Wednesday, March 17, 2010

President SR Nathan in India on private visit, returns on Sunday

Channel NewsAsia - Thursday, March 18
Asian Defense News: SINGAPORE : President SR Nathan has left on a private visit to India on Wednesday evening.

He will return on March 21

President SR Nathan in India on private visit, returns on Sunday

A statement from the President’s office says the Chairman of the Council of Presidential Advisers, Mr J Y Pillay, will be acting President during Mr Nathan’s absence. — CNA /ls

Australia readies for shortened Obama visit

Asian Defense News: SYDNEY (AFP) - – Australia said Tuesday it would "roll out the welcome mat" for Barack Obama at any time, after the United States president delayed and trimmed down his state visit to just over 24 hours.

Obama has pushed back the trip, during which he will address the joint houses of parliament and meet Prime Minister Kevin Rudd, as he attempts to shepherd his healthcare reforms through Congress.

Australia readies for shortened Obama visit

Obama, who has also shelved plans to bring along his wife, Michelle, and two daughters for the trip to Indonesia and Australia, will arrive in Canberra late next Thursday and fly out again the following night.

"We welcome very much his arrival," Foreign Minister Stephen Smith told Sky News. "As the prime minister has said, any time President Obama wants to visit Australia, we're very pleased to roll out the welcome mat."

Smith said parliament, which will be recalled from a break for Obama's address, will not sit as planned on Monday and Tuesday next week but on Friday, March 26.

Washington officials have said Obama's visit will laud the US "model alliance" with Australia and cement the allies' common strategies on trade, the environment and security.

"Australia... is an increasingly important ally in both the region and the world," said Ben Rhodes, Obama's deputy national security adviser for strategic communications.

Obama, who had been expected to visit Sydney, will now confine his trip to Canberra, where he will also hold a joint news conference with Rudd.

The United States is Australia's most important ally, with Canberra sending troops to fight alongside US soldiers in Afghanistan. The countries will mark the 70th anniversary of the US-Australia alliance during Obama's visit.

Rio Tinto staff face trial in China on Monday

Asian Defense News: BEIJING (AFP) - – An Australian executive faces trial in China next week in a case that has badly strained relations, the government in Canberra and a Chinese lawyer involved in the case said Wednesday.

Rio Tinto executive Stern Hu, an Australian passport holder, and three Chinese employees of the Anglo-Australian mining giant will go on trial in Shanghai on Monday, they said.

Rio Tinto staff face trial in China on ...

Rio Tinto staff face trial in China on Monday

A spokeswoman for Australia's Department of Foreign Affairs and Trade said they will face charges of "receiving bribes and infringing commercial secrets" -- essentially an industrial espionage charge.

Zhai Jian, a lawyer for one of the Chinese defendants, confirmed to AFP that all four would go on trial from Monday at the Shanghai No. 1 Intermediate People's Court. Calls to the court went unanswered.

Australia said it was pleased the case was moving to trial, eight months after the four were arrested in Shanghai in July in a case that sent a chill through the foreign business community in China.

The arrests came during fractious iron ore contract talks which later collapsed and just weeks after Rio Tinto snubbed a near 20-billion dollar cash injection from a state-run Chinese company.

Australia said consular officials would attend sessions of the trial relating to the receiving of bribes and that Canberra had asked that China reconsider a ban on attending closed proceedings on the trade secrets charge.

"At the request of one of the parties and in accordance with Chinese law and procedure, the court has decided that the sessions dealing with the infringement of commercial secrets should be closed," the spokeswoman said.

"Australian officials have asked for this to be reconsidered."

Rio Tinto, the world's third-largest miner, has said previously it was not aware of any wrongdoing by its employees.

It released a statement Wednesday saying it hoped the upcoming trial would be "a transparent and expeditious process".

Separately, the company's chief executive Tom Albanese is expected in China this weekend to attend an economic forum in Beijing, company spokesman Gervase Greene told AFP last week.

