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S T R AT E G I C F O R E C A S T I N G , I N C .STRATFOR is the world’s leading private intelligence firm providing corporations, governments and individuals with intelligence and analysis to anticipate the political, economic, and security issues vital to their interests. Armed with powerful intelligence-gathering capabilities and working in close collaboration with STRATFOR’s experienced team of professionals, our clients are better able to protect their assets, diminish risk, and increase opportunities to compete in the global market.

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A b o u t S t r at f o r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i i i

E a s t A s i a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

E x e c u t i v e S u m m a r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 J u n e : T h e M o n t h i n R e v i e w . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 K e y I s s u e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 T h e M o n t h A h e a d : F o r e c a s t s f o r J u l y . . . . . . . . . . . . . . . . . . . . . 1 1 T r e n d s , S t a t s a n d I n d i c a t o r s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 N o t e w o r t h y E v e n t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7

S t r at f o r S e r v i c e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1

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STRATFOR is the world’s leading private intelligence firm providing corporations, governments and individuals with geopolitical intelligence and analysis to manage risk and anticipate the political, economic and security issues vital to their interests. Armed with powerful intelligence-gathering capabilities and working in close collaboration with STRATFOR’s expert team of analysts, clients are better able to protect their assets, diminish risk, compete in the global market and increase opportunities. STRATFOR has an unparalleled record for accuracy and clarity in its forecasts and has been called “the Shadow CIA” by Barron’s.

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onflict between traditional rivals continues in Asia as Japanese quarrels over islets and fisheries, and diplomatic barbs with neighboring China, South Korea and Taiwan persist. China’s delicate balancing act between foreign (mainly U.S.) pressures and domestic pressures shows no sign of easing. Meanwhile, South

Korean-U.S. ties remain chilled while North Korean signals of a return to the six-party talks intensify. In Southeast Asia, Vietnamese-U.S. warmth continues while the Association of Southeast Asian Nations (ASEAN) ponders Myanmar and the Philippine presidential crisis simmers.

T h i s M o n t h ’ s H i g h l i g h t s : I n E v e r y I s s u e : • Territorial Tensions in Northeast Asia • Trends, Stats and Indicators • South Korean-U.S. Chill • Noteworthy Events • U.S. Pressure On China • China’s Buying Spree • Six-Party Talks Close To Resuming

C


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onflict and compromise characterized June, as some traditional rivalries persisted while other former foes came together. Territorial and historic disputes flared between Japan and its traditional antagonists China, South Korea and Taiwan, manifested by fishing disputes, the deployment of warships and inconclusive diplomatic contacts.

In Washington, visits by South Korean President Roh Moo Hyun and Vietnamese Prime Minister Phan Van Khai stood in near-polar contrast. The visit of the leader of the United States’ traditional ally, South Korea, was cold, while that of one-time foe Vietnam was warm. Further emphasizing the growing differences between Washington and Seoul, South Koreans’ meetings with their counterparts in the North seemed almost like family reunions, despite the long-standing conflict between North and South.

But perhaps most significant is the change in U.S.-Chinese relations. Washington is poking China with economic, political and military sticks at a time when Beijing finds itself in some of the most delicate stages of its attempts at economic reform. Already, China’s social stability is fraying, as riots and attacks against security forces increase in frequency and size.

The change in U.S.-Chinese relations comes as Chinese firms are increasing their investments abroad in a move reminiscent of the Japanese buying spree of the 1980s. These investment moves have -- and will -- only increase resistance from the United States, strengthening American resolve to contain what is seen as a looming Chinese threat.

Strangely enough, heightening tensions between Washington and Beijing is increasing the likelihood of renewed talks with North Korea to resolve the nuclear crisis. Several rounds of bilateral discussions among various members of the six-party format already have occurred, and things are lining up for a resumption of talks in July.

In Southeast Asia, two issues are burning brightest -- the Myanmar question and political unrest in the Philippines. Though Myanmar has represented a mixed blessing for ASEAN since it joined the international association, U.S. and European pressures regarding Myanmar’s political and human rights record are threatening ASEAN’s push to create a new East Asia summit -- the precursor to a larger Asian economic bloc.

In the Philippines, what began as a fairly typical -- and exaggerated -- threat to President Gloria Macapagal Arroyo has now entered a new phase with the emergence of a potential leader around whom opposition forces can unify. This will set the stage for a tense month in the Philippines as Arroyo tries to secure her position in the face of mounting opposition.

CE x e c u t i v e S u m m a r y


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J u n e : T h e M o n t h i n R e v i e w

Te r r i t o r i a l Te n s i o n s i n N o r t h e a s t A s i aAs we forecast, tensions continued among Northeast Asian nations over issues regarding history and territory. These tensions were vividly displayed in early June, when Japanese and South Korean tugs tied to two South Korean fishing vessels in disputed waters. Later in the month, it was Taiwanese fishing boats causing the dustup with Japan, and Taiwanese Defense Minister Li Jye went so far as to board the Knox-class frigate Feng Yang and sail near the disputed Diaoyutai/Senkaku Islands. Both incidents ended peacefully, though both provided plenty of fodder for domestic political posturing — particularly in Taiwan.

Amid the confrontations over fishing grounds, Tokyo reportedly prepared to grant Japan’s Teikoku Oil Co., Ltd. the right to carry out test drilling for energy resources in an area of the East China Sea disputed with Beijing. Official approval is expected in July or early August. Separately, Japan’s Land, Infrastructure and Transport Ministry placed a plaque on Okinotori Island, a rock outcropping, declaring the island part of Ogasawara Village, Tokyo. Beijing complained, since it claims the waters around the rocks and contends that Tokyo has no right to declare the outcropping an island, much less part of Japan.

Political tensions between Japan and its neighbors, however, were not limited to maritime territorial disputes. A planned summit between Roh and Japanese Prime Minister Junichiro Koizumi ran into difficulties before it began; in fact, even the date and venue of the meeting could not be finalized until a week before it was held. In their June 20 conference, the two leaders spent most of their two hours together discussing historical differences; neither gave a glowing review of the meeting. The most they could agree upon was that the North Korean nuclear situation ought to be solved through dialogue.

Even Japan’s early June announcement that it was going to replace Ambassador to Seoul Toshiyuki Takano — who created a stir earlier in the

Political tensions between Japan and its neighbors went beyond maritime disputes.


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year when he called the disputed Dokdo/Takeshima Islands Japanese territory — with Shotaro Oshima, a more seasoned, less controversial diplomat, did little to soften the mood at the summit.

Separately, Chinese Vice Foreign Minister Dai Bingguo flew to Tokyo to meet with Japanese officials to try to ease tensions between Tokyo and Beijing — a meeting that, though not quite as cold as the Roh-Koizumi summit, also failed to accomplish much. Despite the visit, the Japanese press made it clear that Koizumi and Chinese President Hu Jintao were unlikely to meet on the sidelines of the G-8 summit in early July. Furthermore, Japan continued its warnings against a Chinese military buildup — a warning that echoed similar remarks from Washington.


