1. “China Stages Military Exercises along Myanmar Border” http://www.voanews.com/content/china-military-exercises-myanmar-border/2810409.html 2.“Will South China Sea Dispute Lead to World War?” http://www.voanews.com/content/will-south-china-sea-dispute-lead-to-world-war/2806950.html 3.“IMF Says China's Yuan No Longer Undervalued” http://www.voanews.com/content/china-yuan-no-longer-undervalued/2793636.html

1. China Stages Military Exercises Along
Myanmar Border
June 06, 2015 3:22 PM Shen Hua
China has launched live-fire air-ground training exercises along the China-
Myanmar border, an area where Kokang rebels have been fighting Myanmar's
army for months.
China’s Foreign and Defense ministries announced that the military exercises
were taking place inside the country's Yunnan province.
The Global Times, under the auspices of the People's Daily, reported that the
Chinese military provided precise coordinates of the area of the exercises but
gave no clear indication of when the drill would end.
The newspaper said it would be contingent upon the situation and level of
effectiveness on the ground. The Global Times called the drill “unusual”
while stressing it was “a promised act to protect the safety and properties of
the Chinese people.”
Eric Shin, coverage chief at Taiwan’s Defense International magazine, agreed.
“Isn’t it the goal of the People’s Liberation Army to protect its people,
sovereignty and territories?” Shih asked. “The PLA has to have a drill at least
to demonstrate to its people, especially after Myanmar has crossed the border
multiple times to combat the rebels and its bombs were found within the
Chinese border.”
June Dreyer, professor of political science at the University of Miami, told
VOA only Beijing knows the true intentions of such a drill, which she read as a
sign of deteriorating relations between the governments of China and
Myanmar, formerly known as Burma.

2. “Since [opposition leader] Aung San Suu Kyi was freed, there have been a
number of protests in Burma against Chinese development projects that the
local people feel are impacting badly on them," she said. "Also, there are a
number of people in Burma who resent so much Chinese economic presence
in their country. Relations between the governments of Burma and China
have not been as good as they used to be under the old military dictatorship.”
Cross-border bombings
In March, the conflict in Myanmar between the ethnic Chinese Kokang rebels
and the Burmese army began spilling over into Yunnan, China. Two incidents
of reported casualties and damage from bombings by the Burmese inside
China drew a sharp reaction from Beijing.
Myanmar said the incidents were unintentional, but the Chinese have
demanded Myanmar investigate the bombings, apologize and pay indemnities
to the victims.
Some analysts believe Beijing may also be seeking to push to expand its power
through the ongoing dispute in the South China Sea with neighboring
countries, including the Philippines and Vietnam.
Peter Huessy, senior fellow in national security affairs at the American
Foreign Policy Council, said, “The Chinese are sending signals, and the
signals they are sending are: We are powerful, we are big, and no one should
interfere with what we want to do, and that is unmistakable.”
However, Shih, the military expert from Taiwan, sees that as a bit farfetched.
He stressed the two areas are fundamentally different.
“The U.S. and China are testing each other’s intentions on the South China
Sea issues,” Shih said. “That is different from what has happened on the
China and Myanmar borders. Chinese were killed from the Burmese bombs
that fell onto the Chinese territories. If the PLA didn’t act on it, the Chinese
government would fall short of satisfying its domestic public.”

4. Will South China Sea Dispute Lead to
World War?
June 03, 2015 10:17 PM Shen Hua
WASHINGTON — Will South China Sea issues trigger a third world war? While
American scholars and New York investors are paying close attention to the
political, military and economic aspects of the South China Sea conflict,
others find the speculation unconvincing.
The U.S. and China have increasingly argued in recent days over Beijing's
artificial island building, turning underwater land into airfields, in the South
China Sea. U.S. Defense Secretary Ash Carter said on Saturday that the U.S.
opposes “any further militarization” of the disputed lands, while one of
China’s top ranking military officials has defended building artificial islands
in contested waters, saying the land reclamation is “justified, legitimate and
reasonable.”
Gordon Chang, author of The Coming Collapse of China, recently claimed that
the South China Sea could become the next “Great War Zone.”
Chang said last week at a panel discussion held by the U.S. Air Force
Association that it will not be long before the U.S. takes initiatives to respond
to China’s unyielding attitude and behavior in the South China Sea. He said
the time frame is now.
“The U.S. Navy is clearly going to test China’s claims of exclusion of the South
China Sea,” Chang said. “We have to do that, because if there has been any
consistent American foreign policy over the course of two centuries, it has
been the defense of freedom of navigation.”
“Now China is infringing on that notion at this time,” Chang added. “I think
we probably will act in a very short time frame.”

