Wednesday, January 25, 2006


This telephone ad from the 1970s could have been written by John Tamihere yesterday.

By Ana Samways

Julie Sowter writes: "While fixing a bike tyre for my nephew, his mother inquired why I was taking the tyre off and getting the inner-tube out. When advised of the intricacies of tyre-fixing, she piped up: "Oh ... I was just going to listen for the leak on the outside and stick a patch on that."

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Reverse psychology? A tourist's T-shirt spotted in Auckland ...

Feed the bears
Don't wear sunscreen
Play chicken with a boat
Leave your lifejacket on the dock.
Thanks you for your support
Wyntoon Paramedics.

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In Cambridge, Britain, a self-proclaimed gothic priest is conducting church services for young Goths. The Reverend Marcus Ramshaw, associate vicar at St Edward King and Martyr Church, said about 20 Goths regularly attended the 45-minute service, which includes a specially written liturgy and music such as Depeche Mode and Sisters of Mercy. Mr Ramshaw said: "I am a Goth myself and realised that quite a lot of people I knew were spiritual rather than religious and were desperately looking for a spiritual home".

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A school in Amsterdam has introduced separate entrances for white and coloured pupils and two separated school names. The Rietlanden/8th Montessori school authorities say it's not about racism because the school welcomes children from all ethnic groups. "For one reason or another our school had acquired a bad reputation," said headmistress Annemieke van der Groen. It was difficult to convince white parents to enrol their children because they were put off by the sight of the black pupils. "Hence, the two entrances and different names for the same school." (Source:

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Cameron Patterson's drive from Pakuranga to the city each day involves the South Eastern Arterial on-ramp and most days he spies a rooster roaming about. But yesterday morning while driving up the on-ramp there was a sign with "R.I.P", a picture of the rooster and "?-2006" at the bottom. "What has happened to Russell the rooster ... is he dead?" asks Cam.

Editorial: Voters can elect who they wish

The United States can be forgiven to a certain extent for believing the world is America writ large. They see foreigners drinking their cola, munching their hamburgers, enjoying their movies and music. Little wonder that they suppose free elections anywhere will produce the government Americans would choose.

But in the Middle East that is plainly not so. Iran has fairly freely elected an Islamist government. Iraqis long ago rejected the Westernised leaders the Bush Administration had in mind for them, and the democracy the United States is expending so much money and effort to establish there could well produce a religious regime. Now, on the eve of elections in Palestine, Washington is disconcerted to find the party of the Islamic militant organisation, Hamas, might win more votes than any other.

Hamas has been polling almost as well as the secular Palestinian nationalist organisation, Fatah, and the US is reported to have spent almost $3 million to try to influence the result. At least that is what the New York Times says it has been told by unnamed officials. Officially the US Government says it is "working with the Palestinian Authority to enhance democratic institutions and support democratic actors, not just Fatah".

That phrase, "not just Fatah", could be fatal to the prospects of the organisation founded by the late Yasser Arafat. The US seems blissfully unaware that any declaration of support is a kiss of death. Here, the anti-nuclear dispute has become a popular test of national sovereignty largely because the US does not like it. If that attitude can prevail in a Western democracy, how much more potent must it be in the Middle East?

But if Fatah loses the election that starts tonight its fate cannot be blamed entirely on the Judas kiss from the US. In its administration of the Palestinian territory, Fatah's own corruption and internal discords are more than enough to have turned voters against it. On the positive side, Hamas has much going for it. The organisation, which makes the world's news mostly for the terrorism it has sponsored, is as well known to Palestinians for providing welfare and other services that they have not received from the government of their territory.

Hamas, which has boycotted previous elections, looks certain to feature in the disposition of power from the parliamentary elections tonight. It will not be easy for the US or Israel to accept a Palestinian government that includes an organisation opposed to Israel's existence. But Hamas has down-played that in the election campaign and it need not be fatal to a relationship with Israel or the US. However much the US might regard Hamas as a terrorist organisation, and thereby "undemocratic", it has participated in this election. Religious parties are popular in Muslim societies and the West needs to recognise that.

