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The International Monetary Fund recently appointed French Minister of Finance Christine Lagarde as its new head. Lagarde\’s success continues the tradition of Europeans being in charge of the IMF. French president Nicolas Sarkozy called it a \”French victory,\” and European countries such as Germany also support this decision.

Christine Largarde and Karl Carstens solicited votes worldwide before the election. They particularly visited China to win support, which pushed the international community\’s discussion on China\’s role in the IMF in the future.

Some experts on international affairs keenly proposed that a question has come to the forefront of public debate: When will the Chinese people enter the executive level of important international economic organizations? What does China see in this intense game of the selection of IMF head?

The author believes the main point is to deepen the understanding of the three things China must further strive to achieve.

First, China should further strive for the right to speak in the international economic and financial realm and strive for the right of reasonably institutionalizing its rapidly growing comprehensive national strength.

Currently, the global economic structure is experiencing an in-depth transformation. The economic aggregate of emerging economies keeps growing and the economic gap between the emerging economies and developed countries of America and Europe continues to narrow. The voices from emerging economies for reforming the international economic order and breaking up developed countries\’ monopoly on international organizations are getting louder. The competition for the position of IMF President and the reform of the IMF are the most obvious reflections of these voices.

The IMF, as the \”Small United Nations\” in the economic and financial realm, together with the World Bank and World Trade Organization, are called the \”three economic pillars\” of the world and has an irreplaceable position. A country\’s share in the IMF could not only decide the county\’s voting power within the IMF but also reflect the country\’s ability to participate in and manage international affairs as well as its international influence.

It is an action with multilateral benefits that China strives for rights to speak and vote in the IMF because it could make the world hear more voices from China and China, as a great power, could actively push forward the reform of the international monetary system, promote IMF\’s supervision of development countries\’ financial realms, apply more preferential credits for developing countries and do some other things like these. It could be said that the competition for the position of IMF President is not a turning point for emerging countries to take over the IMF but will be a new starting line for urging the IMF to further promote the speaking rights of emerging countries.

Second, China should further strive for the power of international rulemaking to better maintain the healthy and stable development of world economy and finance. The importance of developing game rules is self-evident because success and benefit are always inclined to accrue to rule-makers.

It is worth paying attention to the special significance of the recent election. The G20 summit made a decision to select the IMF leader based on the open, transparent and merit-based principle. This clear rule means that candidates\’ nationality will have nothing to do with the election.

In addition, one of Lagarde\’s campaign promises is that he will continue to promote the institutional reform to further improve the position of developing countries in the IMF and will also allow more representatives from developing countries to participate in the decision-making of the IMF. These are changes and breakthroughs in the rulemaking. Actively participating in international organizations is an inevitable path and actively participating in the rule making is an important benchmark for China to play a more important role in the international community.

Third, China should further its efforts to add the yuan into the basket of currencies that makes up the IMF\’s Special Drawing Rights. SDRs are international reserve assets the IMF allocates to member states, which the organization also uses as a unit of account. Currently, the SDR basket currencies include the U.S. dollar, euro, Japanese yen and British pound sterling.

The internationalization of the yuan can increase China\’s influence in the international economic system. If the yuan is included in the SDR basket, one of the many benefits for China is that the yuan will become the world\’s reserve currency and a means of payment in international trade. Furthermore, the inclusion of a stable yuan will make the value of SDRs more stable, and thus serve the interests of the IMF. Overall, the inclusion of the yuan in the SDR basket will be a win-win situation for both China and the IMF.

Lagarde will serve a five-year term as the IMF\’s new managing director. Overall, the IMF leadership selection has not only reflected the ebb and flow of different nations as well as new changes in the international economic situation and structure, but also brought China and other emerging and developing countries the opportunity to expand participation in the reform of the global financial system. It is hoped that the IMF can make satisfying progress by the time the 12th managing director of the organization is elected five years later.

[i]By Zheng Xiwen, an observer on international issues, translated by People\’s Daily Online[/i]

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The dispute in the South China Sea was the highlight of the recently concluded foreign ministers\’ meeting of the Association of Southeast Asian Nations in Bali, Indonesia on July 23. It is universally acknowledged that the South China Sea is China\’s territorial waters. Chinese Foreign Minister Yang Jiechi said that China and ASEAN member nations adopted the guideline to implement the \”Declaration on the Conduct of Parties in the South China Sea,\” which paved the way for further cooperation in the South China Sea and showed China and ASEAN member nations were rational and capable of solving the dispute.

