Expert Zone

Straight from the Specialists

China defence spending rises as U.S. budget declines

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

As China prepares for the final plenum of the 17th Party Congress, it has announced that the new defence budget would amount to 670 billion RMB (approximately $106 billion), which equates to a 11.2 percent increase. This is in sharp contrast to the United States, which, despite a so-called “pivot to Asia,” is busily reducing its defence budget.

The increase in China’s defence spending, atop last year’s 12.7 percent increase, highlights that China’s defence spending is now larger than that of all other Asian nations combined — a sobering statistic when one considers that this includes the world’s third-largest economy (Japan) and North and South Korea, which remain locked in a Cold War-era standoff.

Many look at the U.S. defence budget and decry the fact that it is larger than the next dozen or so states combined. Yet the U.S. is a key enforcer of international norms and safety. It is the American Navy, more than any other, that keeps the world’s sea lanes safe. It is the U.S. Air Force that provides space situational awareness, including conjunction warnings, to all other space-faring nations (including China) and manages the GPS constellation to global benefit — both without charge.

Market reform in China: Should we believe it?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The first step in solving a problem is admitting it. For years, the Chinese government and their defenders overseas insisted first that China was still reforming, then that state-led economic development was superior to market-led development. Evidence to the contrary came as news to many.

Is 2012 the tipping point for China steel?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The 2011 outcomes in China’s steel and related industries have ratcheted up the risks faced in China’s and the world’s steel and steel-making raw materials industries in 2012. Q411 steel production in China was particularly weak, down 12 pct from the levels enjoyed in the first 3 quarters of 2011.

The limits of the Pakistan-China alliance

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(The views expressed in this column are the authors’ own and do not represent those of Reuters)

By Lisa Curtis and Derek Scissors

In the wake of the U.S. raid on Osama bin Laden’s compound last May and deteriorating relations between Islamabad and Washington, Pakistani leaders have sought to play up their country’s relations with China, touting Beijing as an alternative partner to Washington. However, China’s concerns about the future stability and development of Pakistan will limit the extent to which China will bail Pakistan out of its current economic difficulties, and the degree to which China will seek to drive a wedge between Islamabad and Washington.

Global Economics: When China is not just China

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The People’s Republic of China’s (PRC’s) relationship with Iran receives a good deal of attention. As the U.S. considers how to stop Iran’s nuclear weapons program short of military action, the PRC is considered vital in ensuring economic sanctions are effective. But it has been difficult to win Chinese cooperation in applying sanctions. One mistake the U.S. may have made is treating China as a unified entity.

China’s economic data (still) not credible

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

China today announced that GDP growth for 2011 slowed to 9.2 pct. Over the coming days and weeks, there will be a stream of pontificating about what this means. There’s a good chance that everyone involved will be pontificating about nonsense.

News Flash: Pakistan is NOT a U.S. ally

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

U.S. media commentators acted with surprise about reports that Pakistani officials may have given the Chinese access to the downed helicopter left behind in Pakistan following the May 2 bin Laden raid.

U.S. vs China: which economy is bigger, better?

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A girl holds a U.S. and Chinese flag at the White House in Washington January 19, 2011. REUTERS/Kevin Lamarque/Files

(The views expressed in this column are the author’s own and do not represent those of Reuters)

One of the most surprising developments resulting from the financial crisis is the belief among ordinary Americans that China has become the world’s leading economy. This view appeared in the roughest times of 2009 and has persisted even though the impact of the crisis has begun to ebb. U.S. media have frequently conveyed the same belief. But it is patently absurd.

China’s new five-year plan

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A military delegate arrives for a plenary session of the National People's Congress (NPC) at the Great Hall of the People, in Beijing March 10, 2011. REUTERS/Jason Lee/Files(The views expressed in this column are the author’s own and do not represent those of Reuters)

This year’s meetings of China’s National People’s Congress, which started March 5, roll out the 12th five-year plan covering 2011-2015. A flock of freshly minted experts assure us that five-year plans are sacrosanct: If the PRC makes a commitment in the plan, it will be met.

Chinese investment in US: $2 trln and counting

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Chinese one yuan coins are placed on 100 yuan banknotes in this illustrative photograph taken in Beijing February 8, 2011. REUTERS/Petar Kujundzic/Files
(The views expressed in this column are the author’s own and do not represent those of Reuters)

If most members of Congress were asked how much China has invested in the U.S., they would respond with about $900 billion. This is a notable sum. Yet it’s too low by $1 trillion and possibly more. If many participants in financial markets were asked about Chinese investment in the U.S., they would fret over the possibility of disinvestment. This seems perfectly reasonable. At present, though, it’s essentially impossible.

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