Accepting elected Islamic governments does not mean respecting their treatment of women and religious dissidents, or any aspects of their law that are an affront to human rights and civil liberties. But if this is the way Muslim majorities prefer to order their societies, so be it. Islamist parties prosper mainly on external opposition, much as the anti-nuclear cause has done here. Without Western antagonism they would stand to lose much of their appeal. Democracy never guarantees a desired result. Accepting the result is perversely the best way to change it.

John Armstrong: Disappearing jobs not how Labour wants to start year

Beef jerky may be low in fat and high in protein. But short of forcefeeding the populace with the stuff, there is not much the Government can do to save the disappearing jobs of some of those workers who make it.

This was not quite how Labour planned to kick off the political year - digesting job losses at its first Cabinet meeting .

However, the wiping of 102 jobs at Jack Links beef jerky plant in Mangere, along with a rash of redundancies elsewhere, the squealing over the high dollar and the slump in business confidence has suddenly thrust the long dormant debate about economic policy to the top of the political agenda.

And it is likely to stay there. Given the economy has long been forecast to slow, Labour anticipated that would happen. The party's "new agenda of economic transformation" was the first thing the Prime Minister raised when interviewed by the Herald last week following her return from her overseas holiday.

But Labour's worry will be that things may be deteriorating faster than predicted - the doom and gloom increasing the opportunities for National to redefine the debate about economic direction on its terms. To make things worse, the loss of jobs at the beef jerky plant is embarrassing because it was a shining example of the capacity of Jim Anderton's "jobs machine" to lure foreign investors to set up shop in New Zealand. It was almost as if Helen Clark could foresee this week's headlines when she identified "moving the New Zealand economy upmarket" as the critical issue for Labour's third term in power.

The search for fresh ideas to power her "new agenda" has seen front-bench ministers brainstorming with chief executives of Government departments.

While this exercise has yet to bear fruit, it may be more important at the moment that Labour is seen to be at least doing something.

At stake is Labour's hard-won credibility as a safe pair of hands when it comes to economic management - a reputation it was not prepared to endanger last year by joining the rush to slash taxes.

Setting the pattern for this year, Finance Minister Michael Cullen and his National counterpart John Key are already locked in war by press statement, with National pointing to the job losses as evidence of Labour's squandering of the "golden years" of economic growth to make New Zealand businesses truly competitive.

In fact, Helen Clark's talk of economic transformation is an extension of Labour's longrunning "growth and innovation strategy" which began with a hiss and a roar, but has lost political momentum partly because, as Clark freely admits, the strategy was "not well communicated".

That did not matter when the economy was charging ahead at full steam. It does now - and Clark is indicating far more effort will be put into selling what Labour hopes will be a new and "unique model" of economic development such that people will say "Yes, that's the way to do it".

Meanwhile, National has launched a two-pronged attack. It is using the beef jerky plant's difficulties as a reason why it is better to have lower taxes for all than "corporate welfare" for a few in the form of handouts to foreign investors. At the same time, it is blaming Dr Cullen for expanding Government spending and driving up interest rates which, in turn, have made the exchange rate uncompetitive.

Given the Reserve Bank is responsible for shifts in interest rates, the arguing is somewhat irrelevant. But that will not stop it. Someone must be to blame for the high dollar and resulting job losses. National's task is to pin as much of that blame as it possibly can on Labour.

Fran O'Sullivan: We're not winning so forget the score

It's a pity Finance Minister Michael Cullen did not call National's John Key for a bit of advice before slagging the latter off yet again as a currency speculator.

Key could probably have warned him that sending officials to Tokyo in early December to try to talk down the kiwi dollar would be a waste of space unless, or, until there were clear signals that the Reserve Bank's tightening exercise was going into reverse.