[b]South China Sea dispute should be laid aside[/b]

China firmly holds the stance that the dispute in the South China Sea should be solved through peaceful negotiation. Signed in November 2002 by China and ASEAN countries, the declaration aims to maintain stability, enhance mutual trust and boost cooperation in the South China Sea and create a sound condition and environment for the countries concerned in solving the disputes. However, the regional situation has never been peaceful over the past nine years.

Shen Jiru, research fellow with the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said that countries in surrounding areas, particularly Vietnam and the Philippines, misunderstood China\’s sincerity of peace and took China\’s forbearance and patience as a sign of weakness. They invaded and occupied the islands and reefs that belonged to China on both historical and legal bases.

Second, he said some countries in the region applied double standards to the declaration: On one hand, they regarded it as a tool to restrain China. On the other, they took the declaration lightly and never kept themselves within its bounds. Third, some countries in the region, such as Vietnam and the Philippines, who launched military exercises with the United States and insisted on multilateral negotiations, attempted to complicate the matter, make it more international and exert pressure on China. Such moves can only deteriorate the situation in the region.

Teng Jianqun, research fellow with the China Institute of International Studies, said that the Declaration had played a crucial role in maintaining peace and stability in South China Sea. Neighboring countries have never launched a military occupation since the declaration was signed. Because the declaration is legally binding, Vietnam and the Philippines changed their mode of invasion from military occupation to seizure of oil, gas and other resources and continuously expanded the scope and intensity.
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China has made remarkable progress in modernization in the last half century, while the same progress took developed Western countries one or two hundred years. China\’s growth has not only brought direct benefits to more than 1.3 billion Chinese people but also promoted the world prosperity as it has become the engine for world economic growth.

Certain international observers cannot find an answer to this question: How did China make such remarkable progress in such a short time?

\”The socialist system with Chinese characteristics, which fully embodies the distinctive features and strengths of socialism with Chinese characteristics, is a fundamental institutional guarantee of the development and progress of contemporary China,\” Hu Jintao uncovered the reasons for China\’s remarkable progress in his speech marking the Party\’s 90th birthday on July 1.

China has made extraordinarily rapid progress in modernization since the introduction of the reform and opening-up policy over 30 years ago because China\’s political system, which suits its level of development of productive forces, can improve decision-making and implementation efficiency, concentrate resources on major tasks and increase the ability to mobilize. Furthermore, socialism with Chinese characteristics advocates reform and innovation on the basis of learning as well as self-correction and pursuit of truth on the basis of practicing.

Developing a socialist country in China is an unprecedented cause. China\’s fundamental and basic political systems and basic economic system as well as the specific systems of economy, politics, culture and society, which are built upon the aforementioned systems, have all had distinct Chinese characteristics, conformed to China\’s context and followed the trend of the times, and are the combination of the basic theories of Marxism and China\’s reality.

China\’s socialist system with Chinese characteristics has gone beyond existing institutional design and values in the West, made history in China that is completely different from what it experienced over the past 5,000 years, and enhanced the freedom and prosperity of the Chinese people to an unprecedented level.

Despite the facts, some still assume that the \”China system\” seems \”abnormal,\” and is not in line with presupposed values. Therefore, various types of \”collapse theory\” and \”threat theory\” have successively emerged. Doubts, criticisms and negation have always come along with the development of the Chinese society.

In fact, the success of any country must have been achieved based on an appropriate system. This is a simple idea. Without a set of systems consistent with China\’s development, how would the country have eliminated the poverty for hundreds of millions of its people and fed them? How would China have become the world\’s second largest economy and enabled its people to lead moderately prosperous lives? How would China have survived the international financial crisis and injected vitality to the weak world economy? How would China have repeatedly overcome challenges relating to natural disasters, calmly faced the risks involving the social transformation and achieved the stability and harmony of the entire society?

Now, let us suspend the theoretical dispute and see a specific example. Capital is extremely sensitive to the system, and in the era of economic globalization, the ability to attract investment is a widely acknowledged barometer for measuring the quality of a country\’s system. The fact is that China is attractive to large investment countries, capable of steadily attracting direct investments of foreign merchants, and has attracted many of top 500 enterprises of the world to come to invest and establish factories. A potential reason for this fact is that they accept the \”Chinese system.\” Foreign media once said that the world has given an affirmative vote to the \”Chinese system\” using investments.

