2nd May 09

The Age

Australia muscling up as America's power wanes

AUSTRALIA needs to massively bolster its military capacity to deal with the rise of China and the possible decline of American influence in the region, according to a Defence white paper to be released today.

Asia Times Online

China's banks in loans dilemma
By Olivia Chung

HONG KONG - China's big state-owned banks, faced with increasing amounts of bad loans as borrowers go bust in a slowing economy, are being trapped in a dilemma created by conflicting government demands. On one side, Beijing wants them to step up lending as the government pumps out funds as part of its 4 trillion yuan (US$586 billion) economic stimulus package, announced last November, to shore up growth. At the same time, the banks are being warned that increased lending will lead to even more bad loans, eventually hurting lenders' profitability.

An illusion of global governance
By Jonas Parello-Plesner

Since the onset of the financial crisis there have been suggestions to form a Group of Two (G-2) consisting of the United States and China. This proposal is based on the facts that China is the largest creditor of the US, the US is China's biggest export destination, and the strong interdependence of their two economies provides a foundation for joint action that can shape the global economy. This thinking is tempting when the Group of Eight is seen as reflecting an outdated balance of power and the Group of 20 is considered too diluted to respond to global challenges. Yet a G-2 would give a false assumption about stronger global governance and China would probably not deliver in such a format. Let me explain why.