China is not ready to take America's place

Beijing may complain about Washington, but its reliance on American debt stems from the China’s own economic policies

The Chinese sure are doing a lot of worrying these days about the stalemate in Washington. Li Keqiang, China’s Premier, told U.S. Secretary of State John Kerry that he was watching the tussle over raising the government’s debt ceiling with “great attention” in a meeting last week. He has good reason to be concerned. With a stash of nearly $1.3 trillion in Treasury securities, China is the world’s largest foreign owner of U.S. government debt. If U.S. Congress fails to lift the ceiling to allow the government to borrow more by Thursday, Washington may not have enough money to pay its bills, potentially leading to a default. That could sink the value of Treasuries — wiping out a big chunk of Chinese wealth in the process.

That possibility has caused much consternation in China. In a blistering (and highly hypocritical) editorial, state news agency Xinhua blasted what it sees as Washington’s irresponsibility in handling global affairs and called for greater say for developing nations in international institutions like the IMF and a new reserve currency to replace the dollar.

“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world,” the commentary recommended. “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place.”

Among the Chinese public, the stalemate in Washington has caused confusion and ire. Why, some Chinese are asking, have our leaders invested so much of the country’s money in a government that seems so dysfunctional? “Bought so much [American debt], now you are under the control of others,” went one typical comment posted on microblogging site Sina Weibo. “We should find out who made this decision and let him take the responsibility.”

The Chinese can blame themselves. Since the earliest days of Chinese economic reform, policies that the government has employed to create growth and exports have also made it dependent on debt issued by the U.S. Treasury. Those policies have generated huge current-account surpluses and gargantuan reserves of foreign currency that have left Beijing no other option but to invest in the U.S.

Chinese policy has generally pushed exports while discouraging imports. By controlling the value of its currency, the renminbi (RMB), to promote exports, China hasn’t allowed its exchange rate to adjust to shifts in trade in a way that would bring balance. Economist Huang Yiping once proffered that policies that reduce prices of land, energy and other costs of production also subsidize exports, and thus contribute to surpluses. Meanwhile, the government’s regulation of interest rates has favored investment and punished savers, suppressing domestic consumption.

The current-account surpluses China has notched over the years have resulted in a vault full of foreign-currency reserves — a staggering $3.66 trillion at last count. Though China’s surpluses have been declining (relative to GDP), the country is still adding to this mountain of foreign currency. In the third quarter, China’s foreign-exchange reserves jumped by the largest amount in more than two years.

To many, this ocean of foreign currency shows China’s economic strength, but at the same time, it is also a financial burden. Chinese policymakers simply don’t have many options when managing these giant reserves, and that has forced them to gorge on Treasuries. The U.S.-government-bond market is deep, liquid and reliable — the perfect (and, arguably, only) place to park all those greenbacks. Sure, the Chinese can switch some of their dollars into other currencies, but there is a limit to that strategy. Dumping the dollar would depress its value, eroding China’s own holdings. The only way for China to wean itself off its Treasury habit is to change its entire economic system.

That, though, is happening slowly. One strategy China is pursuing to lessen its dollar dependence is by promoting its own currency as an alternative to the greenback in global trade and finance. The government has had some success. The European Central Bank and China’s central bank recently agreed to a large swap of their currencies. And according to a recent survey from the Bank for International Settlements, the RMB entered the list of top 10 most traded currencies for the first time. Yet in order for the RMB to become a true rival to the dollar, China has to undertake far more reform.

The RMB isn’t fully convertible, nor does it trade freely around the world like the dollar, euro or yen. China is taking stabs at the sort of financial liberalization that would give the RMB an international boost — experimenting with freer capital flows in a new zone in Shanghai, for instance — but those steps are tentative at best. The Chinese government is still reluctant to throw open its financial sector and loosen capital flows and currency trading in a way that would turn the RMB into a solid reserve currency like the dollar.

“China’s policymakers remain deeply uncomfortable with allowing market forces a say in determining the exchange rate at times of uncertainty,” research firm Capital Economics said in a report on Monday. “Policymakers still see opening of capital controls as an important goal. But their actions underline that it remains a long way off.”

What this all means is that China and the U.S. Treasury remain locked in an embrace from which it is very hard for Beijing to escape. What it will take is extensive reform to China’s own economy that so far Beijing has been reluctant to undertake. So Beijing can call for a “de-Americanized world” all it wants. China is not ready to take America’s place.

Iran-pakistan gas line progress

ISLAMABAD:
Setting aside fierce US opposition to the Iran-Pakistan (IP) gas pipeline project, in a strategic move, the pipeline may be stretched and connected to western China as Islamabad and Beijing have made it part of the planned economic corridor.

Earlier, India was actively involved in the pipeline project, but withdrew following a civil nuclear energy agreement with the US. Now, prospects have emerged that China will replace India and receive gas from the pipeline that will connect Iran, Pakistan and China.