After the arduous exploration regarding what kind of socialist society to build and how to build it and after the great practice of reform and opening-up, China\’s system construction has realized a double-choice, which means China not only actively inherits its own merits and eliminates its own shortcomings, but also actively absorb the essence of any human civilization in the historical trend.

The \”China legend\” that is going on in the wide mainland of China has reflected the unique magnanimous capacity and integrating power of the \”Chinese system\” and showed the in-depth cultural confidence of China. As long as we learn from others, never give up our own advantages and never cease to make progresses, the \”Chinese system\” will definitely provide constant flow of energy for China\’s modernization.

[i]By Chen Jiaxing from People\’s Daily, translated by People\’s Daily Online[/i]

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Some Japanese media recently expressed doubts about the intellectual property rights of China\’s high-speed rail. They believe Chinese high-speed railways copied the Shinkansen of Japan. Reporters interviewed related parties to learn the truth.

[b]Focus one: Does Chinese high-speed railway copy the Shinkansen of Japan?[/b]

[b]Response: [/b]China grasps the intellectual property rights of Chinese high-speed railway, and the technical level has surpassed that of the Shinkansen of Japan.

According to sources, the CSR Corporation, Ltd. cooperated with the Kawasaki Heavy Industries in 2004 to introduce trains with speeds of 200 kilometers per hour. Seven years later, CSR mastered the design, manufacturing and verification technologies of trains with speeds of 200 to 250 kilometers per hour through jointly designing research experiments and implementing the localization with Kawasaki Heavy Industries and also independently established the design, manufacturing and verification system of trains with speeds of 350 kilometers per hour.

Ma Yunshuang, deputy general manager of the Sifang Corporation, Ltd. under the CSR Group, said that the CSR has taken an innovative path of introduction, digestion, absorption and re-innovation. China\’s national conditions decided that Chinese enterprises could not copy foreign technology.

The train\’s engine car is an important symbol of the independent innovation of Chinese high-speed trains. \”Both the graphic design and technical design of the engine car of the CRH380A trains have been completed by ourselves,\” said Wang Yongping, spokesman of the Ministry of Railways, on July 7.

In fact, the current technical level of the Chinese high-speed railway has surpassed Japan\’s Shinkansen. Data shows that compared with the CRH2 trains that were introduced and jointly produced by the Kawasaki Heavy Industries, the power of China\’s CRH380A trains increased from the previous 4,800 kilowatts to 9,600 kilowatts, and the sustained speed increased from 200 to 250 kilometers per hour to 380 kilometers per hour.

The aerodynamic drag of the head has been reduced by more than 15 percent and the aerodynamic noise has been reduced 7 percent. The bogie realized \”tread contact stress\” 10 percent to 12 percent lower than the European standard. The airtight strength of the train\’s body increased from 4,000 Pascals to 6,000 Pascals to ensure the structural safety and reliability of trains when intersecting inside the tunnel at a speed of 350 kilometers per hour.

Furthermore, many technological indicators used by China\’s high-speed railways are the best in the world, including the minimum radius of curve, maximum gradient, track gauge and tunnel clearance of the high-speed railways linking Beijing to Tianjin, Wuhan to Guangzhou, Zhengzhou to Xi\’an, Shanghai to Nanjing, Shanghai to Hangzhou, and Beijing to Shanghai.

\”A verbal spat is meaningless, and we should let the facts speak for themselves. The intellectual property rights of China\’s high-speed railways are undoubtedly mastered by China itself,\” Wang said.

Many Japanese reporters spoke highly of the Beijing-Shanghai High-Speed Railway. For example, a Japanese reporter from the Tokyo Broadcasting System, who was a passenger on a Beijing-Shanghai bullet train, admitted that the Beijing-Shanghai High-Speed Railway is very advanced and has adopted many technologies that Japan\’s Shinkansen failed to adopt. In addition, the Shinkansen often takes detours, while China\’s bullet trains can consistently run at high speed.

[b]Focus Two: Why has China\’s high-speed rail technology developed so fast? [/b]

[b]Response:[/b] Because the Chinese government has provided strong support, and a large number of talented researchers have devoted themselves to the development of high-speed rail technology.

Wang said that the Chinese government has played a guiding role in the development of high-speed rail technology and has established a re-innovation platform integrating production, education and research. It is no wonder that the country has made three significant achievements in this field in less than six years.

