China starts Maping Disputed seas including Philippines' province and Island of Japan

In the deep of maritime disputes with several of its neighbors, China on Tuesday (March 27, 2012) said it was mapping South China Sea (SCS) or also called West Philippines Sea (WPS) with an aim to step up exploration for oil and gas and to reinforce its territorial claims of the Philippines and Vietnam Waters.

China may step up its exploration of South China Sea to reinforce its territorial claims following announcement that geographical surveys of the area are underway, state-run Global Times reported. "The majority of the disputed waters used to be beyond our reach because we seldom put our claims into action," Zhang Yunling, director of the Institute for International Studies under the Chinese Academy of Social Sciences, told the daily.

"By drawing a map, the country can reinforce its jurisdiction claim in the South China Sea particularly in the Spratlys where the Philippines is in control, and further actions may follow, such as exploiting resources near the Nansha Islands," Zhang said.

Located south of China's coast, SCS is connected with narrow straits with Pacific Ocean and covers 3.5 million sq km of the ocean.

China claims the entire SCS as its own. "We owned everything"  Its claim however has been contested by Vietnam, Philippines, Malaysia, Brunei and Taiwan which assert it is part their maritime waters and 200 Nautical Miles Exclusive Economic Zone granted by the United Nations International Laws of Sea (UNCLOS).

China overlapped its claim including the province of the Philippines in Palawan islands and parts of Brunei, Vietnam, Indonesia and Malaysia.

Much to China's disappointment, the US extended tacit support to the small countries and stepped its presence in the Pacific region, calling for peaceful resolution of the disputes.

India's ONGC also drew Beijing's ire by taking up exploration in the blocks in SCS claimed by Vietnam's Exclusive Economic zone in Vietnam shore.

According to a report released by China's National Administration of Surveying, Mapping and Geo-information (NASMG) a working group jointly set up by 13 government agencies will continue geographical surveying of the South China Sea and draw a map of the sea or its islands to "declare China's stance" on territorial issues.

Similar mapping work will also be carried out on the Diaoyu Islands and other important areas in the East China Sea, (ECS) when the time is right, it said.

Diaoyu islands, known as Senkaku islands in Japan are currently under the administrative control of Tokyo which zealously reasserts its control over the uninhabited islands.

Japan also prohibits fishing by Chinese there which resulted in several skirmishes in the recent times.

"We are currently carrying out relevant work, and further details will be released at a proper time," an official with NASMG's map management office said.

China claims indisputable sovereignty of the Spratlys Islands (Nansha and Xisha islands) and their adjacent waters which are within the Exclusive Economic Zone of the Philippines, but several countries in the region, such as Vietnam and the Philippines, have made competing claims and tried to defend their territory and their EEZ.

Zheng Zemin, a researcher with the Hainan-based National Institute for SCS /WPS Studies, said that through the mapping, authorities may clarify the specific locations of the so-called "nine-dashed line" or "U-shape line" by setting their longitudes and latitudes.

U-shape line or nine-dashed line was a first time claim of china to all the waters in the West Philippines Sea or South China Sea last year 2009.

ASEAN countries who are affected by the claim of china have lodge their protest to the United Nations but China downplayed the protest and instead they used force to drive away Filipino Fishermen in the Philippines Waters claiming as their owned and cut the survey cable of Petro Vietnam

"They may also survey the locations of islands and reefs currently on record, which have changed due to tides over the past decades," Zheng said. Zhuang Guotu, director of Southeast Asian Studies at Xiamen University, downplayed the possibility of the mapping work escalating tensions. "A spat is inevitable but tensions are unlikely to escalate as maintaining cooperation despite disputes has been a basic consensus that China and relevant countries hold," Zhuang said.

The planned survey of China to the reefs and Island of the Spratlys which are within the Philippine territory would become a big challenge for China as the Philippines Navy and Coastguards with the Support of the United States and Japan are closely monitoring the Area.

Any poachers entering the Philippines territory in Spratlys islands without prior approval from the Philippines Government would expect for arrest and detention or another protest to the United Nations to intervene China's invasion.

The United States is eyeing now to set-up their spy drones in Cocos Island south of the Philippines to closely monitor the activity in the West Philippines Sea or other know as South China Sea.

US Warship are now in its routinary visit to the ports of the Philippines as part of courtesy call and US Pivot to Asia.

April 2012 Balikatan Exercises between USA and the Philippines could be the biggest preparation of the Philippines and USA for possible China's invasion to the Philippines territory in Spratlys Archipelago. Philippines is a close ally of the USA in the Asia Pacific,   

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Indonesia, Philippines - in better economic position than Europeans

Indonesia and the Philippines, able to raise funds at a lower cost than Italy, may be poised to get the highest credit ratings since the 1997 Asian financial crisis as the nations step up efforts to boost investment.

Officials from Standard & Poor's, the only company to grade Indonesia's debt as junk, are visiting the largest economy in Southeast Asia this week after raising the nation's bonds to BB+ a year ago, according to the Finance Ministry. Philippine Finance Secretary Cesar Purisima said March 23 that he's confident about getting a rating upgrade after meeting with S&P last week.

"Asian economies, including the Philippines and Indonesia, have finally shaken the effects of the Asian financial crisis," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. "This period thus marks the return to high rates of growth."

Emerging markets, with budget deficits at 1.7 percent of gross domestic product in Indonesia and 3.8 percent in the Philippines in 2009 compared with the Euro area's 6.4 percent, are winning rating boosts even as developed markets from Europe to the U.S. get downgrades. Borrowing costs for the two Southeast Asian nations have fallen 0.6 of a percentage point this year as plans to boost investment in roads and rail systems support growth prospects amid faltering global demand.

