TOKYO MEDIA REACTION - CHINA AND GLOBAL

UNCLAS TOKYO 000684 SIPDIS SIPDIS STATE FOR I/RF, PA/PR/FPC/W, IIP/G/EA, EAP/PD, R/MR, EAP/J, EAP/P, PM; USTR FOR PUBLIC AFFAIRS OFFICE; TREASURY FOR OASIA/IMI; SECDEF FOR OASD/PA; CP BUTLER OKINAWA FOR AREA FIELD OFFICE; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR E.O. 12958: N/A TAGS: OIIP KMDR KPAO JA SUBJECT: TOKYO MEDIA REACTION - CHINA AND GLOBAL ECONOMY ¶1. LEAD STORIES: Most Friday morning papers led with the yen's rapid appreciation against the dollar to the highest level in 12 years. ¶2. "Constant Vigilance Needed against Chinese Strategy" The conservative Sankei editorialized (3/14): "It was revealed during congressional testimony by PACOM Commander Adm. Keating that a senior PLA official proposed that the U.S. and China split and control the Pacific.... The proposal cannot be dismissed as a joke. China's proposal that it take control of the Pacific west of Hawaii offers a glimpse of its ambition of expanding its defense line, which is currently west of Okinawa. This would be an important development affecting Japan's security, including how Japan would respond to a Taiwan contingency. If China trumpets its 'peaceful ascent' and wants to be recognized as a 'responsible stakeholder,' it needs to respect the existing international order and strive to improve its military transparency. It is necessary for the U.S. and Japan to pay closer attention to China's military and diplomatic strategies and call for explanations." ¶3. "Yen's Surge Hits Japanese Economy" On the dollar's plunge against foreign currencies, the top-circulation, moderate Yomiuri said in an editorial (3/14): "It appears that the global stock plunge was halted and market anxiety eased following the recent decision by the FRB and four European central banks to provide a massive injection of credit into the financial market.... The most serious concern is that the end is not yet in sight for a resolution of the subprime loan crisis. As the USG and FRB are viewed as not having effective measures at their disposal to ensure financial stability, disappointment is mounting among market players." ¶4. "Trust in Dollar in Peril" The business-oriented Nikkei's senior writer Takita wrote in a front-page commentary (3/14): "The yen's surge against the dollar to the highest level in 12 years is a byproduct of 'bad dollar depreciation' arising from distrust in the U.S. economy.... It is critical that the U.S. take thorough measures to deal with the losses incurred by the collapse of the 'housing bubble.' Despite the Bush administration's rejection of the idea, infusing public funds into banks that lack a solid capital base is also an option, so long as a bank's management takes responsibility." SCHIEFFER