China-Vietnam Dispute is Messing with the Economy

A security guard stands near a damaged Chinese owned shoe factory in Vietnam's southern Binh Duong province(Reuters)

Tensions between China and Vietnam over a territorial dispute have escalated as riots erupted in Vietnam.

In a rare outpouring of public nationalist anger, 20,000 Vietnamese rampaged in two industrial zones in the country, attacking what they thought were Chinese factories and setting them ablaze.

It is rare for Vietnam's authorities to allow anti-Chinese anger to explode in public and some analysts take that as a worrying sign that the tensions could escalate.

An unlikely early casualty in the dispute were Taiwanese businesses in Vietnam. Some of the factories torched by the mobs were Taiwanese and had no connection with mainland China, with whom the Vietnamese are actually in dispute.

It was a case of mistaken identity but the damage was real and costly. An industry association said that Taiwan companies with business in Vietnam had already lost billions of dollars since the dispute between China and Vietnam ignited earlier this month.

Among the Taiwanese companies whose factories were burned down were Formosa Plastics Group, said Serena Liu, chairwoman of the Council of Taiwanese Chamber of Commerce in Vietnam.

Liu said workers were "terrified and scared" at the Binh Duong industrial park, adding that those who tried to flee were halted by roadblocks.

Some foreign firms responded immediately to the clashes by freezing operations in Vietnam.

A number of companies halted operations with immediate effect. Global exporter Li & Fung said a number of its suppliers in Vietnam had stopped production, while Yue Yuen Industrial Holdings, which makes footwear for Adidas and Nike, said its operations in Vietnam were being suspended as a precaution.

Moreover, the spat could scupper extensive economic ties between Hanoi and Beijing.

According to figures from the Vietnamese statistics office, China was Vietnam's biggest source of imports in 2013, spending $36.8bn in a 26.7% increase from 2012. Vietnam exported $13.1bn worth of goods and services to China in the same period, up 2.1% from the year before.

Chinese investment in Vietnam reached more than $2.3bn in 2013, a sharp rise from the £371m recorded in 2012. By the end of 2013, China had 977 viable projects in Vietnam and accounted for almost 7% of total foreign investment in Vietnam, according to figures from Vietnam's planning ministry.

The relationship has been growing ever closer and these latest clashes appear to have taken many Asia-watchers by surprise. China's bellicose rhetoric over the South China Sea is not new, but the region's economies are more integrated than ever which will make any conflict more costly for the region as a whole.

While the US described China's actions as provocative and China urged the US to act with objectivity and caution, Hanoi has remained unapologetic. Emboldened by its alliance with the United States, it seems that these protests could mark the start of an unstable period for the region.

Iran Talks: How a Deal Would Hurt China and Boost the United States

European Union foreign policy chief Catherine Ashton (L) and Iranian Foreign Minister Mohammad Javad Zarif wait for the start of talks in Vienna(Reuters)

As Iran sat down with global powers to discuss its nuclear programme, the faint whiff of reconciliation lingered in the air of the Austrian capital.

Caution was the key word in Vienna on Wednesday, when foreign ministers briefed the world's press prior to the talks.

All parties stressed that this Vienna summit marks the toughest phase of the negotiations, which began in January this year and are set to conclude in July.

Earlier talks have been marked as the parties outlined their desired final positions, while the gritty details were left untouched. That's why the P5+1, consisting of the US, UK, China, Russia, France and Germany have stressed that a final deal remains a distant prospect until the details can be discussed.

However, with Iran being led by a moderate president and global powers creating a diplomatic space for negotiations, the prospect of rapprochement seems closer than it has for years.

After years of crippling economic sanctions, Tehran's economy is in dire need of access to international markets. Foreign companies are eyeing the prospect of access to a new market. If a deal is reached that leads to a lifting of sanctions, there are sure to be losers and winners.

