New York Times pays damages to Singapore’s leaders
Singapore’s Prime Minister Lee Hsien Loong speaks during Standard Chartered’s 150th anniversary dinner in Singapore February 19, 2009. Credit: Reuters/Vivek Prakash
SINGAPORE (Reuters) – The New York Times Co apologized to Singapore Prime Minister Lee Hsien Loong and former prime minister Lee Kuan Yew on Wednesday and paid S$160,000 ($114,000) in damages for an article about Asian political dynasties.
An apology in the opinion section of the New York Times’ website said that any inference that Lee Hsien Loong “did not achieve his position through merit,” was unintended.
The article, entitled “All in the Family,” was published on February 15 in the International Herald Tribune (IHT), the global edition of The New York Times.
Lee Hsien Loong is the son of independent Singapore’s first leader, Lee Kuan Yew. The New York Times also apologized to Goh Chok Tong, who succeeded the older Lee as prime minister.
Davinder Singh, the lawyer acting for the leaders, told Reuters that the IHT’s publisher, editor of global editions, and the article’s author, Philip Bowring, also agreed to pay damages of S$60,000 to Lee Hsien Loong, and S$50,000 each to Goh Chok Tong and Lee Kuan Yew, as well as pay their legal costs.
Singh said the article was “libellous” and the Singapore leaders had demanded an apology, damages and costs.
He said it was in breach of an undertaking made by both the publisher of the IHT and Bowring in 1994 that they would not make further similar defamatory allegations to those made in an article by Bowring in the IHT in that year called “The Claims about Asian Values Don’t Usually Bear Scrutiny,” for which the IHT and Bowring also paid damages and costs to the three leaders.
A spokesman for The New York Times Co declined to comment beyond the apology, while Bowring did not respond to a Reuters query for comment.
Singapore’s leaders have in the past sued and won damages, or out-of-court settlements, from opposition politicians and foreign media including the International Herald Tribune, Wall Street Journal, Bloomberg and The Economist.
Singapore, considered to have the lowest political risk among Asian nations by many risk consultancies, is a hub for manufacturers, banks and expatriates, who value its stability. The ruling People’s Action Party (PAP) has governed for 50 years.
Singapore was ranked 133rd among 175 countries in the World Press Freedom Index 2009 by Reporters Without Borders.
(Reporting by Neil Chatterjee in Singapore and Tiffany Wu in New York; Editing by Nick Macfie and Raju Gopalakrishnan)
BEIJING – The exchange rate of the renminbi has once again become a target of the United States Congress. China-bashing, it seems, is back in fashion in America.
But this round of China-bashing appears stranger than the last one. When Congress pressed China for a large currency revaluation in 2004-2005, China’s current-account surplus was rising at an accelerating pace. This time, China’s current-account surplus has been shrinking significantly, owing to the global recession caused by the collapse of the US financial bubble. China’s total annual surplus (excluding Hong Kong) now stands at $200 billion, down by roughly one-third from 2008. In GDP terms, it fell even more, because GDP grew by 8.7% in 2008.
Back then, pegging the renminbi to the dollar pushed down China’s real effective exchange rate, because the dollar was losing value against other currencies, such as the euro, sterling, and yen. But this time, with the dollar appreciating against other major currencies in recent months, the relatively fixed rate between the dollar and the renminbi has caused China’s currency to strengthen in terms of its real effective rate.
Of course, there are other sources of friction now that did not seem as pressing five years ago. America’s internal and external deficits remain large, and its unemployment rate is both high and rising. Someone needs to take responsibility, and, as US politicians don’t want to blame themselves, the best available scapegoat is China’s exchange rate, which has not appreciated against the US dollar in the past 18 months.
But would a revaluation of the renminbi solve America’s problems? Recent evidence suggests that it would not. Between July 2005 and September 2008 (before Lehmann Brothers’ bankruptcy), the renminbi appreciated 22% against the dollar. Yet the quarterly US current-account deficit actually increased – from $195 billion to $205 billion.
Most economists agree that the renminbi is probably undervalued. But the extent of misalignment remains an open question. The economist Menzie Chinn, using purchasing power parity (PPP) exchange rates, reckoned the renminbi’s undervaluation to be 40%. But, after the World Bank revised China’s GDP in PPP terms downward by 40%, that undervaluation disappeared. Nick Lardy and Morris Goldstein suggest that the renminbi was probably undervalued only by 12-16% at the end of 2008. And Yang Yao of Beijing University has put the misalignment at less than 10%.