Until that point, any savvy offshore investor would be willing to run with the risk that any prospective currency depreciation would not be so savage or as quick that they would lose their shirts by investing in a country that still sported the highest real interest rates in the OECD.

On this point, I'm with Key.

He may have headed international currency for investment banker Merrill Lynch. But his credentials were rated so highly that he sat on the foreign exchange committee of the Federal Reserve Bank of New York.

Crying wolf should never be the first option.

It's basically an admission of defeat and acknowledgment that the Government and Reserve Bank are (so far) wary of making the sort of real interventions that would pull the rug from under the booming uridashi NZ dollar bond market.

Cullen runs the risk that the officials' comments, particularly now they are in the public domain, will lead to a negative re-rating of the economy that may not turn off the Japanese and European investors who have been piling into uridashi and eurokiwi issues, but foreign investors contemplating major greenfields ventures here.

It's early days yet but figures which I saw yesterday suggest the NZ officials' December exercise may so far have been in vain.

Uridashi NZ dollar issues are still being arranged in Tokyo this month, despite the efforts by Treasury Secretary John Whitehead and his Reserve Bank colleagues to alert top Japanese officials and representatives of leading issuers to our emerging economic problems or, as Cullen put them in last week's statement, to ensure the risks of investing in uridashi NZ dollar bonds were well understood at this time.

Some $1.87 billion of uridashis have been launched since December 1, and a further $706 million of eurokiwis, although this amount might be inflated due to the difficulty of cancelling issues already well down the pipeline.

But the major issue that ought to worry Cullen is that some of those institutions that were on Whitehead's lobbying list - the World Bank and Asian Development Bank, who are among the leading uridashi issuers, and, Daiwa Securities, a major arranger - are still very much in the market.

It was probably too late to cancel the World Bank's $88 million uridashi bond issue which was launched on December 9. But an Asian Development Bank issue worth $598 million was launched by Daiwa on December 21. Another issue was launched by Daiwa on January 6.

Cullen and Whitehead will not have missed the irony.

Cullen sits as one of the World Bank's governors (with representatives from the other 183 member nations). Whitehead is his alternate.

The governors, of course, only set policy.

It is up to the World Bank's executive directors to run the show.

But it is clear that exerting moral suasion on global institutions is a difficult task.

They basically get to clip the ticket when they swap the funds raised from Japanese investors with trading banks after cheap money to lend at significant profit to their clients.

It's a game that many reputable institutions have played.

Even the Government used to make major plays in the international uridashi market.

So well-regarded was one A$400 million uridashi that Daiwa organised on behalf of the Government in 2003 that it won its arranger Euromoney's Uridashi of the Year award for the second year in row.

The Treasury's Debt Management Office emphasises that the Government is not at play in NZ dollar uridashis.

The critical point is that instead of picking a tit-for-tat fight, Cullen might usefully engage Key in an off-the-record chat about the types of policy changes that might be necessary to try to stop our absurdly cyclical exchange rate cycle and buy our exporters respite from the strong exchange rate.

It may not be in Key's long-term political interests for Cullen to quickly work his way out of the high-exchange rate conundrum.

Key favours policies which would see the Government take action to reduce its own negative impact on the economy.

But there's no guarantee that policy set will quickly reverse the exchange rate.

In the meantime, it's probably worth Cullen trying to reach an accord with opponents, just as the Government does on major trade and security issues, to see if they will support measures to ease the pressure on our productive sector.

The country's economic security should take precedence over political point-scoring.

Brian Rudman: 'Stocks' of restorative justice await developer

Auckland's earliest wrong-doers were publicly humiliated by being displayed in wooden stocks at the corner of busy Victoria and Queen Sts. About 150 years on, we shame our miscreants at something called a restorative justice conference.