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Chinese and Japanese relations further soured over Japan’s bid for a permanent seat on the U.N. Security Council — something Beijing quite vocally rejected. Beijing went as far as publishing a white paper laying out its views on potential Security Council reform. For Beijing, Tokyo represents an ever-present economic and security threat, and a Japanese seat on the council would undermine one of China’s remaining “great power” levers in East Asia. Japan, for its part, added to the growing international pressure on China’s yuan valuation, and also agreed to increase missile-defense ties with the United States — something directed more at Beijing than Pyongyang, contrary to common perceptions.

U . S . P r e s s u r e O n C h i n aThough Beijing was able to strike a partial deal with the European Union regarding its textile exports, pressure from Washington continued to mount — not only on textiles, but also on the yuan and China’s defense expenditures and military modernization. Washington is not letting up on China, though some Bush administration officials sought to temper the congressional drive to impose a blanket 27.5 percent import tariff on all Chinese goods. At the end of the month, Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan were able to convince Senators Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., to delay their bill, giving the Bush administration more control over relations with China and buying Beijing a bit of breathing room.

China’s social fabric is rending — and Beĳing lacks the bandwidth to handle the pressure.


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On the military side, however, Washington intervened to sink a deal between China and Israel for the upgrade of Harpy Killer unmanned drones that Tel Aviv had sold to Beijing. Washington also garnered a public apology from Israel, as well as a promise to allow U.S. review of Israeli defense deals with China and other states of concern to the United States.

These tensions provided the backdrop for two accordingly ill-timed Chinese bids for major U.S. companies. The Haier Group sought to purchase Maytag Corp., while China National Offshore Oil Corp. Ltd. made an unsolicited offer to purchase Unocal Corp. for $18.5 billion. The later deal in particular set off alarm bells in the United States, given Washington’s drive for energy security. At the same time, Beijing welcomed the $2.5 billion investment by the Bank of America in China Construction Bank (CCB) — part of Beijing’s preparations to launch initial public offerings (IPOs) at four major Chinese banks.

Also in June, as Beijing sought to repulse EU and U.S. pressure, a series of increasingly public and apparently random riots broke out across China. Many of the disturbances were triggered by interactions with the police or other public security forces, while others were sparked by corruption and collusion among local governments and big businesses. As the urban-rural gap widens and unemployment continues to rise, China’s social fabric is rending — and Beijing does not have the bandwidth to handle the economy, society and external pressures.

S i x - P a r t y Ta l k s C l o s e To R e s u m i n gAs we predicted, June was a time of increased diplomatic traffic on the North Korean nuclear front. Amid diplomatic meetings between Washington and Pyongyang in New York and between North and South Korea in their respective capitals, it became more apparent that July will see the stalled six-party talks restart. U.S. President George W. Bush and North Korean leader Kim Jong Il both offered a softer rhetorical tone (occasionally), Beijing announced Hu’s imminent visit to Pyongyang, and all parties — from Moscow to Washington — said at one time or another that talks would restart soon, with Beijing going so far as to place the restart at the end of July. Just to China’s east, while South and North Korea celebrated their common “Korean-ness” along with the anniversary of the June 2000 inter-Korean summit, Washington and Seoul’s relationship languished, as evidenced by the lack of warmth at Bush and Roh’s summit. Emphasizing the contrast, the White


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House made front-page news in South Korea when Bush met a North Korean defector and author a week after the Roh visit for as long as the Bush-Roh meeting lasted.

P r o g r e s s , D i l e m m a s a n d T u r m o i l i n S o u t h e a s t A s i aPhan also visited Washington beginning June 19. The visit coincided with the 10-year anniversary of the renewal of U.S.-Vietnamese ties, which were severed from the end of the Vietnam War until 1995. The visit focused on the promotion of bilateral, regional and international security ties and on forging economic links between the two countries, as well as on Vietnam’s World Trade Organization (WTO) membership bid. Interestingly, Hanoi and Washington agreed to joint military training in Vietnam, paving the way for new military ties between the erstwhile foes.

In Southeast Asia, two other issues dominated the month: the struggle inside ASEAN over what to do about Myanmar’s planned 2006 assumption of its chairmanship and growing clamor in the Philippines for the ouster of Arroyo.

ASEAN is trying to put the finishing touches on a new East Asian summit that will center on ASEAN but also will bring together other major Asian and Pacific nations to increase dialogue and economic and political cooperation within Asia — all while promoting a sense of “Asianism.” Given the battering the European Union — and the sense of a common European identity — took in June, however, ASEAN faces an uphill battle against seemingly losing odds. And Myanmar’s turn at the helm of ASEAN has forced ASEAN to seek a balance between the group’s founding principle of noninterference and its attempts to make itself both relevant and an international player.

In the Philippines, a series of scandals surrounding Arroyo and her family have resurrected demands for the president’s ouster and have brought a disjointed opposition out onto the streets — and onto the opinion pages of Philippine newspapers. As the month drew to a close, however, Arroyo’s challenge increased as Susan Roces, the widow of Arroyo’s former presidential competitor, the late Fernando Poe, Jr., declared her willingness to participate in the opposition movement — thus offering the previously disjointed opposition a central figure around whom to rally.

ASEAN’s dilemma over Myanmar and growing clamor for Arroyo’s ouster dominated June in Southeast Asia.


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K e y I s s u e s

For Washington, the Iraq war, while far from complete, is moving into a political phase. Washington’s attention is now being shifted to other strategic priorities — particularly Russia and China. The U.S. pressure on China this strategic shift allows is compounding internal Chinese pressures resulting from difficult economic reforms and increasingly public dissent. Meanwhile, Myanmar continues to perplex ASEAN while a disjointed opposition in the Philippines continues to seek the ouster of that nation’s president.

D . C . S q u e e z e s B e i j i n gRelations between the United States and China have firmly moved beyond the benign co-existence characterizing the days after Sept. 11, and now are reminiscent of the early days of the Bush administration. Washington is squeezing Beijing on the economic, political and military front — pressing Beijing on the yuan, on the Chinese role in resolving the North Korean nuclear crisis and on Beijing’s growing military.

For China, the increased pressure could hardly come at a worse time. Beijing used its brief reprieve from U.S. pressure to effect one of the smoothest genera-tional transfers of power in the Communist regime’s history and to accelerate the very delicate work of economic reform, focusing on the banking sector in particular. China’s banking system has served as the backbone of the state-sponsored life support system that kept millions of workers employed in redundant and inefficient state-owned enterprises (SOEs). As Beijing seeks foreign investment — and a way to escape the Asian economic paradigm of growth without profit — it is trying to wean the SOE system off Chinese bank loans while simultaneously strengthening the domestic banking system before opening the Chinese banking sector to foreign competition.

