-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Japan vs. China China Warns Japan Against Seeking Military Power ballistic missile defense BEIJING, Mar. 16, 1999 -- (Agence France Presse) China on Tuesday warned Japan against attempting to become a military power as it debates new U.S.-Japan defense guidelines. "Japan should take concrete steps to limit its defense to its own territory and adjacent waters and not embark on the road of becoming a military power," Foreign Ministry spokesman Sun Yuxi told a news conference. Referring to Japan's decision to join U.S.-led research for a Theater Missile Defense (TMD) program in North Asia, Sun also warned Japan against plans to include Taiwan, which Beijing considers a renegade province. Japan, which was shocked last August when North Korea fired a rocket over its territory, has signed up for joint research with the United States on a defense system but has yet to decide on building or using it. In Tokyo, Foreign Minister Masahiko Komura moved to reassure China earlier Tuesday, insisting that the research program would not include other countries. "The system is not designed to attack anyone, it is a purely defensive measure," Komura said. "If they criticized Japan's defense system, it is hard for me to understand," he said, adding Japan was ready to explain its stance on the TMD to alleviate China's concerns. "We have been explaining to their side and we will continue to do so in order to secure transparency," he said. The missile defense program is only in the development stage but in recent months plans have been floated to include Taiwan in a TMD system for North Asia. Japan's Ambassador to the United States, Kunihiko Saito, told journalists in Tokyo that the program, also known in Japan as a ballistic missile defense (BMD), was a "purely defensive mechanism." "Although China has expressed some concern about BMD, I think we can convince China that there is nothing to worry about," he told the Foreign Correspondents' Club of Japan. Prime Minister Keizo Obuchi told reporters: "Since it is purely a defensive measure, I would like to explain (to the Chinese side) if I have an opportunity to do so." Inside China, March 16, 1999 World Stock Markets Time for the Tokyo Play? by Barry Riley Wall Street could only nibble at the 10,000 mark on the Dow Jones Average yesterday, but its attainment highlights again the market's phenomenal rise since the growth rate radically accelerated at the beginning of 1995 (from roughly 40 per cent of the present level). In the first half of the 1990s the Dow maintained a pedestrian advance at the average annual rate of 7 per cent. Since then growth has been 25 per cent a year. Even so the Dow's 30 venerable blue chips have often failed to keep up with the big technology growth stocks that remain outside the club. Since mid-decade the S&P 500 has climbed at an annualised pace of 28 per cent and the Nasdaq Composite at 32 per cent (so the Nasdaq has outgrown the Dow by a quarter in just over four years). Spare a thought, however, for the smaller stocks in the Russell 2000, which has managed only 12 per cent annual growth over this period, and is now scarcely higher than it was two years ago. Value hunters have been left for dead on Wall Street in the second half of the 1990s but the momentum party cannot go on for ever. Morgan Stanley Dean Witter has been crunching valuation ratios worldwide and, not surprisingly, produces the conclusion that US equities are the world's most expensive, judged against the 10-year averages. Wall Street stands at 53 per cent above the 10-year average, using a composite indicator of eight fundamental measures. Some of the euro-bubble markets, including the Netherlands, Finland and Spain, are at 25-30 per cent premiums. The UK comes in at 16 per cent above the average, but France and Germany are close to past norms. Japan is also 16 per cent ahead of its 10-year average, but Morgan Stanley pleads that this is due to "depressed earnings" and says that on other measures Japan is inexpensive. Of course, it all depends on whether a 0.9 per cent dividend yield basis is regarded as historically cheap or, in absolute terms, still a turn-off - worse even than the minuscule 1.1 per cent on the S&P. At any rate, many global strategists have decided this is the moment to make another Tokyo play, rotating out of high-priced Wall Street and scandal-hit Europe. Foreigners have a recent record of getting Japan wrong, having been swamped in past rallies by eager domestic sellers; but they hope this is not just another traditional ramp ahead of the March 31 banking balance sheet date. Certainly, heavy supply is looming in Tokyo as cross-shareholdings come up for sale - with Fuji Bank and Sumitomo Bank, for instance, giving notice of their intentions this week. On the other hand, financial tension has eased - the "Japan premium" for deposits raised overseas by Japanese banks has almost disappeared - and zero short-term interest rates are giving a powerful monetary push. It remains to be seen whether Sony's hints about corporate restructuring last week will have general relevance. Foreign investors first drooled about the potential for re-engineering back in 1993, when the Nikkei was very close to where it is now, but Japanese culture dictated that an economic slump would be preferable. Still, the Nikkei Average has bounced by 21 per cent from its 1999 low. Back on Wall Street the analysts are starting to get just a little concerned about inflation. The jump in oil prices signals not so much a serious pressure point in itself as the end of a period in which falling prices of commodities and Asian imports have suppressed underlying inflation. For the moment, however, the threat from rising Treasury bond yields has retreated. Now, at least, we shall find out which Wall Street institutions really have a 10,000 bug in their systems. The Financial Times, March 17, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. 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