Deflation is worse now than it was during China’s COVID slump. From 2020 to 2022, Chinese President Xi Jinping attempted to stop the spread of the virus by instituting extreme lockdown measures across the country, which became known as his infamous zero-COVID Policy. Predictably, this brought the Chinese economy to a standstill. Following nationwide protests in November 2022, Xi lifted the policy. Yet, a year later, consumer demand has not rebounded. China is still stuck in the doldrums. Beijing policymakers have set a growth target of 5%, the lowest in decades. Even then, Chinese bureaucrats, notorious for cooking the books, cannot meet this low target.

China is in a very risky situation. Systemic weaknesses make the world’s second-largest economy surprisingly brittle. Unlike Europe or even the US, supposedly socialist China has almost no safety net for retirees. And, after four decades of the one-child policy, older Chinese cannot fall back on their few children to support them, either. They have to rely on their personal savings in order to survive.

In Western economies, people put their retirement funds in a mix of stocks and bonds. These provide a diversified and (usually) reliable return. But China’s financial sector is not nearly as sophisticated. The country lacks a well-developed stock market for private investors to invest. So, 60-70% of household savings are tied up in real estate. And it is the real estate industry that is in the most trouble.

Property prices are plummeting. Developers are finding themselves with properties on their hands that no one will lease or buy. Chinese cities are full of apartment and office buildings with no occupants. Developers cannot make the money back on their investments and therefore cannot pay back their creditors. In 2021, China’s second-largest property developer Evergrande Group defaulted. In 2023, China’s largest developer Country Garden defaulted, too. Dozens of other firms are teetering on the brink of collapse. If the real estate industry crashes, China’s population of over 250 million people over 60 will see their savings vanish into thin air.

Banks are in trouble, too. As real estate firms default on the debt they owe, their creditors, i.e. banks, have to write off huge losses. Defaults by these firms could make the banks insolvent as well. If this contagion spreads throughout the Chinese banking system, the workshop of the world may descend into a recession of titanic proportions.

Xi is taking the ship down

How did China’s economy get so bad?

Zero-COVID took a huge bite. But other forces are afoot. The US is turning increasingly protectionist, unwilling to have its domestic industry compete with China’s low, low prices. As China undergoes deflation, those prices will only get lower and calls for protection stronger. Both Presidents Donald Trump and Joe Biden hiked tariffs and sanctions on China.

Historically, protectionism has done wonders for the US. In the 19th century, the US used tariffs to protect its markets from cheap manufactured goods coming out of Britain’s Industrial Revolution. Instead of becoming a source of raw materials and a market for British goods, the US fostered its own industrial revolution that made it the most prosperous country on the planet. Now, the US is developing a domestic microprocessor industry and no longer wants to rely on imports.

Other countries, too, have cut down on imports from China. “Reshoring,” “nearshoring” and “friendshoring” are the words of the day. Democracies would rather buy from each other than rely on an authoritarian China that uses economic leverage against them. This means the money that used to pay Chinese labor is now going to Mexicans, Indians and Poles.

While overseas changes are a big factor, the fundamental causes of China’s slowdown are internal. For one thing, China is following a pattern that all growing economies go through. Thanks to the biggest and fastest industrialization in history, China made huge profits selling goods at prices that developed countries, with much higher wages and costs, couldn’t match. Now, China’s population is wealthier and demands higher wages. This means that China has trouble competing with other developing nations, such as Vietnam and Bangladesh. Both can underprice China. In transitioning to more profitable high-tech goods, China faces stiff competition from developed economies like the US, Germany and South Korea. China is now very firmly stuck in the “middle income trap” and there is no easy way out of it.

China is also facing other unique problems. Typically, a nation first becomes wealthy, and then its wealthier citizens have fewer children. But China is facing a demographic bust caused by its now-abandoned one-child policy. The Chinese have gotten old before they’ve gotten rich. With fewer young workers, China needs to squeeze more productivity out of each worker to keep growing. Meanwhile, they are increasingly burdened with supporting their elders. That is an impossible task.

A pragmatic administration could make the transition less painful. “Demography is destiny,” goes the adage there is likely no stopping China’s relative economic decline. However, this decline does not have to turn into a crash. Unfortunately, China is no longer ruled by a pragmatis like the legendary Deng Xiaoping but by an ideological Xi.

Like Mao Zedong, Communist China’s founder and dictator, Xi has tightened state control over all aspects of Chinese life. This includes the economy, reversing Deng’s measures. Xi’s father, Xi Zhongxun, was one of Mao’s confidants. Zhongxun later fell victim to Mao’s purges and was thrown in prison. Instead of souring on Mao, Xi seems to have doubled down on Maoism, striving to be even more faithful to this ideology than his father.

Every company has a member of the Chinese Communist Party (CCP) on its board as an “observer.” This has a chilling effect at every level. Entrepreneurs now have to keep their heads down, fearing retaliation if they question the party line. They risk getting their stocks delisted from exchanges and even disappear. The Alibaba CEO Jack Ma vanished for a bit after criticizing the CCP. Such a climate of fear hamstrings business leaders’ ability to give feedback to the government and warn them of potential problems.

Poor communication and misallocation of resources now characterize the Chinese economy. In a market economy like the US, nine million financial service employees are at work ensuring that capital is allocated to productive projects and not spent on wasteful ones. But China has an undeveloped financial sector. Instead of banks, investment firms and entrepreneurs decide where to invest. Behind the scenes, party capos in each province call the shots. They’re incentivized to boost numbers artificially to meet the central government’s growth targets. This creates system-wide misallocations of capital. Wanting to impress the bosses in Beijing, regional governors have massively over-invested in real estate, building shiny new cities with no one to work in them.

On top of this, the Chinese government has discouraged domestic consumption. With falling foreign demand, China could have turned to domestic demand to drive growth. But instead, it has instead encouraged households to save. Xi has resisted calls for boosting domestic consumption, perhaps for ideological reasons. He may simply see consumption as decadent and capitalist. Xi could still correct his course but he seems disinclined to do so.

In this way, Xi resembles the celebrated English writer Samuel Johnson. This towering literary genius composed the first English dictionary and had a great appetite for life. As he lay dying in 1784, he wanted bloodletting treatment, which was then prevailing medical wisdom. His doctors prudently refused. But Johnson snatched a knife from them, stabbing himself as he cried, “I want life, I want life.” Like the great Englishman, Xi is trying to save the economy even as he stabs it incessantly.

China’s economic problems are deep but not insurmountable. Here, the great man theory of history becomes relevant. If someone like Deng had won the struggle for power in the 2010s, things could have been very different. Instead, China has got another Mao at the helm and is heading over a cliff.

What does this mean for the rest of us?

If China goes down, it’ll take a lot of other economies along with it. Too many economies import from the Middle Kingdom and too many export to it. Even without a crash, China’s current deflation will cause damage. It is bad news for Germany and France who will suffer from lower Chinese demand.

Unlike the UK, which makes a lot of money through financial services, Germany is a manufacturing-based economy. The country’s second-largest company is Siemens, which makes machines for manufacturers. As the workshop of the world, China buys a lot of these machines. 51łÔąĎ’s Editor-in-Chief Atul Singh learned this first-hand when he first visited China in 2005. He found Chinese hotels to be full of Germans selling their wares to factory owners.

In a nutshell, Germany is dependent on the Chinese market. When China sneezes, Germany catches a cold.It is for this reason German Chancellor Olaf Scholz flew all the way to Beijing and returned without even spending the night thanks to Xi’s ridiculously rigid zero-COVID policy. This trip made plain what everyone knew: German prosperity is highly dependent on Chinese demand.

Related Reading

Is the German Economy Now Destined to Decline?

The French depend on China too. They sell luxury goods to China’s growing bourgeoisie. Young Chinese have embraced both Christianity and Christian Dior with equal fervor. With the Chinese feeling less wealthy, Christian Dior will not be able to sell them as many perfumes and bags as before. Luxury goods are the first consumption item to be axed in a recession.

Unlike Europe, the US relies less on exports and makes goods mostly for domestic demand. Still some companies will feel the pinch. A slowing Chinese economy means Boeing will sell fewer planes in China.

To respond to falling demand, China might respond with another stimulus. This time, it may not work as well. A slowdown might lead to China dumping even more goods on the global market at rock-bottom prices. Don’t be surprised to see other nations raise anti-dumping duties in response.

The slowdown is causing a cash crunch for China. Now, Beijing will curb spending on its Belt and Road Initiative and other ambitious projects from Latin America to Africa to Asia. These economies will feel the pain as Chinese capital dries up even as exports to China go down as well.

For now, China is continuing its astounding development into a great power despite all of its problems. But it is now more brittle both as an economy and as a political system. The CCP has neither democratic nor ideological legitimacy. The CCP’s claim to legitimacy rests on its ability to deliver growth. With the economy slowing, the Xi-led CCP increasingly relies on nationalism to command blind obedience. This has made China aggressive on its borders and the adjoining seas. Beijing has exacerbated historical grudges with Taiwan, Japan, India and the nations of Southeast Asia. The CCP has also stepped up military parades, a common tactic of fascists and communists. Only the North Koreans rival the Chinese in their love of tank-filled parades and goose-stepping soldiers.

So, China will be both defensive and aggressive at the same time for the foreseeable future. The risk of conflict is now greater everywhere. All it takes is one radicalized young officer with an itchy trigger finger to  start a war in the Himalayas. After all, the Chinese, remember that Indian troops under Lord Elgin’s command destroyed the Old Summer Palace in Beijing.

Nationalism is the last refuge of the scoundrel. As it rears its ugly head in East Asia, there is little in the way of good news to end this piece. The future looks bleak.

[ wrote the first draft of this piece.]

The views expressed in this article/video are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post FO° Exclusive: China’s Worsening Deflation Now Spells Big Trouble appeared first on 51łÔąĎ.

Both India and Vietnam face a security dilemma because of China’s regional power ambitions. They fear Asian domination by a single power. Being China’s neighbors, India and Vietnam are rightly insecure about their borders. China has invaded both countries in the past: India in 1962 and Vietnam in . 

Han and Hindu Nationalism Come Face to Face

To raise the cost of another Chinese military aggression, India and Vietnam are joining hands to counter Beijing. New Delhi and Hanoi completed 50 years of diplomatic engagement last year. It is the last five years that have been the most consequential in their diplomatic history though. During this period, the countries have been intensifying cooperation and are in a position to act in concert on many fronts.

The Dragon Spits Fire

Assertive Chinese behavior in the last few years has rattled India and Vietnam. Be it in the Himalayas or expansive territorial claims in the South East China Sea, Beijing has upped the ante. 

