China Now World's Second-Largest Economy

Some interesting news from the economic and geopolitical side of things. The People's Republic of China has surpassed Japan to become the world's second-largest economy.

Experts say unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030. America’s gross domestic product was about $14 trillion in 2009.

“This has enormous significance,” said Nicholas R. Lardy, an economist at the Peterson Institute for International Economics. “It reconfirms what’s been happening for the better part of a decade: China has been eclipsing Japan economically. For everyone in China’s region, they’re now the biggest trading partner rather than the U.S. or Japan.”

 Pretty interesting, especially considering China's growing between 5-15% per year while we may go back to negative growth...


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Massive Earthquake Hits Off Japan

BREAKING- A large 7+ earthquake has struck off the coast of Japan. More news as it unfolds.

UPDATE- A tsunami warning has been issued for several islands.

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The Worst is Yet To Come

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The end of an era for Japan

The 54 year rule of the Liberal Democratic Party in Japan has come to an end.

From Yahoo News:

Japan's ruling party conceded a crushing defeat on Sunday after almost 54 years of unbroken rule as voters were poised to hand the opposition a landslide victory in nationwide elections, driven by economic anxiety and a powerful desire for change.



The left-of center Democratic Party of Japan was set to win 300 of 480 seats in Japan's lower house of parliament, ousting the Liberal Democrats, who have governed Japan for all but 11 months since 1955, according to exit polls by all major Japanese TV networks.



"The results are severe," Prime Minister Taso Aso said in a news conference at party headquarters, conceding his party was headed for a big loss. "There has been a big satisfaction with our party."



Aso said he would have to accept responsibilty for the results, suggesting that he had to resign as party president.





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Obama to Sell B-2 Bomber Blueprints to China to Pay Off Debt

B-2 Plans for Sale?
Richard Hogarty
Boston Reviewer
June 1, 2009


Record deficits and a crashing economy appear to be taking a toll on the young Barack Obama Administration. The Administration has been talking about hiking income taxes and perhaps instituting a VAT tax.

China is also concerned with the mounting deficits in the United States budget. China is the single biggest holder of US Treasury Bonds and is one of Washington's biggest trading partners. The People's Republic has had a burgeoning economy, but is increasingly wary of the falling US dollar.

While the exact amount of Chinese ownership of US treasuries is unknown, it is estimated to add up to over a trillion dollars. If China were to call in US guarantees on these bonds, economists fear it could lead to an economic collapse larger than the Great Depression.

China has recently expanded its defense budget, ostensibly to keep up with its economic growth. China is reportedly working on its own version of a stealth bomber (the US has the only functioning model) but is lagged by technological defects.

On April 1st, President Obama spoke to Chinese Premier Hu Jintao during the G20 Summit. During this meeting, Mr. Hu expressed interest in writing off some of the US debt in exchange for military technology. The President has since referred the matter to Defense Secretary Robert Gates.

The Defense Department is reportedly furious with the President's proposal to sell blueprints of the B-2 Spirit stealth bomber to the People's Republic. Gates has flatly rejected the President's plan, but has since been asked to step down if he will not facilitate the process.

According to the deal, the United States would sell the plans for the B-2, along with radar-absorbing paints and metals in exchange for $50 billion in debt relief. The B-2 cost the US government $23 billion to develop the bomber in the 1980s.

According to the Administration, this proposal will help the United States resolve its debt issues. They point out their belief that the B-2 bomber is "strategically obsolete", according to a source in the White House Press Office. In addition, the source claims that the Chinese would be unable to create their own functioning stealth bomber fleet for "at least eight years."

American allies Taiwan, Japan, and South Korea are very wary of the proposal. Koo Syi, a geopolitical analyst from South Korea, points out that this technology could be passed to China's allies. This was the case when Chinese nuclear technology was transferred to Pakistan and North Korea. According to Koo, Obama has rendered US allies' opinions as "irrelevant."

While this proposal is controversial, it is not being presented to Congress, where it could meet with stern opposition. Instead, the State Department has been informed to assist the Defense Department with the transfer of materials.

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Interview: Tetsuo Kotani

Jumping in Pools is happy to continue our eighth iteration of our interview series. This interview is with Mr. Tetsuo Kotani, a Ph.D. candidate at Doshisha University in Kyoto and research fellow at the Ocean Policy Research Foundation in Tokyo, Japan. Mr. Kotani has recently written an article in the Japan Times.

1. China has recently been increasing its military budget. Do you feel that
the increase in spending could outstrip economic growth and cause the PRC to
reverse course?

Yes and no. I think China will continue to spend more in defense, even
if that outstrip its economic growth, since strong military is a
symbol of the Communist Party. China needs to keep its 8% economic
growth to create enough jobs domestically; otherwise the Communist
Party has to take care of more social unrest. If China fails to keep
the 8% economic growth and if China fails to reduce defense budget, it
is very likely that the PLA will be used to suppress social unrest.

2. Which branch of the Chinese military could be most destabilizing in East
Asian geopolitics?

The PLA Navy could. The stability of East Asia depends on the balance
between continental power of China and Russia and sea power of the
United States and Japan. China's maritime ambition is destabilizing
this balance.

3. If the United States decided to stop giving direct aid to Taiwan and
canceled the alliance, how could the ROC defend against the PRC threat?

I don't think the US Congress will abandon Taiwan unless Taiwan
unilaterally declares independence. Even if Taiwan's unilateral
behavior brings a military conflict, the United States still needs to
intervene in the end to keep the credibility of its commitment to the
region. In any event, if the U.S. withdraws its defense commitment to
Taiwan, Taiwan has little means to defend itself against the PRC
military threat.

4. Where do you see the next major East Asian conflagration happening?

In North Korea. A sudden collapse of Kim Jong-il could lead to a major
conflagration, possibly a North Korean civil war and international
intervention.

5. How likely is it for Japan to develop nuclear weapons in the next twenty years?

Almost zero. Japan sees no strategic, military, political benefit in
developing its own nuclear weapons as long as the US provides credible
extended deterrence.

6. Is the Obama Administration using the appropriate tools to deal with North Korea?

Too early to know. Special Envoy Bosworth and others are now on the
road, searching both bilateral and multilateral talks with North
Korea. I think it has become clear that the international community
has little leverage on North Korean nuclear and missile programs.
North Korea is behaving like a baby but sensitive about their
interests. Adult supervision is necessary for us. Benign neglect would
just result in more North Korean nukes, larger missiles and their
proliferation in the black market. I think the Obama administration
needs to engage with North Korea, giving rewards for good behaviors
and punishments for bad behaviors.

Cross posted at World Threats.

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Japan: Screw You Guys, We're Eating Whale

Not to say that the Japanese are bad people, but the subject of the article is fairly humorous. Not to say that we haven't done our fair share of whale slaughtering.

But blogs need articles. Japan will not give up their whale-eating ways, even though seemingly everyone is pissed at them over it.

"Why do people say we can't eat the things we've eaten since the end of World War II?" asked Koji Shingu, the proprietor of a whale eatery called Yushin in Tokyo, a few blocks from the city's oldest temple, a popular tourist draw.

His feelings echo those of many older Japanese.

The country has hunted whales for hundreds of years, and the meat is a sentimental favorite of people who lived through the lean postwar years, when whale was the chief source of protein because Japan couldn't afford pork or beef. Whale was a common family dish, and many schoolchildren ate it every day.

My question is, why are people angry at Japan for eating whale. After all there are more important things to be angry at the Japanese over.

They invented anime.