The Big Story – PLA ships enter Senkakus area, again: The Communist regime played its usual game of brinksmanship by sending “three Chinese government ships … into waters around disputed islands controlled by Tokyo, for the first time since late May” (Chosun Ilbo, ROK). The CCP has claimed those islands, which are rich in resources and have been under Japanese control since the United States relinquished them in 1972.
Other International news: The regime is taking a liking to Ed Snowden (Telegraph, UK), although that should surprise no one given that social media is just another theater of “war” for the CCP (Epoch Times). The Xi-Obama summit disappointed Congressman Duncan Hunter (R-California); he makes that plain in the Washington Times. Chen Guancheng, bounced from NYU by the Long Arm of Lawlessness (See second paragraph), tells his side of things (Washington Times).
Have the Communists put China on the path to a Lost Decade? That seems to be what Fitch is thinking. According to Ambrose Evans-Pritchard (Telegraph, UK):
The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.
‘The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,’ said Charlene Chu, the agency’s senior director in Beijing.
‘There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling,’ she told The Daily Telegraph.
In other words, when you try to fool the outside world, the outside world can’t trust you on anything. Fitch says the “hidden second balance sheet” – yes, those are their words – is roughly $2 trillion (with a T).
Fitch doesn’t think the system will come crashing down, but…
There is no way they can grow out of their asset problems as they did in the past. We think this will be very different from the banking crisis in the late 1990s. With credit at 200pc of GDP, the numerator is growing twice as fast as the denominator. You can’t grow out of that.
A Father’s Day message to a prisoner of conscience from his daughter: Danielle Wang offers her heartfelt wishes to her dad, in prison since 1999, in the Epoch Times.
Taiwan President champions tolerance of dissent, but his party is still cozying up to the Communists: The leader of both the island democracy and its Kuomintang Party (Taipei Times), made his statement while sharing the stage with a leading critic of his (Taipei Times), but that still doesn’t erase the KMT’s policy towards the Chinese Communist Party (Taipei Times).
Other Taiwan News: The largest political opposition party – the DPP – opened offices in Washington, DC last week (Taipei Times).
Kim Jong Un wants talks…with the US: After blowing up planned talks with democratic Korea (See Other Korea News), the Communists’ viceroy in the north now says he wants talks with the United States (New York Post).