Countries on China’s periphery have borne the brunt of the dragon’s fire. For example, China claims portions of Indian territory in the western and eastern sectors of its border with India. Beijing also frequently crosses into the Indian side of the disputed border. 

Similarly, Beijing continues to claim all of the South China Sea, disregarding the sovereign rights and of Vietnam, the Philippines, Indonesia, Taiwan, Malaysia and Brunei. China has also repeatedly targeted Vietnamese fishing boats and carried out maritime activities in disputed areas in the chain. Vietnam claims these islands as its territory. So does Taiwan. However, Beijing exercises de facto over the island chain. China also controls the Spratly Islands and Woody Island. Beijing is turning these disputed territories into military installations in the South China Sea. 

The roots of China’s assertive behavior lie in its self-perception. Beijing views itself as a natural Asian hegemon with great power status. Now, China is seeking to become a and challenge the US for the top of the global totem pole.

New Delhi and Hanoi, like Tokyo and Canberra, do not accept China’s self-proclaimed hegemony. These countries do not see themselves as subordinate to Beijing. Naturally, they are critical of any attempts by China to dominate the post-World War II regional order. 

This is also true of the other players in the region. They might not admit it openly, but Malaysia, Indonesia, Singapore and South Korea are uncomfortable with Beijing’s unilateral attempts to dominate the region. However, the fear of a backlash from Beijing, a sizable number of citizens of Chinese origin in their own territories and economic dependence on China prevent these countries from voicing their worries. 

Even in 1978, Lee Kuan Yew, the then prime minister of Singapore, caught the Chinese leader Deng Xiaoping by surprise, that he was more concerned about Beijing than about Hanoi. Deng had gone to Singapore to mobilize Lee Kuan Yew’s support against an ambitious Vietnam. The canny Singaporean statesman perceptively understood that the long-term challenge emanated from Beijing. Since then, it is clear that Beijing has aroused feelings of insecurity amongst its neighbors in Southeast and East Asia.

The fear of outright dominance by a single power compels Asian nations like India, Japan, Malaysia, Indonesia, Singapore and Vietnam to seek multipolarity. These nations believe that multipolarity will maintain a stable regional order. Therefore, their geopolitical and diplomatic strategy aims to counter China. These Asian nations are only following what eminent theorists like Henry Kissinger and John Mearsheimer have long posited about achieving a balance of power in international relations. 

Coalescing around shared interests such as respect for sovereignty and territorial integrity, and freedom of navigation of the seas helps regional powers build a coalition against China. Like other Asian countries, both and have concerns about China’s Belt and Road Initiative. Both want a multipolar, rules-based regional order that  constricts the space for unilateral adventures by Beijing. Therefore, the recent “” announced by Hanoi and New Delhi seeks to make structural and institutional changes that make multipolarity a reality. 

From the mid-1970s, New Delhi and Hanoi were on the same side of the geopolitical and ideological fault lines in Asia. Vietnam was communist and India was socialist. Both were of the Soviet Union and harbored a deep distrust of the United States. 

Communist Vietnam soon found that ideological similarities could not avoid geopolitical rivalries. Deng was deeply about the deepening Soviet-Vietnamese relations. Deng sought to teach the Vietnamese a lesson for “” Beijing and siding with Moscow. Deng believed that Hanoi sought regional dominance in Southeast Asia and he wanted China to have that privilege.

Vietnam’s invasion of Cambodia to overthrow the Pol Pot regime further poisoned its relations with Beijing. China was Pol Pot’s benefactor. Beijing saw Pol Pot’s regime as a bulwark against Soviet influence in Southeast Asia. Once Vietnam got rid of Pol Pot in Cambodia, Deng attacked Vietnam in 1979. stood by Vietnam. Moraji Desai, the then Indian prime minister, issued a statement calling for an immediate withdrawal of Chinese troops from Vietnam as the first step towards ensuring peace in Southeast Asia. Atal Bihari Vajpayee, India’s then foreign minister, shortened his visit to China in protest against this invasion. 

Polygamous Foreign Policy

Over the years, New Delhi and Hanoi have followed a multidirectional foreign policy. Neither wanted to anger their giant northern neighbor. Both regularly championed the idea of “strategic autonomy” that focuses on avoiding sclerotic alliances and security commitments. Given the structural changes in due to China’s rise, both India and Vietnam are moving closer.

Yet there are limits to Vietnam’s relationship with India. Retired Singaporean diplomat Bilahari Kausikan believes that given their relatively small sizes and strategic location, major Southeast Asian countries have no choice but to pursue a foreign policy. As a result, these countries seek friendship with all and confrontation with none. Vietnam is no exception.

By simultaneously juggling many relationships and contradictions, Vietnam aims to diversify its partners. Fundamentally, Vietnam uses these partnerships to pursue its national interests. India is following the same . India buys oil from Russia, conducts military exercises with the US and welcomes investment from Japan. It is friends with Israel and, at the same time, maintains relationships with Iran. Like India, Vietnam also has meaningful in place with all five members of the UN Security Council. Both India and Vietnam have defied conventional Cold-War era wisdom of making binary choices. 

Indo-Vietnamese Push for Multipolarity

Over the last few years, Vietnam has become a focal part of India’s “.” As a result, defense and security have improved. This includes joint exercises and training programs, cooperation and trade in defense equipment. New Delhi has also given $600 million of defense lines of credit to Hanoi. 

Increasing trade and have brought both countries together. Bilateral trade has ballooned from $200 million in 2000 to $14.114 billion in 2021-2022. Several Indian are investing in Vietnam. They are in diverse sectors such as IT, education, real estate, textiles and garments, healthcare, solar technology, consumer goods, and agricultural products. India is Vietnam with infrastructure and connectivity projects, development and capacity-building assistance, and . Despite Chinese apprehensions, India also has oil exploration projects with PetroVietnam in the South China Sea. Cooperation in has also grown at a healthy pace. 

Slowly and surely, a silent change is unfolding in Asian waters. China’s increasing aggression is no longer going unanswered. The Indo-Pacific will not become a Chinese lake. Regional powers are responding. Not only the US and Japan but also India and Vietnam are working more closely together to preserve a multipolar Asia. 

[Contributing Editor and CFO Ti Ngo edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post Vietnam and India Are Now Acting to Contain Aggressive China appeared first on 51łÔąĎ.

In a new for Foreign Affairs bearing the title, “Enemies of My Enemy: How Fear of China Is Forging a New World Order,” Beckley makes the case that having and sharing an easily identified enemy is the key to effective world government. The Cold War taught him that “the liberal order” has nothing to do with good intentions and being a force for good. Instead, it thrives on a strong dose of irrational fear that can be spread among friends.

Ukraine’s Tug of War and the Implications for Europe (Language and the News)

READ MORE

As the Republican presidential candidate in 2000, George W. Bush produced these immortal : “When I was coming up, it was a dangerous world, and you knew exactly who they were. It was us vs. them, and it was clear who them was. Today, we are not so sure who the they are, but we know they’re there.” Probably unwittingly, Beckley echoes Bush’s wisdom. “Today, the liberal order is fraying for many reasons,” Beckley writes, “but the underlying cause is that the threat it was originally designed to defeat—Soviet communism—disappeared three decades ago.”  Unlike the clueless Bush, Beckley now knows who the “they” is. It’s China.

History has moved on. China can now replace the Soviet Union as the star performer. Bush proposed Islamist terrorism as his coveted “them,” but that ultimately failed. The terrorists are still lurking in numerous shadows, but when President Biden withdrew the last American troops from Afghanistan in August 2021, he definitively delegitimized it as a threat worthy of spawning a new Cold War. And now, even while Russia is being touted as the best supporting actor, the stage is finally clear to push China into the limelight.

Today’s Weekly Devil’s Dictionary definition:

Shared enemy:

A powerful nation whose negative image can be modeled by another powerful nation in such a way that its name alone inspires fear, to the point that it may be generously offered to governments of weaker nations on the pretext of forming a profitable alliance

Contextual Note

For Beckley, US hegemony needs China’s help. Now that the Middle Kingdom has now achieved the status of a high-profile enemy to be generously shared with obedient allies, the liberal order may thrive again, as it did during the Cold War. For Beckley, it is China, not Donald Trump, that will “make America great again.”

Some may find Beckley’s historical logic slightly skewed. He explains that the modern liberal order was “designed to defeat … Soviet communism.” If it was “designed,” what does he have to say about the designer? Who indeed could that have been, and what were their real motives? Could it have been the Dulles brothers, whose combined clout in the Dwight Eisenhower years allowed them to dictate US foreign policy? More alarmingly, Beckley seems to be suggesting that without a pretext for paranoia, the liberal order would not or could not exist.  

Beckley is probably right but for reasons he might not appreciate. The idea of needing an identifiable enemy stands as a purely negative justification of the liberal order. But Beckley has already dismissed the idea that it is all about bettering the world. He seems to underestimate the need ordinary Americans have to think of their country as a shining city on a hill, endowed with the most powerful military in the history of the world whose mission is not to maraud, destroy, displace populations and kill, but to intervene as a “force for good.”

It’s not as if social harmony was the norm in the United States. The one thing that prevents the country from descending into a chaos of consumer individualism, or from becoming a nation populated by angry Hobbesian egos intolerant of the behavior of other egos, is the ideology that Beckley denigrates but which politicians continue to celebrate: the “enlightened call to make the world a better place.” Americans would fall into a state of despair if they no longer believed that their exceptional and indispensable nation exists as an ideal for humanity.

Make Sense of the World

Unique Insights from 2,500+ Contributors in 90+ Countries

I agree to receive emails and other content from 51łÔąĎ. I understand that I may repeal my consent at any time. You can review our Privacy Policy and Terms of Use for further information .

But recent events have begun to shake their faith in what now appears to be a manifestly not very egalitarian democracy. Increasingly oligarchic, if not plutocratic, American society remains “liberal” (i.e., free) for those who control the growing mountains of cash that visibly circulate among the elite but rarely trickle down to meet any real human needs.

As the defender of an idealized liberal order, Beckley is right to assume that, with so many factors undermining the American consensus, the cultivation of a shared enemy may be the necessary key to maintaining that order. Fear has always had the unique virtue of diverting attention from serious and worsening problems. Between income inequality, climate change and an enduring pandemic punctuated by contestable government mandates, people’s attention definitely needs to be diverted.

Historical Note

Michael Beckley is certainly very knowledgeable about China. He admires Chinese civilization and many of its accomplishments. He also believes a war between the United States and China is far from inevitable. Moreover, he is a realist. He admits that, as many people across the globe affirm, the US represents the biggest threat to world peace. At the same time, he “that the United States has the most potential to be the biggest contributor to peace.” He lucidly notes that “when the United States puts its weight behind something the world gets remade, for better or for worse.” But, having said this, he eludes the implicit moral question. If both the better and worse are possible, the rest of the world should be the ones to decide every time its reality is “remade” whether that remaking was for the better or the worse.