He Huawu, chief engineer with the Ministry of Railways, said the organizations and individuals that have participated in the government-sponsored research and development high-speed rail technology include 25 key universities, 11 first-class research institutes, 51 state-level labs and engineering research centers, 63 academicians, more than 500 professors, more than 200 researchers and more than 10,000 engineering personnel in China.

\”Up to now, China\’s high-speed railway has possessed a full set of independent technical standard systems, which covers aspects such as project construction, high-speed train, train control, railway station construction, system integration, operation maintenance and environmental protection standards,\” He Huawu said.

He Huawu said that, taking the train control system as an example, as a core technology of high-speed railways, it is the \”brain\” for the safe, efficient and orderly operation of the train. China\’s train control system is closely connected with China\’s actual railway transportation situations and its existent signaling equipment mode. It cannot be a copy of any other system of the same kind.
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Facing the \”hazards of civilization\” that have come with modernization, China must have sufficient risk awareness and adequate countermeasures.

After a high-speed train rear-ended another one on July 23, the central government has drawn particular attention to the relief work, and the work — rescue, medical treatment and notification of relatives — was initiated as soon as possible. It was moving that many Wenzhou residents proactively went to the site of the accident to help transfer passengers and queued to donate blood overnight.

The high-speed train crash was the latest in a \”summer filled with accidents.\” Because the accident relates to a railway that has always been considered safe, it has led to a considerable social impact. The high frequency of safety incidents in a wide range of sectors, including a bus fire, coal mine floods, an escalator failure and bridge collapses, has sounded a warning to the \”society with hazards.\”

Incidents, such as the oil spill in the Gulf of Mexico and Japan\’s nuclear leak, have shown that the more sophisticated the technology is in the modern society, the more complicated the technology will be. The more advanced the technology is, the more interdependent and interactive the technology will be. A tiny mistake and any negligence of details will possibly lead to hazards.

Today\’s China is faced with many risks. The country has made remarkable progress in modernization in the last half century, while the same progress took Western countries several hundred years.

Unfortunately, many risks are unavoidable in the process of modernization. Urbanization, industrialization, informationization and modernization have brought both benefits and risks to the people. Therefore, people should be vigilant against possible dangers and develop effective countermeasures in order to attach a \”safety belt\” to the \”era of rapid development.\”

China\’s railway sector has entered a \”high speed\” era after long efforts, ranking first in the world in terms of the total length and top speed of high-speed railways. China needs high-speed railways, but it should be noted that faster speeds, shorter intervals and more routes should be accompanied by better management systems and greater safety consciousness. This should be an essential principle for the development of high-speed railways.

When high-speed trains are \”flying like a bullet,\” a safety belt made up of a sound management system and great consciousness of responsibility should be fastened. Only in this way will China\’s high-speed railway sector really deserve its top ranking.

There are usually many minor or near accidents before a major one occurs. China\’s high-speed railways had experienced many minor failures before this train crash, and the crash may have been avoided if enough attention was paid to previous failures.

Immediately after the crash, Vice Premier Zhang Dejiang rushed to the accident scene and stressed that the accident must be thoroughly investigated in order to not let the Chinese people down. This has shown the central government\’s firm determination to draw lessons from the accident, to identify its cause and close loopholes, to strictly punish those responsible and to adequately compensate accident victims and their families. The central government will take a responsible attitude to protect the interests of the victims and to ensure public safety.

Since many fatal security accidents have occurred recently, the State Council Work Safety Committee issued a notice, requiring relative departments to effectively and uncompromisingly prevent any further major or severe accident and guarantee the safety of the people\’s lives and properties. It reminds the administrators of all levels that they — with a people-orientated mindset — must have an unprecedented sense of risk during the dawning of a \”risky society.\”

While the trains are flying on the railways, has the administrative system followed up? While the buildings keep setting new records of height, are the fire protection measures and safety precautions growing with them? While new bridges and roads keep emerging, can the construction qualities and project monitoring levels rise accordingly? While we are being proud of the \”Chang\’e\” satellites flying in the outer space and the \”Jiaolong\” submarine reaching the bottom of the sea, can we guarantee a more rapid development in the area of public safety?

After the accident, more trains will run on longer railway, and the development direction of China\’s high-speed railways will not change. However, much stronger safety awareness must be put on the agenda seriously after the accident has been handled and lesions have been learned.

Let us hope the administrative departments could strengthen the safety precautions with the responsibility of \”always recalling the painful experience\” and the sense of \”treading on eggshells.\” In doing so, we will enable all passengers to reach their destinations safely. And let us hope China, a bullet train running in a complex environment at an extremely high speed, could bring its people to the future more steadily and safely.

