 6,708 points, the lowest level of the last
downturn, it has continued its downward trend, falling below the 10-year moving
average of 6,500 points to reach its lowest point in two years.
Further afield, financial research firm MSCI Barra’s Asia-Pacific Index
(excluding Japan) has fallen nearly 30 percent from its high point — an even
bigger fall than the losses of 12 percent on the US S&P 500 and around 20
percent for developed markets outside the US.
As everyone knows, aside from the US Federal Reserve’s policy of allowing the US
dollar to weaken and the effect on the US and global economies of long-term low
interest rates, the main culprit behind the current US economic recession has
been the end of the real estate bubble, including the sub-prime mortgage crisis
and the troubles faced by the “mortgage twins” — the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation, known as Fannie Mae
and Freddie Mac.
Further, this financial crisis has had a knock-on effect on the entire global
economy. Putting this account and the statistics together, the question arises
of why it is that when the US sneezes, Europe and other advanced countries get a
fever and newly emerged markets like those of Taiwan and other Asian countries
come down with a heavy cold.
It was last year’s sub-prime mortgage crisis that started the domino effect of
falling growth rates around the world, as low-deposit home loans were
securitized and sold to investors in other developed countries with the promise
of high rates of return. First we saw reputable banks suffering heavy losses or
even facing collapse, and then central banks injecting funds to keep the
disaster from spreading. The situation is so serious, however, that no amount of
aid could stop these countries’ economies from experiencing a big slowdown under
the onslaught of the sub-prime crisis.
Another effect of the sub-prime troubles has been a drop in US import demand,
resulting in the spread of cheap currencies and falling exports for newly
industrialized countries. As a result, the economies of these emerging markets,
which account for a half of total world GDP, have slowed down considerably.
As developed and emerging markets, interconnected as they are, drag each other
down, the global economy has become engulfed in bearishness. The international
nature of the current crisis is proof of the global economy, and the question of
why a sneeze in the US economy has led to fevers and colds in other countries
can be explained by the three-stage process of first, the transfer of risk
arising from financial innovation in the US to other regions, second, the
re-import of the crisis and third, the snowball effect and re-export.
US sub-prime lending risk has, by means of financially innovative securitization
of assets, been spread out among investors all over the world, and Europe, as
the main market for collateralized debt obligation (CDO) financial products, has
also been the biggest buyer of sub-prime mortgage securities. This year’s
mid-year report from the Institute of International Finance (IIF) shows that
European banks have lost US$200 billion since the beginning of last year because
of the credit crunch, outstripping the US$166 billion lost by US banks.
This clearly shows how the transference of US financial risk to other countries
has allowed the sub-prime crisis to spread and cause connected and derivative
financial products to lose value. This has created a global credit squeeze, and
that is how this US economic virus has come to infect Europe, Australia and
other advanced countries.
Besides, most Americans have gone into consumption overdraft on the basis of the
“wealth drive” of rising real estate prices. In other words, the rising value of
their homes inspired consumers to increase their consumption to the extent of
negative savings. The sub-prime mortgage crisis has on the one hand shrunk
personal wealth, cutting Americans’ consumptive capacity dramatically and, on
the other, directly caused a big fall in real estate prices. As a result,
Americans are now plagued by shaky personal credit and debt. Since consumption
accounts for 70 percent of US GDP, negative growth in consumption is bound to
lead to a recession in the US economy.
Falling consumption leads in turn to a rapid fall-off of imports from emerging
economies, which are the factories of the modern world, and so the US’ trade
deficit has begun to narrow. Since exports have always been the main engine for
emerging economies to earn foreign exchange and drive economic growth, slowing
or falling imports are bound to push such countries toward recession, and so
they are the ones coming down with heavy colds. Moreover, transnational
companies account for a large part of newly industrialized countries’ export
markets.
These countries’ exports, therefore, make a definite contribution to the
earnings of US transnationals. When US transnationals abroad are not making
money, they have no money to send back to their parent companies in the US. This
has a negative impact on growth, and that is what we mean by “re-importing the
crisis”.
The financial storm sparked by the sub-prime crisis has, via the global
production chain, caused substantial economic repercussions at home, which then
snowball and are “re-exported.” As a result, the whole world is now facing a
three-pronged assault of financial crisis, a sagging real-estate market and
economic recession, none of which shows any sign of going away. The global
economy is groaning as bears go on the rampage.
As for Taiwan, in trade relations it is positioned between two major economic
powers — China and the US. Given the sorry state of the global economy, Taiwan
is bound to have a hard time. In other words, there are two reasons Taiwan’s
stock market keeps plumbing new depths — on the one hand, it is being dragged
down by the sluggish performance of the US and other developed economies and, on
the other, the rapidly growing economies of China and other emerging markets are
now slowing down, which can only hurt investor confidence in Taiwan.
As the main economic powers on either side of the Pacific falter, Taiwan is
getting squeezed like the filling in a sandwich. Added to this are the factors
of political interference and disappointment over the Ma government’s retreat
from “Ma will turn things around right away” to “Ma will turn things around
gradually.” In such an environment, the stock market has nowhere to go but down.
The “heavy cold” we are suffering is understandable and, sad to say,
unavoidable.
Jeff Wu is a doctoral candidate and a
manager in the service industry.