C h i n a ’ s B a n k s G o P u b l i c , S l o w l yState-run asset management bodies, such as the Assets Supervision and Administration Commission, are now the main source of cash transfusions into the SOEs. Some of these asset bodies are now under investigation themselves, while China’s big four banks are undergoing administrative and structural changes to prepare them for IPOs later this year or next year. The

Beĳing seeks foreign investment to escape the Asian economic paradigm of growth without profit.


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CCB is the first — and furthest along — of the main banks preparing to go public before year’s end. A $22.5 billion capital injection, the divestiture of nonbanking units and the removal of several key banking officials for corruption paved the way for a deal with Bank of America to purchase some 9 percent of CCB in a $2.5 billion deal that included an option for the Bank of America to purchase another 10 percent of CCB.

This sale represents the first of similar deals Beijing hopes to make, and Beijing is hoping the CCB’s relation with the Bank of America ups the Chinese bank’s market value and for a larger injection of cash through CCB’s IPO. But the deal carries risks for Beijing and Bank of America, which the latter sees as an “in” for future credit card and banking operations in China. If the arrangement works smoothly, China will gain a confidence boost for its banking system, but if problems emerge, Beijing’s bet on banking reform and increased foreign investments — instead of on direct competition — faces a serious challenge.

What China needs — but does not have — is time. At least two of the big four banks originally were to have completed IPOs by the end of this year. Now, completing even one IPO would represent an accomplishment. While Beijing is propping up several ailing industries and protecting strategic sectors of the economy, it is attempting some significant systemic changes. At this stage, however, any external pressures threaten to throw off the delicate balance between carefully selected, isolated pain and a loss of control over the process.

E x t e r n a l P r e s s u r e C o m p o u n d s I n t e r n a l U n r e s tBeijing has little breathing room. Despite an initial deal with the European Union on some textile issues, China still faces additional EU pressure — and the United States has yet to compromise on trade, either. In fact, while the Bush administration plays “good cop” to Congress’ “bad cop” when it comes to calling for across-the-board tariffs against China, Washington is unified in its push to break the yuan out of its pegged and artificially low position — something that could increase the cost of U.S. imports, but would hurt China much more.

The push against the yuan is coupled with increasing political pressure from Washington, which is critical of Beijing for not doing enough to bring Pyongyang back to the nuclear-negotiating table. At the same time, Washington is stepping up military pressure on China, raising a cry over


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Chinese defense development while tightening cooperation with Japan, Australia and others in a defense alliance that has missile defense as one of its mainstays.

In the past, China turned to Europe to try to reduce U.S. pressure, but the collapse of European cohesion after the rejection of the EU constitution by French voters has left Europe a poor partner when it comes to countering U.S. might. Beijing is trying to work within an Asian framework, pressing forward with its “peaceful rise” policies and trying to strengthen security cooperation with traditional U.S. allies in the region, such as Indonesia and the Philippines. Beijing also is turning toward Russia, but China’s leaders do not trust their neighbor and still are banking on using their economic clout to gain breathing room from the United States — thus weakening any potential for a significant strategic alliance with Moscow.

In essence, China has no good options. What Beijing needs is time and space, and Washington is not granting that. The result of this is being seen inside China, as localized riots and attacks against police and internal security forces increase in frequency and scale. Video footage of Chinese farmers in Hebei battling hired thugs working for a company seeking to build a power plant provided just one of the vivid examples of social structures reaching their breaking point. And in the southern province of Guangdong, several hundred people confronted police officers after the police stopped a bus for waiting too long to pick up passengers, while in Anhui province, several thousand people rioted after a traffic accident, attacking a police station, burning vehicles and looting stores. These incidents illustrate how the Chinese leadership is steadily losing control of the local authorities — and of the masses.

As Beijing faces increasing external pressures and increasing unrest from within, Southeast Asia faces its own troubles — from the ever-present Myanmar question to growing political unrest in the Philippines. ASEAN is seeking to reshape East Asia as a more integrated economic — and potentially political — bloc, with ASEAN at the center. But the Myanmar issue continues to plague ASEAN’s relations with the United States and Europe, and given that Yangon is one of the Bush administration’s new “outposts of tyranny,” Myanmar is receiving more pointed attention from Washington. This dilemma threatens Asian unity, since ASEAN must now choose between internal cooperation and recognition, and bargaining power abroad.

Beĳing needs time and space, but Washington is not granting that.


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T h e P h i l i p p i n e O p p o s i t i o n U n i t e s , M a y b eMeanwhile, in the Philippines, what started as a series of scandals and disjointed-opposition pushes now looks more serious. Arroyo was holding her own in the face of growing pressure while the various opposition factions were unable to unite their cause or present a viable alternative to Arroyo. That is changing, and the emergence of the widow of Arroyo’s competitor in the last presidential election could provide the focus missing from the opposition movements, potentially seriously jeopardizing Arroyo’s position.

One additional notable issue must be raised — that of the apparent Japanese economic recovery. All indicators are up for Tokyo, and foreign direct investment is reaching record levels. But the ride is unlikely to last, as Japan has yet to fundamentally address the structural weaknesses in its economic system. Though the malaise will eventually return, the Japanese are currently riding high.

T h e M o n t h A h e a d :F o r e c a s t s f o r J u l y

H i g h l i g h t s : • Putin and Hu’s Central Asian Consensus • Six-Party Talks Resume • Australian-ASEAN Nonaggression Pact • Renewed Aceh Talks • Arroyo’s Make-Or-Break Month

Hu travels to Russia and Kazakhstan at the beginning of July for meetings that will offer insight into whether Moscow and Beijing will join to attempt to resist U.S. pressure or remain as wary of each another as they are of Washington. During Hu’s Moscow trip, Russian President Vladimir Putin likely will offer a pipeline to China again, but given that Moscow has reneged on previous promises made by Putin, Beijing is unlikely to place much credence in such an offer until the promised pipeline is built and running into Chinese territory.

Putin and Hu could agree more readily, however, on Central Asia at the Shanghai Cooperation Organization (SCO) summit. At the summit, SCO members probably will formalize plans for a regional rapid-reaction force, as well as offer observation status to India and Pakistan and strengthen


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economic ties among SCO member states. For Hu and Putin, the SCO serves as a useful vehicle for jointly contending with U.S. pushes into the region. And given Central Asia’s location on the border of both Russia and China and the region’s importance for energy security, Beijing and Moscow see little room for maneuver, and so must strengthen their ties regionally to counter U.S. encroachment.

Hu also plans to travel to North Korea in early July, amid growing signs that North Korea and the United States will return to the negotiating table later in the month. Hu will not visit Pyongyang unless he knows he will get some sort of assurance from the North Korean leadership that they will rejoin the six-party talks. But Hu also will seek to regain influence over Pyongyang, giving Beijing greater control over the talks and increased leverage with Washington. Beijing hopes to balance U.S. concerns against North Korean nukes with Chinese concerns over U.S. economic pressure. Washington has reined in Congress, at least temporarily, and will now look for China to reciprocate.