Usually these heart-to-heart sessions between victim and offender pass unnoticed, but tonight's conference at the Onehunga Community Centre starring serial tree destroyer George Bernard Shaw has become something of a show trial, with the Auckland City Council pumping out public notices and press statements inviting us all to roll up and tell the property developer what we think. Leave your rotten tomatoes at the door, please.

Beginning at 6pm, it certainly sounds like more fun than Day Three of Simon and Wendy on TV One, and for Mr Shaw at least, more important. His performance tonight could put him in, or keep him out of, jail.

A year ago, one of Mr Shaw's offsiders cut down a protected, 100-year-old, Royal Oak pohutukawa. After nearly 12 months of denials, Mr Shaw confessed to a "very bad error of judgment" and pleaded guilty to the offence.

He has a past record of such behaviour. In 1997, a judge fined him $18,000 and warned that if he reoffended, the court "would not treat such matters as lightly".

Before Christmas, Judge Fred McElrea delayed sentencing pending the outcome of tonight's meeting. At it, members of the public will be invited to say how they've been affected by the offence and Mr Shaw will be allowed to speak. "After that time, those present will discuss a plan for how the loss to the community can be repaired."

No doubt aware that destroying a scheduled tree carries a maximum penalty of a $200,000 fine or two years in prison, and with the previous judge's warning ringing in his ears, Mr Shaw has already grovelled greatly, saying he wished he could turn back the clock, and paying the council $50,000 in costs.

Will it be enough? We'll know on February 13 when sentencing takes place. But history shows how important tonight's session may be.

Late last year, Environment Court judge Laurie Newhook and commissioner Ross Dunlop delivered a paper on penalties for illegal tree destruction entitled "To Cut and Run or Not ... " and concluded the answer was clearly "in the negative".

They said councils were very active in enforcing tree protection rules, and that penalties were increasing.

"The courts have been acting to deter defendants ... by means of higher levels of penalties imposed."

The paper noted that in 2003, Waitakere developer Andrew Borrett was sentenced to 20 weeks' imprisonment, reduced to 12 weeks on appeal, for, among other offences, clearing protected bush.

Judge Newhook also contrasted two examples of restorative justice conferences early last year. One involved a prosecution by Auckland City against a company called 12 Carlton Gore Rd Ltd and its director, Ms M. K. Lowe, before Judge McElrea.

Ms Lowe pleaded guilty to cutting three exotic and two native trees and offered "a fulsome apology", $8000 for landscaping the property and a $3000 donation to a local community association.

Judge McElrea was "prepared to place particular weight" on the conference outcome, convicted the company and ordered it pay the council's costs, but did not fine it.

"In view of the strong constructive response of the lady director, she was discharged without conviction."

But there was a "different outcome" from the attempted restorative justice conference in a prosecution of A. and I. Covich before Judge Robert Whiting. This didn't involve cutting trees, but the often-related activity of earthworks.

The defendants pleaded guilty, but "chose to use the [restorative justice] conference process to continue criticism of the [Waitakere City] council, and offered no remorse". Neighbours "were not satisfied with the generally equivocal and grudgingly offered apologies".

The judge refused any "credits" for the restorative justice process and considered imprisonment, but because of the age of the defendants, their "straitened circumstances" and previous good records, imposed a sentence of 300 hours' community work, with costs of $3500 awarded to the council.

From Mr Shaw's earlier expressions of contrition, one can presume he has been well-briefed on the above options.

In the end, though, whether he ends up inside for a brief period, is fined heavily and/or sent out to sweep the streets as penance, none of this really hits the developer where it hurts most.

To me, the only way to really hit a law-breaking developer is to slap a development freeze of say five or 10 years on the site. No development equals no profits, equals maximum pain, equals big "ouch" in pocket, equals won't do it again.

Peter Lyons: Obsession with inflation damaging and distorting

New Zealand may have recently achieved a dubious world first.

It is unlikely that any other sovereign nation has had government officials travel abroad to actively discourage overseas investors from investing in their country. Media reports state that Reserve Bank officials recently visited Japan in an attempt to dissuade the Japanese from lending to us.

