Breaking News -- Far East
|Heat is on China after North Korean missile test
Kristin Huang - South China Morning Post
Beijing will face pressure from the US and its allies to support additional sanctions, analysts say, after latest provocation by Pyongyang
Beijing may be more willing to support additional international sanctions against Pyongyang after North Korea launched a ballistic missile into the Sea of Japan on Sunday, analysts said, though they acknowledged what China could do was limited.
South Korea said the move by the North was a “show of force” designed to test US President Donald Trump, who responded by pledging “100 per cent” support for Washington’s key regional ally Japan.
Reuters cited an unnamed US official as saying the Trump administration was likely to increase pressure on China to rein in Pyongyang. Trump has previously said Beijing was not doing enough to keep its ally in check.
North Korea fires ballistic missile to ‘test response from President Trump’
Relations have thawed in recent days after Trump reaffirmed Washington’s “one-China” policy in what he described as a “very warm” telephone conversation with President Xi Jinping.
There was no immediate comment on the missile launch from Beijing. But analysts said the move by the Kim Jong-un regime should not come as a surprise, and that Beijing had limited options in how to respond.
“The North Korea issue has long put China in an awkward situation,” Liang Yunxiang, an international affairs expert at Peking University, said. “It is in Beijing’s interest to see the survival of [the North Korean regime], yet Pyongyang pays no heed to China,” he said. “China has no viable solution except reiterating its call ... on all parties to exert self-restraint – but in reality no parties are willing to restrain themselves.”
Xu Liping, a researcher at the Chinese Academy of Social Sciences, said Pyongyang’s provocations had strengthened the US alliances with Japan and South Korea. Seoul has agreed to host the US military’s Terminal High Altitude Area Defence (THAAD) anti-missile system, which China views as a threat to its security.
“If North Korea is to continue such actions in the future, China will join the international community in sanctioning North Korea,” Xu said.
New Chinese missile capable of threatening US, Japan bases in Asia makes latest appearance in drills
China had already come out in support of sanctions adopted by the United Nations following Pyongyang’s fifth nuclear test last year.
Cui Zhiying, a Korean affairs expert at Shanghai’s Tongji University, said accelerating the deployment of THAAD would worsen tensions between Beijing and Seoul. Beijing would likely remain committed to solving the North Korean nuclear issue through dialogue, he said.
Japanese Prime Minister Shinzo Abe, whose country is in range of the North’s missiles, called the test “absolutely intolerable” at an impromptu press conference with Trump in Florida.
The missile was launched at about 7.55am from Banghyon air base in the western province of North Pyongan, and flew east towards the Sea of Japan, the South’s defence ministry said. It flew about 500km before falling into the sea.
“Today’s missile launch ... is aimed at drawing global attention to the North by boasting its nuclear and missile capabilities,” the ministry said in a statement. “It is also believed that it was an armed provocation to test the response from the new US administration under President Trump.”
Beijing hoping Seoul will slow down on missile shield, diplomat says
South Korea’s Joint Chiefs of Staff said the missile was “highly likely” to have been a medium-range Musudan missile. It was the first such test since October.
Trump, speaking alongside Abe, said Washington was committed to Japan’s security.
“I just want everybody to understand and fully know that the United States of America stands behind Japan, its great ally, 100 per cent,” he said.
Japan’s top government spokesman, Yoshihide Suge, said the test was “clearly a provocation to Japan and the region”.
South Korea’s acting president Hwang Gyo-ahn vowed a “corresponding punishment” in response to the launch.
In January, Kim boasted that Pyongyang was in the “final stages” of developing an intercontinental ballistic missile in an apparent attempt to pressure the incoming US president. Trump shot back on Twitter, saying: “It won’t happen.”
Additional reporting by Agence France-Presse and Reuters
US, Japan, S Korea Request Urgent UN SC Meeting on DPRK Missile Test
US, Japan and South Korea have requested an urgent UN Security Council meeting on North Korean ballistic missile test fire.
The United States, Japan and South Korea have requested an urgent United Nations Security Council consultations on North Korean Sunday's ballistic missile test fire, Reuters reported citing an official in the US mission to the United Nations.