All signs point to a renewal of the six-party talks, probably around July 25, and intense backroom negotiations already under way will accelerate as the date nears. Pyongyang and Washington will simultaneously raise the stakes, looking for maximum advantage once the negotiations restart. A resolution to the nuclear crisis is unlikely in July, but the resumption of talks themselves will alter the perception of the threat level. If things are going well, Pyongyang could even offer hints of a return visit to Seoul by Kim.

For Beijing, keeping the North Korean lever in the face of U.S. pressure is more important than ever. Inversely, it is vital for Washington to resolve the crisis to strip China of this lever, regain the trust and cooperation of the South Koreans, and present a unified face toward containing China. Nuclear talks will resume, but the main players will be Washington and Beijing — Pyongyang, on the other hand, will sit back and enjoy the ride.

In the second week of July, Indonesia will restart talks with the separatist Free Aceh Movement (GAM). The easy part of negotiations between the government and GAM is over, however, and more serious tactical discussions are set to take place. Given the Indonesian government’s tightened control

All signs point to a renewal of the six-party talks.


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over the province — in particular over the distribution of aid money — since the Dec. 26 tsunami, GAM finds itself in a weakened state. But with a significant amount of pledged money failing to reach Indonesia yet, there is plenty of room for wider discontent to spread in isolated areas of Aceh as hardships wrought by the tsunami look no closer to resolution than they did six months ago.

In late July, the ASEAN Ministerial Meeting will be held in Laos. At or before this meeting, it is expected that Myanmar will officially waive its turn to host ASEAN in 2006 — provided it can simply trade places with the Philippines. This will provide needed breathing room for ASEAN, which will then set its sights on the planned East Asian summit. Australia is likely to sign a nonaggression pact with ASEAN before the end of July, despite controversy and concerns that not only would the pact prevent pre-emptive strikes by Australian forces, but also might run counter to existing defense treaties with the United States. But such qualms are unlikely to hinder Canberra in its quest not to wind up on the sidelines of a regional dialogue.

In the Philippines, July looks to be a make-or-break month for the Arroyo presidency. She will begin the month with a Cabinet reshuffle, removing officials linked to her husband and son — and to the scandals surrounding them — in an attempt to free herself from a tightening opposition noose.

In the beginning of June, the chief of the Philippine military announced that plots to destabilize Arroyo’s regime — presumably hatched by former military officers — had been uncovered, and said the military was on high alert to prevent any such action. Meanwhile, the trial of Arroyo’s son, Juan Miguel “Mikey” Arroyo on charges of profiting from illegal gambling on the game of jueteng continued, with several witnesses directly implicating Mikey Arroyo and his father (Arroyo’s husband) as additional beneficiaries of the profits.

On June 6, audio recordings emerged allegedly showing Arroyo, her husband, and an electoral commission official speaking, thus implicating her in a scheme to rig the May 2004 election. By June 27, rising public pressure forced Arroyo to apologize to the Philippine people for speaking with the

If the opposition can rally the “dead Poe society,” Arroyo could face a challenge she cannot deflect.


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electoral official, saying the conversation was a “lapse in judgment,” but she maintained that she had committed no crimes. In addition, Arroyo sent her husband into exile, saying nothing would distract her from completing election reforms.

Though several “people-power” revolts have shaken the Philippines in the past, opposition figures were not able to rally support to oust Arroyo in June. Their primary problem was a failure to provide a viable alternative — or at least a figure that various opposition factions could rally around. But the emergence of Roces could provide the rallying point that unites the opposition. If opposition leaders can rally the masses into this “dead Poe society,” Arroyo could face a challenge she cannot deflect. July will prove a critical month for the embattled president, who initially rose to power through a similar “people power” rising.


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T r e n d s , S tat s a n d I n d i c at o r s

Brunei

Cambodia

China

Indonesia

Japan

Laos

Malaysia

Myanmar

North Korea3

Philippines

Singapore

South Korea

Taiwan

Thailand

Vietnam

N/A = not available

All data are provided by the governments of respective countries, unless otherwise noted.

