Thursday Short Shorts

China Reform Monitor passed this Vietnamese newspaper link around:

Several experts said China’s claim over 80 percent of the East Sea was based on little of substance. They said a map submitted by China to the UN to stake its claim had only complicated the situation.

Professor Ramses Amer of Stockholm University in Sweden said that no one understood what that map – which shows a dashed line around the country’s claim to 80 percent of the sea – was trying to express, including many Chinese scholars.

Nazery Khalid, a Senior Research Fellow at the Maritime Institute of Malaysia's Center for Economics Studies & Ocean Industries, said the map was unfounded and had ignited controversy.

Tran Cong Truc, former head of Vietnam’s Government Border Committee, said Chinese researchers themselves were unsure about the map’s legitimacy.

Rodolfo Severino, head of the ASEAN Studies Center Institute of Southeast Asia Studies, said there were no co-ordinates attached to the dashes on the line and China had never explained their meaning.

It reminds one of the several times previously China has displayed someone else's territory on its map, as if attempting a sneak grab of it. For example, a decade ago the Indonesian Natunas Islands suddenly appeared on Chinese maps.

SCMP reported that a PLA singer has landed in Taiwan and is touring the island:

Chen Sisi , the first PLA soldier to land in Taiwan, will stage her historic performance today at the National Dr Sun Yat-sen Memorial Hall in Taipei after arriving in Taiwan on Tuesday.

But Taiwan's opposition lawmakers urged the government yesterday to ban her performance, citing security concerns.

Apparently she's a colonel in the Song and Dance Troupe of the PLA Second Artillery.

Speaking of hot, how about them money inflows? Taiwan is being flooded with flows of speculative cash from foreign investors. The NT is likely set to appreciate, at least in the short term.

Lin reiterated the central bank does not welcome speculative trading in the forex market. Several foreign investors had remitted substantial funds into Taiwan but failed to invest in stocks as stated in their declaration documents. The central bank has referred the names of these investors to the Financial Supervisory Commission for investigation.

Under instructions from CBC Gov. Perng Fai-nan, the forex department held a news conference Jan. 4 and provided journalists with reports from Nobel economics laureate Joseph Stiglitz and the United Nations.

The reports pointed out risks of asset bubbles in the event of continued international "hot money." The central bank's moves suggest it does not rule out the possibility of tightening management over capital accounts to prevent a scenario like the Asian financial storm of 1997 or the global financial tsunami of 2008.

Meanwhile, emerging markets should be capable of controlling asset inflows in order to refrain from creating economic bubbles.

Recent influx of hot money has produced a major impact on the forex market, Lin said.

Many countries such as Brazil, Russia and Indonesia have indicated plans to take measures against hot money, the director-general added. Brazil, for instance, plans taxation of 2 percent against foreign investors.

An economist pointed out that one reason for the inflows is that it is traditional for businessmen in Taiwan to clean up their debts before Lunar New Year begins. This increases the demand for NT dollars, driving up their value. Marc Chandler says:

To be sure foreign investors have been buying Taiwanese shares. Through today, foreign investors have been net buyers of Taiwanese shares for 11 consecutive days. Last year, foreign investors bought an estimated $15.6 bln of Taiwanese shares, the most in three years. Taiwan’s Taiex index rose almost 75% over the past 12 months and the key index now stands at its highest level since mid-2008.

Recall that in mid-Nov 2009 Taiwan barred foreign investors from using time deposits to park funds. Today’s move is aimed at the same thing–deterring speculation in the Taiwanese dollar. The central bank indicated yesterday that recent inflows, which it monitors closely, exceeded the value of equity purchases by foreign investors.

These type of measures can be effective for a short-term and it would not be surprising to see the US dollar recover some recent ground lost against the Taiwanese dollar. However, Taiwan’s increasing economic ties to China, including allowing mainland investors to buy Taiwanese shares and the general global economic recovery bodes well for Taiwan assets and currency.

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Daily Links:

• Our Good Cooperation Partner passes new law giving Chinese high tech firms preference over foreign firms in bidding. But if only Taiwan moves closer to China, China will reciprocate.....
• Global Post: Taiwan's Love Motels Step Up Their Game
• Taiwan scientist discovers new strawberry crab.

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