Beijing has insisted the case will be handled by the book and that it would "fully guarantee" the rights of the employees.

When the four were charged in February, China's official Xinhua news agency said they were accused of using their "positions to obtain benefits for others and on many occasions solicited or accepted bribes".

They had also "on many occasions obtained the trade secrets of Chinese steel companies, leading to serious consequences for the relevant steel companies", Xinhua said.

Lawyers involved in the case have declined to discuss the possible sentences the accused may face, citing the sensitivity of the case.

According to the website of China's Supreme People's Court, charges of bribery and abuse of one's position bring a sentence of at least five years in prison for large cases, or up to five years for lesser violations.

The trade secrets charges call for sentences of at least three years in jail for cases resulting in "especially" large losses, or lesser terms for smaller cases, it said.

Japan, detractors trade barbs on eve of tuna debate

Asian Defense News: DOHA (AFP) - – Japan threw down the gauntlet Wednesday ahead of a key debate over bluefin tuna, saying that if the species were truly facing extinction its defenders should seek a halt to all fishing rather than just cross-border commerce.

Monaco, meanwhile, also worked the corridors at the 175-nation Convention on International Trade in Endangered Species (CITES) in Doha, seeking votes for its proposed trade ban on bluefin caught in the eastern Atlantic and Mediterranean.

Japan, detractors trade barbs on eve of tuna debate

When the issue comes to a vote next week, the future of a species and a multi-billion-dollar business could hang in the balance.

Japan, which buys three-quarters of the global catch of bluefin, is campaigning fiercely to prevent catches from these two fisheries from falling under CITES' Appendix I, which outlaws all international commerce.

Up to now, this status has been primarily reserved for iconic fauna such as big cats, primates and elephants rather than a mainstream commercial species.

In an interview with AFP, top Japanese negotiator Masanori Miyahara described the proposed ban as unworkable and unfair, and took aim at supporters of the moratorium.

"We are very serious about bluefin tuna," he said.

"If they are really concerned about the future of the bluefin tuna, let's stop the fishing -- that's the best way," Miyahara said.

For Monaco, Appendix I is a lifeline without which the species will slip towards extinction.

"We have gotten to the point where the collapse of stocks in the wild is inevitable," said Patrick Van Klaveren, the principality's top negotiator in Doha.

Scientists agree that bluefin stocks in the Atlantic and Mediterranean have crashed, with populations declining by up to 80 percent from only three or four decades ago.

"Let's leave the species alone for five or 10 years to give it a chance to avoid certain catastrophe," said Van Klaveren.

Miyahara sniped at the United States and the European Union, saying they backed a ban knowing that under CITES rules they could still harvest the species in their domestic waters for consumption at home.

"They are saying Appendix I is okay because their fishermen will continue the fishing and sale for the domestic market," he said. "That is unfair."

Tokyo acknowledges that bluefin are in trouble, but says the solution lies with enforcing existing quotas set by the International Commission for the Conservation of Atlantic Tunas (ICCAT), the inter-governmental fishery group responsible for tuna stocks in the Atlantic Ocean and adjacent seas.

Japan is pressing for support from neighbours South Korea and China to thwart the two-thirds vote needed from delegates. It has also been campaigning hard with African countries, say sources.

If no agreement is reached on Thursday -- a near certainty -- CITES will form a working group to hash out the issue behind closed doors, and perhaps craft a compromise proposal.

Europe, which remains divided internally, "risks getting into some very complicated discussion," said Laurent Stefanini, head of the French delegation.

Australia has called for an Appendix II listing for Atlantic bluefin, which would allow cross-border trade to continue, but under more stringent monitoring and rules.

Environmental groups retort that this would simply serve as a cover for business as usual, and point out that ICCAT has failed over three decades to enforce its own quotas.

Miyahara insisted Japan could do without the prized delicacy, which sells for up to 170,000 dollars (125,000 euros) a fish in Toyko, and 25 dollars a morsel in high-end restaurants.