Alan Bollard, the Governor of the Reserve Bank, is damned if he does and damned if he doesn't. He is responsible for keeping New Zealand's inflation rate between 1-3 per cent in the face of a continuous domestic spending binge, largely funded by overseas lenders.

He has repeatedly castigated his countrymen for their prolific borrowing and spending habits. This has had little result. He has now targeted "misguided foreign investors" eager to lend to us because of our high interest rates.

New Zealand's economic situation could best be described as lopsided and bizarre.

We are near full employment after years of strong economic growth. To an extent, this has been fuelled by consumer spending, largely the result of the feel-good factor of a rampant housing market and the availability of easy credit. Some commentators believe high levels of employment underpin the housing market and consumer spending but it is difficult to determine whether high employment levels are a cause or effect.

Because of this boom we are experiencing inflationary pressures. We have the highest interest rates in the Western world but this hasn't dampened the festive mood of consumers and property buyers.

Our exchange rate is overvalued because of the demand for the New Zealand dollar by overseas investors eager to lend our dollars back to us.

The high New Zealand dollar is throttling our exporters and contributed to a blowout in the current account deficit. This means we are spending far more than what we are earning in our dealings with the rest of the world.

Bollard has laid the blame on New Zealanders and their willingness to take on debt to fund their excessive spending habits. He has also blamed overseas lenders for their inability to appreciate the risks they are taking by lending to us. Unsurprisingly he does not acknowledge the role of the Reserve Bank's monetary policy in underpinning the entire process.

The process can be described very simply. The Reserve Bank must control inflation between 1-3 per cent. If it is concerned about inflation it raises short term interest rates in New Zealand to reduce demand.

In the global financial market, high New Zealand interest rates make us attractive to lend to for overseas lenders.

Financial institutions can borrow cheaply overseas and pump this money into the loans market in New Zealand. This helps fuel the housing boom and consumer spending creating further inflationary pressures and the circular process continues.

Switch on the telly at prime time and numerous ads exhort us to take the money from kindly leading institutions who care about us and our financial and housing needs.

The present situation is not about the ignorance of overseas lenders or the prolific spending habits of New Zealanders. It will not be resolved by nagging either party.

Introducing clumsy controls on bank lending or house buying are unlikely to be effective or politically acceptable. The heart of the problem is the obsession with controlling inflation and the subsequent need for an explicit target of 1-3 per cent.

An explicit and narrow inflation target provides financial institutions with a very pleasant trading environment. They can predict with relative accuracy what will be happening to interest rates in New Zealand.

This allows them to access cheap finance overseas and pump it into the loans market in New Zealand. You can almost hear the chortles in the bank boardrooms in Sydney.

The obsession with rigorously controlling inflation is a legacy of the 1970s and 80s when New Zealand was subject to the effects of an inflationary spiral. The oil price shocks of the 1970s led to wage and price hikes fuelling further inflation and further wage and price increases in a continuous process.

Protectionist trade policies restricting imports allowed firms to raise their prices because of a lack of competition either domestically or from abroad.

Most workers were unionised with national awards determining wages. Government spending habits such as Think Big and supplementary minimum prices for farmers helped fuel inflationary pressures. We were a tightly insulated, highly regulated cost plus economy infected by an inflationary virus.

Nowadays the New Zealand economy is a completely different beast. The stringent monetarist approach to managing the economy is based on a misguided fear of returning to the distorting double digit inflation of 1970s and 80s. Over time the cure has become as damaging and distorting as the disease.

Bollard should be inviting debate about the merits of continuing such a rigid monetary stance and whether less destructive options are available. This is unlikely to happen because few institutions have the objectivity or courage to question the validity and effectiveness of their own key function.

* Peter Lyons lectures in Foundation Studies at Otago University.

