China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury’s first-ever direct relationship with a foreign government, according to documents viewed by Reuters.

The relationship means the People’s Bank of China buys U.S. debt using a different method than any other central bank in the world.

The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.

China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn’t been necessary.

The documents viewed by Reuters show the U.S. Treasury Department has given the People’s Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.

CONTINUED at Reuters.

A group of Communist Party veterans have written a daring open letter calling for the removal of China’s top security official, in the latest sign of disunity ahead of Beijing’s leadership transition.

Security chief Zhou Yongkang, one of China’s top nine rulers, is viewed as a hardliner and is linked to Bo Xilai , the charismatic party leader whose downfall earlier this year triggered the nation’s biggest political scandal in decades.

In an open letter to President Hu Jintao, published on a number of overseas websites, the veterans suggest that Zhou is part of a movement to revive the China of Mao Zedong.

Zhao Zhengrong, a retired anti-corruption official from the southwestern province of Yunnan, told the AFP news agency that he, and 15 other party members from the same province, had sent the proposal advocating Zhou’s removal to higher authorities.

Speculation has been growing about the future of Zhou since the downfall of another top politician, Bo Xilai.

Al Jazeera’s Melissa Chan said that the letter was significant because it was rare to see this type of dissent in China.

“For the first time in 20 years, we really are seeing a debate and a split in the political leadership,” she said.

Despite this divide, she said the letter was unlikely to have any impact on the national government.

“What’s lost in this entire narrative is that the next president and premier of China are not going to change,” she explained.

Source: Al Jazeera. Video at link.

The United States on Wednesday opened its banking market to ICBC, China’s biggest bank, for the first time clearing a takeover of a US bank by a Chinese state-controlled company.

Just days after high-level US-China economic talks in Beijing, the Federal Reserve approved an application from Industrial and Commercial Bank of China to buy a majority stake in the US subsidiary of Bank of East Asia.

The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States.

ICBC has been the most aggressive of China’s “big four” banks in expanding overseas.

According to the Fed the bank has total assets of roughly $2.5 trillion.

It will buy up to 80 percent of the US unit of the Hong Kong-based Bank of East Asia, which operates 13 branches in New York and California.

As part of the deal ICBC and two state-backed financial firms — China’s sovereign wealth fund the China Investment Corporation (CIC), and Central Huijin Investment — will be recognized as bank holding companies, regulated as commercial US banks.

The broad expansion of China’s footprint in the US market comes amid a series of financial reforms in China that could begin to open the lucrative market to US firms.

After the May 3-4 meeting, the US Treasury noted China had made “encouraging progress” on a number of issues sought by the Obama administration, including taking steps toward a more open and market-oriented financial system.

The Fed said Wednesday that the ICBC proposed acquisition, which is “relatively small,” would not have much of an impact on the banking market.

“The combined deposits of the relevant institutions in the Metropolitan New York banking market represent less than one percent of market deposits,” the central bank noted.

The competition includes Bank of China branches in the New York metropolitan area, and CIC, which has a noncontrolling stake in Morgan Stanley.

ICBC will pay $140 million to buy an 80 percent interest in Bank of East Asia USA, China’s state news agency Xinhua reported in January 2011, at the time the deal was signed.

“This unprecedented acquisition of a controlling stake in a US commercial bank by a mainland bank is strategically significant,” Xinhua quoted ICBC chairman Jiang Jianqing as saying.

The Fed said its Board also consulted with the China Banking Regulatory Commission, the country’s main banking regulator, and pointed to steady improvement in regulation since its founding in 2003.

“For a number of years, authorities in China have continued to enhance the standards of consolidated supervision to which banks in China are subject, including through additional or refined statutory authority, regulations, and guidance,” it said.

In other Fed board decisions, Bank of China, the third-largest bank, won approval for a branch in Chicago. Bank of China operates two insured federal branches in New York City and an uninsured branch in Los Angeles.

Agricultural Bank of China, the fourth-largest bank, was set to establish a branch in New York City, where it already operates a representative office.

Source: Yahoo News Canada.

Thousands of pills filled with powdered human flesh have been discovered by customs officials in South Korea, it was revealed today.

The capsules are in demand because they are viewed as being a medicinal ‘cure-all’.

The grim trade is being run from China where corrupt medical staff are said to be tipping off medical companies when babies are aborted or delivered still-born.

The tiny corpses are then bought, stored in household refrigerators in homes of those involved in the trade before they are removed and taken to clinics where they are placed in medical drying microwaves.