But assume that China does revalue its currency sharply, by, say, 40%. If the adjustment came abruptly, Chinese companies would suffer a sudden loss of competitiveness and no longer be able to export. The market vacuum caused by the exit of Chinese products would probably be filled quickly by other low-cost countries like Vietnam and India. American companies cannot compete with these countries either. So no new jobs would be added in the US, but the inflation rate would increase.
Now assume that the renminbi appreciates only moderately, so that China continues to export to the US at higher prices but lower profits. This would push up inflation rates significantly, forcing the US Federal Reserve to tighten monetary policy, thereby quite possibly undermining America’s recovery, which remains unsteady. New difficulties in the US and China, the world’s two largest economies, would have a negative impact on global investor confidence, hurting US employment even more.
In both scenarios, US employment would not increase and the trade deficit would not diminish. So then what? The historical evidence from the 1970’s and 1980’s, when the US consistently pressed Japan to revalue the yen, suggests that US politicians would most likely demand that the renminbi appreciate even more.
The exchange rate measures the relationship between at least two currencies, whose values are based on the productivity and domestic balance of their respective national economies. Causes for misalignment may be found on both sides. If the US dollar needs to devalue because of fundamental disequilibrium in the US economy, the problems cannot be fixed by lowering the dollar’s value alone.
Of course, there are problems with China’s external imbalance with the US, such as excessive national savings (which account for 51% of China’s GDP) and distortions in the prices of energy and other resources. All those problems contribute to the imbalance, and China should fix them.
But we should realize that there are fundamental causes for the imbalance on the US side as well, such as over-consumption financed by excessive leverage and high budget deficits. Only when both sides make serious efforts to fix their domestic fundamentals will the imbalances be reduced in a serious and sustained way. Short-run exchange-rate adjustments simply cannot fix negative long-term trends.
China may resume a “managed float” of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes. In choosing whether or not to do so, its policymakers may weigh factors ranging from China’s international responsibilities to the potential damage of foreign protectionism or even a “trade war.” What is certain, however, is that China’s politicians have a domestic agenda just like the Americans. The key element of that agenda is to maintain employment growth.
One-third of China’s labor force remains in agriculture, earning only about half what migrant workers in China’s booming cities earn. (Per-capita earnings for China’s farmers may rise to $770 if the renminbi appreciates by 10%, but of course that is only a US dollar-term revision, with Chinese farmers feeling no increase at all). Getting more farmers into better-paid manufacturing and service-industry jobs will mean not only a reduction in poverty, but lower income disparity. By any moral standard, that goal is at least as important as anything on America’s agenda.
Fan Gang is Professor of Economics at Beijing University and the Chinese Academy of Social Sciences, Director of China’s National Economic Research Institute, Secretary-General of the China Reform Foundation, and a member of the Monetary Policy Committee of the People’s Bank of Chi
Google's attempted detour around China's Internet censorship rules was met with countermeasures Tuesday by the communist government, which blocked people on the mainland from seeing search results dealing with such forbidden topics as the pro-democracy movement.
China's maneuver, as well as its public rebuke of Google's decision to stop censoring searches for the government, rattled some of the company's investors, advertisers and users.
The chief concern is whether Google poisoned its business in one of the world's most promising Internet markets. One analyst critical of Google's move predicted the maneuver will cause the company's stock to fall by as much as $50 — or about 10 percent — in the coming weeks.
The stock fell $8.50, or 1.5 percent, to $549 Tuesday.
Last month, Google said it no longer felt comfortable complying with the country's demands that it censor Web content deemed objectionable by the communist rulers. On Monday, Google began sending Web searchers in mainland China from the China-based Google.cn to Google.com.hk, based in Hong Kong. The former British colony has an open Internet, and Google is not legally required to censor results there.
But that end-run doesn't prevent China's government from using its Internet filters — known as the Great Firewall — to block some search results and Web sites from being seen in the mainland.
On Tuesday, a search request from within mainland China about the 1989 Tiananmen democracy protests returned a notice that the "page cannot be displayed." It also caused the Web browser to disconnect for several seconds. Under the old google.cn, a similar query usually returned a list of sanitized sites about Tiananmen Square.
If the Chinese leaders really want to foil Google, they could block all mainland access to the Hong Kong service. Or they could exert their control of Chinese telecommunications companies to slow the speed of queries and responses, to help drive traffic to homegrown rivals.
"It really comes down to the extent of their vindictiveness," said Duncan Clark, managing director of BDA China Ltd., a technology market research firm.
The tensions between Google and China's government already appear to be denting the company's business. TOM Online, a provider of online and mobile services in China that is owned by a Hong Kong tycoon, said it would not renew an alliance with Google to avoid violating any Chinese laws. Owners of Chinese businesses also may be more reluctant to advertise on Google for fear of reprisals.