As Pew show, most people outside the US appear to believe that American initiatives across the globe over at least the past half-century have been predominantly for the worse. Beckley himself cites Iraq and Vietnam as egregious examples. But, ever the optimist, he sees in what he calls the ability of the “system of US alliances” to create “zones of peace” the proof that the worse isn’t as bad as some might think.

Beckley recognizes that alliances are not created out of generosity and goodwill alone. In his influential book, “Super-Imperialism,” the economist Michael Hudson describes the workings of what is known as the “Washington Consensus,” a system of economic and military control that, in the decades after World War II, managed, somewhat perversely, to miraculously transfer the immense burden of its own debt, generated by its military adventurism, to the rest of the world. The “Treasury-bill Standard,” an innovation President Richard Nixon called into being to replace the gold standard in 1971, played a major role. With the dollar as the world’s reserve currency, Hudson notes that “foreign governments were obliged to invest their surplus dollars in U.S. Treasury securities.” It was part of a complex financial, diplomatic and military system that forced US allies to finance American debt.

Beckley’s&˛Ô˛ú˛ő±č; “zones of peace” are zones of dependence. Every country that participated in the system found itself forced to hold US Treasury bonds, including China. They thus had an interest in maintaining the stability of a system that dictated the flow of money across the globe. To a large extent, that is still the case. It explains why attempts to dethrone the dollar are systemically countered, sometimes violently through military action (as in Libya, to scotch Muammar Gaddafi’s for a pan-African currency).

None of that worries the eternal optimist Beckley, clearly a disciple of Voltaire’s Pangloss. He believes that — even while admitting the US has “wrecked the world in various ways” — its “potential” for peace trumps the reality of persistent war and that its “capability to make the world much more peaceful and prosperous” absolves it from the wreckage it has already produced. 

From a cultural point of view, Beckley is right. Americans always believe that what is “potential” trumps what is real and that “capability” effaces past examples of incapable behavior. That describes a central feature of American hyperreality.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The 51łÔąĎ Devil’s Dictionary.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post An Expert Explains Why We Need a New Cold War With China appeared first on 51łÔąĎ.

I’m boycotting these games in Beijing. Doing so does not come easy for me. As a life-long sports enthusiast, I have always looked forward to the Olympics. Watching the world’s preeminent athletes compete on the world stage and rooting for my own national team and others who seem to defy the oddsmakers never failed to excite me. As a kid, I even once dreamed of becoming an Olympic competitor myself. (Alas, my 1.7-meter frame was simply not up to the task of throwing the shot put or discus on the world, or any other, stage!)

Why Democratic Nations Must Boycott the Beijing Winter Olympics

READ MORE

Here in the United States, NBC television is broadcasting the Winter Olympics, devoting at least six hours per day of coverage. Traditionally, its broadcasts dominate the ratings as Americans gather in front of their TV sets and computer and phone screens to watch and cheer on US athletes. I will be cheering on our athletes, too. But I won’t be watching.

The IOC’s Charter

I will not watch these games because they betray the very values enshrined in the IOC’s&˛Ô˛ú˛ő±č; and its definition of “Olympism.” That is, it “seeks to create a way of life based on the joy of effort, the educational value of good example, social responsibility and respect for universal fundamental ethical principles.” It further states its goal “to place sport at the service of the harmonious development of humankind, with a view to promoting a peaceful society concerned with the preservation of human dignity.”

Based on its charter, the IOC should have flatly denied China’s petition to host the 2022 Winter Games. How could the IOC have been so blind to its values in awarding the games to Beijing? How was it possible to allow China to host the Olympic Games when the government of the People’s Republic of China has systematically persecuted, incarcerated, shackled and tortured up to 2 million Uyghurs, sterilized their women and sought to snuff out their Muslim faith? Uyghurs, a Muslim-majority, Turkic-speaking people, have inhabited China’s western Xinjiang province for at least 1,000 years.

But the suffering of the Uyghurs at the hands of an overbearing, intolerant Beijing isn’t a one-off. The Chinese have been doing largely the same thing for decades to the people of Tibet, effectively carrying out a campaign of cultural genocide.

Several years ago, the world again witnessed China’s notion of “respect for universal fundamental ethical principles” and “promoting a peaceful society concerned with the preservation of human dignity.” Beijing-directed henchmen attacked the people and institutions of Hong Kong, decimating the last vestiges of democracy in the enclave. The government has been arresting and trying any and all opponents, dissidents, and human rights advocates unwilling to buckle under Beijing’s iron-fisted, authoritarian order.

More recently, the world has observed Beijing turn its aggression to the island of Taiwan, the lone democratic outpost today within China’s one-party, one-man “Asian Reich.” Taiwan presents an unquestionably complex and difficult issue. But the inhabitants of Taiwan have embraced democracy and the freedoms that come with it. Resolving Beijing’s differences with the island and its people with menacing and aggressive behavior — dozens of mass warplane , repeated threats and belligerent bombast — cannot possibly lead to a solution. Rather, a threatened invasion of the island would not only likely crush its democracy, but also inject enormous instability in Asia and torpedo the global economy in a manner unseen since World War II.

To the IOC, however, none of this mattered. Its president, Thomas Bach, and even UN Secretary-General Antonio Guterres traveled to Beijing for the opening ceremony of the games with nary a word about China’s abysmal human rights policies in Xinjiang, Hong Kong or Tibet. Instead, the IOC wants to see another “successful” games, which typically means an Olympics that makes money. Lots of it.

The IOC, NBC and Sponsors

Enter the American media giant, NBC. For exclusive broadcast rights to the Olympics through 2023, the network has paid the IOC $7.75 billion. That comes out to roughly $1.8 billion for the Beijing Games alone, or about 20% of the cost of the games. Tragically, revenues trump rights for China and for the IOC.

One would think that with that kind of leverage, NBC and the IOC’s numerous  and advertisers — globally recognized names like Allianz, Toyota, Bridgestone, Panasonic, Coca-Cola, Airbnb, Intel, Proctor & Gamble, Visa, Samsung and others — would have stood up to the IOC, explaining the harm to their brands of awarding the games to Beijing.

Make Sense of the World

Unique Insights from 2,500+ Contributors in 90+ Countries

I agree to receive emails and other content from 51łÔąĎ. I understand that I may repeal my consent at any time. You can review our Privacy Policy and Terms of Use for further information .

And what about NBC itself? The Chinese government has imposed restrictions on journalists covering the games. The sort of 360-type coverage that is traditionally featured in its coverage of the Olympics — not just the events themselves but also the athletes, their lives and backgrounds, the host country and its people — is being severely . One Dutch journalist has already experienced China’s intolerance, having been  away while reporting live on camera.

Are the dollar earnings so great that NBC will sacrifice its journalistic ethics and responsibilities, all while other members of the profession  under Beijing’s crackdown on truth and free journalism?

China is not Nazi Germany. But Germany in 1936 was not yet the depraved hell of human suffering — the tens of millions of destroyed lives of Jews, Slavs, Roma and so many others — that it would become under Nazi rule. But we might have seen it, given the way the Nazis and Adolf Hitler engaged in over-the-top self-promotion and outward, sensational displays of Aryan superiority and Nazi rule.

The IOC, NBC and their many sponsors and advertisers have given China center stage to arrogantly parade and shamelessly hawk its own brand of unyielding, intolerant authoritarian rule. In China, the power of the state, its ruling Communist Party and great leader, XI Jinping, vitiate Olympism’s concepts of “social responsibility and respect for universal fundamental ethical principles” and “basic human dignity.”

If they won’t recognize this contemptible undertaking for what it is, I will. I will miss the world’s best athletes and the great ritual of the world coming together for 17 days to celebrate individual struggle and achievement. I won’t be watching these Winter Olympic Games.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post A Personal Boycott of the Beijing Olympic Games appeared first on 51łÔąĎ.

China, the Bogeyman of the New Cold War

READ MORE

White, emeritus professor at the Australian National University, tends to a policy of national accommodation regarding China and its apparent inexorably growing influence in all aspects of world affairs. Therefore, he has not found a trip-wire that generates bolder positioning against Chinese activities and is unlikely to do so in the future.

Jennings, executive director of the Australian Strategic Policy Institute (ASPI), takes the position that Australia needs to have trip-wires with China and that Canberra should show early robustness to demonstrate it will take action to protect its current way of existence.

Two Schools

The accommodation and assertion schools of thought both have valid components.

When China’s policy shift over Australia became publicly apparent, the accommodation school urged the Australian government to exercise caution and demanded ministerial contact to remedy the financial damage done to export income by Beijing. Negligible attention was paid to other demonstrations of Chinese influence and control exerted through Australian institutions, notably via universities, despite the strength of evidence published by the ASPI and by researchers such as Clive Hamilton in his 2018 book, “.” Concern about the economic consequences declined, with exporters finding alternative markets following the May 2020 Chinese sanctions through their market . This leaves the main line of opinion focusing on various thresholds for tougher Australian policy toward China and analysis of the intent of the United States and its own ability to deal with Beijing.

For the assertion school, Australia’s policy needs to be clear and firm, with more elaborate military arrangements with like-minded countries to deter China and politically strengthen the international system. The favorable rules-based order continues to provide the for cooperation between the European Union, the US and countries in South and Southeast Asia and the Pacific.

With pushback against China, its approach is likely to shift from growing its appeal to pressing its influence. A 2021 by the European Think-Tank Network on China (ETNC) about the standing of Beijing’s soft-power and influence in 17 European countries shows that European states are disinclined to listen to China and actively deny it leverage from its soft-power investments and economic importance.

Our response to China will have to both measure against those of other international friends and press ahead where it must. But it will also draw on nationally coalescing factors that create an acceptable and comprehensible foundation for national resistance.

Australia is not mono-cultural, nor has it the satisfaction of a core religious, ethnic or aspirational identity. Additionally, it has weak internal cohesion on common values that can mobilize national efforts to project influence sufficient to comfort the country about its security.

Looking at “Sacred Values”

“” are not only what drives people and groups into, for example, collective defense or violent extremism. They also drive people in negotiations to settle conflicts. Sacred values, those generally not tradeable against pecuniary or operational sustainment, will drive Australian policy on China. Such values include the conception of human rights, the role of the individual within society, liberty and the rule of law, and political participation in setting laws.

When asked to trade-off sacred values in a deal with a peace dividend, research shows that people typically react with a hostile “backfire effect,” plus an increased commitment to these sacred values, in addition to higher potential for protective violence or preparation for it. Researchers Scott Atran and Jeremy Ginges evidence for this.