1 Asian Development Bank 2 International Monetary Fund 3 Information provided by South Korea

N/A

4.1390 2003

1,660.0 2004

183.29 2004

4,446.5 2003

N/A

118.32 2004

N/A

19.110 2004

84.567 2004

111.00 2004

668.10 2004

315.38 2004

147.52 2004

39.045 2003

N/A

12.824 2004

1,306.31 2005

216.41 2004

127.69 2005

5.8400 2004

26.128 2005

53.300 2004

22,709 2004

75.504 2000

4.8082 2004

48.461 2004

22.715 2005

62.799 2002

80.902 2003

N/A

311.00 2003

1,271.0 2004

834.00 2004

34,824 2003

N/A

4,528.0 2004

N/A

841.00 2004

1,120.0 2004

23,085 2004

13,786 2004

13,884 2004

2349.0 2004

439.00 2003

N/A

3.40% 2003

9.40% Q1 ‘05

5.13% 2004

2.60% 20042

6.50% 20041

5.70% Q1 ‘05

N/A

2.20% 2004

4.60% Q1 ‘05

2.40% Q1 ‘05

4.60% 2004

5.71% 2004

3.30% Q1 ‘05

7.23% Q1 ‘05

N/A

0.1150 20041

22.370 2005 thru May

4.9360 2005 thru Apr

37.211 FY 2004

0.0170 20041

2.0740 20041

0.1280 20031

N/A

0.0570 20041

5.3780 20041

12.770 2004

(-5.1890) 20041

0.1000 2005 thru Feb

1.6589 2005 thru May

N/A

3.1% 20041

4.2% 20041

9.6% 20041

4.4% Apr ‘05

N/A

3.3% Q4 ‘04

N/A

N/A

8.3% Apr ‘05

4.0% 2004

3.4% May ‘05

4.1% May ‘05

2.0% 2004

5.6% 2004

N/A

2.4610 2004

276.40 2005 thru May

69.714 2004

565.38 2004

N/A

165.973 2005 thru Apr

N/A

1.0200 2004

39.598 2004

343.37 2004

253.84 2004

58.490 2005 thru Apr

42.562 2005 thru May

11.969 2005 thru May

N/A

3.1040 2004

246.39 2005 thru May

46.520 2004

454.90 2004

N/A

132.69 2005 thru Apr

N/A

1.8400 2004

40.300 2004

98.508 2004

224.46 2004

58.110 2005 thru Apr

48.836 2005 thru May

14.555 2005 thru May

N/A

1.3% Apr ‘05

(-0.2%) May ‘05

0.2% May ‘05

0.3% Apr ‘05

10.6% 2004

2.6% Apr ‘05

N/A

N/A

0.5% May ‘05

(-0.2%) May ‘05

(-0.2%) May ‘05

0.6% May ‘05

0.8% May ‘05

0.5% May ‘05

N/A

0.6573 Mar ‘052

663.19 Mar ‘052

34.380 23 Jun ‘05

832.88 Apr ‘052

0.2250 20041

73.413 Apr ‘052

0.7191 Jan ‘052

N/A

13.826 Mar ‘052

112.81 20041

205.25 May ‘05

253.17 May ‘05

47.906 Apr ‘05

6.0270 20041

GDP

bil

lions

USD a

t 200

4 mar

ket p

rices

Popu

latio

n mi

llions

GDP

per

cap

ita

billio

ns US

D at 2

004 m

arke

t pric

es

GDP

gro

wth

%

chan

ge fr

om ye

ar pr

eviou

s

Inco

min

g FD

I co

ntrac

ted bi

llions

USD

Unem

ploy

men

t % Ex

ports

billio

ns US

D

Fore

ign

Curr

ency

Res

erve

s

billio

ns US

D

Impo

rts

billio

ns US

D

Infla

tion

CPI %

chan

ge fr

om m

onth

previo

us


J U L Y 2 0 0 5

T r e n d s , S tat s a n d I n d i c at o r s

Brunei

Cambodia

China

Indonesia

Japan

Laos

Malaysia

Myanmar

North Korea

Philipines

Singapore

South Korea

Taiwan

Thailand

Vietnam

*Closing Rates

Beginning

1.6880

4,257.0

8.2865

9,529.0

108.55

10,580

3.8010

6.2625

2.2000

54.610

1.6670

1,008.1

31.395

40.681

15,865

Low

1.7040

4,226.0

8.2865

9,476.0

106.48

10,552

3.788.0

6.2625

2.2000

54.250

1.6440

1,001.5

31.118

39.220

15,022

High

1.7080

4,277.0

8.2865

9,719.0

110.64

10,888

3.8040

6.2625

2.2000

56.000

1.6890

1,032.1

31.665

41.365

16,625

End

1.7040

4,271.0

8.2865

9,716.0

110.58

10,664

3.8010

6.2625

2.2000

55.980

1.6860

1,032.1

31.665

41.365

15,866

Regional Currency Rates


J U L Y 2 0 0 5

N o t e w o r t h y E v e n t s

June 1, AUSTRALIA/INDONESIA: The Indonesian Embassy in Canberra, Australia, closes after embassy officials receive an envelope that preliminary tests indicate contains a biological agent.

June 1, CHINA/U.S.: Chinese Foreign Minister Li Zhaoxing and U.S. Secretary of State Condoleezza Rice say in a phone conversation that they will make joint efforts to prepare for meetings between top leaders of the two countries.

June 1, NORTH KOREA: North Korea divides the Ministry of Metal and Machine-Building Industries into two ministries.

June 1, INDONESIA: The Indonesian Parliament issues a resolution asking the government to boycott all meetings of the Association of Southeast Asian Nations (ASEAN) if Myanmar becomes ASEAN’s chair.

June 1, JAPAN: Japan says it has “no plans for state-sponsored prospecting” in an area of the East China Sea it disputes with China.

June 1, PHILIPPINES: Philippine militant group the Moro Islamic Liberation Front rejects a cease-fire proposed by the government as a precondition for the resumption of formal peace talks.

June 1, SOUTH KOREA/VIETNAM: South Korea and Vietnam agree to a bilateral trade agreement that would boost Vietnam’s bid to join the World Trade Organization by the end of 2005.

June 2, BRUNEI/CHILE/NEW ZEALAND/SINGAPORE: Representatives from Brunei, Chile, New Zealand and Singapore say they have reached a free trade agreement to eliminate duties on more than 90 percent of goods.

June 2, CHINA: China charges Zhao Yan, a researcher for The New York Times, with fraud.

June 2, CHINA: China’s Sinopec Corp. acquires a 40 percent stake of the Northern Lights Oil Sands Project in Alberta, Canada, for about $122 million.


J U L Y 2 0 0 5

June 2, CHINA/INDIA/RUSSIA: Chinese Foreign Minister Li Zhaoxing, his Russian counterpart Sergei Lavrov and Indian counterpart Natwar Singh meet in Vladivostok, Russia, for the fourth informal Chinese-Indian-Russian foreign ministers’ meeting. The three exchange views on regional and international situations and explore trilateral cooperation in the economic field.

June 2, CHINA/RUSSIA: After 40 years of negotiations, Chinese Foreign Minister Li Zhaoxing and Russian Foreign Minister Sergei Lavrov sign a final agreement on their two nations’ eastern border.

June 2, CHINA/U.S.: U.S. Commerce Secretary Carlos Gutierrez arrives in Beijing to meet with Chinese Vice Premier Wu Yi and Chinese Commerce Minister Bo Xilai.

June 2, JAPAN/INDONESIA: Indonesian President Susilo Bambang Yudhoyono and Japanese Trade Minister Shoichi Nakagawa agree in a summit meeting to start negotiating a free trade agreement by July and to step up cooperation for disaster management.

June 2, PHILIPPINES: Philippine President Gloria Macapagal Arroyo says she will call a constitutional convention to change the country’s form of government from a presidential system to a federated, parliamentary system in 2006.

June 2, NORTH KOREA/SINGAPORE: Asia’s defense ministers begin a three-day meeting in Singapore to discuss security, terrorism and the nuclear standoff with North Korea.

June 2, SOUTH KOREA: Trade ministers from the Asia-Pacific Economic Cooperation forum countries start a conference on Cheju Island, South Korea.

June 2, JAPAN, SOUTH KOREA: A two-day standoff between South Korea and Japan in waters off the coast of South Korea ends peacefully after both sides agree to a deal.

June 3, CHINA: Construction starts in China on what is to become the largest shipyard in the world, marking a major step forward in China’s ambition to become the world’s leading ship builder.


J U L Y 2 0 0 5

June 4, CHINA/U.S.: Chinese Minister of Commerce Bo Xilai holds talks with U.S. counterpart Carlos Gutierrez in Beijing to find a solution to the Sino-U.S. textile trade friction and to discuss intellectual property right protection. June 5, MALAYSIA: Malaysian Islamist group Parti Islam se-Malaysia (PAS) names new liberal leaders in an effort to stay relevant. PAS elects reformist Nasharudin Mat Isa as deputy to conservative leader Hadi Awang.

June 6, NORTH KOREA/U.S.: North Korean officials meet in New York with Joseph DeTrani, U.S. special envoy to the six-party talks on North Korea’s nuclear weapons program, and Jim Foster, director of the U.S. State Department Office of Korean Affairs.

June 6, JAPAN/U.S.: Japan and the United States will begin a five-year development phase of a joint sea-based missile defense system in 2006, Japanese Self-Defense Forces Chief Yoshinori Ono says.

June 6, PHILIPPINES: A spokesman for President Gloria Macapagal Arroyo says a tape smearing Arroyo’s reputation is fabricated. The Arroyo administration releases the allegedly doctored tapes.

June 7, AUSTRALIA/INDONESIA: A suspicious parcel delivered to the Indonesian Embassy in Canberra, Australia, forces the embassy to close for the second time in a week.