When Western companies flocked out of Iran amid increasing alarm over the country's nuclear ambitions and tough American-led sanctions on Tehran, Chinese companies stepped in to fill the space.

Oil companies were at the forefront of the new investment opportunity, as Chinese firms profited where others dared not, for fear of angering Washington. While the past years have been kind to Chinese companies, Iranian firms have reported issues with the quality of Chinese products that could see them ditching China for European or Japanese companies.

Falcon Procurement's Arash Heiratangiz told Agence France Presse last week that China could well lose out if sanctions were lifted on a permanent basis.

"With quality an issue, we expect the market to switch back towards them, rather than us keeping the Chinese," he said.

"The Japanese and Europeans can come back if the sanctions are lifted," he added.

While private companies have registered frustration with the quality of Chinese products, central government appears to be losing patience too.

Oil Minister Bijan Zanganeh cancelled a $2.5bn contract with China National Petroleum Corp at the start of the month, adding the company failed to carry out its contractual obligations.

The move has been interpreted as an invitation to other international firms.

If sanctions are lifted and the Chinese lose out there will be no shortage of firms from the United States, Europe and Russia queuing to step in.

For all the adversarial recent history and bellicose rhetoric that has accompanied, Iranian presidents from Rafsanjani to Ahmadinejad have sought stronger ties with the West.

Iran's last president called for stronger ties with the United States in 2009, although with the proviso that the country's nuclear ambitions were not up for discussion.

Rouhani is under pressure from conservative hardliners to be tough with the US but he gave a conciliatory speech at the World Economic Forum this year, urging the old adversaries to end three years of hostility and inviting global companies to "seize opportunities" in Iran.

Other ministers in Rouhani's administration have made eyes at the West, touting the country as a reliable gas and oil supplier at a time when relations with Russia have deteriorated.

Moscow currently supplies around a third of Europe's gas needs but Russian President Vladimir Putin has warned European leaders that supplies could be affected by the price dispute between Russia and Ukraine.

Iran could certainly benefit from American expertise in the energy sector, but analysts think it is unlikely that Tehran would seek to trump a longstanding ally like Russia.

Moscow has partnered with Iran on nuclear technology in the past and has been contracted to build two more nuclear power plants in the country. Russia has also helped keep Iran's military technology and arms supply up to date while the country while the country has been under sanctions.

If all sided can reach an agreement and sanctions are lifted, the prospects of Iran looking West are strong, although this would not be done to spite Russia. However, as all parties are eager to stress, that moment is still a long way off.

Eastern Europe's Economy Severely Hit by Russian Crisis

Russian President Vladimir Putin shakes hands as he meets local residents during events to mark Victory Day in Sevastopol.Reuters

Growth in former Soviet Bloc countries plus Turkey will be severely hampered by the ongoing political turmoil between Russia and Ukraine.

The European Bank for Reconstruction and Development, a multilateral development bank, has decreased its regional forecast by more than half: from 2.8% to 1.3%.

The most dramatic revisions come in Ukraine, which is now expected to contract by 7% having been previously forecast to grow by 1.5% and Russia, which was expected to grow by 2.5% but is now set to completely stagnate at 0%.

Speaking at the development bank's annual conference in Warsaw, chief economist Erik Berglof said he "wouldn't be surprised if Russian growth goes below zero" adding that future sanctions could severely impact the credit side of the financial system.

But more peripheral economies to the crisis, such as Romania, Serbia, Modlova and Belarus, are all now expected to grow much more slowly than previously anticipated. Many EBRD states are dependent on Russian energy imports, which are expected to be interrupted over coming months.

The EBRD lends money and issues guarantees for commercial bank lending in its member countries, which span from Mongolia in the East to Morocco in North Africa.

Its purpose is to galvanise private sector activities in member states and its projections are a reflection of the lack of confidence in Eastern Europe, stemming from the crisis sparked by the events in Crimea earlier this year.