[i]By Zhang Tie from People\’s Daily, translated by People\’s Daily Online[/i]

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Few countries evolved into world powers peacefully, so many people doubt the feasibility of China\’s path of peaceful development. By their logic, if China wants to protect and expand its national interests as well as to resolve maritime territorial disputes, a war with neighboring countries will be unavoidable. They believe that China is stuck in a dilemma between development and peace.

This is a misinterpretation of China\’s peaceful development path. In fact, it is highly possible to resolve the South China Sea disputes and other issues through peaceful means. Peaceful resolution of disputes will be an important symbol of China\’s rise.

First of all, China is taking the road of peaceful development, unlike certain Western countries that evolved into world powers through military expansion. Wars are no longer the theme of the times.

The United States gained tremendous benefits from the two world wars, but two prolonged wars in Iraq and Afghanistan in the past 10 years have cost it several trillion U.S. dollars. The superpower now carries a heavy burden because of the two wars, and whether it has won the two wars is still open to question. The country hurt itself badly while hurting others.

By contrast, China has quickly enhanced its comprehensive national strength and international status by adhering to peaceful development. At present, China is at a crucial period in its reform and opening-up, and problems should be avoided whenever possible. A war may put China at risk of losing rare development opportunities and the momentum for growth.

Second, it is completely possible that territorial sovereignty disputes can be resolved in a peaceful manner.

China has resolved most of the territorial disputes with other countries through consultations and negotiations since the founding of the New China. China tackled the territorial disputes with countries such as Burma, North Korea, Nepal, Afghanistan and Pakistan through negations between the late 1950s and early 1960s. China\’s has solved 90 percent of its land border disputes in a peaceful manner and achieved peace and stability in its border regions.

Despite the particular complexity in maritime borders, there have been many successive examples in the world. As one of the first countries to put forward constructive ideas for the peaceful settlement of the South China Sea issue, China believes a solution that is acceptable to all sides involved will eventually be produced.

Certainly, taking the path of peaceful development does not mean that China will compromise its interests when encountering every problem. China’s rejection of the use or threat of force in dealing with problems such as disputes in territorial sovereignty does not mean that China will allow itself to be seized without putting up a fight. In contrast, China will determinedly fight and never back down if China\’s core interests such as sovereignty and security are violated.

Currently, someone used boundary disputes to violate China\’s sovereignty and restrict China\’s development during the critical period of China\’s development. This will only damage the overall environment of peaceful development and good opportunities for mutually beneficial cooperation and ultimately harm the interests of both sides.

China does not fear difficulties and will not deliberately create difficulties in dealing with issues such as territorial disputes. The more difficult the environment is, the more we should strengthen the determination of peaceful settlement. Achieving the great rejuvenation of the Chinese nation and creating a favorable international environment for the peaceful settlement of territorial and maritime disputes is a battle that China should make efforts to win.

[i]By Zheng Xiwen from Guangming Daily, translated by People\’s Daily Online[/i]

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The State Administration of Foreign Exchange released the \”Question and Answers on Foreign Exchange Reserves\” on July 20 and reaffirmed that the appreciation of the RMB will not directly cause losses in foreign exchange reserves. How does the RMB exchange rate influence China\’s export trades and overseas investment? Reporters interviewed related parties regarding this question.

Real effective exchange rate fell more than 3 percent in first half

The middle rate of the RMB against the U.S. dollar has increased more than 5 percent since the further reforms of the mechanism for setting the RMB exchange rate in June 2010.

Although the middle rate of RMB against the U.S. dollar continues to increase in 2011, the real effective exchange rate of the RMB showed a decline in the first half of 2011, exceeding the appreciation on the whole. The middle rate of the RMB against the U.S. dollar increased by more than 2 percent in the first half of 2011, and the real effective exchange rate of RMB showed a depreciation trend in January, March, April and June, while it appreciated in February and May. The real effective exchange rate fell more than 3 percent in the first half of 2011.

Data recently released by the Bank for International Settlement shows that the real efficient exchange rate index of RMB stood at more than 116.3 in June, a decline of nearly 2 percent compared with May, and the nominal effective exchange rate index of the RMB stood at nearly 112.1, a decline of nearly 2 percent compared with May.

