2008-10-17 04:45:01 -
China Defence and Security Report Q3 2008 - a new market research report on http://www.companiesandmarkets.com
www.companiesandmarkets.com/Summary-Market-Report/China-Defence- ..
The most significant development pertaining to the general security situation in China this quarter is the result of the recent presidential election in Taiwan. Ma Ying-jeou of the Kuomintang (KMT) party was elected President of Taiwan in late March 2008 on a platform that emphasised improved relations with mainland China. This development was well received in Beijing: Premier Wen Jiabao almost immediately invited the KMT-controlled government of Taiwan to participate on economic co-operation and a possible peace agreement. On 12 April, Taiwanese Vice-President-Elect Vincent Siew met with Chinese President Hu Jintao at the Forum for Asia Conference on Hainan.
This was the first high-level meeting between the two governments since 1949. President Ma called for a new chapter of peace
in his inauguration speech on 20 May. Shortly afterwards, there was another historic meeting, between President Hu Jintao and KMT Chairman Wu Poh-hsiung. And, in early June, a conference in Beijing examined a possible resumption of direct transport links between Taiwan and the mainland: this was the first substantive bilateral discussion between the two sides in over a decade. In contrast to the improvement in relations with Taiwan, the situation in Tibet has deteriorated. The previous quarter was marred by continued protests and unrest among Chinas Tibetan minority. Steven Marshall, a Senior Advisor for the US Congressional-Executive Commission on China, suggested that except for periods of armed conflict between Tibetan and Chinese armed forces, no Chinese government has been confronted by an upsurge of Tibetan discontent as widely dispersed, sustained and popular since the Chinese Communist Party established the Peoples Republic of China in 1949.
Mr Marshall notes that the latest episode differs from the two previous major periods of unrest in 1959 and 1989 for two reasons. First, the protests are not just confined to Lhasa and the Tibetan Autonomous Region. They have spread to the Tibetan Autonomous Prefectures in Qinghai, Gansu and Sichuan Provinces. Second, the unrest has continued even as the Chinese authorities took steps to suppress, or at least to limit the flow of information from, the protesters. The Dalai Lama, as spiritual leader of Tibetan Buddhism and a figure who has consistently urged non-violence, suggested that protests could intensify if the latest (and seventh) round of discussions between the Tibetans and the authorities in Beijing fail to produce a constructive solution. As we have explained in recent quarters, business is booming for Chinas indigenous arms companies. This is partly because of the actual (and likely to continue) double-digit growth in the economy. It is also partly because of the ongoing transformation and modernisation of the armed forces with major procurement programmes for each of the three major branches.
Moreover, China has shown that it is competitive as an exporter of advanced equipment. In Q207, AVIC I announced a number of new orders for its ARJ21-900 airliners: in addition, several Chinese organisations signed technological co-operation agreements with foreign governments. Nevertheless, huge challenges remain to be overcome. As we explain in this report, many of the Chinese arms companies are operating facilities that are over-manned, inefficient and for historic reasons in sub-optimal locations that are a long way from major manufacturing centres such as the Pearl River Delta region. It also appears that despite economic growth slowing slightly in Q307, China now looks all but guaranteed to secure its fastest annual pace of expansion since 1993. This has increased expectations of further tightening from the authorities, especially in view of stubbornly high inflation, but we nonetheless remain sanguine on the prospect of this happening at a faster pace than we are currently witnessing. The upcoming 2008 Olympic Games to be held in Beijing in August will also be China´s highest-profile public event to date, and will at least symbolically mark its emergence onto the world stage.