"Escalation of the crisis and/or a disorderly adjustment of Ukraine's economy could have significant negative impact on investor confidence, growth, trade and possibly energy and food security in the region," said Erik Berglof.

Turkey, which has its own raft of political problems, is set to grow 0.8% slower than anticipated in January, with the EBRD downgrading its forecast to 2.5%.

The EBRD report said: "In our baseline scenario, growth in the transition region slows down to 1.4% in 2014 from 2.3% in 2013, instead of rising to 2.7% as foreseen in our January forecast, mainly on account of expected slowdown in Russia and Ukraine with spillovers primarily to neighbouring countries as well as a deceleration in Turkey. Growth is then expected to edge up to only 1.9 per cent in 2015."

Bitcoin to Be Treated As 'Value-Added Electronic Record' in Japan

Bitcoin industry has recently been hit by a number of woes.Reuters

Japan's government will redesignate bitcoin as a form of "value-added electronic record" similar to credit card transactions, as part of a series of measures to monitor illegal deals made using the digital currency.

Kyodo News International, citing government and ruling party officials, reported that Japan is planning to crack down on illicit bitcoin trades amid fears that crime organisations have used the cryptocurrency for money laundering or drug dealing.

However the government will not regulate digital currency trading, and will not treat digital currencies as a traditional currency.

The Ministry of Economy, Trade and Industry is to draw up a series of measures to curb illegal bitcoin deals, and will work closely with the Financial Services Agency and the National Police Agency, Kyodo News added.

The government will also warn citizens about the risks involved with bitcoin transactions, putting responsibility solely on consumers, and is likely to impose a consumption tax on purchases of bitcoin, as the digital currency would be classified as an investment vehicle.

Nevertheless, capital gains from bitcoin are unlikely to be taxed in the country. In the US, capital gains are taxable as the country treats the digital currency as a property.

Demands for regulating bitcoin are on the rise in Japan, after the collapse of MtGox, which once hosted more than 75% of trades in the popular digital currency.

The company cited a two-year long cyber attack when filing for bankruptcy protection in Japan on 28 February, and subsequently in the US.

In March, Shinzo Abe's Cabinet adopted a formal position on bitcoin transactions, treating the digital currency as a non-currency market product like precious metals.

Last week, a Japanese man was arrested for allegedly importing class A drugs using bitcoin, in a case thought to be the first of its kind in the country.

China Jails 11 People for Selling Poisoned Dog Meat

Cruelty to dogs in China is still rife despite attitudes changing (Reuters)

A Chinese court has sentenced 11 people to prison for selling poisoned dog meat in the central province of Hunan.

The state-run Xinhua news agency reports the verdict was given by the court in Dingcheng district in Changde city.

The convicts have been given prison terms ranging from one to seven years along with fine. They were found guilty under the charges of selling hazardous food substances.

The members of the gang had killed about 1,000 dogs using darts which are dipped in highly toxic chemical - succinylcholine chloride – and later they stored the meat in freezer.

The policed had busted the ring in December last year seizing about 12 tonnes of dog meat. They had already sold meat from about 10 dogs when they were arrested.

In many Chinese provinces eating dog meat is prevalent and is considered traditional. The Chinese in some provinces also believe that dog meat has medicinal purposes. Nonetheless, the consumption has often been condemned by pet lovers and animal rights activists.

Missing MH370: Malaysian PM Najib Rasal Admits Search Was Delayed

At least 25 countries have joined in the search for the missing plane.

The start of the search for missing flight MH370 was delayed due to "confusion", Malaysia's Prime Minister Najib Razak has said.

The comments came shortly after the UN aviation agency announced the industry would voluntarily undertake measures to improve the tracking of aircraft.

In an article published on the Wall Street Journal, Razak said the Malaysian government had important lessons to learn from the mistakes made during the search for the plane, which is still missing.

"We didn't get everything right," he wrote in the signed article. "In the first few days after the plane disappeared, we were so focused on trying to find the aircraft that we did not prioritise our communications.

