P 180848Z MAR 09
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UNCLAS HONG KONG 000502 
 
 
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TAGS: OPRC KMDR
SUBJECT: MEDIA REACTION: AIG; TIBET; CHINA AND U.S. BONDS; 
CHINA: SOUTH CHINA SEA DISPUTES 
 
TOPICS: 
¶1. AIG 
¶2. Tibet 
¶3. China and U.S. bonds 
¶4. China: South China Sea disputes 
 
HEADLINES AND EXCERPTS: 
 
¶1. AIG 
 
"What's special about bankers, bar their greed?" 
 
The independent English-language South China Morning Post said in an 
editorial (3/18):  "The US$165 million in bonuses American 
International Group has earmarked for some of its employees has, 
understandably, brought outrage across the U.S. and incomprehension 
around the world.  What is even more absurd is that the money is 
being paid to staff of a derivatives unit which, almost 
single-handedly, brought AIG to its knees.  The company has just 
reported the single largest quarterly loss in U.S. corporate 
history. Without unprecedented government bailouts, it would have 
been wiped out months ago.  U.S. President Barack Obama is surely 
right to argue that attempts by himself and state authorities to 
block the payments are not only about money but the values by which 
we want to define capitalism.  The free market is supposed to reward 
people who succeed with enterprise and ingenuity, not those who make 
terrible mistakes and then expect taxpayers to keep them in 
business.  Perhaps even more dangerous than moral hazard is the 
incentive for reckless and risky behavior that lavish bonuses have 
created....  If those AIG executives have any shame, they should 
forgo their bonuses or accept their own toxic derivatives as 
payment.  It is time for the financial services sector to face the 
music like everyone else." 
 
¶2. Tibet 
 
"Pressure point" 
 
Commentator Frank Ching wrote in the 'Insight' page in the 
independent English-language South China Morning Post (3/18):  "The 
U.S. House of Representatives last week voted 422 to 1 to adopt a 
resolution calling on China to end repression in Tibet.  And 
Beijing, as expected, responded by accusing Washington of 
interfering in its internal affairs.  Many people say, with good 
reason, that such public condemnation of China will not achieve 
anything and may even be counterproductive.  They argue that the way 
to go is to work inside the system and try to reform from within. 
But is it actually possible to change things on the mainland by 
working within the system?  The record suggests that the powers that 
be make it very difficult indeed for anyone trying to initiate 
change, or even just to vent their frustration....  The party 
appears unwilling to allow people any means of venting their 
frustration. That way, pressure will only build up and, one day, 
there will be a mighty explosion.  It makes you wonder why such 
smart people, who enabled the country to modernize so rapidly, can 
be so stupid.  Meanwhile, public condemnation, such as the vote in 
Congress, will continue." 
 
¶3. China and U.S. bonds 
 
"Does China have other investment strategy if it does not buy 
U.S.?" 
 
The independent Chinese-language Hong Kong Economic Journal said in 
an editorial (3/18):  "...Premier Wen Jiabao last Friday said at the 
closing press conference of the National People's Congress that he 
was concerned about the safety of U.S. bonds that China held.  He 
urged the U.S. to keep its promise.  Despite what Premier Wen said, 
China continues to buy U.S. treasury bonds.  The reality has not 
changed....  China is still buying more U.S. treasury bonds. 
However, looking at the distribution of assets, the Chinese 
government's strategy has obviously changed since the second half of 
last year.  First of all, they gradually reduced their purchase of 
long-term treasury bonds....  Secondly, there is an increase in the 
number of short-term treasury bonds purchased....  Thirdly, in the 
third quarter last year, the sum of money that China spent on 
long-term U.S. corporate bonds and U.S. shares dropped.  According 
to the above phenomena, it shows that the People's Bank of China was 
concerned about the depreciation of U.S. treasury bonds and U.S. 
dollar assets in the medium to long term.  Hence, it has to reduce 
its holding of these assets to reduce risk.  However, reducing U.S. 
bonds is only one of the ways the Chinese government needs to think 
of better ways to manage its reserves." 
 
¶4. China: South China Sea disputes 
 
"South China Seas has become the new wrestling field for China and 
the U.S." 
 
The pro-PRC Chinese-language Macau Daily News remarked in an 
editorial (3/18):  "...Following the easing of cross-strait 
tensions, the Sino-U.S. wrestling field is moving from the Taiwan 
Strait to the South China Sea.  The situation in the South China Sea 
has become tense recently.  In early March, a U.S. navy survey ship, 
the 'Impeccable', entered China's exclusive economic zone in the 
South China Sea.  The ship conducted illegal surveying without 
China's approval, collecting information on China's newly developed 
nuclear submarine base ? the Yalong Bay nuclear submarine base in 
Sanya....  The incident has aroused Chinese and U.S. concerns.  U.S. 
President Obama said in the meeting with Chinese Foreign Minister 
Yang Jiechi that the level and frequency of U.S.-China military 
dialogue should be increased to avoid similar incidents from 
happening again.  However, U.S. words do not match with its deeds. 
Its ship did not stop its mission in the South China Sea.  Instead, 
the U.S. announced dispatching the Aegis destroyer USS Chung-Hoon to 
escort the 'Impeccable' to carry out its surveying mission in the 
South China Sea.  The conflict between China and the U.S. in the 
South China Sea may escalate.  The sovereignty dispute over the 
Nansha Islands [Spratly Islands] may be another focus....  The U.S. 
proactively gets involved in the dispute over the South China Sea by 
supporting some countries.  This move has made the South China Sea 
issue more complicated....  The U.S. offering its navy ships to the 
Philippines at this sensitive moment will make others speculate that 
the U.S. wants to use the Philippines to confront China...." 
 
DONOVAN