The role of sacred values is applicable to all regions and levels of discord and has been so demonstrated in experiments. Sacred values are also layered, in that limited trade-offs for assured security can take place — depending on the nature of the threat, of course. Dismissal of sacred values fails.

Sacred values relate to group emotion and identity and are used by political leaders to mobilize their constituents to shape acceptance of policy changes and action. This point is made clear in the 2019 by Barry Richards, “The Psychology of Politics,” which uses psychoanalytic ideas to show how fear and passion shape the political sphere in changing societies and cultures. The use of “sacred values” language also discredits adversaries during political debate. This may well later befall Australian business lobbies because sacred values arguably matter more than money.

Make Sense of the World

Unique Insights from 2,500+ Contributors in 90+ Countries

I agree to receive emails and other content from 51łÔąĎ. I understand that I may repeal my consent at any time. You can review our Privacy Policy and Terms of Use for further information..

When our government uses sacred values rhetoric, it will incite what researcher calls a “valorisation effect,” whereby the political leader using sacred rhetoric is seen as principled and determined. There can be no other way to respond to the breadth of the challenges posed by the China issue.

Jennings says the China threat is not tolerable on a structural and national autonomy basis. White implies that the China threat is tolerable on the basis of trade, income and employment and that we should adapt to its new geopolitical environment.

This debate is not yet settled in the Australian political world. There are many other issues in play. For example, what do Australia’s Southeast Asian friends think? Are Australia’s European allies thinking along the same basic lines? But we will get to use sacred values sooner than we expect. This is because China has not indicated that it intends to cease or decrease its foreign policy activity, which is seen by many states as both malignant and dangerous.

Research on “sacred values” in political negotiations shows that a lack of outcome options, inappropriate negotiating procedures and poor recognition of emotions set in a context where sacred values are in play typically cause poor results. China’s diplomatic rhetoric and methods directed at Australia embody these factors.

How will a possible future shift in Australia’s foreign policy position, as a result of Chinese pressure, be seen by the public and presented by the political class, especially if there are sacred values involved? Nichole Argo and Jeremy Ginges about the management of this question in their essay titled, “Beyond Impasse.”

As the China debate continues, we can ask these questions: What are the current declared values we attach to foreign policy regarding China? Are the values “today’s values” or are they values linked to future goals, thereby allowing their adjustment by political leaders in the course of circumstance? Can we concede to China on one value alone, and would doing so be a tool to protect other values?

Clarification

The Australia/China question has further evolving factors to watch. We need to observe the rhetorical framing and content of any future dialogue with China and assess this not only against our values and interests, but also against the set we assess to be held by our allies in their dealings with Beijing. How are the indicators of Australia’s sense of self and identity being used or indeed being created by our political and public leaders? In view of the world economy, our region and our needs, what appears to being traded-off in caution toward China? Is our strategy on China nationally or sectorally driven? If sectorally, what is the level of reference to sacred values in the promotion of, for example, education exports over responses to China’s territorial and political acquisitiveness in the Pacific?

So far, Australia does not have a clear path and must choose between one of two directions: trade and money or values. The choice is clarifying. The big issue for the government is to create a wider and convincing range of responses to China. To do so means consolidating a national position around how hard to pin down Australian values. This matter deserves attention. It requires the absorption by Australia’s various identity communities of a robust set of values and principles that commonly define the country and its citizens’ rights, responsibilities and expectations.

So far, the policy over China has largely been reserved for expert strategists. For a nationally effective response to the threat of an unfavorable fundamental change in circumstances caused by China, sacred values need to be found, clarified and called on as required to bolster policy resolve.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post Finding the Source of Australian National Strength in the China Context appeared first on 51łÔąĎ.

In the decade that has just passed, its productivity gains faltered and credit-driven investment in low return capital propped up its growth. China must address its slowing productivity gains to produce a smooth rebalancing of the economy. Productivity growth will not come from textiles, steel or the property market, and the flourishing services sector will require cutting-edge technology to remain competitive. To pull it off, China will need to acquire and deploy advanced technology quickly and efficiently throughout its economy.

The Coming Chinese World Order

READ MORE

China is diligently preparing to assume a seemingly preordained role as the world leader in a plethora of areas. It is driven. It is focused. And it will stop at nothing to ensure that it has all the advantages it can glean from the existing world order to create a world order in its own image. Technology is absolutely critical to achieving that objective, and there is little that is more important in that regard than cutting-edge telecommunications — specifically 5G technology.

The Huawei saga has served to illustrate this point. ´ˇłľ±đ°ůľ±ł¦˛ąâ€™s issues with Huawei are as much about who has access to, and thus controls, the data of the future, as they are about superpower politics and the rule of law. Some Western intelligence sources believe the company is state-owned and has deep connections to China’s intelligence services. Its founder was an engineer with the People’s Liberation Army (PLA), and it is worth adding that no large Chinese company is fully independent of the government.

Although China spends more than $200 billion on research (second only to the US), generates close to 30,000 PhDs in science and engineering, and leads the world in patent applications each year, its record is mixed in terms of the actual impact of innovation, as measured by the success of companies in commercializing new ideas and competing in the global market. China has some unique strengths in innovation, which includes the rapid commercialization of new ideas by virtue of the size of its consumer base.

It also has the world’s most extensive manufacturing ecosystem, enabling continuous innovation in production processes that reduce costs and improve quality, and has created capacity for research with a growing number of universities and research institutions, as well as an expanding pool of talent. On the minus side of the ledger, China’s slow regulatory processes and weak intellectual property protections prevent foreign investors from wanting to bring their best and brightest researchers and innovations to the country.

Completing the journey from innovation sponge (absorbing and adapting existing technology and knowledge from around the world) to global innovation leader is not just a way to signal China’s progress as an economy and society. The boost to productivity that innovation provides is critically important for sustaining China’s growth.

Beijing has enacted some two dozen laws that have created a technology-siphoning machine. That apparatus maintains databases of foreign co-optees and distributes stipends, sinecures and cash to foreign donors of high-tech innovations. China has targeted all sources of American innovation, including universities, corporations and government labs, exploiting both their openness and naivete, with methods and tradecraft custom-tailored to each target.

The Chinese government’s current system for processing and reverse engineering stolen designs has grown significantly larger than it was during the Cold War and has developed from a strictly military operation into a system permeating the entire Chinese government. It is an elaborate, comprehensive system for identifying foreign technologies, acquiring them by every means imaginable and converting them into weapons and competitive goods. China could not have experienced the dramatic economic transformation it has experienced in the 21st century, nor have sustained its progress as it has, without inexpensive and unrestricted access to other countries’ technology.

Chinese firms have routinely become investors in American startups, particularly those working on cutting-edge technologies with potential military applications. These are companies that make rocket engines for spacecraft, sensors for autonomous navy ships and printers that make flexible screens that can be used in fighter-plane cockpits. Many of the Chinese firms are owned by state-owned companies or have direct connections to Chinese leaders.

According to the US Department of Defense, Beijing actively encourages Chinese companies with close government ties to invest in American startups specializing in critical technologies such as artificial intelligence (AI) and robots to advance China’s military capacity, as well as its economy.

US government controls intended to protect potentially critical technologies against countries like China have fallen short. It took a while, but such transactions eventually started ringing alarm bells in Washington. US lawmakers raised broad questions about the nature of China’s economic relationship with the US well before the Trump administration started applying tariffs on Chinese products, in an effort to reduce the inherent inequity in bilateral trade between the two nations.

China is extremely capable and driven. When it aims to be a leader in a particular sector or acquire a certain technology, it does so with precision. There is no question that Beijing aims to be a leader in AI, semiconductors and any number of other sub-sectors of the technology-driven 21st-century economy. It has the advantage of having a lot of money to spend and plenty of people and resources to devote to the issue.

Since it certainly appears that the US government will not be devoting similar resources to the tech sector any time soon, it is merely a question of time until China captures that title, too. In the battle for the future, the Chinese Communist Party understands very well what is at stake. It took the US and West too long to realize what China was doing, and by the time they did, Beijing was already approaching strongly from behind. Soon enough, the West will be looking at China in the tech space from the front window, rather than the rearview mirror.

*[Daniel Wagner is the CEO of Country Risk Solutions and author of the new book, “.” This article is an excerpt from the book.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post China’s Race for Scientific and Technological Supremacy appeared first on 51łÔąĎ.

Just like a physical wall, the Great Firewall constitutes a barrier that limits the flow and exchange of information. Google, Facebook, Twitter, Dropbox and foreign websites, particularly news agencies such as the BBC or Reuters, are all inaccessible to a Chinese internet user. Instead, Beijing has supported the development of Chinese providers, most importantly Baidu, a Chinese equivalent of Google, or WeChat, a social media platform. In contrast to foreign companies, these national providers fully cooperate with Chinese authorities.

Ubiquitous Censorship

In addition to limiting information flow across the wall, Chinese authorities restrict the information exchange between people living within the wall. Censorship is pervasive. The Chinese Communist Party’s (CCP) propaganda department sends out memos to radio, TV and newspaper agencies informing them on how to report on certain incidents.

Although the privatization of Chinese media has reduced the official grip on the broadcasting of information, media outlets practice “self-censorship,” attempting to anticipate what might be censored so as to not be fined or closed down by authorities. Private websites, blog articles and social media accounts of citizens are similarly censored if the party-state regards them as too critical or as having the potential of stirring too much public debate.

As a consequence, the “Great Chinese Firewall” severely hampers access to information and freedom of expression. The (BTI) 2018 survey on China, for instance, rates Chinese citizens’ freedom of expression at two out of a possible 10 points (whereby one is the worst and 10 the best). This rank is only worse in countries such as North Korea or Oman, which have a ranking of one point. Since 2016, censorship has been tightened even further, increasing the amount of foreign and domestic websites blocked on the Chinese internet.

Information Propagates the Official Line

The Great Firewall and domestic censorship limits information flow across and within China and also shapes and directs public opinion, and thereby influences how information that contradicts the official “line” is perceived. Information is not only censored but tailored to promote a specific view on Chinese history, the CCP and foreign countries, aiming to foster nationalist sentiments.

Student textbooks, for instance, teach Chinese children to be patriotic and critical of “the West,” whose arrival in the 19th century has in “100 years of humiliation” of the “great Chinese civilization.” Chinese citizens encounter these views and praise of the CCP in the form of billboards and posters in streets, public transport or at the workplace. Public opinion is also shaped in a more subtle manner by governmental social media accounts or the so-called “” — state-employed bloggers who influence opinion online by posting positive comments and news about the government.

Thus, the Great Firewall creates a certain space in which information is limited and targeted in a way so as to direct public opinion and indirectly preempt the potential impact of critical information.