According to sources, Pakistani and Chinese officials will discuss the laying of the gas pipeline from Gwadar to western China in a meeting to be held here on August 26. They will also take up a proposal about constructing an oil pipeline between the two countries.

The two sides will sign a memorandum of understanding (MoU) on the economic corridor, which had already been approved by the cabinet.

The upcoming dialogue is a follow-up to Prime Minister Nawaz Sharif’s visit to China in the first week of July. During the trip, Chinese companies expressed interest in laying the gas pipeline from the Gwadar Port to western China. Iran has also expressed interest in stretching the pipeline to China.

As part of the economic corridor, Gwadar Port will be connected through road and rail links to China which will help enhance trade between the two countries. Oil and gas pipelines will feature in the economic corridor, providing much-needed boost to economic activities in insurgency-hit Balochistan.

Pakistan government has asked Iran to bear the entire cost of the gas pipeline as it has found it difficult to arrange funds from some countries following pressure from the US.

The US is pressing Pakistan to shelve the IP pipeline and rather focus on the TAPI gas pipeline which will start from Turkmenistan and reach India through war-torn Afghanistan and Pakistan.

Iran has already committed $500 million for financing Pakistan’s side of the pipeline but Islamabad insists that Tehran should enhance the credit limit

Total cost of pipeline construction in Pakistan has been estimated at $1.5 billion. To cover part of the cost, the government will award a contract for engineering, procurement and construction (EPC) to Iranian firm Tadbir Energy.

“We are waiting for a response from the new Iranian government,” an official said, adding Tehran had already assured the previous government that it could enhance the credit limit if required.

Under the project, Pakistan will import 750 million cubic feet of gas per day (mmcfd) with an option to increase it to one billion cubic feet. Of the import, the Balochistan government seeks to consume 250 mmcfd at the Gwadar Port, which may encourage the central government to purchase more from Iran to meet needs of the least developed province.

Carbon Farms Reverse Global Warming?

A recent study by German researchers presents the possibility of "carbon farming" as a less risky alternative to other carbon capture and storage technologies. It suggests that a significant percentage of atmospheric CO2 could potentially be removed by planting millions of acres of a hardy little shrub known as Jatropha curcas, or the Barbados nut, in dry, coastal areas.

But other experts raised doubts about the study's ambitious projections, questioning whether the Barbados nut would be able to grow well in sandy desert soils and absorb the quantity of carbon their models predict.

The researchers behind the study say Barbados nut plantations could help to mitigate the local effects of global warming in desert areas, causing a decrease in average temperature and an increase in precipitation. If a large enough portion of the Earth were blanketed with carbon farms, they say, these local effects could become global, capturing between 17 and 25 metric tons of CO2 per hectare each year over a 20-year period.

"All the other techniques we know about just prevent emission, nothing else," said lead author Klaus Becker of the University of Hohenheim in Stuttgart, Germany. "Only plants are able to extract carbon dioxide from the air."

The study, published in the journal Earth System Dynamics, states that if 730 million hectares of land -- an area about three-quarters the size of the United States -- were devoted to this method of carbon farming, the current trend of rising atmospheric CO2 levels could be halted.

Carbon farms would not compete with food production if they were concentrated in dry coastal areas, the researchers said. In their scenario, oceanside desalination plants, partially powered by biomass harvested from the plantations themselves, provide a low-emissions irrigation method.

Could huge plantations change weather patterns?
The study states that the Barbados nut is uniquely suited to growing in regions inhospitable to other crops. The plant, which produces a nonedible seed that can be used to create biodiesel, is comfortable growing at temperatures exceeding 100 degrees Fahrenheit. It can also withstand high levels of contamination in the soil, making wastewater another potential source for irrigation.

Additionally, the plant grows rapidly and develops "pretty large roots below the soil, which is important for carbon binding," said co-author Volker Wulfmeyer, also of the University of Hohenheim. As part of their research, Wulfmeyer and Becker traveled to a Barbados nut plantation in Luxor, Egypt, to collect physical samples from the plants to estimate their carbon-storing potential.

There are about 1 billion hectares of desert land in coastal areas that could be used for Barbados nut plantations, the researchers estimate, located in countries such as Mexico, Namibia, Saudi Arabia and Oman. If the entirety of this land were used for carbon farming, the study found, atmospheric carbon dioxide could be reduced by 17.5 parts per million over two decades, or 16.6 percent of the CO2 increase since the start of the Industrial Revolution.

But less ambitious projects may also have an impact. Using models, the researchers projected that 100-square-kilometer plantations in Oman and Mexico's Sonoran Desert could cause temperatures to fall by more than 1 degree Celsius. The model also saw a precipitation increase of 11 millimeters per year in Oman and 30 millimeters per year in the Sonoran.