5. Chang called it “a classic zero-sum game” for China to challenge the U.S. in
the South China Sea. He said China sees the South China Sea as one of its core
interests with no room for negotiation, while the U.S. has been the influential
maritime power for the past two centuries. Both could concede on the South
China Sea issues, Chang said, but they will not abandon their long-held
positions.
Rick Fisher, senior research fellow at the International Assessment and
Strategy Center, told VOA that attention should also be paid to the
development of nuclear weapons in China and North Korea. He said that
although North Korea stays quiet for now, it is likely to take advantage of the
South China Sea disputes in the foreseeable future.
“As soon as North Korea can demonstrate that it can fire a nuclear missile,
then North Korea becomes a factor because North Korea itself can decide to
take a period of high confrontation in the South China Sea and put greater
pressure on the United States in order to obtain concessions from South Korea
or the U.S. itself.” So, Fisher said, “as soon as there is a crisis, North Korea
could become a very dangerous element.”
Fisher said although Kim Jong Un has rifts with the Chinese government,
both share and act by the same communist ideology.
Well-known American investor George Soros also expressed concerns about
the Chinese aggression in the South China Sea in recent months. He said at a
recent World Bank forum that if China suffers economically, it is likely to
initiate a third world war in order to achieve national solidarity and to get
itself out of the economic difficulties. Even if China and the U.S. do not
engage in a war directly, Soros said, there is a high possibility of military
conflicts between China and one of the U.S. security partners, Japan. World
War III could follow as a result, Soros said.
Tad Daley, director of the project on abolishing war at the Center for
War/Peace Studies, disagrees with the notion that the South China Sea issues
are having a strong impact on Chinese nuclear weapon strategies. He said
China seems to only want to maintain nuclear deterrence, keeping its second-
strike capability without taking the pre-emptive strike, or the first strike.

6. Daley said China achieved its second-strike capability many decades ago.
“Maybe in 1975, when China said you’d better not launch nuclear strikes on
us, because probably a few nuclear warheads would remain, and we could take
out Los Angeles and San Francisco,” Daley said. “That situation existed for
many decades.”
All these Chinese nuclear developments, he said, have not changed that “in
any kind of meaningful way.”
President Barack Obama on Monday also sternly warned China that its land
reclamation projects in the South China Sea are counterproductive and a
threat to Southeast Asian prosperity.

7. IMF Says China's Yuan No Longer
Undervalued
May 27, 2015 9:47 PM Xiao Xun
China’s currency is no longer undervalued given its recent appreciation, but
the government should pick up the pace in loosening controls on the
exchange rate, the International Monetary Fund said.
Economists critical of the IMF’s assessment said it did not reflect the real
value of the Chinese yuan, and that the IMF was being pressured by Beijing to
help clear the way for the yuan to be added to the Special Drawing Rights
basket.
The IMF said in a statement in Beijing on Tuesday that “our assessment now
is that the real effective appreciation over the past year has brought the
exchange rate to a level that is no longer undervalued.”
An IMF mission is visiting China this week, including its first deputy
managing director, David Lipton. Speaking at the conclusion of an annual
review of the Chinese economy, Lipton said the yuan had appreciated against
most other currencies in recent months, helping China to reduce its “very
large” current account surplus and slow its accumulation of foreign reserves.
He said all these indicated that the yuan was no longer undervalued.
According to statistics cited by Bloomberg, the yuan rose against all 31 major
currencies over the past 12 months, while the Russian ruble and Brazilian real
depreciated the most.
Toward a floating rate

8. While dropping its long-held view that the yuan was undervalued, the IMF
continued to urge China to “make rapid progress toward greater exchange
rate flexibility.”
Lipton said China should strive to realize a floating exchange rate within two
to three years, because such a move would be helpful for the government to
weather continued upward pressure on the yuan as productivity increases.
Yuan appreciation against the currencies of China’s major trading partners,
especially the U.S., has been a subject of hot debate for years. The U.S.
accuses China of keeping the yuan low to encourage exports, an accusation
China denies.
The U.S. Treasury Department suggested in its semiannual report to Congress
last month that the yuan was still “significantly undervalued.” Treasury
Secretary Jacob Lew reiterated last week that China should make more
progress on exchange rate reforms.
Economists in Washington reacted differently to the IMF assessment of the
yuan. William Cline, an economist at the Peterson Institute for International
Economics, gave the same conclusion recently in his independent research.
His colleague, Gary Hufbauer, senior fellow at the Peterson Institute, agreed.
“I think we can conclude right now the Chinese yuan is appropriately valued,”
he said. “I know it’s a big issue in recent years, but right now it’s not been an
issue.”
IMF assessment "out of date"
Robert Scott, director of trade and manufacturing policy research at the
Economic Policy Institute, disagreed. He called the IMF’s assessment “out of
date and mistaken.”
“The fact is that China is still intervening heavily in the foreign currency
market,” he said. “It simply stopped engaging in traditional purchases of
foreign exchange reserves held by the Central Bank.” What China has done
instead, he said, "is switch over to a great increase of its holdings of sovereign
wealth funds — government-controlled investment in private stocks, bonds,
commodities, lands and real estate abroad.”

9. Scott said China’s holding in early 2015 in the sovereign wealth fund reached
nearly $1.5 trillion. “There’s a very strong correlation between foreign
investment and accumulation of the large, growing current account
surpluses,” he said. “So China is intervening, and China has large and
growing current account surpluses.”
Although Beijing reduced its financial control and is concerned about the
subsequent economic damage of having greater flexibility in the yuan’s
foreign exchange rates, it is very active in seeking the yuan’s greater
influence in the international financial system, including adding the yuan to
the SDR basket.
The IMF’s Lipton said in Beijing that the fund welcomed “Chinese efforts in
this regard.” Markus Rodlauer, IMF’s deputy director of the Asia and Pacific
Department, said the IMF would work closely with China to include the yuan
in the SDR basket. He added that it was not a matter of “if” but “when.”
Every five years, the IMF reviews the SDR basket, which currently includes the
U.S. dollar, the euro, the Japanese yen and the British pound. The IMF will
review the basket composition later this year.