This is not to say that Chinese citizens blindly believe and follow official propaganda. Many have become wary of official media outlets and propaganda posters. Foreigners and Chinese alike use virtual private networks (VPNs) to circumvent the Great Firewall and access uncensored information. Others circumvent official censorship by using code words and metaphors to criticize the government and the lack of freedom of speech. When the true meaning of these puns is discovered, new ones are invented.

Crackdown Underway on Opposition

Nevertheless, despite these efforts, the Great Firewall and official censorship can only be circumvented and not directly opposed. Specialized or insider knowledge is needed, for example, to access VPNs and understand coded language.

With an increased crackdown on both — VPNs and critical bloggers — the already limited freedom of expression and access to uncensored information has been reduced. Moreover, the party-state is becoming increasingly savvy in their efforts to more subtly influence public opinion, potentially becoming more successful in shaping Chinese citizens’ perceptions and interpretation of information.

The Great Chinese Firewall, therefore, not only constitutes a barrier between the outside world and China, but it simultaneously creates a space in which the party-state can flexibly influence public opinion. With the tightening of control under President Xi Jinping, the space for freedom of expression and critical thinking will further shrink in the future. However, despite its potential to indoctrinate Chinese citizens, it is yet to be seen whether this strategy can promote the two main objectives of the party-state: economic development and social stability.

Expressing criticism lets off steam that may otherwise be channeled into open protests. Critical thinking and free access to information are needed to be innovative — a key skill the party-state needs for economic development. This means that Beijing will need to find the right balance between allowing and censoring information and freedom of speech to meet its key goals for the future.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post The Great Firewall of China appeared first on 51łÔąĎ.

Apparently, this legendary envoy of the Han dynasty came to Central Asia 2,100 years ago. In the words of Xi, Zhang’s “mission of peace and friendship” led to the “ancient Silk Road linking east and west, Asia and Europe.” Xi reminded the audience that his home province of Shaanxi was the starting point for this legendary trade route and Almaty was on it too. And he called for a modern reincarnation of the ancient Silk Road.

In what will go down as a historic speech, Xi promised to create an “economic belt along the Silk Road” that would benefit “the people of all countries along the route.” Thus was born the Belt and Road Initiative (BRI). Its five prongs included increased policy communication, improved connectivity across Asia, unimpeded trade, enhanced monetary circulation and better understanding among people of different countries.

Less than a month later, Xi gave another  in Indonesia. Again, he invoked old ties going back to the Han dynasty. Importantly, he also invoked the 15th-century Chinese admiral Zheng He. This sailor from the era of the Ming dynasty made seven voyages and visited many key islands of Indonesia.

Replete with references to literature and shared memories of independence struggles, Xi quoted another of those proverbs for which his country is rightly famous: “[A] bosom friend afar brings a distant land near.” In a land still scarred by the shock therapy that the International Monetary Fund inflicted upon the country in 1997, Xi emphatically rejected the “one-size-fits-all development model,” reassuringly promising to respect the path Indonesia takes for its economy, politics and society. Instead of inflicting policy prescriptions like the IMF, President Xi promised China would “share opportunities for economic and social development with ASEAN, Asia and the world.”

What Is the BRI?

The  (CFR) calls the BRI “the most ambitious infrastructure investment effort in history.” This effort involves “creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward—through the mountainous former Soviet republics—and southward, to Pakistan, India, and the rest of Southeast Asia.”

, an effort by the Center for Strategic and International Studies (CSIS) to unpack the complexity of China’s rise, captures the stupendous figures involved. About 4.4 billion people live in countries that have signed up for the BRI. They comprise 62% of the world population. The GDP of these countries is $23 trillion. Trade between BRI countries and China amounted to $3 trillion between 2014 and 2016. In the first half of this year, as per , “Beijing signed about $64 billion in new, mostly construction contracts, a jump of 33% from 2018.” What is this construction spree all about?

To understand China’s construction frenzy, it is important to remember that there are two prongs to BRI. One is rooted in China’s outreach to Central Asia. It aims to bring about a renaissance of the ancient Silk Route. The other is to build upon Zheng’s maritime voyages and create a network of ports that link China to the rest of the world. Asia and Africa are to be a particular focus. In addition to physical infrastructure, the Middle Kingdom will create 50 special economic zones à la Shenzhen, the first such zone established in 1980 as a result of Deng Xiaoping’s economic reforms of 1978.

Although a chemical engineer by training, Xi is a keen student of history. He remembers a time when China was the world’s largest economy in the world. Chinese silk, spices, jade, porcelain and other goods went West, while gold, silver, ivory, glass and various items came East. According to many analysts, the BRI seeks to create the infrastructure and system of trade that makes China top dog again.

Emulating their American counterparts, the Chinese speak of the BRI as benefiting everyone involved. If one is to believe  of Renmin University, the Middle Kingdom seeks to “promote lasting peace, common security, common prosperity, openness and inclusiveness, and shared and sustainable development.” He argues that China would share “its development experience, but it will not interfere in the internal affairs of other countries.”

Wang claims the Chinese model “aims to promote a perfect combination between a functioning government and an efficient market, in which the visible and invisible hands both play their roles.” He asserts that ultimately the market would play a decisive role, but countries where the market economy has not developed would have an alternative to the failed free-market model peddled by the IMF, the US and the West.

Even as Wang reassures the world about the Belt and Road Initiative, many shudder in horror at its scale, scope and speed of the project. The CFR worries whether the BRI is “a plan to remake the global balance of power.” Could the BRI be “a Trojan horse for China-led regional development, military expansion, and Beijing-controlled institutions?”

So, what is the real story? Is the Belt and Road Initiative the benign win-win that Wang paints it to be, or is it a sinister plot for world domination by a secretive, authoritarian regime?

The Chinese Rise and the Americans Respond

Since 1978, China has experienced the biggest and fastest transformation in history. Its economy has grown exponentially. Deng’s experimentation with reforms has paid off handsomely. With its vast supply of labor, entrepreneurial energy and national ambition, China has come back with a bang on the world stage after two centuries in the shadows.

China’s economic rise is based on mass industrialization. Data from the  tells us that exports went up from a mere 4.5% of GDP in 1978 to 36% in 1996. Since the glory days of 2006, Chinese exports have fallen to 19.5% of GDP as per 2018 figures, but even this diminished percentage tells us that much of the production of China’s factories is still shipped overseas. This export-led model has served the country well and, for the last few years, it has become the . This workshop has supplied the planet’s biggest market: the US. Access to this market has been critical to China’s rise.

So, why was the US happy to import from China? Part of the answer lies in the Cold War with the Soviet Union. American imports fueled the rise of South Korea, Taiwan and Japan after World War II. The free-trade order that Uncle Sam created locked its allies firmly into its own orbit. Countries that stayed out of the American solar system such as India, Vietnam and China remained poor.

When China took to reforms in 1978, the US was itching to wean the Middle Kingdom away from the Soviet Union’s bosom. In 1991, when the dysfunctional regime in Moscow completely collapsed, the US still saw benefits in incorporating China into its orbit. Uncle Sam was even willing to overlook the 1989 Tiananmen Square protests because its high priests bet that economic transformation would lead to political change in China’s timeworn land. Eventually, prosperity would make the Middle Kingdom more open, plural and democratic.

Thanks to this assumption, the US supported China’s entry into the World Trade Organization (WTO) in 2001. There was another reason for getting the Chinese into the WTO. Importing from the Middle Kingdom improved Walmart’s bottom line because Chinese goods were inevitably cheaper. After all, wages in this country of over a billion were less than in the US. Not only shareholders of Walmart but also American consumers were happy. After all, who does not want to buy more for less?

Not everyone won because of this arrangement. Many American workers lost their jobs when production moved to China or Mexico. The wise men in charge of the US economy told them that their pain was short term. Broad, uplit sunlands were just around the corner. Oracles like  and Larry Summers proclaimed that a more integrated world economy with freer movement of capital would lead to cheaper products, better paid jobs and a cleaner environment. In 1991, when Summers was at the World Bank, he proposed that many poorer countries were under polluted and toxic industries could move there from the first world. 

When this  was leaked in 1992, it caused a minor furor but most Americans bought into the gospel of trade. Even then there were some curmudgeons like Ross Perot, the populist 1992 presidential candidate. He inconveniently warned that wages would decline because of overseas competition. Even then, Americans were worried about fair and unfair competition. Perot saw “one-way trade deals” leading to a “” of jobs going south. Unsurprisingly, this Texan billionaire’s warning was pooh-poohed away by economists at places like Harvard, Yale and Chicago. Even as Perot made his comment in the pre-election debate, George H.W. Bush and Bill Clinton proclaimed that trade was a win-win and smiled on.

Economists, the new temple priests of globalization, also said trade was a win-win. Clinton bought into this prophecy with the zeal of a new convert. In 1994, this Arkansas boy  trade would allow “all to reap the benefits of enhanced specialization, lower costs, greater choice, and an improved international climate for investment and innovation.” If greed was good in the era of Ronald Reagan, globalization was glorious in the age of Clinton.

In 2001, China’s entry into the WTO gave it an autobahn with no speed limit to zoom ahead. As the US got embroiled in Iraq, the Middle Kingdom dutifully followed : “[H]ide your strength, bide your time.” It industrialized much as the US did in the 19th century, by stealing industrial secrets, protecting key sectors and providing manufacturing with steroids such as massive infrastructure spending and cheap credit.

Eventually, China’s growth started making Americans nervous. Some started to worry about rising US current account deficits. Inevitably, the top dog was bound to push back and it duly did. After years of negotiations, Barack Obama signed the Trans-Pacific Partnership (TPP) in 2016,  shutting out China from a gargantuan trade deal. Through the TPP, the US sought to seduce the Asian giant’s troubled neighbors away from its sinewy arms. This trade deal was a part of the Obama doctrine, which envisaged the US pivoting to Asia from the Middle East. Naturally, it caused China much concern.

If Obama chose jujitsu, President Donald Trump has opted for a bar fight. As this author observed in 2018, Trump has declared economic war on China. Under his administration, the mood in Washington has turned sharply against the Middle Kingdom. , the celebrity columnist of The New York Times, has declared that China deserves Trump. Now, China is no longer just making “toys, T-shirts, tennis shoes, machine tools and solar panels.” It is competing with the US in “supercomputing, [artificial intelligence], new materials, 3-D printing, facial-recognition software, robotics, electric cars, autonomous vehicles, 5G wireless and advanced microchips.”