Paradoxically, this is because plantations are darker than the surrounding desert, explained Wulfmeyer, retaining more heat during the daytime. As a result, a low-pressure system develops over the carbon farm, causing changes in wind patterns that allow clouds to develop and precipitation to increase.

Automatically Tune Any Guitar In Seconds

Throughout their 23-year history, automatic guitar tuners have remained stubbornly complex systems that cost thousands of dollars and require tedious professional installation. Chris Adams, CEO of Tronical in Hamburg, Germany, has figured out a way around these problems. Using an off-the-shelf microprocessor, custom tuning algorithms, and six lightweight motors, Adams developed the first system that musicians can retrofit onto nearly any guitar’s headstock—without any wiring, drilling, or soldering. Once attached, his $299 TronicalTune can make an instrument pitch-perfect in about five seconds.

ATTACH
The TronicalTune consists of a three-inch computer and six motorized tuning pegs, which screw onto the headstock in place of the existing pegs. On traditional tuning pegs, strings thread through holes—a technique that can cause breakage when strings rub against the edges. TronicalTune uses a gentler method: The strings coil around rods on the pegs.

TUNE
After selecting from 12 presets (e.g., standard, open E), a user strums all six strings at once. A piezoelectric sensor picks up the vibrations, and a processor separates out the tones of each string. When it detects an off-pitch note, it signals the servomotor in the peg to turn, tightening or loosening the string to adjust the pitch. Once all six strings are tuned, the system turns itself off.

REFINE
Different guitar bodies and strings create slight variations in timbre, so Adams programmed the TronicalTune to grow accustomed to a guitar over the course of 10 to 20 tunings. The processor tracks the overtones and adjusts its tuning accordingly.

TronicalTune
Tuning Time: 3–10 seconds
Weight: 9 ounces
Price: $299

Cause of China’s Infamous Black Carbon Smog

China’s cities are infamous for their thick haze of air pollution. Just this week, Hong Kong hit an extreme high of 187 on the air pollution index, prompting the government to issue a warning for children, sick people and the elderly to stay inside. Surprisingly, however, authorities struggled to pinpoint the main sources of the soot. Now, a new study reveals two guilty parties: traffic and home cooking. UPI reports:

A powerful carbon-14 identification method was used to trace fully four-fifths of the black carbon emitted in China to incomplete combustion of fossil fuel such as coal briquettes used in home cook stoves and automobile and truck exhaust, they reported.

“The current results suggest reduction measures in China should focus on domestic coal combustion (e.g., introduction of cleaner-burning cookers and heaters) and vehicle emissions (e.g., application of diesel particle filters),” the authors write in their paper. These sort of mitigation efforts, they say, could, over time, improve air quality and, by extension, the health of China’s residents. Mitigation would also reduce China’s contribution to climate change.

China says it’s on it. The country just announced a program aimed to cut air pollution by cutting back on coal consumption and increasing its capacity for clean energy, Business Insider reports. These efforts, the government estimate, will run around $277 billion USD, or 1.7 trillion yuan.

China Will Stop Harvesting Organs From Prisoners in November

For decades, the organs of executed Chinese prisoners have gone directly to hospitals. But in November, the Chinese government will be phasing out the practice and will only take organs from donors who agree to the donation. The announcement makes China the last in the world to give up the practice, one that human rights organizations and the World Health Organization have been pushing against for years.
the number of organs that came from prisoners wasn’t small. About 64 percent of the transplanted organs in the country came from executions. This year, that number was at 54 percent. Just like everywhere else, the number of Chinese who need organs far surpasses the number who are able to get them. But it’s not just ethics concerns that makes harvesting organs from prisons a dubious practice. Huang Jeifu, a senior Chinese official, told that organ donations from prisoners tended to have higher rates of infection than those from willing donors.

Investigations into China’s capital punishment system in the past have suggested that for the right price, prisoners could even be killed for their organs. “It’s very clear that what’s been happening is that people are being executed to order,” Fiatarone Singh, a researcher at the University of Syndey told that. “It’s inconceivable that someone could go to China and then just by chance a prisoner would be executed. And just by chance their blood type matches yours.”

But not everyone is certain that this new policy will help. China denied that organs were coming from prisoners until 2005. They passed a law in 2006 to stop organs from coming from prisoners, but they didn’t do anything to enforce that law until 2010. Until then, there was no real organized organ donation program for non-prisoners at all. The World Health Organization is hopeful, however, that the new policies in China will actually be acted upon. They spoke with Haibo Wang, the director of the China Organ Transplant Response System Research Center who pointed out some of the unique challenges to organ donation in China—including the cultural belief that people should be buried whole.

A small but growing number of people are deciding to donate willingly, though. In 2010, only 63 people in China donated organs. This year, about 130 people donated organs each month. For context, there are 300,000 people on the wait list every year for organs in China