The Mekong, one of the world’s major rivers, starting in Tibet and flowing through south China, Burma, Thailand, Laos, Cambodia, and Vietnam, provides sustenance through irrigation and fishing to those living in its basin. But it also provides hydroelectric power through dams, three of which were built in China and with more planned. And it is precisely these dams that are now threatening the water supply, the livelihood of those living downstream, and the relations between China and its southern neighbors.

Thailand’s government is now attempting to deal with record-low water levels in the Mekong, a river which supports the livelihoods of about 60 million people in Southeast Asia. Many along the river blame the problem on China, which has planned eight hydroelectric dams on the upper Mekong, four of which have already been built.

In 1986, China began to build eight hydroelectric dams and two reservoirs on the waterway in Yunnan province, where the Lancang tributary traverses more than 1,000 kilometres.

The first dam at Manwan, was finished in June 1995. The second, at Dachaoshan, began in August 1997 and will be completed in 2003. The 2.7 billion U.S. dollar Xiaowan project, with a total installed generating capacity of 4.2 million kilowatts, is scheduled to be completed in 2012.
Xiaowan should further affect the level of fish stocks in Cambodia and water supply for Vietnam’s rice fields. But China contends controlling the water flow will prevent the adverse effects of erosion caused by the Mekong’s flooding cycle and will supply renewable energy. Winning the debate or coming to a workable compromise is further complicated by China’s refusal to join the Mekong River Commission, an inter-government agency whose members include the four of the downstream countries. And though the global financial crisis has put on hold other dams being planned by the downstream countries, China is moving ahead with its plans.

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China has announced that its military budget will rise by 7.5 per cent this year. The numbers if official will end more than two decades of annual double-digit increases.

The increase was unveiled on the eve of the annual session of China’s parliament, the National People’s Congress (NPC).

The meeting of the NPC is the biggest event on the Chinese political calendar, and the event is tightly scripted. It is more for show than for actual policy-making.

More from the Associated Press:

China on Thursday announced its smallest increase in defense spending in more than two decades, a likely result of both financial constraints and growing concern over perceptions of Beijing as a regional military threat.

The planned 7.5 percent boost in defense spending in 2010 follows at least 20 years of double-digit increases in the budget for the People’s Liberation Army — the world’s largest standing military with more than 2.3 million members.

Rapid military modernization and the acquisition of cutting-edge jet fighters, warships and submarines have aroused suspicions in Washington, Tokyo, New Delhi and elsewhere over China’s intentions, further fueled by Beijing’s growing diplomatic assertiveness and booming economic might.
The increase will be used to enhance China’s ability “to meet various threats,” said Li Zhaoxing, spokesman for China’s parliament, the National People’s Congress, at a news conference held on the eve of the opening of its annual legislative session.

“China is committed to peaceful development and a military posture that is defensive in nature,” Li said.

He said this year’s defense budget of 532.11 billion yuan ($77.9 billion) remained relatively low, particularly in relation to the country’s vast territory and population. Li said Chinese defense spending has accounted for about 1.4 percent of gross domestic product in recent years, as opposed to more than 4 percent in the United States and more than 2 percent in Britain, France and Russia.

The increase over actual military spending in 2009 was 37.12 billion yuan, Li said. Defense expenditures account for 6.3 percent of China’s total budget, a decline from previous years, he said.

Officials say about one-third of China’s spending goes to salaries and improving living conditions for soldiers, with the rest split between replacing equipment and military research and development.

However, many overseas analysts believe the official figure accounts for only a part of actual military spending, with estimates on the total amount ranging up to twice or more what Beijing claims.

Figures provided by China’s Cabinet show the country’s last single-digit percentage in defense spending was in the 1980s.

The smaller rise in spending is due in part to the hit China’s economy, especially the crucial export sector, has taken from the global financial crisis, prompting the government to rein in some expenditures, said Ni Lexiong, a defense analyst at Shanghai University of Political Science and Law.