"It took air-traffic controllers four hours to launch the search-and-rescue operation. But the plane vanished at a moment - between two countries' air-traffic controls - that caused maximum confusion.

"Despite this, the search began about a third quicker than during the Air France Flight 447 tragedy in 2009," he said, referring to a plane which crashed en route to Paris from Brazil in 2009.

"Nevertheless, the response time should and will be investigated. In an age of smartphones and mobile internet, real-time tracking of commercial airplanes is long overdue."

He also recommended changing aeroplane communications systems so they could not be disabled in mid-flight, and prolonging the battery life of black boxes.

Inadequate tracking has been among the factors blamed for the failure to locate MH370, which is presumed to have crashed with 239 people on board in a remote part of the Indian Ocean about 1,600 km northwest of Perth, Australia.

After two months of extensive searching, the missing flight is yet to be found.

FLIGHT MH370 FACTBOX

Flight MH370 took off from Kuala Lumpur International Airport en route to Beijing at 00:41 on Saturday 8 March (16:41 GMT Friday).

About 50 minutes later, the aircraft lost contact with air traffic control.

No distress call was made.

On board, there were 12 Malaysian crew members and 227 passengers from 14 countries. That included 153 Chinese and 38 Malaysians.

Two Iranian male passengers, Pouria Nour Mohammad Mahread and Delavar Syed Mohammad Reza, were travelling on fake passports. Neither had any apparent links to terrorist groups.

No debris from the plane has been found in the international search.

Last confirmed communication with Indian Ocean satellite occurred at 08:11am, meaning plane continued to fly for seven hours after radar signal was lost.

At least 25 countries, including China, the US and Singapore, have now joined in the search for the missing plane.

Hot Shots Photos of the Day: Putin Mural, Royal Celebrities, Space Landing

A man looks out of his window surrounded by a recently created mural depicting the Kremlin, Russia's President Vladimir Putin and the Russian flag, on the wall of a residential building in the Crimean port of SevastopolReuters

A man stands near the remains of a destroyed Ukrainian army mobile mortar truck in the eastern Ukrainian village of Oktyabrskoe. Pro-Russian separatists ambushed Ukrainian troops, killing seven in the heaviest loss of life for government forces in a single clash since Kiev sent soldiers to put down a rebellion in the country's eastReuters

The Soyuz TMA-11M capsule with International Space Station crew members Japanese astronaut Koichi Wakata, Russian cosmonaut Mikhail Tyurin and US astronaut Rick Mastracchio lands south-east of the town of Dzhezkazgan in KazakhstanReuters

An helicopter drops water on a burning hillside as firefighters battle the Bernardo Fire, north of San Diego, CaliforniaReuters

A Turkish coalminer is rescued after an explosion and fire at a pit in western TurkeyOzgu Ozdemir/Getty Images

Buddhists holding candles leave a light trail as they walk around a large Buddha statue during Vesak Day, an annual celebration of Buddha's birth, enlightenment and death, at a temple in Nakhon Pathom province on the outskirts of BangkokReuters

Monks take part in a candlelit ceremony celebrating Visak Day at Wat Pan Tao in Chiang Mai, ThailandGetty

Crown Prince Frederik of Denmark looks at a reconstructed synagogue ceiling as he visits the Museum of the History of Polish Jews in WarsawAFP

Prince William talks to Emma Watson and Kate Moss at a gala dinner held at Windsor Castle to celebrate the work of The Royal Marsden HospitalGetty

Cara Delavigne, Cate Blanchett and Helena Bonham-Carter arrive for a dinner to celebrate the work of The Royal Marsden Hospital hosted by Prince William at Windsor CastleGetty

A member of staff works out the seating plan for Sunday's Bafta Television Awards at the Theatre Royal, Drury Lane, LondonGetty

Nicole Kidman and Tim Roth are seen at the Grand Journal de Canal television studio on the Croisette on the eve of the opening of the 67th Cannes Film FestivalReuters