Yields Narrow

The extra yield investors demand to own Indonesia's dollar bonds instead of U.S. Treasuries has narrowed 61 basis points this year, or 0.61 percentage point, to 1.89 percentage points as of March 26, while that for the Philippines (JPSSEMPH) has fallen by 62 points to 1.76 percentage points, according to JPMorgan Chase & Co.'s EMBI+ Indexes. They compare with the additional yield of 3.16 percentage points to buy emerging-market dollar-denominated debt instead of U.S. securities.

Indonesia's dollar bonds due May 2021 are trading at 3.79 percent while Philippine dollar debt due January 2021 is trading at 3.44 percent, compared with 6.25 percent for Italy's dollar notes due September 2023 and 4.12 percent for Russia's dollar notes due April 2020, according to prices from Royal Bank of Scotland Group Plc. and compiled by Bloomberg. S&P rates Russia two steps above Indonesia and three levels higher than the Philippines.

Ratings upgrades could underscore confidence in the Southeast Asian economies' resilience as a slowdown in China's growth adds to the threat to Asian expansion, which has already been crimped by Europe's debt crisis.

Chinese Profits

Chinese industrial companies had their first January- February profit decline since 2009 as slowing exports and a government campaign to cool property prices damped earnings, a report showed today. Net income dropped 5.2 percent from a year earlier to 606 billion yuan ($96 billion), the National Bureau of Statistics said on its website.

In contrast, a report showed South Korean consumer confidence rose to the highest level in four months, buoyed by signs of improvement in the U.S. economy and progress in containing Europe's crisis. The sentiment index rose to 101 in March from February's 100, the Bank of Korea said.

The global economic outlook is improving, though "severe downside risks remain," International Monetary Fund Deputy Managing Director Naoyuki Shinohara said today in Bangkok, adding that emerging economies need to "stay vigilant for the spillover from advanced economies."

Asian economies will experience only a modest slowdown in growth as domestic demand remains resilient, supported by strong employment and high capacity utilization, he said. The Asian economy as a whole will expand by 5.9 percent this year, with growth accelerating to 6.4 percent in 2013, while the economy of the Association of Southeast Asian Nations will grow by 5 percent this year and 5.5 percent in 2013, he said.

French Confidence

Reports in Europe may show consumer confidence rose in March in Finland while holding steady in France, according to Bloomberg surveys. The Netherlands will report final GDP data for the fourth quarter after a preliminary estimate showed the economy contracted 0.7 percent from the previous three months. Turkey and Hungary may keep interest rates unchanged, Bloomberg surveys showed.

In the U.S., the Conference Board's release today may show its consumer confidence index was little changed at 70.1 this month after reaching a one-year high of 70.8 in February, a survey median showed.

Presidents Susilo Bambang Yudhoyono in Indonesia and Benigno Aquino in the Philippines have both won upgrades from Fitch Ratings and Moody's Investors Service in the past year as they pledged to contain their budget deficits, fight corruption and woo investment to spur economic growth. The two companies have brought Indonesia to investment grade, while the Philippines remains one step behind at Fitch and two steps below at Moody's.

Credit Default Swaps

Five-year credit-default swap contracts on Philippine debt traded at 141 basis points on March 26 and 161 for Indonesia, according to data provider CMA, which compiles prices quoted by dealers in the privately negotiated market. The contracts insure debt against non-payment, and traders use them to speculate on credit quality. That compares with 370 basis points for Italy and 422 points for Spain.

"I'm hopeful that S&P will raise Indonesia's rating within this year, which will bring in foreign investors again," Ezra Nazula, Jakarta-based head of fixed income who helps manage 24 trillion rupiah ($2.6 billion) at PT Manulife Asset Management, said in a March 20 interview. "It will be a plus point for Indonesia if the government can show that they are willing to increase the fuel prices and reduce the subsidies' burden on the budget."

Raising Prices

Indonesia's plan to raise diesel and petrol prices to 6,000 rupiah per liter from 4,500 rupiah is subject to approval by lawmakers. The country must raise fuel prices to curb a subsidy bill that threatens to sap funds from pivotal health, education and road and port building programs, National Economic Committee Vice Chairman M. Chatib Basri said in an interview with Bloomberg Television in Hong Kong on March 23.

Ratings changes aren't necessarily accompanied by corresponding moves in bond prices. Instead of falling in value after S&P stripped the U.S. of the top AAA sovereign rating, Treasuries rallied and the government's borrowing costs fell to record lows. While stocks fell, wiping $2.5 trillion from the market value of global equities on the first trading day after S&P on Aug. 5 cut the U.S. by one level to AA+, the gain in benchmark 10-year government notes sent yields down almost a quarter percentage point, to 2.32 percent.

Asian Crisis

Still, a rating upgrade would endorse Indonesia's efforts to move its economy out of the shadows of the 1997-98 Asian financial crisis, when it needed a bailout from the IMF.

The nation's parliament approved a land-acquisition bill in December that will allow Yudhoyono's administration to accelerate road, port and airport projects. The government is also setting up a new financial market regulator that is due to start operating in January 2013, supervising capital markets, insurers, pension funds and other non-bank institutions.

In the Philippines, Aquino is seeking $16 billion of investments in projects including roads in the capital and airports in the provinces to upgrade the nation's infrastructure.

Indonesia's $707 billion economy has expanded more than 6 percent for five straight quarters, weathering a decline in global demand that has hurt growth across Asia. The Philippine economy grew 3.7 percent last quarter from a year earlier.

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