In brief, Friedman agrees with Trump that China is now a rival. Its “subsidies, protectionism, cheating on trade rules, forced technology transfers and stealing of intellectual property since the 1970s [have become] a much greater threat.” In the old days, Friedman argues it did not matter if the Chinese were “Communists, Maoists, socialists — or cheats” but, now that it is a competitor, “values matter, differences in values matters, a modicum of trust matters and the rule of law matters.” Tellingly, a Democrat trumpeter is giving a clarion call for a new Cold War unleashed by a much-despised Republican president. To modify the words of a Nobel laureate, the times indeed are .

Chinese Counter Response

Even as the US has struck to chop down the Chinese tall poppy, the Middle Kingdom has played its own set of cards. To counter Obama’s China containment policy, Xi did two big things. First, he launched Belt and Road Initiative in 2013. Second, his administration formulated a new “” industrial policy in 2015. Seeking to avoid the middle-income trap and just make toys or tennis shoes for Friedman’s grandchildren, the Chinese decided to embrace high-tech manufacturing. Their policy sets out 10 high-tech industries as a national focus, including electric cars, advanced robotics and artificial intelligence.

In an earlier article, this author pointed out how high-tech manufacturing in brainbelts was putting the US and Europe back on the map. China seems to be aware of this trend. Hence, it is making sure that it does not get stuck in low value-added, low wage manufacturing. China has set targets, is providing subsidies and making foreign acquisitions to close the gap with the West. Its government has also forced foreign companies operating in China to share their intellectual property and intellectual know-how. Tellingly, intellectual and industrial espionage remains part of the Middle Kingdom’s modernization toolkit.

The Middle Kingdom still has a long way to go. People often forget that China’s per capita annual income is still a measly $8,000, much below the US figure of $56,000. China may have grown dramatically in the last four decades, but it is still markedly poorer than the US. And for years, this poor country has lent the rich one money. Over the years, China has accumulated huge dollar reserves. In part, it has done so to depress its currency, keep exports cheap and its factories humming. Yet this imbalance was never sustainable.

A few months before the financial crisis of 2007-08, this author argued that Americans could not keep consuming on Chinese debt. The “” had to end. That end is nigh for three reasons. First, American sanctions have dampened demand for Chinese goods. Second, high-tech smart manufacturing is making supply lines shorter and bringing back factories to the US. Third, an energy revolution has quietly transformed the US. It is the largest natural gas producer in the world with  per million British thermal unit (Btu) since 2015. Cheap energy costs mean that many energy-intensive industries can move back to America. The savings in labor costs are outweighed by cheap gas.

David Petraeus, a retired general and former spymaster, put this figure into context by pointing out that the price for natural gas for ´ˇłľ±đ°ůľ±ł¦˛ąâ€™s competitors is much higher. In 2014, he observed that the Japanese were paying $16-17, the Chinese $10-12 and the Europeans $9-12 in contrast to the Americans who were then paying around $3.70 to $3.80 per million Btu for natural gas. Since then, prices have declined and the “extraordinary comparative advantage” of the US has only increased. Bit by bit, the US is going to produce more and import less. So, China has no alternative but to try something else.

With so much excess capacity, the Middle Kingdom has come out with its version of the Marshall Plan. It is trying to create an Afro-Eurasian economic and trading area to rival the US-dominated transatlantic one. China’s big hope is that the BRI will create new markets for its goods. The country would be able to supply cement, steel and other goods as well as find useful activity for its high-speed rail firms. Just as British firms once built railways, roads and ports in Africa and India, Chinese ones are doing the same in Africa and Central Asia. These projects would remove infrastructural bottlenecks to trade and provide a big economic stimulus not only to China but to the wider region.

This investment is also a way to diversify China’s assets. For too long the Middle Kingdom stockpiled gargantuan dollar reserves and got little in return for its investment. Now, the country is investing its foreign exchange reserves in projects with greater risk but potentially higher return. It is choosing infrastructure because that is what it has the most experience with. After all, infrastructure investments worked in China. Why should they not work elsewhere?

There is another factor at play. Like Germany, China has contributed to what the Federal Reserve’s former chairman, Ben Bernanke, has called a “.” Simply put, this means that desired saving exceeds the desired investment. China is using its excessive savings to stimulate domestic demand and invest abroad through the BRI.

China’s Three Big Fears

A two-part Deutsche Welle documentary chronicles how the new Silk Road is moving across  in Asia and other exotic locations right into the . It compares China’s construction of roads, railways, bridges, tunnels and ports to Rome’s imperial roads. If one was to believe the Germans, China is a supremely confident power with a vision and energy to become the preeminent global power as it was for most of its history.

The Chinese do not quite have the same view as the Germans. When this author speaks to Chinese friends, he finds anxiety inextricably intermingled with pride. They have three big fears. Importantly, Chinese fears are reminiscent of the Japanese before World War II, who had built up industrial might but did not have captive markets in the form of colonies or sources of energy at home unlike the British.

China’s first fear is running short of energy. The Middle Kingdom might have coal, but it relies on the Middle East, Central Asia and Russia for oil and gas. The US Navy could block the Straits of Malacca in hours, bringing Chinese cars, trucks, trains and planes to a halt. Pipelines from  and  are plays to secure energy supplies. So are ports that China is building in Southeast Asia, South Asia and the Middle East. Centuries after Zheng He embarked on his legendary voyages, the Middle Kingdom is also belatedly investing in a . It has no choice. China is now a major trading nation in much the same manner as the US.

China’s second fear is unrest in Xinjiang. Throughout its history, the Middle Kingdom has experienced rebellions in restive regions and challenges to the unity of the country. It fears that the Muslim Uyghur minority might demand secession from the country and agitate for it. Therefore, Chinese authorities have launched a brutal crackdown and the region is under virtual lockdown. Approximately a million Uyghurs are estimated to be in reeducation camps.

Apart from the stick of repression, China is using the carrot of development to bring its restive region to heel. The BRI hopes to trigger economic growth in Central Asian countries such as Kazakhstan, Kyrgyzstan and Uzbekistan so that Xinjiang prospers as well. It also hopes that close ties with Central Asian countries will dampen separatist instincts. In the words of , Xinjiang is “both at the heart of China’s biggest worries and is one of its greatest hopes.”

China’s third fear is that the US and its European allies might put in glass ceilings to stop its rise. Meng Wangzou, a top executive in Huawei, was arrested in Canada at the behest of the US, giving proof to this thesis. Intelligence agencies in the US, Britain and elsewhere have warned against the potential security risk that Huawei and other Chinese companies pose. Chinese investment, once welcomed, now causes  in Europe and the US. In the battle of narratives, China believes that the West has painted its face jet-black to stymie its progress.

Many Chinese genuinely believe that Western media and intelligence agencies are fomenting discord in Hong Kong and resentment in places like Kenya or Sri Lanka. They believe that the West resents their rise and will do what it takes to stop it. Some of this fear is paranoia but some of it is real. There is a new wind blowing across the US. Like Friedman, many Americans do want to rub Chinese noses in the dirt and some of them work in the highest echelons of government. By investing in the BRI, the Chinese are taking out insurance against Western blowback.

In his own way, President Xi is trying to reassure not only the West but also the rest of the world. Even as Trump embraced protectionism, Xi’s 2017  sang paeans to economic globalization. He also proclaimed it had to become “more inclusive and more sustainable.” Xi sounded almost American when he spoke about “growing an open global economy to share opportunities and interests through opening-up and achieve win-win outcomes.” He repeated this  four months later when the inaugural global BRI Forum gathered in Beijing.

For China, the Belt and Road Initiative is not only about economics but also geopolitics. The BRI is part of a strategy to engage more deeply with the outside world. It expands the arc of Chinese influence and counters the anti-Chinese measures of the US.

Rivals and Risks

China’s BRI is causing unease not only in the West, but also in countries like Japan, Vietnam and India. All three have been involved in conflict with their larger neighbor. Just as China fears containment by the US with its bases in Japan, South Korea and across Southeast Asia, India is terrified of being encircled by China’s “.” This term refers to the ports that China is building, which India suspects have not only a commercial but also a naval purpose.

Japan is taking the lead in countering the BRI. It has stepped in to replace the US with the collapse of the TPP. Japan has also teamed up with India to launch a $200-billion infrastructure plan for the broader Indian Ocean area. Funding power plants, railways, roads and ports as well as flexing military muscle seems to be Japan’s response to BRI.

Even in countries where China has invested big in BRI projects, there is resentment and, sometimes, backlash. In Pakistan, a suicide attack killed Chinese engineers in Baluchistan last year. In this allied country, the Chinese work and live under police protection. In , Sri Lanka, Kenya, Hungary and elsewhere, China almost invariably faces criticism for pricing projects too high, disregarding local laws and importing labor instead of boosting local employment. Allegations of “” refuse to go away. The Sri Lankan port of  is used as a classic example of this diplomacy. Apparently, China won a 99-year lease for writing off Sri Lankan debt. 

Along with rivals and resentment, China has to deal with turf wars at home. Just as different agencies and departments squabble in Washington, reports of fighting between foreign, commerce and defense ministries are rife in Beijing. China’s planning commission and provinces are also part of the fight club. Conflicts of interests are emerging between different companies involved in far-flung projects and the government. It might be fair to say that there is a certain incoherence to the sprawling efforts involved in the BRI.

Beijing is also having to balance divergent imperatives. One of the BRI’s aims is to gain better returns on China’s foreign exchange reserves. However, there are few profitable projects in Central Asia, Southeast Asia or Africa. Another aim is to plant the flag in key geostrategic locations. The Chinese have little experience in evaluating such locations. As a result, the BRI might be constructing too many white elephants with little economic or strategic value.

, a professor at the MIT Sloan School of Management, fears that the BRI has huge risks of debt default. Most countries do not have the cash to pay China back. They will ask for debt forgiveness and write-offs. China’s already burdened savers will ultimately be left with the bill. Apparently, only 28% of BRI investments in the first half of 2018 came from private sources, down from 40% for the same period in 2017. The fall in private money for the BRI shows that China’s policymakers, not business leaders, are making most big investment decisions, increasing risks to the taxpayer. 

Like the former Soviet Union, communist China is still struggling to deal with religion. Most societies, democratic or authoritarian, accord a certain sanctity to religious belief. Some like Saudi Arabia use religion as soft power and profit enormously from being the custodian of holy sites. Every American politician invokes god in a supposedly secular country. The right to freedom of religion is enshrined in the constitutions of many countries such as Germany, South Africa and India. China’s treatment of Buddhist Tibetans might gain an occasional mention or fire up Hollywood celebrities, but its persecution of Muslim Uyghurs is capturing more global attention.