Ding Zhijie, president of the School of Banking and Finance under the University of International Business and Economics, said that many people observed that although the exchange rate of the RMB against the U.S. dollar increased, the exchange rate of the RMB against many other currencies shows overall depreciation. Therefore, it is not true that the appreciation of the RMB has accelerated since the reform.

Reason why RMB showed overall depreciation

Why has the RMB appreciated against the U.S. dollar while its overall real effective exchange rate depreciated?

Zhang Yansheng, director of the Institute of Foreign Trade under the National Development and Reform Commission, said that the U.S. dollar is on a \”long-term depreciation path\” due to the United States\’ low interest rates, quantitative easing policy and high unemployment rate. Furthermore, the recent battle between Democrats and Republicans over raising the U.S. debt ceiling has added uncertainty to the future of the country’s economy and caused the dollar to drop sharply against most major currencies. The yuan has risen against the U.S. dollar but fallen against other major currencies because the appreciation of the yuan could not completely offset the depreciation of the dollar.

\”China should further the reform of the RMB exchange rate regime and peg the yuan to a basket of currencies rather than just to the U.S. dollar, though it takes some time to make adjustments based on the real effective exchange rate of the RMB. In the past six months, the yuan has risen against the dollar relatively quickly, but its real effective exchange rate has fallen,\” Zhang said.

Xie Taifeng, dean of the School of Finance under the Capital University of Economics and Business, said that the real exchange rate is the weighted average of a country\’s currency adjusted for the effects of inflation. The nominal exchange rate of the RMB has been increasing, but its real value has dropped sharply due to high inflation since the beginning of 2011. Both the euro zone and dollar bloc are predicting inflation of around 2 percent in 2011, while China\’s inflation target for the year is much higher than 2 percent.

\”Consumer prices are closely related to the exchange rate between two countries\’ currencies. The real exchange rate is adjusted for inflation, and the real value of the yuan has dropped quickly, so there is really no reason for yuan appreciation,\” Xie said.

\”Double-edge sword effect\” requires attention

However, in the context of a possible economic slowdown in economic growth, the quite strong expectation of RMB appreciation and the exchange rate that are attracting hot money will hit China\’s export-orientated enterprises on the one hand but will benefit the overseas investments of China\’s enterprises on the other hand. Therefore, China should always pay close attention to the \”double-edge sword effect\” of the exchange rate.

\”Globally, the production system of the U.S. dollar is much larger than that of euro or any other currency. Therefore, whether China will carry out the \’bringing in\’ strategy or accelerate its \’going out\’ strategy, the future trend of the U.S. dollar exchange rate will inevitably affect the expected incomes or cash flows of costs of China\’s overseas investments,\” Zhang said.

Zhang said if the RMB appreciates to a great degree against the U.S. dollar, it means a certain amount of RMB could be changed for more U.S. dollars. In that case, China will benefit if it invests in U.S. dollar regions or regions where prices are marked by U.S. dollar but will suffer if it invests in non-U.S. dollar regions.

\”In addition, great RMB appreciation will increase the costs of foreign merchants\’ investments in China, raise the prices of RMB assets and slow down the growth of long-term investments. But meanwhile, it will also generate more opportunities for international capital to obtain short-term profits in China and aggravate the fluctuation of China\’s macro-economy.\”

\”RMB appreciation against the U.S. dollar will deviate from the actual purchasing power of the currencies of the two counties. At the current exchange rate, since there is little risk involved in purchasing RMB, many venture capitalists will certainly be attracted. Meanwhile, the public\’s willingness to hold foreign currencies has become very weak, but foreign currencies have a strong desire to get RMB loans, because they, with the expectation of RMB appreciation, will benefit while repaying the loans in the future. On the one hand, the RMB is depreciating within China; on the other hand, the foreign exchange reserve and the surplus are increasing. These abnormal phenomena are both caused by the RMB appreciation against U.S. dollar,\” Xie said.

In addition, the RMB appreciation will also bring a lot of difficulties to the export-orientated enterprises. The bankrupt toy manufacturing enterprises in the city of Dongguan are just examples. These enterprises, which have created a lot of jobs, not only have difficulties finding financing within China but also are under the pressure of RMB appreciation. Therefore, the RMB appreciation makes against the export-orientated, labor-intensive enterprises.

[i]By People\’s Daily Online[/i]

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Mumbai, the financial center and India\’s largest city, suffered a major terrorist attack on July 13. Frequent terrorist activities in the city, including the 2008 Mumbai attacks and the 2006 serial subway blasts, have cast a huge shadow upon Indian citizens.