Gwynne Dyer: Nuclear ticket to all the high tables

The leaders of states who use terrorist methods against us, as well as those who consider using ... weapons of mass destruction, must understand that they would expose themselves to a firm and appropriate response on our part. This response could be a conventional one. It might also be of a different kind."

President Jacques Chirac last week announced a major change in French nuclear strategy while visiting Ile Longue, the country's main nuclear submarine base. Speaking on the missile-firing submarine Le Vigilant, he said that, in future, France would consider using nuclear weapons against any country that supported a major terrorist attack against it.

But he did promise that he'd only nuke it a little bit: "We should not have to choose between inaction and obliteration ... The flexibility and reactivity of our strategic (nuclear) forces should allow us to respond against its power centres, against its capacity to act."

Oh, good. For a minute there it sounded as if Chirac was planning to obliterate any country that he suspected of sponsoring a terrorist attack against France. But no. He would only nuke their "power centres" and their "capacity to act."

What does that mean? Well, it seems to mean that if terrorists flew a hijacked plane into a tall building in Paris and Chirac suspected that Iran was behind it, for example, he would nuke only the prime minister's office, the defence ministry and the intelligence headquarters in Tehran, and maybe three or four key military facilities around the country. With luck, only a few million Iranians would die.

Chirac is so concerned about sparing innocent lives that he has even ordered France's missiles to be modified for selective strikes that don't obliterate whole countries. "All our nuclear forces have been reconfigured accordingly. To this end, the number of warheads has been reduced on some missiles on our submarines," he said.

During the Cold War, every one of the 16 missiles on each French submarine had six nuclear warheads, because France wanted to be able to kill fifty or a hundred million Russians if the Soviet Union invaded Western Europe. (It was called "deterrence.") But now, Chirac assures us, a few of the missiles on each French submarine carry only two or three warheads, adjusted to cause smaller nuclear explosions, in case he wants to kill foreigners in (relatively) smaller numbers.

What has incited Chirac to start talking like this only months before he leaves office? Partly, one suspects, it is just his frustration at no longer being in the limelight, but he also has a more serious goal: to secure the future of France's "force de frappe" (nuclear striking force) long after he has left office. Like its creator, Charles de Gaulle, he believes that it is an essential element of France's independence and its ticket to all the high tables of the planet.

Even among Chirac's own right-wing colleagues there is now open debate about the desirability of maintaining France's nuclear striking force forever. After all, the Soviet Union, the enemy it was built to deter, has been gone for 15 years now, and there is not a single nuclear-weapons power in the world that sees France as a potential enemy.

It costs €3 billion euros ($5.3 billion) a year just to maintain France's nuclear striking force, and one day in the not too distant future it will cost a great deal more to modernise it. Why not just scrap it?

On the other side of the Channel, Tony Blair's Government simply argues that Britain must keep its nuclear weapons because - well, because who knows what the world will be like 20 years from now? In Cartesian France, however, you are expected to make a more coherent argument than that, so Chirac is doing the best he can.

Chirac's basic problem is that France has no real, nuclear-armed enemy to deter with its nukes any more. His solution is to extend the target list to include non-nuclear enemies - "terrorist-supporting states" for example - and justify their retention that way.

Chirac's new position is not unique. The United States retracted its old half-promise not to use nukes against non-nuclear-weapons states years ago, and the Bush administration has been pressing for the development of a new generation of "mini-nukes" to do exactly what Chirac suggests at a somewhat lower cost in innocent lives.

Bush believed that Saddam Hussein supported the terrorist attacks against the United States (or at least he said he did), and existing US doctrine would have allowed him to use those nukes in response.

He invaded instead because the neo-conservatives who run US foreign policy had been seeking a pretext to do so for years, but another time might be different. So why shouldn't Chirac adopt the same doctrine?

Because to demand that countries outside the nuclear weapons club renounce any ambitions to get them, while the existing members expand their nuclear target lists to include countries that don't have them, is worse than hypocritical. It is self-defeating.