If that happens, Google may reduce its sales force in China. For now, the company is maintaining both its engineering and sales staffs in the country, reflecting its hope that the Chinese government's anger will cool off. Google also believes it will be able to revive plans, delayed for now, to have its Android software support more mobile phones and applications in China.
Other foreign companies that have angered the Chinese government have been stymied in the country. American defense contractor Raytheon Co. closed its Beijing offices last year in frustration over its inability to win contracts for commercial aviation and consulting services. American executives believed Raytheon was being penalized for selling its Patriot missiles to Taiwan.
Although Google discussed various options in talks with the Chinese government over the past two months, the company made its decision to shift mainland traffic to Hong Kong without the ruling party's approval. Google makes relatively little of its money in China now. Analysts have estimated the country accounts for $250 million to $600 million of its $24 billion in annual revenue.
But the pie is expected to get substantially bigger as China's economy expands and the country's Web audience increases beyond the roughly 350 million people online now.
Susquehanna Financial Group analyst Marianne Wolk expects China's Internet ad market to grow from about $3 billion last year to as much as $20 billion in 2014. Google appeared to be well positioned to pick up about $5 billion to $6 billion of that projected 2014 revenue, Wolk said, because its Chinese search engine has a roughly one-third share — a distant second to the homegrown Baidu Inc.
But Google's share is likely to shrink if the Great Firewall blocks or slows traffic.
BGC financial analyst Colin Gillis said he expects Google's dustup with the Chinese government to reduce the company's market value by $10 billion to $15 billion, or $30 to $50 a share.
"What Google has done is a slick trick, but it's also a direct slap in the face to the government," Gillis said. "The repercussions from this will be going on for several years."
In China some Internet users mourned Google's exit, placing flowers and chocolates at the large Google sign in front of the company's offices in Beijing. But others noted that the situation could raise awareness about China's strict online censorship.
Zhang Shihe, a freelance Chinese journalist and well-known blogger, said coverage of Google's departure could spur Chinese to demand more free speech online and offline.
"The incident has angered and saddened a lot of netizens, and now they will understand what type of country we live in," said Zhang, who blogs under the name "Tiger Temple." ''This is another win for freedom of expression."
China is expected to make substantial progress in integrating telecom, radio and TV, and Internet networks this year. The aim is to promote the development of all three sectors and domestic consumption in related industries.
At this year's China Content Broadcasting Network, or CCBN, integration of the three networks is the main topic for almost every exhibitor. They say the Chinese government's message to develop this sector has been clearer than ever. There is no reason not to tap into this market.
Content protection solution provider Irdeto says the cable networks are ready to launch the next generation of services.
In the next two years, China will carry out pilot programs to connect telecom, Internet, and TV and Radio networks. After that, the three networks will be comprehensively connected by 2015.
China Digital Video, a local visual network solution developer, says much of the technology and infrastructure is already in place.
Zhang Dayong, Dept. Director, China Digital Video, said,“During the past few years, players in the three sectors have done a great deal of work in preparation for the integration of the network, especially infrastructure. That includes 3G mobile technology, digital TV and wireless broadband. It's like the highways have been built by large. And we expect cars to run on the highways very soon, because demand from consumers is real and tangible.”
Google has recently been warned by several foreign authorities over its controversial services including Google news, Google street view, as well as the latest social network service Google buzz.
Last month, the European Union Commission said it had received various requests for anti-monopoly investigations regarding the Internet search giant.
Last month, the European Union Commission said it had received various requests for anti-monopoly investigations regarding the Internet search giant. They claim Google has been filtering out its competitors on purpose in order to keep more advertisement profits.
In France, the government has formed a special team to investigate lawsuits filed by local media companies against Google. They accuse the company of profiting from their products without reimbursement. Another lawsuit was filed by Louis Vutton. The luxury bagmaker said it has found links on Google's website to pirated products. Italian authorities have also launched an anti-trust investigation against Google filed by the country's print media.
Meanwhile, Google street view, which was introduced in 2007, has challenged privacy laws in Britain and Germany. Though the company has begun to obscure search results for human faces and car license plates, it is still frequently taken to court for violating privacy rights. Its latest social web service, Google Buzz, has also been accused of a privacy breach. The company was ordered by the Canadian government to explain privacy bugs, which have already triggered widespread complaints.
Google's trouble seems to be everywhere. Recently Spanish telecom operator Telofonica accused the company of using free bandwidth for its own benefit. The company said it is considering charging Google for network use.