In particular, it is making Muslims around the world unhappy. This author has met many Arab, Iranian and Indian Muslims who seethe at China’s injustices against people who share their faith. Some of them talk of boycotting all Chinese goods. This creates tricky situations for China’s allies. Pakistani Prime Minister  might claim that he does not know “the exact situation of the Uyghurs,” but Pakistani  cover China’s actions regularly. China’s actions in Xinjiang might be increasing risks of attacks on its workers and engineers in Pakistan and elsewhere. Like the US, China might be able to work with elites, but it might lose public support in Muslim countries, weakening the intended impact of the BRI.

Even if  is right about the Belt and Road Initiative being “more coherent, potent, and resilient than many believe,” China suffers a gigantic disadvantage. For instance, it is building ports, railways and roads in Kenya, but it has little impact on the country’s culture. English is the language of government, people watch the English Premier League and most Kenyans pray to a white Jesus Christ. Despite one in three black men ending up in jail once in their lifetime, Kenyans dream of immigrating to the US, not China. This means that once the BRI projects are completed, the Chinese might vanish from Kenya like their medieval admiral Zheng He.

Finally, many Chinese themselves still look up to the West. Christian Dior and Christianity salve their bodies and souls. Xi’s own daughter did her undergraduate degree at Harvard. Far too many Chinese are still desperate to emigrate for a better life. The rich still move heaven and earth to get their wealth out of the Middle Kingdom. In contrast, the US attracts talent and wealth from around the world.

The Belt and Road Initiative might have energy, ambition and even vision, but it is not backed by an inspiring idea. That is its biggest limitation.

*[Akshata Kapoor conducted research for this article.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post Is China’s Belt and Road Initiative Strategic Genius, Arrogant Overreach or Something Else? appeared first on 51łÔąĎ.

Here is today’s 3D definition:

American privilege:

A synonym for white privilege, as applied beyond the borders of the United States

Contextual Note

White privilege has been prevalent since the founding of the United States. American privilege came into being in the aftermath of World War II, at which time the US dollar seized the opportunity to dominate the world economy. Both forms of privilege have played a significant role in establishing and maintaining at least a semblance of world order. At the same time, it has always been considered politically indiscrete to mention either of them out loud, other than in the euphemism, “American exceptionalism.”

Everything changed when Trump became president. For the first time in over 70 years, a policy of explicit US domination (“America First”) has been paraded as the active principle that guides US actions abroad. At the same time, Trump’s obsession with borders has focused attention on the conviction many people have of the US as a white society that grudgingly admits other ethnicities into its culture, and only in limited numbers. Between the civil rights movement of the 1960s and Trump’s presidency, the unique politically correct representation of the US was as a multi-racial nation.

Trump’s assertiveness has changed all that. Whereas Republican officials at both the federal and state level have been working quietly and discreetly in the background to ensure white domination of both politics and culture, the Trump administration’s ostentatious battle to impose and enforce white domination at the border has advanced the question of white privilege to center stage.

Before Trump, Kansas Secretary of State Kris Kobach had already put in place a cleverly designed new form of technocratic manipulation to suppress minority voters from the electoral rolls based on their names. , the now notorious interstate voter registration database Kobach created, was finally exposed by investigative reporter Greg Palast. Kobach claimed it would prevent the same person cheating by voting in two states, but this turns out to be an extremely rare occurrence. In reality, Crosscheck was designed to remove tens of thousands of minority voters from the rolls on the grounds of similarity of their first and last names with someone else in another state. What could be more innocent or more politically and culturally invisible than building and exploiting a simple database?

Crosscheck was just one of a variety of techniques Republican state officials across the nation have been keen on implementing to replace the very visible practices of Jim Crow in the South that had been banned in the wake of the civil rights movement. In 2018, the Supreme Court in struck down part of the 1965 Voting Rights Act, thus granting states the latitude to devise new procedures for voter registration that could target minorities. The court reasoned that after several decades of civil rights reforms, the problem of racial discrimination had been definitively solved. Because white privilege had always been invisible, it was easy for the court’s majority to believe it simply didn’t exist.

Despite such laborious denials, official actions and decisions demonstrate that the defense of white privilege is clearly part of the fabric of the nation’s culture. Although the rapper Kanye West may be invited to the Oval Office to praise his narcissistic president — there will always be a place for talented blacks in US culture — “America First” means, above all, “White America First.”

Historical Note

When in their eagerness to exorcise the devils of two world wars, the nations of the world quietly accepted the notion of a “” engineered to allow the US to give direction to the global economy, they tacitly understood that both “white privilege” and “American privilege” were two pillars of the new world order. One of the rules required not talking about either form of privilege, possibly in the vague hope that the rules might one day also be applied to the US in a spirit of evolving equality.

Starting in the 1980s, the somewhat flexible rules-based economy evolved into the increasingly ideologically rigid neoliberal economy promoted by US President Ronald Reagan and British Prime Minister Margaret Thatcher. Games of power played out within and around — although also occasionally against — the shared diplomatic rules and proclaimed liberal social values that public personalities (politicians, business people, economists) made an effort to honor, at least in their rhetoric.

As has now become glaringly evident, the growth of inequality of wealth and income — and, more significantly, power — has overwhelmed the former intellectual commitment to equality. In economic terms, the now dominant neoliberal ideology has increasingly perceived yesterday’s shared “rules” as constraints inhibiting not just economic growth, but also the sense of uninhibited freedom those who control resources believe themselves to be entitled to. The financial, economic, political and cultural elite see themselves as a class of privileged but worthy managers of global resources. As a class, they have learned how to attract the admiration of the masses by freeing themselves from all shackles: legal (by maneuvering around the law), economic (as super-consumers) and, in many cases, moral (as sexual exploiters, if not predators).

Today’s privileged class is international, but unlike the ancient European aristocratic model of a supranational ruling class, the US, exercising its new global responsibilities, has for the past 70-odd years assumed the task of providing a replacement model that relies on talent and assertiveness, rather than inheritance or caste. One doesn’t have to be American to benefit from American privilege, but one has to accept the cultural leadership of the US.

Before Trump, both white privilege and American privilege were quietly honored and required no fanfare to convince people to fall in line. But the US empire had too many cracks and the US culture of individualism showed too little understanding of humanity’s social reality for the system not to show signs of weakness. As historian Alfred McCoy has argued, the US empire began an accelerated decline under George W. Bush, due principally to his foreign policy that pushed the idea of American privilege into a serious danger zone. At the same time, the neoliberal economic ideology fatally led to the Great Recession of 2008, further undermining the notion of American privilege.

Barack Obama attempted to restore order or at least the semblance of order, but by diffidently refusing to counter the existing trends, continued and confirmed the process of decline. Then came Trump, who effectively announced to the world that there is no point pretending the nation’s privileges are invisible. A true American believes that if you’ve got it, flaunt it. He has never stopped claiming that he’s got it and so he has never ceased flaunting it.

His followers think that’s normal. It’s the American way. But they also refuse to see it as a sign of privilege just as they refuse to admit that the US has constructed an empire. The rest of the world, of course, understands what Trump is doing and how dangerous it may become.

And now the Chinese, despite their culturally conditioned avoidance of contradiction and their commitment to harmony and saving face, have broken the law of silence about American privilege and have called Trump’s bluff.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, , in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post American Privilege Is No Longer Invisible appeared first on 51łÔąĎ.

Here is today’s 3D definition:

Privacy:

That part of a person’s real or imaginary life experience in which an individual is nothing but an individual, having no obligations to the outside world

Contextual Note

The societies of the West revere democracy as the most just political system and human rights as the concept that founds democracy’s legitimacy. Beyond purely legal and political considerations, these beliefs and concepts have created a culture of individualism that contrasts strongly with collectivist cultures of Asia in which the idea of individuals not defined by their sense of connection and belonging to a family, social group, caste, network and — to a varying extent — nation is unthinkable. In Chinese culture, because a particular person is the result of the full range of that person’s connections, the idea that any and all individuals should benefit from a status that separates them from their connections would seem anomalous.

Western assessment of what China is doing reflects Western ideas and social practices more than it does Chinese reality. It tells us more about how similar questions about privacy — which absolutely do exist — are likely to play out in the West than how they will play out in China.

This has led to a skewed discussion in which “Western concerns about what could happen with China’s Social Credit System have in some ways outstripped discussions about what’s already really occurring.” Jeremy Daum, a senior research fellow at Yale Law School’s Paul Tsai China Center in Beijing, detects a perverse political reason why this may be the case when he notes that “anything less invasive than our imagined version of social credit seems sort of acceptable, because at least we’re not as bad as China.”

Once the fear of what the inscrutable Asians are doing is instilled, it becomes easy to worry that we might even become “as bad as China.” One commentator has remarked: “The more I look around, the more it seems like an American social credit system is springing up around us—and it doesn’t look all that different from China’s.” Americans may not have noticed that the Chinese were inspired by that very American invention that has played a major role in restricting individual liberty: personal , which have been around for decades. The difference between the two systems should reassure Westerners about what China is preparing but worry the hell out of what’s happening particularly in the US.

Thanks to the whistleblower Edward Snowden, everyone should know that the US government is constantly gathering information on them, the nature of which can never be known because the programs hide behind the impenetrable veil of “national security.” Thanks to the Cambridge Analytica scandal, we know that Facebook not only collects data on our private lives but has never been averse to selling it to other people and institutions. But Facebook is not alone. By its very conception, the internet ensures that Big Data includes our data, but it doesn’t include any data accessible to us about who has access to it.

The serious question Westerners should ask is this: Do they prefer a “liberal” system in which being judged and manipulated by private interests they are rarely aware of, or a Chinese style system that is defined and now even publicly debated as a tool for making the entire society’s relations more efficient and — as a final irony — ultimately more publicly responsible and transparent?

The Chinese government will, of course, do what every government now does: surveil their population to root out terrorism and what they consider to be subversive dissidence, and they will undoubtedly continue to do it with fewer checks and balances than those that exist in the West. But, for the moment, it would appear that the West has done far more to rob its own citizens of their privacy, mainly because the initiative for doing it lies in a multitude of private hands who are largely left alone, if not encouraged by the government.

Historical Note

For more than two centuries, Western society has been grappling with the consequences of adopting democracy as its political norm. As the world’s first democratic nation, the US launched an abstract justification for democracy — “all men are created equal” — but initially had no qualms about the practice of democracy being restricted to a specific race, a specific gender and the fact that those white men owned property. The idea of an “individual” who had a right to privacy did not apply to everyone. Over time, but very slowly, the right to democratic existence and privacy was extended to African-Americans and women, by giving them the vote, but the spirit of depriving groups of people of their freedom lives on — for example, in no-fly lists or Donald Trump’s Muslim ban.

Only since the civil rights movement in the 1960s has US culture built into its ideology the dominant idea (though not necessarily the practice) that all groups must be treated identically not just by the law, but also through the widest variety of social interactions. The right to privacy is among the requirements of equality, as is — through political correctness — the right not to be offended, which translates as the right to take offense. These systems of judgment have radically changed the notion of what is or should be public and what is or should be private.

