MEDIA REACTION: CURRENCY, CHINA'S MILITARY STRENGTH

UNCLAS SECTION 01 OF 02 BEIJING 000820 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: CURRENCY, CHINA'S MILITARY STRENGTH BEIJING 00000820 001.2 OF 002 -------------- Editorial Quotes -------------- ¶1. CURRENCY a. "Enlarge the influences of the RMB and promote China's RMB internationally " 21 Century Business Herald (21Shiji Jingji Baodao) under Guangdong 21 century publishing company Ltd. (03/27): "While the U.S. dollar crisis it is a good time to reform the international currency system. But, as the tool of the U.S.' global hegemony, the weakened position of the U.S. dollar means the weakened position of the U.S.' power. It is therefore understandable that the U.S. is against this. Although Europe hopes to replace the U.S. dollar with the Euro and strengthen the supervision and restraint in the American financial system, Europe may not support the new proposal of a super-sovereign currency, because if they do so, the position of Euro will be weakened as well. The new proposal, which reflects the opinions of most countries, might do three things; spur America to responsibly stabilize their exchange rate, highlight the unreasonable international status of U.S. dollars (USD),and point out a direction for the reform of the IMF. For China, the present is not the time to destroy the status of the dollar. It is time to accelerate the regional influence and internationalization of the RMB. China's aim is to support the existing IMF framework rather wiping out the existing international system." b. "The call for international reserve currency is aimed at warning America" The Beijing based News Agency co-founded by Guangming Daily and Nanfang Daily Group Publication; The Beijing News (Xin Jing Bao) (03/27): "As the supporting foundation for the USD starts to shake due to the global financial crisis; America continues to conduct easy money policies. The voices for "pulling down (the current international currency system) to build up a new one" have become stronger. But in this situation, when the global economy hasn't yet recovered, if the USD's position as the reserve currency fluctuates, there are more disadvantages than advantages. Most of the countries will suffer huge deficits from the devaluation of the USD. Due to a lack of consensus on the future direction of reform measures for the international currency system, 'the super-sovereign currency' is hard to implement. Although China has called for a new international reserve currency; China's economic power is not up to the standard needed to lead. The real purpose is to warn America. If America wants to keep its international reserve currency status, it will have to restrain the U.S. dollar. America must be responsible and respect the assets of other countries. This is a signal to emerging economies, a call towards participation in the reform of the international currency system." ¶2. CHINA'S MILITARY STRENGTH a. "Pentagon Report 'grossly distorts facts'" The official English-language newspaper China Daily (03/27): "Beijing yesterday dismissed a Pentagon Report on the country's military strength, saying it "grossly distorts facts" and "smacks of Cold War mentality". The report continues to play up the fallacy of China's military threat and interferes in China's internal affairs. China unswervingly sticks to a path of peaceful development and pursues a policy which is purely defensive in nature, a Foreign Ministry Spokes person said, noting that Beijing is committed to safeguarding world peace and stability. "We urge the United States to respect this basic fact. We suggest the United States drop the Cold War thinking and prejudices, stop releasing such reports and stop groundless accusations to prevent further damage to the relationship between the two countries and two armies." Yesterday the Ministry of Defense said that it was annoyed with the U.S. Report. There are still many hurdles to be removed in the China-U.S. military relations, which are experiencing a difficult period. Song Xiaojun, a Beijing-based military expert, said the Pentagon routinely uses the "China military threat" to seek increases in the defense budget from Congress. "The Pentagon has always put China's defense budget at twice the level of the Chinese government's figure. Its motives are not pure," he said. "The negative view of the U.S. military shows that some people in the U.S. still view China as a threat. They always try to make the worst-case scenario about China, said Niu Xinchun, vice-director of the Center for American Studies at the China Institute of BEIJING 00000820 002.2 OF 002 Contemporary International Relations. The U.S. military needs to create a potential enemy after the Iraq War and some are picking China," a military officer said yesterday on condition of anonymity." PICCUTA