Meanwhile, the leadership has realized that large increases are generating concern and suspicion among China’s neighbors, potentially sparking an arms race, he said.

“The decline shows that China does not want to be seen as an aggressive military power,” Ni said.

Thursday’s announcement follows repeated protests recently by Beijing over the U.S. sale of weaponry to Taiwan. Those sales are driven by threats from China to use force to bring the island under its control, backed up by an estimated 1,300 Chinese ballistic missiles positioned along the Taiwan Strait.

Communist-ruled China split with Taiwan amid civil war in 1949 and continues to regard the self-governing democracy as part of its territory. Beijing has warned of a disruption in ties with Washington if the sale goes ahead, but has not said what specific actions it would take.
Li, the congress spokesman, accused some foreign countries of backing Taiwan to thwart China, calling that unacceptable interference in China’s internal affairs.

Washington’s announcement in January that it intended to sell Taiwan $6.4 billion in helicopters, air defense missiles and other military hardware was especially unwelcome because it came amid a warming trend in Beijing’s relations with the island, he said.

Taiwan relations are less a factor in Beijing’s defense spending than economic stress and worries about appearing overly aggressive, said defense scholar Wang Kun-yi of Taipei’s Tamkung University.
“China’s defense budget is not specifically linked to cross-strait developments, but rather it is more related to the country’s global positioning,” Wang said.

Defense spending is among budget items to be approved at the end of the National People’s Congress’ session, which begins Friday and runs through March 14.

This year’s session is expected to see a shift in spending priorities toward affordable housing, education, health care and other social programs.
Li said the full assembly this year would amend a law on how deputies are selected, correcting a disparity that gave urban Chinese greater representation than their more numerous rural neighbors.

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101 East looks at the Ainu, Japan’s indigeneous people, and their fight for cultural survival and acceptance. Over the last century, they have seen their traditions and their language stripped away, along with their ancestral lands. But after generations of oppression, racism and forced assimilation, change is in the air for the Ainu.

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Former U.S. Secretary of Labor Robert Reich warns easy money and stimulative policies may be creating the next global economic bubbles. He speculates that the two most worrisome candidates within the next year are commodities and China.

Is the U.S. economy showing signs of recovery, as some indicators suggest, or are these assertions dangerously premature?

Having served in three administrations, former U.S. Secretary of Labor Robert Reich is uniquely positioned to share his take on the 2010 economic outlook for California, the U.S., and the rest of the world in this year’s annual installment of the Walter E. Hoadley Economic Forecast. – Commonwealth Club

Robert Reich is professor of public policy at the Goldman School of Public Policy at UC Berkeley. He served in three national administrations; his articles appear frequently in The New York Times and The Washington Post, and he is a commentator for American Public Media’s “Marketplace,” heard on NPR.

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Adam Segal, senior fellow at the Council on Foreign Relations and John Delury, associate director of the Center for U.S.-China Relations at the Asia Society, join Daljit Dhaliwal to discuss Sino-American relations and whether China will assume global supremacy.

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Marcus Mabry, international business editor of The New York Times, and John Authers, the investment editor for the Financial Times, join Daljit Dhaliwal of World Focus to discuss the impact of US economic policies overseas, the risk of inflation in China, the fate of Japan’s economy and recovery efforts across Europe.

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Less than six months after taking power, Japan’s new government is grappling with a budget blowout, financial scandals, and falling voter support. The story in Reuters:

Just over half of Japanese voters don’t want the ruling party to win a majority in a mid-year poll, a survey showed on Friday, a sign of frustration that could add to pressure on a party kingpin to quit over a funding scandal.

The scandal linked to a top Democratic Party official has eroded support for Prime Minister Yukio Hatoyama’s government ahead of the election for parliament’s upper house in July or August, risking policy stalemate in the long term.

