UNCLAS SECTION 01 OF 02 BEIJING 000801

DEPARTMENT FOR INR/R/MR, EAP/CM, EAP/PA, EAP/PD, C
HQ PACOM FOR PUBLIC DIPLOMACY ADVISOR (J007)
SIPDIS

E.O. 12958: N/A
TAGS: OPRC KMDR CH

SUBJECT: MEDIA REACTION: G20 SUMMIT, NORTH KOREA

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Editorial Quotes
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G20 Summit

a. "The U.S. rashly responds to China's suggestion"

The official Communist Party international news publication Global
Times (Huanqiu Shibao)(03/24): "The Director of the People's Bank of
China suggested the creation of a super-sovereign international
reserve currency. The influence of this article has continuously
spread. U.S. Treasury Secretary Geithner and Federal Reserve
President Bernanke have both reacted to the suggestion that the U.S.
should give up the USD. It is surprising that many American
officials reacted to this issue in such a sensitive way. The USD's
importance to the national position of the U.S. can be compared to
the power of the U.S. aircraft carriers whose presence is felt in
many oceans.

Meanwhile, internationally, the public have given much understanding
and sympathy towards this issue because China, as a country holding
a large amount of American dollars, is airing its worries. Chinese
analysts believe that although it would be difficult to create a new
international reserve currency, it would not be impossible. China's
decision to show its stance on the issue is obviously beneficial in
reducing any wrong judgments on China's financial strategies. He
Weiwen, from the American Economic Association of China, says that
the dominant position of the U.S. dollar stands for America's
dominance in the world. Therefore, America is very sensitive
towards the suggestion of creating a super-sovereign international
reserve currency.

After World War II, U.S. dollars played an active role in promoting
global trade and economic development, however, the U.S. government
has, consciously or unconsciously, misused the special international
position of U.S. dollar when making domestic policies. Obama's
series of measures to stimulate the capital flow reminds people of
the way America traditionally handles its economic troubles: by
over-issuing dollars in order to transfer the influence of the
financial crisis to others. Chinese scholars say that America's
domestic policies can significantly impact other countries, and that
there are no hard restraints for U.S.

Such rights and responsibilities are unbalanced. He Weiwen also
points out that the U.S. often utilizes the dominant posit

ion of
U.S. dollar for its own benefit, especially during a crisis.
Therefore, using the U.S. dollar as an international reserve
currency is not at all reasonable. A researcher from China
Institute of International Studies said that America will definitely
secure the U.S. dollar's dominance at the G20. The U.S. should be
aware that they need to stimulate the economy and think about
international interests; otherwise, sooner or later the U.S. dollar
will be abandoned."

b. "The U.S. used their detoxifying plan to 'give in' during the
G20"

The official Xinhua News Agency international news publication
International Herald Leader (Guoji Xianqu Daobao)(03/26):"Geithner
has announced a plan that would help U.S. banks let go of their
toxic assets. Finally, this plan has brought the support of the U.S.
government. Chinese analysts are reminded that the objective of the
U.S. is worth a second look given that his plan was put forward just
before the G20 Summit. Wang Rongjun, from the Chinese Academy of
Social Science, thinks that dealing with the toxic assets is one of
the keys to stabilize the American financial market and solve the
credit crunch problem.

This plan could provide help and is a much more targeted and more
operable plan than the other financial stimulus plans. Though this
plan is welcomed by the market, there are also questions regarding
the side effects it may bring, especially concerning the issuing of
loans which may result in a further devaluation of the U.S. dollar.
An expert from Renmin University says that the top priority for the
U.S. is to handle the short term problem--deflation, and deal with
the long-term side effects when they appear.

However, other Chinese analyst thinks that this plan is a strategic
move by the U.S. government. The financial strength of the U.S. is
very powerful. By only looking at what is on the surface, one cannot
see the real problems of the U.S. financial system. Before the G20,
the U.S. is trying to tell the world that America is facing serious
problems and hoping that other countries will invest their capital
into the IMF. At this time, U.S. dominance in the world is
threatened. We need to evaluate this plan based on long-term effect
rather than short-term influence. When we analyze the whole thing,
we should learn from past lessons and find out what the future
concerns and intentions of U.S. are. The verity and the transparency

BEIJING 00000801 002 OF 002


of the U.S. stimulus packages are not good, which creates a lot of
uncertainty for people."

North Korea

a. "North Korea plays the game 'farmer and the wolf' with the U.S.
and Japan"

The official Xinhua News Agency international news publication
International Herald Leader (Guoji Xianqu Daobao)(03/26): "Although
North Korea insists that it will only launch a satellite, the U.S.,
Japan and South Korea believe that it will be a missile. U.S.,
Japan, and South Korea are in a dilemma. On the North Korean issue,
the U.S. must consider the concerns of its allies. Japan had to make
a large effort, based on their laws, in order to explain their
intention to intercept North Korea's missile. According to Japanese
law, they are allowed to shoot down a missile if it is aimed at
Japan. However, Japan hopes not to have to take this action,
intensifying the situation with North Korea. South Korea, without
relatively efficient anti-missile measures is worried about North
Korean troops aiming at its capital and standing at its border. It
is like a "mouse in a blower", who has to suffer the threats from
both sides. America's "red line" can't stop the North Korean
satellite. The U.S.-North Korean relationship is like that of the
game 'farmer and the wolf'. The farmer told the wolf not to steal
more than 5 chickens. If the wolf steals only four chickens, the
farmer can only admit that fact by having to adjust his own
behavior. This is just like what has happened in the U.S.-North
Korea nuclear negotiations. North Korea will absolutely have reason
to "be the one who laughs the loudest" on the issue of "launching a
satellite"."


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