The discoveries since last August has shocked even hardened customs agents who have pledged to strengthen inspections.

There is a huge demand for alternative Chinese remedies – which include ground up rhino horns. The Chinese have historically consumed human placentas to improve blood supply and circulation.

Health authorities in Asia are concerned that if the powdered foetus trade is allowed to continue the capsules will find their way onto the internet and be sold to gullible or sick desperate people in other parts of the world.

The South Korean Customs Service said today that it had heightened its searches of suspicious packages being brought into the country by travellers from China in an attempt to stamp out the sickening trade.

According to customs agents, 35 smuggling attempts have been made since August last year involving more than 17,000 capsules disguised as ‘stamina boosters’.

Hospitals and abortion clinics in China reportedly pass the remains onto drugs companies when a baby is stillborn or aborted, the South Korean SBS documentary team reported last year.
The San Francisco Times reported that tests carried out on the pills confirmed they were made up of 99.7 per cent human remains.

The tests were successfully able to establish the genders of the babies used.

There is a huge demand for the pills which are thought to enhance stamina. Microwave-dried placenta is also sought after for its alleged ‘medicinal’ benefits.

However, in reality the human flesh capsules contain super-bacteria and other harmful ingredients.

There have been disturbing reports that some babies were those who had perished in China’s notorious ‘dying rooms’ where youngsters are deliberately left to die because they were born into families that already had the limit of one child in country areas. …

Despite their disgust at discovering packets of the so-called rejuvenation pills being brought in from China, South Korean officials have refused to confirm where the babies came from or who made the capsules.

Sources said this was because they were not prepared to create diplomatic friction with Beijing, preferring to leave it to Chinese officials to do something about the horrific trade in powdered babies.

Source: The Daily Mail.

Secretary of State Hillary Rodham Clinton toldChina on Thursday that it must protect human rights, in remarks that rejected Beijing’s criticism of the U.S. for getting involved in the case of a blind dissident whose fate overshadowed the opening of annual talks between the powerful countries.

Clinton said at the opening of the talks on foreign policy and economic issues that the U.S. believes “all governments have to answer our citizens’ aspirations for dignity and the rule of law and that no nation can or should deny those rights.”

Her comments came as the dissident, Chen Guangcheng, pleaded for more help from Washington. The blind, self-taught lawyer took refuge in the U.S. Embassy after escaping house arrest, but left Wednesday to get treatment for a leg injury at a Beijing hospital. He initially said he had been assured that he would be safe in China, but hours later he said he fears for his family’s safety unless they are all spirited abroad.

China already demanded an apology from the U.S. even before Chen balked at a deal in which he would remain in his homeland. Now that he wants to leave, the case is looming over talks in which Clinton and Treasury Secretary Timothy Geithner are to discuss foreign policy and economic issues with their Chinese counterparts.

China’s President Hu Jintao said at the opening of the talks that China and the United States “must know how to respect each other” even if they disagree.

CONTINUED at Yahoo News.

It’s an exhilarating, if somewhat mystifying, experience to find yourself a supporting player in a modern media maelstrom. It’s even more instructive to learn that a dust-up over a few words can obscure a much more significant message.

“My first thought was, this is what they do in China on party matters if you talk off script.”

Those words were spoken Sunday night by Jon Huntsman, the former Utah governor and Republican presidential candidate, in a public interview with me at New York’s 92nd Street Y. Huntsman was describing how his comments about the potential appeal of a third party got him disinvited to speak at a Republican National Committee event in Florida.

Before dawn, websites were reporting the quote under headlines like “Huntsman compares GOP to Communist Party of China.” By sunrise, Huntsman was on “Morning Joe,” scoffing that “bottom-feeder” blogs had taken his comments out of context. By midday,Buzzfeed–the target of Huntsman’s critique–had posted a lengthy video excerpt from my interview to argue that no, he had not been taken out of context.

For what it’s worth, I don’t think Huntsman was painting with a brush so broad as to compare the Republican Party with Communist China. For one thing, Huntsman is not yet under house arrest with his Internet access forbidden.

But here’s what the dust-up missed. If you take all of what he said to me over some 90 minutes, it is all but certain that John Huntsman is not going to be a Republican much longer.

CONTINUED at Yahoo News.

Chinese President Hu Jintao met with a top North Korean envoy in a reaffirmation of traditional ties following Chinese pique over Pyongyang’s recent attempted rocket launch.