The nationwide survey by the Yomiuri newspaper and Tokyo’s Waseda University showed 35 percent of nearly 1,800 respondents said they wanted the Democrats to gain an outright majority in the election, against 54 percent who said they did not.

The Democrats want to win an outright majority in the upper house to help pass legislation smoothly. Without it, coalition dynamics could continue to complicate policy decisions because two tiny coalition partners sometimes differ on key policies. Japanese media say Democratic Party Secretary-General Ichiro Ozawa will voluntarily submit to questioning by prosecutors for about four hours on Saturday as they seek to determine the source of misreported funds used to buy property.

Ozawa, under fire after his former aides were arrested on suspicion of improperly reporting political funds, has denied intentionally breaking any laws.

He will likely tell prosecutors the money came from his own and family bank accounts, but prosecutors suspect construction firms seeking public contracts may have been involved, Japanese media said.

Some newspapers said prosecutors are probing the possibility that Ozawa himself was involved in illegal activities.

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There is little doubt that past year saw an increasingly assertive China that was willing to challenge the Obama Administration on number of fronts from human rights and climate change to trade and monetary policy. And the outlook for the immediate future does not bode well. From the Washington Post:

The United States and China are headed for a rough patch in the early months of the new year as the White House appears set to sell a package of weapons to Taiwan and as President Obama plans to meet the Dalai Lama, U.S. officials and analysts said.

The Obama administration is expected to approve the sale of several billion dollars in Black Hawk helicopters and anti-missile batteries to Taiwan early this year, possibly accompanied by a plan gauging design and manufacturing capacity for diesel-powered submarines for the island, which China claims as its territory. The president is also preparing to meet the spiritual leader of Tibet, who is considered a separatist by Beijing. Obama made headlines last year when the White House, in an effort to generate goodwill from China, declined to meet the Dalai Lama, marking the first time in more than a decade that a U.S. president did not meet the religious leader during his occasional visits to Washington.

The expected downturn with Beijing comes despite a concerted effort by the Obama administration for closer ties. U.S. officials have held more high-level meetings with their Chinese counterparts — including a summit in Beijing in November — in the first year of this administration compared with the inaugural years of the four previous presidencies since relations were normalized with Beijing in 1979, records show.

“I think it’s going to be nasty,” said David M. Lampton, director of China studies at the Johns Hopkins School of Advanced International Studies and author of “The Three Faces of Chinese Power: Might, Money and Minds.” That said, he added, “the U.S. and China need each other.”

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Here is the Monday, January 11th, 2010 edition of what’s making news and interesting reads from around the world. Also please note that off to the left there are two widgets with updates on news from Asia and the world in a separate page: Around Asia & Around the World New Feeds.

Venezuela’s Two-Tiered Devaluation
On Friday after markets had closed, President Hugo Chávez “adjusted” the value of Venezuela’s currency, the bolívar. The bolívar had been fixed at 2.15 to the dollar since 2005 as part of Chávez’s strict controls of Venezuela’s economy in line with his “21st century socialism” policies. But Chávez, in a live address on state TV, said the bolivar would now have two levels — a preferential rate of 2.6 per dollar for essential imports like food, health and machinery and a 4.3 “petro-dollar” rate for other things. The bond market is likely to react positively to the news but the move is likely to spur inflation in Venezuela, already the highest in Latin America. To combat rising prices, Chávez has threatened to expropriate any business that raises its prices.

Venezuela last devalued its currency in 2005, to 2,150 bolivars per dollar from 1,920 bolivars. In 2008, it re-denominated the currency, lopping off three digits. Venezuela’s economy is estimated to have shrunk 2.9 percent in 2009.

The other aspect worth noting is that multi-tiered exchange rate tend to spur corruption and Venezuela has under Chávez descended to the ranks of one of the world’s most corrupt countries. When Transparency International, an NGO that tracks governance issues, first reported its Corruption Perception Index in 2001, Venezuela ranked 69th in a list of 91 countries — or at the bottom 25th percentile of the world’s most corrupt countries. In 2009, Venezuela ranked 162 in the list of 180 countries, or in the 10th percentile of the world’s most corrupt.