"If bluefin doesn't come to the Japanese market, no problem, we can give it up!" he said.

The species only accounts for three percent of the "high quality tuna" consumed in Japan, he added.

Jewel of Muscat’s journey an inspiration to all who share hopes of new Asia

Asian Defense News: SINGAPORE : Singapore’s Minister for Foreign Affairs George Yeo has said the journey of the Jewel of Muscat, a replica of a 9th—century Arabian ship, is an inspiration to all who share in the hopes of a new Asia.

He said this in a letter to Captain Saleh Said Al Jabri and the crew of the Jewel Of Muscat to congratulate them on their safe arrival in Cochin, India.


The crew of the Jewel of Muscat

  • The crew of the Jewel of Muscat watch an Indian naval ship as they approach the Indian coast.
  • Image Credit: Supplied photo



The Jewel of Muscat is a gift from Sultan Qaboos bin Said of Oman to the people of Singapore.

It set sail on its historic voyage from Sultan Qaboos Port, Muscat, to Singapore on February 16 and arrived in Cochin on March 15.

Singapore Foreign Service Officer Jeff Khoo is part of the crew.

Cochin is the ship’s first port of call. From Cochin, it will set sail for Galle, Sri Lanka. It is expected to make port calls at Penang and Malacca.

The ship is expected to arrive in Singapore in July 2010.

In his letter, Mr Yeo said: "I have followed your daily updates with interest and admiration. I have also kept readers of my Facebook and blog sites regularly informed of your progress.

"Your re—enactment of a journey that took place over a thousand years ago fills us with awe and excitement. The seamanship of the Omani people is once again in full display!"

Mr Yeo said the gift of the Jewel of Muscat by Sultan Qaboos to the people of Singapore expresses the friendship between the two countries.

He said: "It also reminds us of the links that have connected the Middle East and Southeast Asia over the centuries.

"Of course, in this century, the maritime silk route is being revived on a huge scale. Your voyage is therefore an inspiration to all of us who share in the hopes of a new Asia."

Mr Yeo added that Senior Minister of State for Foreign Affairs Zainul Abidin Rasheed will represent Singapore at the welcome ceremony for the arrival of the ship in Cochin.

Mr Zainul will meet the Mayor of Cochin, Professor Mercy Williams and the secretary—general of the Omani Ministry of Foreign Affairs, Sayyid Badr Al—Busaidi. — CNA/ms

DPM Teo meets US Defence Secretary Gates in Washington DC



Asian Defense News: WASHINGTON DC : Singapore Deputy Prime Minister and Defence Minister Teo Chee Hean, who is now in the US, met several officials in the capital Washington DC on Tuesday.

In a meeting with his counterpart, US Defence Secretary Robert Gates, both men discussed regional and global issues.

DPM Teo meets US Defence Secretary Gates in Washington DC

They also reaffirmed the excellent Singapore—US ties based on shared perspectives and military cooperation.

Earlier this week while in San Diego, Mr Teo observed an integrated exercise involving a Singapore Navy frigate and Sikorsky naval helicopters.

Free shuttle service from Changi Airport to Resorts World Sentosa

Asian Defense News: SINGAPORE: Tourists arriving at Changi Airport can now make use of a free shuttle service to get to Resorts World Sentosa and Universal Studios Singapore.

The shuttle service, which operates from 8am to 11.30pm, makes 21 trips daily at 45—minute intervals.

Free shuttle service from Changi Airport to Resorts World Sentosa

It ferries about 20 passengers on weekdays and 100 on weekends.

Taxi drivers remain divided on whether the free shuttle service would affect their business.

One cabby said: "Free shuttle service might affect our business. Those who weren’t intending to go there might take advantage of the service to go there." — CNA/vm

Inquest blames Afghans over refugee boat blast

Asian Defense News: SYDNEY (AFP) - – Three Afghan asylum-seekers deliberately set fire to a people-smuggling boat that blew up off Australia last April, killing five and injuring dozens, an inquest found on Wednesday.