The official has also said that the United States expects a meeting to take place on Monday.
North Korea launched a missile earlier from an airbase in the western province of North Pyongan. The ballistic missile travelled several hundreds of miles before plunging into the Sea of Japan outside of the Japanese exclusive economic zone. DPRK government has declared the launch successful.
North Korean state-run Korean Central News Agency (KCNA) reported that the missile was nuclear-capable and could engage in evasive manoeuvres.
The ballistic missile test fire led to protests from the country’s closest neighbours, Japan and South Korea, both stating that Pyongyang’s actions were in breach of the United Nations Security Council resolutions.
North Korea has conducted several missile launches in the past months, including its biggest nuclear test last September, prompting condemnation from international community.
Japan Will Invest Its Pensions In US Infrastructure To Create "Hundreds Of Thousands Of US Jobs"
by Tyler Durden
Having decided to actively increase its risk exposure over the past few years, including venturing into high beta stocks and junk bonds - a gamble that has lead to a big jump in quarterly volatility not to mention significant downside risk should global markets suffer a crash - Japan's Government Pension Investment Fund, or GPIF, the world's largest pension fund, has decided to invest in US infrastructure projects next.
According to Japan's Nikkei, infrastructure investments in the U.S. by Japan's GPIF will feature heavily in the economic cooperation package to be discussed at next week's summit in Washington between the two countries' leaders. The stated goal is to create "hundreds of thousands of American jobs", in keeping with U.S. President Donald Trump's agenda, and deepen ties between the two countries. The unstated goal is to avoid Trump lashing out at Japan as a currency manipulator, and putting in peril Japan's QQE "with curve control" experiment, which is the bedrock of all Abenomics (as further expained in the following Nikkei piece).
Japan has grown nervous that after Mexico, China and Germany, it may be next nation to find itself in Trump's spotlight, something Trump hinted at yesterday during his meeting with pharma CEOs when he said that "other countries take advantage of America by devaluation," and then directly named China and Japan as "planning money markets," presumably implying manipulation.
As such, Japan's prime minister may be simply offering up billions in pension fund capital as a source of capital for the upcoming Trump infrastructure projects to placate the president and avoid a far more dire outcome, should Trump launch currency or trade war with Japan. Whatever the logic behind Abe's thinking, new cabinet-level talks discussing trade policies and economic cooperation agreements are also on the table.
Japan's contingent headed to the US would likely include Finance Minister Taro Aso, Economic Minister Hiroshige Seko, and Foreign Minister Fumio Kishida, the Nikkei reported. The U.S. is expected to send incoming Commerce Secretary Wilbur Ross and incoming U.S. Trade Representative Robert Lighthizer to that meeting. Japanese Prime Minister Shinzo Abe and Trump will aim for agreement on that framework during their Feb. 10 meeting.
"I wish to discuss [Japanese] contributions toward improved productivity and competitiveness in the entire U.S. industrial sector, or a large framework that includes aid for infrastructure development," Abe told members of the lower house Wednesday. His government has started to lay out a comprehensive initiative addressing job growth.
The draft proposal will feature infrastructure investments in the U.S. by Japan, joint robotics and artificial intelligence research by the two sides, and countermeasures against cyberattacks.
How will the Japanese megafund alllocate pension capital? According to the Nikkei, the GPIF will purchase debt - using the funds of retired Japanese citizens - issued by American corporations to finance infrastructure projects. Up to 5% of the roughly 130 trillion yen ($1.14 trillion) in assets controlled by the megafund can go toward overseas infrastructure projects. Currently, only tens of billions of yen are invested in that asset class, leaving room for expansion. Additionally, long-term financing for high-speed rail projects in Texas and California would be provided through such avenues as the Japan Bank for International Cooperation.
While we doubt Japanese pensioners are aware that the returns on public infrastrcuture are some of the lowest in the world, if not outright negative, we are confident they will learn soon enough, although since the full IRR will become evident only over a period of years, they may have bigger concerns should the Nikkei and/or global stock markets, where the GPIF is now heavily invested, crash first.
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