India has long been a victim of international terrorism, and its criticism of Pakistan over terror links has become a serious obstacle to relations between the two countries.

The two countries held foreign secretary-level talks not long ago and will soon hold foreign minister-level talks. Under this context, the recent Mumbai attack raised fears that it may bring new troubles to the relations of the two countries.

Fortunately, Indian intelligence agencies responded quickly this time, revealing on July 14 that intercepts in early 2011 had warned of a possible terror attack by Indian Mujahedin this July. In the past, the usual suspects for such attacks were always linked to Pakistan, while this time India quickly found out that the Islamic extremist organization Indian Mujahedin was behind this attack.

In fact, Pakistan is also a victim of terrorism. Friendly relations between India and Pakistan will not only meet the practical needs of the two countries themselves but also promote regional security in South Asia.

It is known to all that although India is not a Muslim country, its Muslim population is as high as 160 million. After the Partition of India, most regions where Muslim people account for a majority were put in the domain of Pakistan, but there were also a lot of Muslims who chose to stay in India. From then on, various contradictions between Hindus, Muslims and people of other minority nationalities have existed for a long time.

In 1990\’s, The Babri Masjid Mosque in the city of Ajodhya was destroyed, leading to bloodshed. In addition, there are also a lot of anti-government armed forces and extremist organizations of various kinds within India. The suspected \”India Mujahedeen\” is just one of them. Even the Indian Premier Manmohan Singh once said that the domestic anti-government organizations are the real threats to the national security of India.

The terrorist forces always focus their attention on large cities, and it is a huge challenge for the anti-terrorism and security-prevention abilities of the Indian Government. This time, the Indian Government reacted very fast. The information was reported to the public through TV and short message at once, and the victims were sent to the hospital immediately. Then, the Indian Premier and some senior anti-terrorism officials appeared on TV quickly, telling the people to calm down and have faith in the government\’s capacity to deal with the situation. Meanwhile, many arrangements were also made to strengthen the security of other large cities. This series of measures are widely praised nationally and internationally and could reflect that the Indian Government has learned lessons from the past and improved its countermeasures a lot.

Currently, the anti-terrorism situation of South Asia is at a very delicate moment. The aftereffects of the killing of Bin Laden by the United States have not been eliminated and the revenge speeches of international terrorist forces are still active. The United Nations is gradually withdrawing its troops from Afghanistan, but it also has declared that it would suspend the military supports to Pakistan. A lot of elements are weaved together, and the comprehensive effects still need further observation.

[i]By Zhao Gancheng from People\’s Daily, translated by People\’s Daily Online[/i]

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A Chinese proverb goes, \”Be mindful of possible danger in times of peace.\” Being vigilant against dangers in times of peace should be a fundamental characteristic and political duty of a ruling party.

CPC Central Committee General-Secretary Hu Jintao warned all Party members in his July 1 speech that the Party is confronted with growing dangers of sluggish mentally, being incompetent, alienating the masses, and being dispirited and corrupt. He stressed that cracking down on and preventing corruption is crucial for gaining the people\’s support and ensuring the survival of the Party. If not effectively curbed, corruption will cost the Party the trust and support of the people. Hu\’s remarks are enlightening and thought provoking.

In the process of revolution, construction and reform in China that has been carried out in the past 90 years, preventing the \”political risk\” caused by corruption was always an issue that the Party prioritized and actively tried to solve. Mao Zedong once warned the Party that corruption would be a fundamental reason for turmoil in socialist societies. Minor corruption would lead to opposition and the dissatisfaction of the masses, and severe corruption would lead to \”a second revolution\” and change the color of the Party and country.

Deng Xiaoping once educated the Party, \”If China goes in the wrong direction, it will be caused by the internal problems of the Party\” and \”if we do not fight against and punish the corruption, especially the corruption of senior officials, it is quite possible our Party will die.\”

Judging from the Party\’s ruling practice, corruption is a very prominent factor that can cause fatal injuries to the Party during the peace-building period. Judging from the world political history, a ruling party can maintain its ruling position and safeguard national stability and development only through firmly opposing and effectively preventing corruption.

The Party and the government launched the campaign of combating corruption and building a clean government based on the overall situation of the Party and the country in the recent years. China\’s anti-corruption ability continues to increase, the anti-corruption strategy continues to be improved and the fight against corruption continues to deepen.