Northern Territory coroner Greg Cavanagh said the three hatched a plan to set the boat ablaze, fearing it would be returned to transit point Indonesia after being stopped by Australia's navy off the country's north.

The boat, known as SIEV 36 and carrying 49 people, then exploded, hurling passengers into the water including five who drowned.

Inquest blames Afghans over refugee boat blast

"I have concluded that the explosion was caused when a passenger or passengers deliberately ignited petrol which had collected in the bilge area below the deck of SIEV 36," Cavanagh told the inquest.

"Prior to this, a group of passengers mistakenly believed they were to be returned to Indonesia. They planned to set fire to SIEV 36 to cripple it and ensure that they could not be returned," he added.

Cavanagh said he would refer his findings to police to see whether they could lay criminal charges against the three, named as Ghulam Mohammadi, Arman Ali Brahimi and Sabzali Salman.

He added that the explosion could have been avoided if the boat had been searched properly by navy personnel, who boarded the vessel near Ashmore Reef but failed to secure the petrol and lighters on board.

But he found the navy's rescue efforts were "appropriate" and saved many lives despite earlier reports of video footage that showed a sailor kicking a struggling asylum-seeker as he tried to get out of the water.

The case dramatically highlighted Australia's problem with asylum-seekers who make the perilous journey to its shores, with dozens more boats arriving this year alone.

Prime Minister Kevin Rudd, who has been criticised for reversing the tough immigration policies of his conservative predecessor, said people-smugglers were "scum of the earth" shortly after the incident.

Two Indonesian fishermen were jailed for five years in October for ferrying the boat-load of Afghans who were fleeing their war-torn homeland.

Trial of Sri Lanka's ex-army chief adjourned

Asian Defense News: COLOMBO (AFP) - – The court martial of Sri Lanka's former army chief was adjourned on Wednesday after judges said they could not hear both of the separate sets of charges against him, officials said.

Sarath Fonseka, who led the military to victory over the Tamil Tiger rebels last year, fell out with President Mahinda Rajapakse and unsuccessfully tried to unseat him in elections in January.

Trial of Sri Lanka's ex-army chief adjourned

He faces one set of charges that he interfered in politics before he retired from the army, and another set alleging he was involved in corrupt arms deals.

On Wednesday, a statement from the army said the judges had decided they could only hear the political interference case, which will start on April 6.

The trial on defence procurement irregularities was adjourned indefinitely.

Fonseka's spokesman, Anura Kumara Dissanayake, said the decision was a tactic to prolong Fonseka's detention and prevent him from campaigning in parliamentary elections on April 8.

"The army judges did not wake up this morning and discover that they have been appointed to both courts," Dissanayake said. "They knew it from the day they were appointed."

Fonseka denies all the charges and says they are part of a vendetta against him.

Rajapakse has been accused by political opponents and international human rights groups of suppressing dissent since his resounding re-election.

Fonseka entered politics after quitting the military in November, six months after the separatist Tamil rebels were finally crushed.

When he resigned from the military, Fonseka said that Rajapakse suspected him of planning a coup.

Fonseka was arrested 12 days after he lost the presidential election to Rajapakse.

Relief effort launched in storm-ravaged Fiji

Asian Defense News: SUVA (AFP) - – International relief supplies began arriving in cyclone-ravaged Fiji on Wednesday as reports emerged of widespread destruction in isolated parts of the Pacific nation.

Officials said there were estimates that half the buildings in the eastern Lau group of islands had been destroyed or badly damaged by Cyclone Tomas and two villages were believed to have been wiped out.

Australian Defence issued photo shows an AUSAID operative overseeing the loading of humanitarian supplies bound for Fiji

Aircraft from Australia, New Zealand and France started aerial surveys of the devastation and brought much-needed relief supplies for villages badly hit by the storm.

The leader of Fiji's military regime Voreqe Bainimarama, in a national address, called for Fijians to unite in the face of the disaster.