State broadcaster CCTV made no mention of the failed April 13 launch in its report on Hu’s meeting Monday with Workers’ Party international relations chief Kim Yong Il at the Great Hall of the People in the heart of Beijing.

Hu sent his congratulations to North Korea’s young new leader Kim Jong Un on his assuming the title of Workers’ Party first secretary and said strengthening ties with North Korea was a key priority for China’s ruling communists.

“We will carry on this tradition … boost strategic communication and coordination on key international issues and work for peace and stability on the Korean peninsula,” CCTV quoted Hu, who also leads the Chinese Communist Party, as saying.

Kim Jong Un concurred in a statement carried late Monday by the official Korean Central News Agency. “It is the steadfast stand of our party and government to invariably develop the traditional DPRK-China friendship provided and cultivated by the leaders of elder generations of the two countries,” the statement said.

The high-profile reception for Kim’s envoy illustrates how Beijing is determined to maintain strong ties with its communist neighbor despite exasperation over its provocations against the South and Pyongyang’s refusal to embark on economic reforms that would reduce its dependency on foreign aid.

CONTINUED at NY Times.

The Evacuated Tube Transport (ETT) system (U.S. Patent 5950543, assigned to ET3.com, Inc.) would take passengers from New York to Beijing in just two hours. Advocates of Evacuated Tube Transport (ETT) claim it is silent, cheaper than planes, trains, or cars and faster than jets.

How it would work: put a superconducting maglev train in evacuated tubes, then accelerate using linear electric motors until the design velocity is attained. Passive superconductors allow the capsules to float in the tube, while eddy currents induced in conducting materials drive the capsules. Efficiency of such a system would be high, as the electric energy required to accelerate a capsule could largely be recaptured as it slows.

The maglev tubes are permanently maintained at near vacuum conditions, and the capsules are inserted into and removed from the tubes through airlocks at stations along the route. After the capsules are accelerated to the design velocity (some 4,000 mph or 6,500 km/h), they coast for the remainder of the trip.

While tubes could be networked like freeways, with capsules automatically routed along their trip, local and long-distance trips would require separate maglev tubes to avoid unreasonable scheduling delays.

Members of the ET3 consortium have worked with parties in China, where they say more than a dozen licenses for the company have been sold.

Source: KurzweilAI.

China likely provided the mobile long-range missile launcher that North Korea displayed in a military parade over the weekend, which would put Beijing in violation of U.N. sanctions, analysts say.

The 16-wheeled vehicle, known as a transporter-erector-launcher (TEL), is apparently based on a Chinese design, said Ted Parsons of IHS Jane’s Defense Weekly.

The Chinese and North Korean versions of the TEL “have the same windscreen design, the same four windscreen wiper configuration, the same door and handle design, a very similar grill area, almost the same front bumper lighting configuration, and the same design for the cabin steps,” Mr. Parsonsnoted.

North Korea’s TEL was featured in a massive parade in Pyongyang over the weekend, one of a series of events held to commemorate the centenary of the communist regime’s founder, Kim Il-sung.

“If confirmed, China’s involvement in providing this erector-launcher toNorth Korea would put it in breach of U.N. Security Council Resolution 1874,” said James Hardy, the Asia Pacific editor for Jane’s Defense Weekly.

CONTINUED at the Washington Times.

China, India and South Korea – three of the most vibrant economies in Asia – are also beefing up their military arsenals with new weapons systems from the United States, Russia, Germany, France and the UK.

According to the latest figures released Monday by the Stockholm International Peace Research Institute (SIPRI), the world’s five largest arms importers in 2007-2011 were all Asian states beating out the traditional frontrunners – the rich, oil-blessed Middle Eastern countries.

India was the world’s single largest recipient of arms, accounting for 10 per cent of global arms imports, followed by South Korea (six per cent of arms transfers), Pakistan (five per cent), China (five per cent) and Singapore (four per cent).

The five biggest arms suppliers in 2007-2011 were the United States, Russia, Germany, France and the UK.

With the exception of Germany, the four other suppliers are veto-wielding permanent members of the UN Security Council.

The top five suppliers accounted for 75 per cent of all international arms transfers.

New deals

Still, the most significant purchase in 2011, and the largest arms deal for at least two decades, was Saudi Arabia’s order for 84 new and 70 rebuilt F-15SG fighter planes from the United States.

CONTINUED at Al Jazeera.