The Party urgently needs to seriously study the deep background of the \”risk of passive corruption\” and continues to strengthen its ability to fight against degeneration and withstand risks when facing the spread of various new corruption phenomena, the severe anti-corruption situation and the arduous task of fighting against corruption.

The corruption of power is the concentrated expression of corruption. All kinds of corruption phenomena are hidden in power. The corruption of power comes from the dissimilation of power. All kinds of power dissimilation deviate from the Party\’s duty of being built for the public and exercising state power for the people, and will cause the phenomenon of seeking private gain through power, which will harm the credibility of the Party and the government and the interests of the country and the people.

Facts have proven that corruption is always the results of the failure of objective and subjective defense lines. The power without self-discipline will inevitably go astray; the power without supervision will surely lead to corruption. Therefore, leading officials at all levels must bear in mind that their power is entrusted to them by the people and can only be used in the interests of the people, and they must not turn their power into a tool of making interests for themselves or a hand of individuals; they can only be confident to guard against the dangers of corruption by building a solid spiritual defense line and developing the immunity against corruption.

Furthermore, Hu Jintao said, \”In exercising power, we must serve the people, hold ourselves accountable to them, and readily subject ourselves to their oversight.\” This type of oversight should be performed not only by systems but by establishing and improving related restraint and supervision systems, improving intra-Party democratic supervision systems and ensuring that leading officials conform to statutory authority and procedures when exercising their power but also by the people, as well as promoting the transparency of Party and government affairs and making the exercise of the power transparent and under the oversight of the masses. The masses can play significant roles in combating corruption. The dangers of negative and corrupt phenomena can only be prevented and eliminated in a reliable manner by building a close supervision network and regulating the exercise of power.

The existence of dangers serves as both vigilance and a spur. Given the tests of the reality and the expectations of the people, no matter how leading officials maintain integrity and combat corruption, or how the Party and the country eliminate corruption, the most powerful response to the dangers is just actions and the most effective answer is to satisfy the needs of the people.

[i]By People\’s Daily Online[/i]

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Following the release of the second-quarter economic data, the market has been increasingly concerned about downward trends in China\’s economic indicators.

Some said that slower economic growth would lead to a series of economic and social problems, such as falling incomes and rising unemployment. Some experts believe that the tight microeconomic policies will cause a large-scale deflation after restoring the inflation to a normal level, resulting in a dramatic transition in China\’s economy from overly hot to overly cold.

[b]Opportunities amid drop in economic growth [/b]

In response to the market concerns, the National Bureau of Statistics released latest economic data: China\’s GDP growth rate has stood between 9.5 percent and 10 percent for four consecutive quarters. National Bureau of Statistics Spokesman Sheng Laiyun said, \”The growth rate is relatively high in terms of both the targets set in China\’s 12th Five-Year Plan and the international standard.\”

Although some major economic indicators behind the relatively high growth rate should be further adjusted to lower levels, Fang Zulan, a professor at the School of Economics under Renmin University of China, said that China\’s economy will not suffer a “hard landing” because there are greater development opportunities despite the drop in the economic growth.

\”China is in the transition period of development structure and industrial model, which is different from developed Western countries. Therefore, although there are some serious problems, there are also many opportunities in the transition. The key of seizing the current opportunity is to tap the potential of human capital,\” Fang said.

Fang also said that management layer should be open-minded and create conditions to maximize the potential of human capital rather than simply control the capital. The largest infrastructure construction of a country is no longer the construction of airports and roads but the release and construction of human capital. Fang believes China will not miss the opportunity of transformation if it completes the infrastructure construction.

David Beim, a U.S. professor, also pointed out that the economic slowdown would lay a more solid foundation for China\’s development in the future.

\”No country but China could maintain such a high-speed growth for 30 consecutive years, which is very remarkable. China\’s economic growth will slow down in the future. However, it does not mean that China will stop developing. The slight slowdown will make China look more like a normal country, not a particular country,\” Beim said.

[b]Speed is absolutely not the key[/b]

Many experts believe the speed of economic growth is absolutely not the key in the current China\’s economy, and the truly important core of China\’s economy is the transformation of development mode during the 12th Five-Year Plan period and even over a longer period of time.

\”Growth rate is not the only index measuring China\’s economic strength,\” Fang said. She also said that China\’s economic growth mainly depended on the export-oriented original equipment manufacture formed by low-quality labor. However, the profit margin has become increasingly small. Therefore, China must go on expanding domestic demand. The current transformation mainly refers to a more fundamental reform in aspects such as institution and culture.
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