"The winds of Tomas reached up to speeds of... 240 kilometres (150 miles) per hour. To state the obvious, such winds can only cause devastation," he said.

"We, as a nation have shown that we have the resilience, the strength to bounce back from such adverse, such hard times."

New Zealand and Australia each sent a C130 Hercules aircraft packed with emergency equipment including tarpaulins, tents, and water containers after a state of emergency was declared for the north and east Tuesday.

Aircraft and Fijian naval vessels started distributing the equipment to Fiji's isolated north and east, which bore the brunt of the category four cyclone -- the second strongest on a five point scale -- on Monday and Tuesday.

Australia and New Zealand also pledged one million Australian dollars and one million New Zealand dollars (totalling 1.6 million US) as initial contributions to the aid effort.

Fiji-based Pacific deputy representative for UNICEF Tim Sutton said about 150,000 Fijians had potentially been directly affected by Tomas, with Bainimarama describing the damage late Tuesday as "overwhelming."

National Disaster Management Office operations officer Anthony Blake said unconfirmed reports painted a bleak picture of the situation in the Lau group, a string of islands in the country's east with a population of about 11,000.

"We have got reports of at least two villages totally destroyed," he said.

There have been no confirmed reports of deaths from Lau and residents of at least one of the destroyed villages were able to shelter in caves, Blake said.

"We are hoping there is no loss of life and all the villagers are okay and we will get emergency supplies to them."

"According to our estimates based on the worst-case scenarios of the track of the cyclone and what has happened in the north, we suspect at least 50 percent of the Lau group has been severely damaged."

The scale of the destruction and any further casualties looked set to become clearer on Thursday and Friday after inspections of affected areas.

Only one fatality has so far been confirmed -- a woman who drowned in rough seas as the cyclone approached at the weekend -- but another emergency official said Tuesday there had been unconfirmed reports of "a few" deaths.

By Wednesday, fewer than 9,000 people remained in evacuation centres throughout the country, down from around 17,000 on Tuesday, Blake said.

The main island of Viti Levu -- including the popular tourist region in the west of the island -- escaped the worst of the cyclone, along with the western part of the second biggest island Vanua Levu.

"We have been blessed in that our main regions and sectors have not been affected by Tomas," Bainimarama said.

North Korea may turn more menacing but options limited


Asian Defense News: (Reuters) - Policy blunders and an economic crunch have put North Korean leader Kim Jong-il into one of the riskiest periods of his iron rule, which could make him turn even more aggressive in his dealings with the outside world.

NORTH KOREA

But even if he chooses to resort once again to scare tactics to try to boost his bargaining power, he lacks a game-changing ace to play that would seriously rattle the international community or spook markets long used to his grandstanding.

Unless he is prepared to sail dangerously close to provoking a suicidal war -- and most experts firmly believe he is not -- then the most he can do is demonstrate incremental advances in the destructive capability of his armory or boost weapons sales to other countries at odds with the United States.

He is quite capable of provoking annoyance and concern, analysts say, but much less able to generate the kind of alarm that would cause a serious reassessment of the risks facing governments and financial markets in a region that includes the powerful economies of China, Japan and South Korea.

In fact, a signal of reconciliation may be his first step by ending a more than year-long boycott of international nuclear disarmament-for-aid talks, possibly within the next month.

If talks break down, as they have at every previous juncture, then Kim may well return to military grandstanding in the hope of forcing help from a nervous outside world and, in the process, bolstering allegiance from his million-strong army whose welfare he has enshrined in the constitution at the top of society.

ANOTHER NUCLEAR TEST?

North Korea, which Kim's family established 60 years ago, is even poorer since he took power in 1994. It is reeling under the loss of international aid and the impact of U.N. sanctions.

A currency reform debacle last year caused rare civil unrest, showing cracks in Kim's leadership though his grip on power looks unchallenged -- for now.