June 7, CHINA/OMAN/QATAR/RUSSIA/UNITED ARAB EMIRATES: Chinese Vice Premier Zeng Peiyan leaves for four-nation tour of Oman, Qatar, Russia and the United Arab Emirates. Zeng will attend the second South Summit in Doha, Qatar, on June 15.

June 7, AUSTRALIA/CHINA: Two Chinese nationals seeking political asylum in Australia publicize claims that their government has a network of 1,000 spies in Australia and often engages in illegal efforts to abduct Chinese nationals in Australia and transport them back to China.

June 7, INDONESIA: A bomb threat hoax at Indonesia’s Trade Ministry building in Jakarta leads to the evacuation of hundreds of staff. A staff member reportedly receives the threat via mobile phone message, but a police bomb squad finds no device when it searches the building.


J U L Y 2 0 0 5

June 7, THAILAND/U.S.: During his meeting with Thai Prime Minister Thaksin Shinawatra and Thai security officials, U.S. Secretary of Defense Donald Rumsfeld calls for more regional cooperation in fighting pirates.

June 7, BRAZIL/GERMANY/INDIA/JAPAN/U.N.: Brazil, Germany, India and Japan will delay the submission of a draft resolution on U.N. reform to the U.N. General Assembly until at least July from an initial target of June.

June 8, CHINA/U.N.: China issues a position paper on U.N. reforms, emphasizing multilateralism and urging that reforms meet the needs of developing countries.

June 8, CHINA: China’s Shenhua Energy Co. Ltd. sells more than 3 billion shares and raises $2.95 billion -- less than it sought -- in the world’s largest initial public offering in 2005.

June 9, NORTH KOREA, U.S.: North Korea has an arsenal of nuclear bombs and is in the process of increasing its size, North Korean Vice Foreign Minister Kim Gye Gwan says. Kim adds that North Korea has no plans to attack the United States.

June 9, PHILIPPINES: The Philippine military is on full alert after receiving reports that anti-government protesters would add to the calls for President Gloria Macapagal Arroyo’s ouster.

June 10, CHINA/EU: EU Trade Commissioner Peter Mandelson arrives in Shanghai, China, for talks with Chinese government officials, including Commerce Minister Bo Xilai, regarding the increase in Chinese exports of certain textile products.

June 10, SOUTH KOREA/U.S.: U.S. President George W. Bush and South Korean President Roh Moo Hyun meet in front of reporters in the White House, where Bush says the United States and South Korea share the same goal of peace on the Korean Peninsula. June 10, TAIWAN/VIETNAM/WTO: Talks in Hanoi between Taiwan and Vietnam on Vietnamese accession to the World Trade Organization end.

June 11, BRAZIL/CHINA/INDIA/SOUTH AFRIFA/G-8: Chinese Finance Minister Jin Renqing meets with finance ministers of the G-8 nations and of Brazil, China, India and South Africa in London.


J U L Y 2 0 0 5

June 11, CHINA/EU: Following 10 hours of marathon talks between top trade officials, China and the European Union reach a deal to settle their ongoing dispute over textile trade. The deal will limit the growth of Chinese textile and clothing exports to EU in the coming three years to secure a smooth transition before the complete opening of the European market to Chinese textile products in 2008.

June 11, PHILIPPINES: Approximately 5,000 demonstrators gather in Manila to call for President Gloria Macapagal Arroyo to step down over corruption allegations.

June 11, SOUTH KOREA/U.S.: U.S. President George W. Bush and South Korean President Roh Moo Hyun meet for 40 minutes.

June 13, AUSTRALIA/EAST TIMOR: Australian peacekeeping troops in East Timor hand over an army base in the Timorese town of Moleana, marking the final withdrawal of Australian forces from East Timor.

June 13, NORTH KOREA/U.S.: U.S. President George W. Bush and North Korean defector and human rights activist Kang Chol Hwan meet and discuss Kang’s book “Aquariums of Pyongyang,” which details his 10 years in a North Korean prison camp.

June 14, CHINA/AUSTRALIA: The Australian Security Intelligence Organization, Australia’s domestic intelligence agency, announces it will investigate claims by Chinese diplomat Chen Yonglin that China is operating a network of around 1,000 spies in Australia.

June 14, CHINA/EU: The European Union calls off plans to lift its arms embargo against China. China’s Foreign Ministry then demands that theEuropean Union lift its arms embargo as soon as possible to help end “political discrimination against China” and to remove the last obstacle in Sino-EU relations.

June 14, MYANMAR: Members of the Supreme Court are assigned to set up the trial of former prime minister and spy chief, Khin Nyunt. A specific start date has yet to be set. Some 300 people linked to Nyunt face secret tribunals within Myanmar’s Insein prison. The court heard charges against Nyunt in an earlier secret hearing; specific charges are not known.


J U L Y 2 0 0 5

June 14, JAPAN: Japanese lawmakers pass a bill allowing incoming ballistic missiles to be intercepted from Japanese territory.

June 15, NORTH KOREA/SOUTH KOREA: North Korea and South Korea conduct joint ceremonies in Pyongyang, North Korea, to commemorate the fifth anniversary of the inter-Korean summit.

June 15, INDONESIA: A bomb is defused in Jakarta in the parking lot of the Tanjung Barat rail station.

June 16, CAMBODIA: Four masked men hold children hostage at the Siem Reap International School. The leader, Chea Khom, kills a two-year-old Canadian boy to show security forces that he is serious. The siege ends when Cambodian police raid the school.

June 16, PHILIPPINES: Customs agents in Manila intercept a shipment of high-powered firearms, ammunition and gun parts officials say was intended for groups seeking the overthrow of the Philippine government.

June 16, CHINA/U.S.: Chinese and U.S. representatives begin initial consultations regarding textile trade via videoconference and discuss import restrictions recently imposed by the United States on seven categories of Chinese-made clothing and textile goods.

June 17, CHINA/U.S.: U.S. officials are in sharp disagreement with Israel over its sale of military technology to China, U.S. Secretary of State Condoleezza Rice says.

June 17, NORTH KOREA/SOUTH KOREA: A man in a North Korean military uniform is found hiding in a truck at a public park in Cheorwon, South Korea, near the demilitarized zone with North Korea. The South Korean military says it believes the man, who speaks with a North Korean accent, is a defector.

June 17, NORTH KOREA/SOUTH KOREA: Two North Koreans arrive at the South Korean island of Baekryong aboard a small motorless vessel and express their hope to defect to the South.

June 17, NORTH KOREA: North Korean leader Kim Jong Il meets with visiting South Korean Unification Minister Chung Dong Young for about five hours in Pyongyang, North Korea.


J U L Y 2 0 0 5

June 17, CHINA/U.S.: Bank of America Corp. signs a deal to buy a 9 percent stake in China Construction Bank Corp., the largest acquisition by a foreign financial institution in China.

