MEDIA REACTION: CAPITALIST DEVELOPMENT, RMB EXCHANGE RATE,

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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: PREL ECON SENV KGHG KMDR OPRC CH

SUBJECT: MEDIA REACTION: CAPITALIST DEVELOPMENT, RMB EXCHANGE RATE,
U.S. POLICY

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Editorial Quotes
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1. CAPITALIST DEVELOPMENT

"Reflection on capitalism in the international financial crisis"

The official Communist Party People's Daily (Renmin Ribao)
(02/09)(pg 23): "The outbreak of the international financial crisis
urged many people to reexamine the capitalist's development
direction. In the post-crisis era, capitalist society is bound to
undergo some new changes. Yoshinobu Onishi, Chairman of Mitsubishi
UFJ Research and Consulting Co. Ltd, a major Japanese think tank,
said that Japan is also concerned with the prospect of the U.S.
dollar. It is still uncertain when where the world's major funding
is heading will change. Only if the market and the government each
play a balanced role, will the society soundly develop. The United
States represents neo-liberalism, which means that they overly rely
on the market and curbing the government's role. Obama won the
election, indicating that the American people also recognize the
danger of liberal economy. After taking office, Obama emphasized
social security and the introduction of a medical insurance system,
which is also an amendment to excessive neo-liberalism. Francis
Fukuyama, author of 'The End of History and the Last Man,' said that
after one year of Obama's presidency the post-crisis world hasn't
significantly changed. Economic recovery has come too fast, which
means that the crisis is not serious enough to make the United
States look for long-term resolutions. From a global perspective,
the economic crisis has brought a few high lights: although the
international financial system's legitimacy was questioned, the
system did not collapse. China, India and other countries did not
abandon their open market policies, which will help the two emerging
economies grow rapidly. Another positive consequence of the crisis
is that the role of the Group of 20 becomes better than the Group of

8. This new mechanism enables China, India, Brazil and other
emerging countries to have a voice. From a long-term point of view,
the issue of American ideology is even more important than the issue
of economy. The Americans have become very rigid now and the way
they look at the world is based on strong ideological bias. The
financial crisis may make the Americans change [reevaluate] certain
prejudices, but overall, their mindset will remain the same, which
will cause them great trouble. Unless there is a change on this
issue, otherwise, the lessons learned in this crisis will be
wasted."


2. RMB EXCHANGE RATE

"Calmly dealing with the RMB exchange rate game"

The People's Daily-sponsored and internationally-focused commercial
news publication Global Times (Huanqiu Shibao) (02/09)(pg 14): "If
the U.S. Department of Finance calls China an 'exchange rate
manipulator' in its semi-annual report, once negotiations with China
fail, a trade war between the U.S. and China will be triggered. If
arms sales to Taiwan are like light machine guns firing, the RMB
exchange rate is more like heavy bombs because it is related to
employment and the lives of the people, a substantial livelihood
issue. China will be harmed, as if its arm is fractured, if the RMB
exchange issue is not well dealt with. Despite some divergences
within China, at least there is one common view: the principle of
initiative, controllability and the gradual nature, pursued by China
on the issue, should not be changed in the short term. We should
also make an effort to distinguish what are America's test moves and
what are their real intentions. The United States should be clear
that any policy related to the RMB exchange rate must be consistent
with the pace of development, but not dominated by the U.S.'s club.
If a larger scale trade war is triggered, the U.S. will also not
benefit. Currently, calmness is needed for both countries. China
should tease out China's interest structure and sequence, prioritize
them and make a full preparation for competition with the United
States."


3. U.S. POLICY

"The U.S. has three strategies for maneuvering troops globally"

Elite Reference (Qingnian Cankao),a newspaper affiliated to the
official Communist Youth League China Youth Daily (02/09) (pg 06):
"A Lieutenant-General of the U.S. Joint Chiefs of Staff recently
said at a hearing at the House of Representatives that the U.S. has
prepared three combat strategies. The strategies were directly
targeted at the top three hot areas: the Korean peninsula, the
Taiwan Strait, and the Persian Gulf - taking North Korea, China, and
Iran as the assumed enemies. From a number of contents exposed by
military media, one can see the clues as to how the U.S. military
will deploy forces to deal with the three 'focus areas.' First, the
U.S. military will use mechanized infantry division to contain North

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Korea army's attack. As to the possible military conflict on the
Korean peninsula or on the Taiwan Strait, U.S. troops in the West
Pacific have quite detailed deployments. The U.S. military's pacific
headquarter will revise combat plans against China and North Korea
every two years. Once any incidents occur in any of these two
areas, the U.S. military will come from three directions, Japan,
Guam Island and the U.S.'s west coast, for military support.
Meanwhile, in the Persian Gulf, the U.S. military has started long
before to build military base in the east and west sides of Iran,
aiming to contain Iran."

HUNTSMAN