His mounting economic problems mean he will fall far short of honoring his heavily promoted promise to make North Korea a "strong and prosperous state" by 2012, and may undermine his efforts to win support from senior cadres to back his youngest son as successor to the family dynasty.

"The failure of this (2012) campaign, and it can only fail, is only going to make the regime more likely to resort to diversionary military spectacles of some sort," said B.R. Myers, an expert on the North's ideology at Dongseo University.

Moves could include a third nuclear test, which would put the North slightly closer to having a working atom bomb.

But Kim would still lack the capability to effectively use it as a weapon -- his Soviet-era bombers are no match for regional air forces, and he is far from being able to miniaturize a nuclear device so it can be mounted on a missile.

Another possible provocation would be restarting all of the Yongbyon nuclear plant, source of bomb-grade plutonium, that was being taken apart under six-country disarmament discussions.

Park Hyeong-jung, a specialist at the Korea Institute for National Unification, said the North could try to show off its uranium enrichment program, which provides a second path for producing bomb-grade fissile material.

And it may try to upgrade its mid-range missiles, which are designed to hit targets in Japan and U.S. military bases in Guam.

Kim's regime will also hope to sell more weapons to states like Iran, something U.S. officials cite as a major worry.

"Its motivation to survive could lead it to engage in more dangerous proliferation activities when other sources of foreign exchange are no longer available," the nongovernmental International Crisis Group said in a report this week.

MARKETS HAVE HIGH STRESS TOLERANCE

Regional investors have become largely inured to the North's violent gestures, as long as they have been contained to saber-rattling and not full scale armed confrontation.

"If North Korea takes unpredicted, negative actions, such as nuclear tests, stock markets will be dealt a blow. But this will probably be short-lived and investors will eventually return," said Han Beom-ho, a market analyst at Shinhan Investment Corp.

Of more concern to many is the possible collapse of the mercurial North if Kim's already doubtful health worsens or the economy's troubles deepen so seriously that the tightly controlled society turns unruly.

South Korea's government, mindful of the massive risk to its own economy, has been offering major, long-term investment to the North to prepare it gradually for eventual reunification.

That, say analysts, is something Kim sees as too big a threat to his own grip on power -- he would not dare to be seen at home as treating the South as his savior.

By some estimates, South Korea could face a bill of $1 trillion or more -- about the size of its annual economic output -- if it suddenly had to absorb its destitute neighbor.

CHINA TO THE RESCUE?

While the parlous state of his economy may give Kim the incentive to rally support with some military muscle-flexing, it also limits his options, if he wants to avoid even more punishing U.N. sanctions and a U.S. Treasury crackdown on his finances.

"The North Korean regime cannot risk any further destruction of the economy at this point," Myers said.

China, the North's only major benefactor, offers Kim one of his few ways out.

Beijing fears a collapse of his government would bring chaos to its border and has blocked any global economic push that would significantly destabilize Pyongyang. It has also supplied food, oil and money to keep his government afloat.

China appears to want to augment social stability along its three provinces that border North Korea by increasing investment with the state, according to John Park, an expert on the region with the United States Institute of Peace.

"China is helping facilitate localized development needs to boost its broader geopolitical needs," Park said.

That relationship may help to temper any provocations by Kim who does not want to put China in the position of having to fend off global criticism for propping up Pyongyang. (Additional reporting by Yoo Choonsik, Christine Kim and Jungyoun Park, editing by Jonathan Thatcher and Andrew Marshall)

China digs in heels on yuan as U.S. raises pressure

Asian Defense News: China digs in heels on yuan as U.S. raises pressure
An employee counts yuan banknotes at a branch of Bank of China in Taiyuan, Shanxi province February 10, 2010. REUTERS/Stringer

An employee counts yuan banknotes at a branch of Bank of China in Taiyuan, Shanxi province February 10, 2010.

Credit: Reuters/Stringer

China said on Wednesday it "could not be any clearer" in its repeated commitment to a stable exchange rate after the U.S. Congress threatened to levy duties on some Chinese exports unless it revalues its currency.