A New Institutional Crisis in Argentina
After Argentine President Cristina Fernández de Kirchner removed the President of the Central Bank, Martín Redrado, by decree, the Congress moved to reinstate him plunging the country into another political showdown. The unprecedented confrontation, which could end up before the Supreme Court, has brought to a head a fight over a bid by the president to use central bank reserves to pay down the national debt. Federal Judge María José Sarmiento will examine the government’s appeal of her decision to temporarily suspend a government decree that removed central bank president Martin Redrado from office after he refused to let the reserves be used for debt payments.

Sarmiento has two days to decide whether to accept the appeal lodged by the government on Saturday. If she rejects it, the government can go to the Supreme Court for an urgent decision to resolve an institutional conflict that could threaten Argentina’s fragile economy.

North Korea Seek Peace Treaty with the US
The New York Times reports that North Korea has proposed talks with the United States to reach a formal peace treaty that would replace the truce that ended the Korean War 57 years ago, indicating it would not give up its nuclear weapons until Washington signed such an agreement.

Social Democrat Ivo Josipovic Scores Decisive Win in Croatia
In Croatia’s presidential elections on Sunday, a left of centre Social Democrat, Ivo Josipovic, took just over 60 percent of the vote. Croatia has mixed parliamentary/presidential system with the Prime Minister governing day-to-day affairs but with the President serving as Commander-in-Chief of the armed forces and conducting foreign policy. More from the EU Observer:

Social Democrat law professor and classical music composer Ivo Josipovic won Croatia’s presidential elections on Sunday (10 January), pledging to back the centre-right government’s efforts against corruption on the path to EU accession.

Mr Josipovic won the vote by a sweeping 60.2 percent against his populist rival, Milan Bandic, according to official results out on Monday. The former chairman of the Croatian composers’ society compared the event to a “victorious symphony.”

Despite being from rival political camps, Mr Josipovic promised to back the centre-right Prime Minister Jadranka Kosor’s drive to implement reforms and fight corruption, as required by Brussels to complete EU accession talks.

South Korea Emerges as Nuclear Power Giant
South Korea’s unprecedented acquisition of a US$20.4 billion contract to develop nuclear power plants for the United Arab Emirates is fueling hopes of at least short-term economic development with regard to nuclear energy-related industries. The acquisition of the contract also marks the beginning of a new relationship with the United States over nuclear power. The largest single construction contact Seoul has ever won, it makes South Korea the world’s sixth exporter of nuclear plants. The Asia Sentinel profiles South Korea’s emergence in the nuclear power industry.

EU Railroad Market Deregulation Sets Stage For a Clash of Titans
As of the first of the year, long-distance passenger rail services are completely deregulated within the EU. Der Spiegel looks at the brewing battle between Germany’s Deutsche Bahn and France’s SNCF for the long distance rail market. It’s a clash of titans. Deutsche Bahn, a joint stock company fully owned by the German government, has long claimed to be Europe’s foremost rail transport company but France’s state-owned SNCF is looking to challenge its German rival. Deutsche Bahn generates about €33.5 billion ($48.5 billion) in sales annually, while SNCF brings in around €25 billion. Deutsche Bahn carries approximately two billion passengers each year.

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Australia has been one of the beneficiaries of China’s economic growth over the last two years.

Despite cooling off slightly during the global economic crisis, China’s continuing demand for raw materials has been a major boost to the Australian mining industry.

China’s need for commodities such as iron ore is helping mineral-rich Western Australia lead the rest of the country to recovery.

Al Jazeera’s Aella Callan reports from the small coastal town of Geraldton, where plans are under way to build a new deep water port by 2012 to keep up with the demand from China and other emerging economies in Asia.

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