Oscar Pistorius gazes ahead during his trial at the North Gauteng High Court in PretoriaReuters

Aisha Yesufu, 40, prays in her home in Abuja. Yesufu, a businesswoman who is originally from Kano and has two children, has joined protests calling for the release of school girls abducted from the remote village of ChibokReuters

A father seats beside his daughter as she is treated for cholera at a hospital in Alamada, Mindanao, PhilippinesGetty

Duped Investors Seek Over $40bn from $4bn Bernard Madoff Victim Fund

Duped investors have sought over $40bn from $4.05bn Madoff Victim Fund.Reuters

Convicted fraudster Bernard Madoff's customers are looking to recover over $40bn from a federal fund constituted to compensate victims of his $65bn Ponzi scheme.

Richard Breeden, the "special master" overseeing the US justice department's $4.05bn (£2.4bn, €2.9bn) Madoff Victim Fund, has received more than 51,700 claims from 119 countries, including Kazakhstan, Madagascar and Vietnam, at the close of the claim period on 30 April.

That was more than three times the number of claims filed during the Madoff bankruptcy proceedings.

Breeden said that some 78% of claimants reported losses of $500,000 (£296,736 / €346,458) or less.

The US accounted for 58% of claimed losses and 38% of claimants. Germany, Italy and France threw up the next most claimants.

“"Our first distribution will go to people who have recovered very little or nothing. Our message is, there is hope here. Help is coming, if you meet the eligibility standards.”

- Richard Breeden

Breeden is permitting "indirect" investors who had accounts at so-called "feeder funds" -- hedge funds, banks and other entities that invested with Madoff -- to try and recoup losses.

In contrast, New York lawyer Irving Picard, the court-appointed bankruptcy trustee tasked with reimbursing victims who invested in Bernard L Madoff Investment Securities, has allowed only direct investors to recoup money.

Breeden said a different law allows him to pay off a wider range of victims than Picard.

He expects to reject a "substantial" number of claims on grounds that they are ineligible, duplicative or inflated. He also said that it was too early to provide a timeframe for payouts.

"The volume was surprisingly large," Breeden, a former US Securities and Exchange Commission (SEC) chairman told Reuters.

"Other than the Gobi desert and the polar icecaps, few places on Earth seem to have escaped the scourge of this fraud. This fraud was of epic, and truly global, proportions," he told AFP.

"Our first distribution will go to people who have recovered very little or nothing," he said. "Our message is, there is hope here. Help is coming, if you meet the eligibility standards."

Picard has recouped $9.8bn, roughly 56% of the $17.5bn in principal he said was lost by those who submitted claims, and has distributed nearly $6bn. Picard accepted 2,518 of the 16,519 claims he received.

About $1.7bn of Breeden's fund came from JPMorgan, which was Madoff's main bank over two decades, and $2.2bn came of the estate of Jeffry Picower, a Florida investor who benefited from Madoff's ploy.

Picower's estate also paid $5bn to Picard.

Madoff pleaded guilty in 2009, following his arrest in December 2008, and was sentenced to 150 years in prison for controlling the biggest Ponzi fraud ever detected.

Turkey Coal Mine Disaster: Photos of the Rescue Effort

Rescue workers are racing against time to reach hundreds of miners trapped underground after an explosion and fire at a coal mine in western Turkey.

The explosion tore through the mine as workers were preparing for a shift change, so there were more miners inside the mine than usual.

During the night, people cheered and applauded as some trapped workers emerged, their faces and hard hats covered in soot and mud.

Osman Orsal / Reuters

Reuters

A man kisses his son after he was rescued from the mineBulent Kilic/AFP

Osman Orsal / Reuters

Osman Orsal / Reuters

Bulent Kilic/AFP

Osman Orsal / Reuters

Ozgu Ozdemir/Getty Images

Bulent Kilic/AFP

Bulent Kilic/AFP

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