June 18, PHILIPPINES: The smuggled firearm parts seized by Bureau of Customs agents at the Manila International Container Port on June 16 were unlikely to be used in destabilization efforts against the government, the Bureau of Customs deputy commissioner says.

June 19, SOUTH KOREA: South Korean soldier Kim Dong Min throws a grenade and fires a rifle at his fellow soldiers as they sleep, killing eight of them and injuring two. The attack occurred in Yeoncheon county near the border with North Korea.

June 19, CHINA/EU: Chinese and European scientists say they have identified a cure for SARS. The scientists found that cinanserin, a medicine used to treat schizophrenia, effectively inhibits the corona virus that causes SARS.

June 20, VIETNAM/U.S.: Vietnamese Prime Minister Phan Van Khai, on a one-week visit to the United States, meets with Microsoft Corp. founder Bill Gates and tours Microsoft’s headquarters.

June 20, CHINA: Chinese Foreign Minister Li Zhaoxing and his Israeli counterpart Silvan Shalom meet in Israel.

June 20, JAPAN/SOUTH KOREA: Japanese Prime Minister Junichiro Koizumi meet with South Korean President Roh Moo Hyun in Seoul to discuss bilateral ties and historical issues between their two countries.

June 20, INDONESIA/PHILIPPINES: Indonesian President Susilo Bambang Yudhoyono arrives in the Philippines for a three-day visit with government officials to discuss bilateral economic relations between the two countries and counterterrorism operations.

June 21, CHINA: China’s government appoints veteran civil servant Donald Tsang as Hong Kong’s new leader.

June 21, SOUTH KOREA/CHINA: South Korean Prime Minister Lee Hae Chan meets with Chinese Premier Wen Jiabao in Beijing, where the two discuss regional and international issues, including the situation in North Korea.


J U L Y 2 0 0 5

June 21, TAIWAN: Taiwan deploys two frigates to waters near uninhabited islands in the East China Sea to protect fishing boats from interference from Japanese patrol boats. June 21, PHILIPPINES: The Philippine House of Representatives begins hearings into allegations of vote rigging in President Gloria Macapagal Arroyo’s May 2004 election victory, stemming from recordings of Arroyo allegedly speaking with officials from the election commission.

June 21, PHILIPPINES: Cardinal Jaime Sin, former leader of the Roman Catholic Church in the Philippines, dies after suffering from a high fever and multiple organ failure since June 19.

June 21, VIETNAM/U.S.: Vietnamese Prime Minister Phan Van Khai and U.S. President George W. Bush meet in the Oval Office and discuss bilateral economic relations, Vietnamese entry into the World Trade Organization, security issues and human rights issues.

June 21, SOUTH KOREA/NORTH KOREA: A delegation from North Korea arrives in Seoul for a meeting that concludes with a 12-point joint statement announcing the parties have agreed to take “substantial steps” toward a peaceful resolution of the North Korean nuclear weapons program issue.

June 21, JAPAN/TAIWAN: More than 10 politicians from Taiwan sail near uninhabited islands northeast of Taiwan to show their resolve to protect Taiwanese fishermen from Japanese harassment in an area claimed by both sides.

June 22, CHINA/SOUTH KOREA: Chinese President Hu Jintao agrees to cooperate closely with South Korea to revive the stalled six-party talks on North Korea’s nuclear weapons program.

June 22, PHILIPPINES: A Philippine worker is freed after seven months of captivity by militants in Iraq.

June 22, SOUTH KOREA: South Korean Defense Minister Yoon Kwang Ung offers his resignation to President Roh Moo Hyun after a soldier killed eight fellow troops June 19.

June 23, CHINA: China National Offshore Oil Corp. bids $18.5 billion in cash for Unocal Corp., the ninth-largest oil company in the United States.


J U L Y 2 0 0 5

June 23, CHINA: A Chinese delegation led by Foreign Minister Li Zhaoxing meets Syrian Prime Minister Mohammad Naji al-Otari in Damascus to discuss strengthening economic ties between the two nations.

June 23, CHINA/JAPAN: Chinese Vice Foreign Minister Dai Bingguo and Japanese Vice Foreign Minister Shotaro Yachi meet in Tokyo for the second round of strategic talks on bilateral relations.

June 23, CHINA/SYRIA: Syrian President Bashar al Assad, Prime Minister Mohammed Naji al-Otari and Foreign Minister Farouk al-Shara meet separately with visiting Chinese Foreign Minister Li Zhaoxing in Damascus.

June 23, CHINA/U.S.: Federal Reserve Chairman Alan Greenspan testifies before the Senate Finance Committee that imposing trade tariffs on China would be misguided and would put the future of the U.S. economy at risk.

June 23, INDONESIA: Two shots are fired at a Red Cross vehicle in Aceh province in the west coast town of Lamno, wounding a Chinese tsunami aid worker.

June 23, INDONESIA/OPEC: The Organization of the Petroleum Exporting Countries (OPEC) asks Indonesia to retain its membership amid rumors Jakarta is thinking about leaving OPEC.

June 23, NORTH KOREA: The United States pledges to give North Korea 50,000 metric tons of food aid. The aid will be distributed through the U.N. World Food Program.

June 23, INDIA/SOUTH KOREA: South Korean steel company Posco announces plans to build a plant in India’s Orissa state. The deal, worth $12 billion, will represent South Korea’s largest foreign direct investment to date.

June 23, THAILAND: Thailand plans to send security forces into government-declared “violent zones” in the predominantly Muslim southern provinces of Narathiwat, Pattani and Yala to try to kill those responsible for a surge of deadly attacks.

June 23, VIETNAM/U.S.: U.S. military specialists will return to Vietnam to help train Vietnamese soldiers under a new agreement with the Pentagon, a senior Vietnamese official says.


J U L Y 2 0 0 5

June 24, CHINA: China’s government will order 6,000 industrial firms in Beijing to shut down for a week during the summer and will order another 5,800 companies to give their workers days off to manage a severe power shortage, state-owned newspaper China Daily reports.

June 24, CHINA: Donald Tsang is sworn in as the new chief executive of Hong Kong.

June 24, PHILIPPINES: Philippine President Gloria Macapagal Arroyo appoints Lt. Gen. Generoso Senga as commander in chief of the country’s armed forces.

June 24, PHILIPPINES: Five thousand protesters march on central Manila to demand Philippine President Gloria Macapagal Arroyo’s resignation over allegedly fixing the 2001 Philippine presidential election.

June 26, ASIA-EUROPE FORUM: Finance Ministers from 13 Asian and 25 European nations, as well as representatives of the European Commission, gather in north China’s Tianjin Municipality for the Asia-Europe Finance Ministers’ Meeting to discuss various options for deepening economic and financial ties between the two continents.

June 27, ASEAN/AUSTRALIA: Australian Foreign Minister Alexander Downer says Canberra would be willing to sign a nonaggression pact with Association of Southeast Asian Nations (ASEAN) to take part in ASEAN’s East Asia Summit, as long as the pact does not interfere with other Australian treaties.