BARACK OBAMA | CHINA

The temperature in the long-running dispute over China's exchange rate regime is rising quickly, with a bipartisan bill introduced on Tuesday in the U.S. Senate that aims to get Beijing to let the yuan rise.

Focusing on the yuan will not help to solve problems in the Sino-U.S. bilateral trade relationship, a Chinese Commerce Ministry official told Reuters.

"We oppose the over-emphasis on the yuan's exchange rate," the official said, when asked about the bill. "The yuan's exchange rate is not a magic potion for solving global economic imbalances."

The apparent hardening of positions drove the yuan to a three-week low against the dollar in the offshore forwards market, implying just 2.4 percent of appreciation over the next 12 months.

Ding Zhijie, a professor at the University of International Business and Economics in Beijing, said U.S. arm-twisting on the exchange rate was "totally counter-productive."

"With such heavy pressure from the United States, any move would look like giving in to foreign pressure -- for both the Chinese government and the Chinese public, it would be unacceptable," Ding, who provides advice to the government, said.

SHIFTING CIRCUMSTANCES

The World Bank also weighed into the debate, recommending a stronger exchange rate and a tighter monetary policy to restrain inflation expectations and asset bubbles.

The case for greater exchange rate flexibility had, on balance, increased over the last year, Ardo Hansson, the bank's lead economist in Beijing, told a news conference.

"If there is a concern about inflation, if there is a concern about sensitive capital inflows, this is part of the arsenal for dealing with these policy issues," he said.

Beijing's stance had been consistent and was unchanged, the Chinese official said. He cited Premier Wen Jiabao and Commerce Minister Chen Deming, who have said that a stable yuan has contributed to both the Chinese and the global economic recovery.

"We have repeated ourselves multiple times. And we cannot be any clearer," the official said.

FRICTION OVER DEFICIT

China has in effect pegged the yuan near 6.83 to the dollar since mid-2008 to cushion its exporters from the global crisis.

Rising inflation and recovering exports had fueled market expectations that Beijing was on the cusp of resuming the gradual path of appreciation followed for three years starting in mid-2005.

Wen on Sunday recommitted China to pushing ahead with reform of the yuan's exchange rate mechanism, leaving the door open to reintroducing exchange rate flexibility if it suits Beijing.

But the premier also said that the yuan was not undervalued and said calls for appreciation were tantamount to protectionism.

The Commerce Ministry official rejected the argument that China's yawning trade surplus with the United States and broader global economic imbalances were due to the yuan.

"Focusing on the yuan's exchange rate is not an effective way to address trade issues between China and the United States," the official, who spoke on condition of anonymity, said.

DEADLINE LOOMS

The U.S. trade gap with China narrowed to $226.8 billion in 2009 from a record $268.0 billion in 2008.

But with the administration of President Barack Obama keen to expand exports and jobs, the deficit remains a point of friction between the two powers, which have also recently been at odds over human rights, Tibet and U.S. arms sales to Taiwan.

The U.S. Senate bill, a rare show of bipartisan accord, adds to pressure on Obama, whose administration must decide whether to label China as a currency manipulator in a semiannual Treasury Department report due on April 15.

Many U.S. lawmakers, with strong backing from economists, believe the yuan is undervalued by at least 25 percent, giving Chinese companies an unfair edge in trade -- an advantage seen as more critical now that the U.S. economy is struggling to recover from the worst downturn since the 1930s.

But Ding, the Beijing professor, said the United States, not China, would be the loser if the currency spat escalated because of the relative cyclical strength of the two economies.

"If -- and I say only if -- a trade war takes place, it's almost certain that the U.S. economic recovery will halt and there will a double-dip," he said.

Dan Ikenson, a trade policy analyst at the Cato Institute in Washington, said he feared the legislation could inflame relations with Beijing without accomplishing the lawmakers' goal of reducing U.S. imports from China.