After this, how can France demand with a straight face that Iran forgo nuclear weapons? The world has got used to this sort of behaviour from the sole superpower, but who gave Chirac permission to behave like an American president?

* Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.

Michael Richardson: China looks to answer blowing in the wind

Wind energy has expanded fast in the United States and Europe in recent years. It is also becoming an increasing part of the energy scene in Australia and New Zealand. But the growth of the giant modern windmills to generate electricity is being limited by concerns that include blade noise, visual pollution and the death toll on passing birds and bats.

Such concerns, however, are not a hindrance in China which is expected to emerge as the leading global user of wind power within a decade or so. Worried by high oil prices, chronic electricity shortages and air pollution caused by burning coal, China is set to embark this year on a campaign to promote alternative energy sources using the power of the wind, sun and river water instead of fossil fuels.

Last February, China's Parliament passed a renewable energy law that sets tariffs and other incentives in favour of non-fossil energy such as water (hydro), wind and solar power. The law takes effect this month.

The Government says China uses renewable energy to meet 7 per cent of its total needs and plans to raise that amount to 15 per cent by 2020. One of the biggest boosts is expected for wind energy.

A report issued in November by a domestic industry group forecast that China's wind-power sector, using the windmill-like turbines in clusters or farms both on land and offshore, should be able to generate 40 gigawatts of electricity a year by 2020. By then, China would have overtaken Germany, Spain, the United States, Denmark and India to become the world's largest producer of wind power.

The Chinese Government is more conservative in its predictions but also sees great potential for harnessing the wind.

"By 2010, we plan to reach 4000 megawatts, and by 2020 we expect to reach 20,000 megawatts, or 20 gigawatts," says Wang Zhongying, director of China's Centre for Renewable Energy Development. He adds that these targets are conservative and may easily be surpassed.

Even so, wind power needs to be put in perspective. If the official target of 20 gigawatts by 2020 is reached, it will be equivalent to just 1 per cent of China's predicted annual electricity consumption at that time. Base load power generation will continue to come chiefly from coal although hydro- and nuclear-power will be increasingly important.

Still, more than 40 wind power farms are operating in various parts of China. The biggest is near Huitengxile in Inner Mongolia. It plans to increase its generating capacity to 400 megawatts by 2008, from 68 megawatts today. This would make it Asia's largest wind farm.

South Korea's Electric Power Corp (Kepco) recently started work on a wind power plant in Yumen city in the northwestern Chinese province of Gansu. It is the first foreign electricity firm to enter China's wind power market and many others are likely to follow.

The plant will cost about US$58 million ($83.6 million) and is due to start operating next August.

One of the most promising areas for catching the wind is in industrialised Guangdong and some local officials say wind power could help cut the air pollution plaguing the province and adjacent Hong Kong caused partly by plants that burn coal or fuel oil to generate electricity.

An expert study commissioned by the Greenpeace environmental group and published last October said that Guangdong had the potential to produce 20,000 megawatts of energy, or 17 per cent of its current demand. About 10,000 turbines, or windmills, would be needed to produce this much electricity. The provincial government has set its target to raise wind power from 86 megawatts, to 3000 megawatts, by 2020. This is about the amount of electricity that three large nuclear power plants could generate.

At present, the wind power industry in China is limited by its high costs, with the price of power from a 100-megawatt wind project over two times higher than the equivalent from a coal-fired utility. Around 80 per cent of equipment is imported and few Chinese firms make the larger turbines needed for more cost-efficient generation.

However, China plans to build its first offshore wind farm in the Bohai Sea off the northern province of Hebei this year and Shi Pengfei, vice-chairman of the Chinese Wind Energy Association, says he expects the cost of wind-generated power to move closer to that from coal-burning plants when there is around 3000 megawatts of wind-power output - a point likely to be reached in the next few years.

* The writer, a former Asia editor of the International Herald Tribune, is a visiting research fellow at the Institute of South East Asian Studies in Singapore.