June 27, CHINA: China’s National Development and Reform Commission (NDRC) decides to raise the prices of gasoline and diesel oil by 5 percent and 4 percent per ton, respectively.

June 27, PHILIPPINES: An impeachment complaint is filed in the Philippine House of Representatives against President Gloria Macapagal Arroyo, saying Arroyo should be ousted for a “betrayal of public trust” arising from the “Gloriagate tapes” that allegedly establish voter fraud during May 2004 Philippine elections. In a televised statement, Arroyo acknowledges the voice on the tape is hers, but denies having influenced the election.


J U L Y 2 0 0 5

June 29, SOUTH KOREA/U.S.: South Korean Unification Minister Chung Dong Young begins a visit to the United States scheduled to end July 3.

June 30, CHINA/KAZAKHSTAN/RUSSIA: Chinese President Hu Jintao be-gins a state visit to Russia and Kazakhstan scheduled to end July 7 that will include attending the summit meeting of the Shanghai Cooperation Organi-zation in the Kazakh capital, Astana.

J u l y a n d B e y o n d

July 1, VIETNAM: Vietnamese Prime Minister Phan Van Khai to meet Japanese Prime Minister Junichiro Koizumi in Japan.

July 1, SOUTH KOREA: South Korean Ministry of Finance and Economy to establish the state-run Korea Investment Corp.

July 1, ASEAN/CHINA: China and Association of Southeast Asian Nations to reduce duties on 7,445 products.

July 4, CHINA: Greater Mekong Subregion Summit to be held in Kunming, China, through July 5.

July 4, VIETNAM: Evaluation of Vietnam’s compliance with the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights compliance and of Vietnam’s draft of intellectual property law to be held through July 29.

July 5, KAZAKHSTAN/SCO: Shanghai Cooperation Organization summit to be held in Astana, Kazakhstan.

July 6, U.K.: G-8 Summit to be held through July 8 in Gleneagles, Scotland.

July 7, JAPAN/SOUTH KOREA: South Korea and Japan to hold consular affairs talks in Seoul, South Korea.

July 11, THAILAND/U.S.: The fourth round of Thailand-U.S. free trade agreement negotiations to be held in Montana through July 29.

July 12, SINGAPORE/U.S.: Singaporean Prime Minister Lee Hsien Loong to hold talks with U.S. President George W. Bush in Washington.


J U L Y 2 0 0 5

July 18, CHINA/VIETNAM: Vietnamese President Tran Duc Luong to meet Chinese President Hu Jintao in China through July 22.

July 19, AUSTRALIA/TAIWAN: Bilateral economic consultations between Taiwan and Australia to be held in Canberra, Australia, through July 20.

July 24, ASEAN/LAOS: The 38th annual Ministerial Meeting of the Association of Southeast Asian Nations to be held in Laos through July 30.

July 28, APEC/U.S.: Asia-Pacific Economic Cooperation symposium on avian influenza to be held in San Francisco through July 29.

July 29, JAPAN/TAIWAN: The 15th round of fishery talks between Japan and Taiwan to begin in Tokyo.

July 31, APEC/MALAYSIA: Kuala Lumpur, 3rd Asia-Pacific Economic Cooperation Business Advisory Council meeting to be held through Aug. 2. TBD, CHINA/NORTH KOREA: Chinese President Hu Jintao likely to visit North Korea, probably in early July.

C h a n g e s

ChinaAfter 10 hours of negotiation, EU Trade Commissioner Peter Mandelson and Chinese Commerce Minister Bo Xilai reached an agreement early June 11 settling the current disputes between the parties over textile trade. The agreement, a memorandum of understanding, will limit the year-on-year growth of exports of Chinese textiles into the European Union to 8 percent to 12.5 percent through the end of 2007. Currently, the European Union is second only to the United States as a trading partner with China. The China Banking Regulatory Commission (CBRC) announced June 16 that the Chinese legislature seeks to define fraudulent activities for bank loans and illegal disposal of nonperforming assets as crimes under Chinese law. Additionally, the CBRC said June 22 it will raise the maximum limit on foreign ownership of domestic banks. This move is intended to increase involvement of foreign investors in the management of Chinese banks and to hasten banking reform.


J U L Y 2 0 0 5

Hong KongDonald Tsang, sworn in as the new chief executive of Hong Kong on June 24, is a Hong Kong native born in 1944. He attended Wah Yan College, graduating in 1964, after which he entered public service. Tsang worked in various government offices until 1981, when he went to study in the United States, receiving a master’s degree in public administration from Harvard University in 1982. He also has received honorary doctorates from the Chinese University of Hong Kong, the Hong Kong Polytechnic University and the University of Hong Kong. From 1985 to 1993, Tsang served as deputy secretary of the General Duties Branch and director general of trade before being promoted to secretary for the treasury. In September 1995, Tsang became the first person of Chinese heritage to be appointed financial secretary. In 2001, Tsang was promoted to chief secretary. After Tung Chee Hwa resigned, Tsang was appointed acting chief executive until the end of Tung’s term on June 30, 2007. Tsang was knighted in 1997 for long-time service to Hong Kong, but does not use his title in public. He is also a devout Roman Catholic.

South KoreaSouth Korean Prime Minister Roh Moo Hyun appointed Chun Jung Bae to be his new justice minister. Chun, who graduated from Seoul National University in the 1970s with a law degree, focused his career on human rights law, representing unionists and dissidents. He was elected to Parliament in 1996, and became the Uri Party floor leader in May 2004.

Lee Jae Yong was appointed to be Minister of the Environment. Lee originally made his career as a dentist, but became involved in politics in the early 1990s through his involvement with environmentally minded nongovernmental organizations. He unsuccessfully ran for mayor of Daegu in 2002, and also unsuccessfully sought a seat in the National Assembly as a member of the Uri Party in 2004.

TaiwanTaiwan’s National Assembly adopted a packet of substantial constitutional reforms June 7, which included a provision for the assembly’s abolishment. The legislature had approved reform packet in August 2004; the reforms enjoyed broad support from both the Democratic Progressive Party and the opposition Nationalist Party.


J U L Y 2 0 0 5

Electoral reforms include an entire restructuring of the voting system, from a “single-vote, multiple-seat constituency” system to a “single-seat constituency, two ballots” system. Impeachment procedures for presidents and vice presidents are now relegated to the Council of Grand Justices. Reforms of the Legislative Yuan, Taiwan’s legislature, are also significant. Beginning with the next election in 2007, the number of legislative seats will drop from 225 to 113, while legislators’ terms will increase from three years to four years. All constitutional matters, formerly addressed by the now-defunct National Assembly, will be decided by national referendums.


J U L Y 2 0 0 5

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J U L Y 2 0 0 5

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Enterprise Subscription Packages – STRATFOR also offers multiple-user packages to corporations, government agencies, educational and non-profit institutions that need reliable intelligence and insightful analysis and forecasts in their everyday activities.





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