He noted that when the yuan rose 21 percent against the dollar between July 2005 and July 2008, the U.S. trade deficit with China actually increased to $268 billion from $202 billion.

(Additional reporting by Zhou Xin and Alan Wheatley; Editing by Alex Richardson)

Drive a Porsche? Up your status with a phone


Asian Defense News: SINGAPORE, March 17 - As if a Porsche isn't enough of a status symbol, the German luxury sports car company's subsidiary, Porsche Design, is marketing a mobile phone that's exclusive to Porsche owners.

The Porsche Design P'9522 BLACK, the latest in the company's series of mobile phones, held its global launch in Singapore, where, for now, only the 1,600 or so drivers of Porsche cars in the affluent city state can buy it from the car dealership, Stuttgart Auto.

The phone is made by Sagem Wireless and combines matt black anodised aluminium and black mineral glass. Features include a fingerprint sensor to authenticate users.

Retailing for 2,280 Singapore dollars , the phone is about three times the price of a Blackberry or an Iphone in Singapore.

But its agent expects demand to be strong in the country and from the Asia Pacific, a region that Forbes magazine recently said witnessed an 80 percent increase in the number of billionaires in 2009.

"The Porsche Design brand is doing very well in Asia, Russia and the Middle East, and the usage of our products, especially mobiles, is high in Asia," said Samy Redjeb, business director for Brand Lab, the sole distributor of Porsche Design mobiles in several Asian countries, including China and Singapore.

"In Europe, people are used to buying phones that are subsidised by phone operators, but in Asia, people like to have something unique -- they like to show their status by putting the phone on the table, which says 'look, I'm rich'."

Porsche Design is a global luxury brand targetting men, founded in 1972 by Ferdinand Alexander Porsche, the designer of the iconic Porsche 911 car.

Redjeb said the brand was doing very well in China, where Porsche has around a dozen car showrooms.

He forecast demand in Singapore would be boosted by its two casinos -- one of which is already open -- which he said would attract more rich tourists from Southeast Asia.

And for those craving even more distinction -- and with the pockets deep enought to pay for it -- Redjeb said Porsche Design was working on a luxury yacht that will also be launched in Asia.SINGAPORE, March 17 - As if a Porsche isn't enough of a status symbol, the German luxury sports car company's subsidiary, Porsche Design, is marketing a mobile phone that's exclusive to Porsche owners.

The Porsche Design P'9522 BLACK, the latest in the company's series of mobile phones, held its global launch in Singapore, where, for now, only the 1,600 or so drivers of Porsche cars in the affluent city state can buy it from the car dealership, Stuttgart Auto.

The phone is made by Sagem Wireless and combines matt black anodised aluminium and black mineral glass. Features include a fingerprint sensor to authenticate users.

Retailing for 2,280 Singapore dollars , the phone is about three times the price of a Blackberry or an Iphone in Singapore.

But its agent expects demand to be strong in the country and from the Asia Pacific, a region that Forbes magazine recently said witnessed an 80 percent increase in the number of billionaires in 2009.

"The Porsche Design brand is doing very well in Asia, Russia and the Middle East, and the usage of our products, especially mobiles, is high in Asia," said Samy Redjeb, business director for Brand Lab, the sole distributor of Porsche Design mobiles in several Asian countries, including China and Singapore.

"In Europe, people are used to buying phones that are subsidised by phone operators, but in Asia, people like to have something unique -- they like to show their status by putting the phone on the table, which says 'look, I'm rich'."

Porsche Design is a global luxury brand targetting men, founded in 1972 by Ferdinand Alexander Porsche, the designer of the iconic Porsche 911 car.

Redjeb said the brand was doing very well in China, where Porsche has around a dozen car showrooms.

He forecast demand in Singapore would be boosted by its two casinos -- one of which is already open -- which he said would attract more rich tourists from Southeast Asia.

And for those craving even more distinction -- and with the pockets deep enought to pay for it -- Redjeb said Porsche Design was working on a luxury yacht that will also be launched in Asia.