The West rarely reflects on its own culture and even more rarely on other cultures, except to note their inability to hone to Western standards. The Wired article cites Daum on one of the significant differences between Chinese and US culture. He points out that the “phrase �social credit’ has different connotations in English that it does in Chinese. To an English speaker, the two words together might signal a reference to interpersonal relationships. In Chinese, the term is more closely associated with a phrase like “public trust.”

The Chinese seek to understand their own society through their notion of sharing their common reality mediated by the government, even the brutal or darker part of it. Americans build their private view of society in a spirit of commanding discord, which often prevents them from seeing what most concerns them. In the end, however, both populations will have to face the same set of problems due to a concentration of power — in public or private hands — that neither can oppose.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, , in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post Reassessing China’s Social Credit System appeared first on 51łÔąĎ.

Raising the debate to the level of universal principles, Chinese President Xi Jinping has framed his response to US President Donald Trump’s doctrine of America First, a specific brand of the widespread idea of American exceptionalism. At a conference in Beijing, XiĚý that China would “be more open to the world,” while calling “stupid … those who believe in cultural superiority.”

Xi hopes “that all countries will adhere to the spirit of openness and promote policy communication, connectivity and smooth trade.” In what some might deem a glance at US history, he added: “It is stupid to believe that one’s race and civilization are superior to others, and it is disastrous to wilfully reshape or even replace other civilizations.” Could this presage good news for the province, whose culture the Chinese government has been aggressively assailing? This would be an appropriate moment for them to remind President Xi of the implications of his new policy.

The reassuring message Xi wants the world to understand could be translated as: Don’t expect us to insist on Chinese exceptionalism. Behind it may be the idea that other nations should have no hesitation to join China’s “Belt and Road” effort to restructure geopolitics because, unlike the US, Beijing will not try to impose its cultural values beyond its borders.

President Trump didn’t invent American exceptionalism, an idea embraced by the overwhelming majority of the political class. In some ways, Trump’s America First policy undermines the concept itself, just as his aggressive philistinism has cast a shadow on the global prestige of US culture. Trump’s exceptionalism emphasizes celebrity, wealth, narcissism and a form of moral impudence Americans like to call assertiveness. John F. Kennedy invited Duke Ellington to the White House; Trump invited Kanye West.

Here is today’s 3D definition:

Superiority:

The sense that one is above all rivals and, therefore, entitled to and impose one’s values and refuse the criticism of others

Contextual noteĚý

Xi spoke at a conference with the title, “Dialogue of Asian Civilizations,” an event organized by what Reuters to as Beijing’s “propaganda ministry.” The fact that the motivation behind the conference might be propaganda seems to contradict Xi’s message of openness, respect for other civilizations and denial of cultural superiority. But it was the author of the Reuters article that chose to use the term “propaganda,” which sounds fearful and reminds readers of the Cold War. The official translation, preferred by the Chinese, is the of the Communist Party. The English word “propaganda” itself comes from Latin and simply means “things that are disseminated, propagated or spread.” In this age of marketing, which means selling oneself as well as one’s products, spreading a loaded message has become a universal human activity.

The notion of publicity certainly sounds innocent and propaganda worryingly sinister, which explains why both sides — East and West — will promote the idea that propaganda is something the other side does but we don’t. The West is proud of its free press, which — as — has a curious habit of echoing its establishment’s official line, while focusing its analysis and criticism not on policies but on personalities.

In contrast, the Chinese government effectively exercises centralized control over its media, which has the merit of not allowing propaganda to masquerade as independent reporting. In the West, and particularly in the US, the government has quietly but effectively subcontracted propaganda to the corporate media, who tend to be only marginally and occasionally disobedient.

To better understand the pertinence of Xi’s rhetoric and the contrast with the US, try to imagine Trump or indeed any US president inviting their media/propaganda team to propose a conference with the title, “Dialogue of American Civilizations.” This would be unthinkable from several points of view. For the US, there is only one America, a fact that constantly irritates both Canadians and Latin Americans, who have trouble accepting the idea that only US citizens have the right or rather the arrogance to call themselves “Americans.”

But the idea of speaking about “American civilizations” would also mean recognizing true Americans, those who populated the continent before Europeans and, more particularly, the British arrived in North America. The systematic genocide and land grab carried out over several centuries aimed not just at exterminating people and laying a claim to the valuable land that could, according to European cultural values, be divided up into exploitable property, but also at suppressing the very idea that the “savages” may have had a “civilization” (or civilizations).

Historical note

As we enter the period of history that future historians are likely to call the “Chinese century” following the decline of the US empire, Xi expects his message to sound reassuring to most regions of the world that have lived first through several centuries of submission to “European superiority” and then to what was commonly referred to as Pax Americana (the rule of American peace), which, as political scientist Michael C. Desch , should really be called Bella Americana (the rule of American wars). In his words: “While the Cold War was hardly an era of harmony and good fellowship, the post-Cold War era of American primacy actually deserves the sobriquet of Bella Americana.”

The US achieved its dominance after World War II by seducing Europe and Japan with its apparently generous effort to rebuild their economies, coupled with a monumental effort to spread its values through cultural channels. Hollywood and the music industry played major roles. But for the superficial icing on the cake, so did neoliberal economic theory, which was the cake.

The wonderful thing about theories, rather than actual pastry, is that you can have your cake and eat it if you get other people to believe in it. It contains the magic ingredient that has always fascinated Warren Buffett in the same way that black holes fascinated Stephen Hawking: . Albert Einstein jokingly called it the eighth wonder of the world, followed by this : “He who understands it, earns it … he who doesn’t … pays it.”

In some sense, the China of Deng Xiaoping discovered the mystery of compound interest in the late 20th century. While retaining the Communist Party as the unique foundation of its political system, the world’s most populous nation got its hands on the secrets of capitalism’s internal mechanics and found ways of mobilizing energies that the West was no longer capable of summoning up.

This has put the West in a defensive position that increasingly relies on siege tactics and military organization. If China is capable of evolving toward the kind of openness that Xi Jinping is promising, even if it is a slow evolution, its seductive attraction for the rest of the world will enable it to achieve superiority while avoiding the narcissism of exceptionalism.

In any case, for the moment it’s a clever, seductive ploy that is bound to have some serious success. It has already begun having an effect in Europe — that may further destabilize the continent itself — as both and the seem ready to sign on to the Belt and Road initiative.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, , in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]Ěý

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post China Renounces the Goal of Cultural Superiority appeared first on 51łÔąĎ.

This week on 51łÔąĎ, Daniel Wagner reminds those who may not be paying attention that we are witnessing the rapid decline of the US empire and the inexorable rise of China. Unless we find a way of saving the current order, according to Wagner, we are headed for a radically different world order dominated by the Chinese.

“Not since the modern liberal order was born in the 1940s has the world had to grapple with the possibility of its demise,” Wagner writes. Actually, that is not quite true. During the Cold War and at specific moments such as the Cuban missile crisis of 1962, the world very concretely envisaged its own global demise, a consideration that is coming back to haunt us again both in terms of nuclear risk and planetary extinction.

Here is today’s 3D definition:Ěý

Demise:

A euphemistic or cleverly ambiguous synonym for death, signifying the end of something once considered valuable, which may be understood as either final and absolute but also suggests the process of fading away. A possible compromise between physical death and gradually disappearance, it also admits the possibility of survival with severe degradation.Ěý

Contextual noteĚý

As with all speculations about the future, Wagner’s relies on a certain number of cultural stereotypes. The first, which is solidly embedded in the still dominant Western “liberal order” whose demise Wagner predicts, is that history is a form of competition in which there will always be a winner and a loser.

This brings with it the corollary that the world can only have one dominant cultural power at a given time. Nothing in history obliges us to think this way. It’s our mental image of the Roman and British Empires as well as the Pax Americana — another name for Wagner’s current “liberal order” — that leads us to assume that history always ends up selecting a single dominant power. Globally dominant empires are historical exceptions, including the ones we don’t often think about, such as Genghis Khan’s Mongol Empire, which certainly merits consideration when predicting that China will dominate the world in the decades to come.

US culture incites us to think that there is always a unique winner. Unlike soccer and chess, matches in American sports never end in a draw. There must be a winner and a loser and the manifest destiny of the US crowned the winner in the last century. But this imbalance implies that other scenarios, in which different regions and cultures coexist, are preferable, with local actors who in various ways dominate their neighbors. Despite Francis Fukuyama’s brave but failed attempt to declare an three decades ago, no single “order” or cultural system needs to achieve absolute dominance. Belief in that illusion is what has allowed the idea of “American exceptionalism” to continue to fester in people’s minds.

In an interview with journalist Chris Hedges, former Marine intelligence officer and UN weapons inspector Scott Ritter offers a different perspective on winning and losing. Speaking of what he deems to be the “success” of Hezbollah in Lebanon and Syria, he explains: “When you go to war with a side who says that we can only win when we emerge victorious, simply surviving means the other side lost. Hezbollah did that in 2006.” He then applies it to the case of Iran: “That’s really all Iran ever has to achieve. They can’t defeat the United States, but they can outlast the United States.”

Ritter makes a final point when he mentions that Donald Trump’s Iran policy is “accelerating the demise of the dollar as the world’s reserve currency” as Europeans and Russia scramble to allow trade based on the euro. In contrast, Wagner alarmingly predicts the yuan will simply replace the dollar. Ritter shows more nuance. History has not yet spoken.

Historical note

Wagner expresses the historical dilemma for the West in these terms: “Just at a time when the world is in need of the stability and good governance it has had the luxury of relying upon for decades, it must contemplate transitioning to a world order not of the West’s choosing.” The West gave us the consumer society and suddenly finds itself deprived of the ability to choose its world order.

While recognizing that this legal and institutional system of international relations has provided a framework for developing a globalized economy, we might ask ourselves how “liberal” that order has been and whether it really has provided a model of “good governance.” No one doubts that it has achieved wonders for elites in the West and elsewhere in the world. Many cite the success of Southeast Asian economies as the example that confirms Wagner’s point.

But in his book, , which examines the recent history of the region’s political economy, author Michael Vatikiotis, writing from his vantage point in Singapore, perceives “beneath these sleek metropolitan glass-and-steel carapaces an enduring and seething underbelly of unmet popular aspiration suppressed by the effective concentration of power in the hands of a privileged few.” He adds: “Behind the smiling mask of tropical abundance there lurks the reality of perennial threats to stability and survival, fuelled by rising levels of social and economic inequality and a chronic absence of the institutional safeguards and legal certainty we take (or at least used to take) for granted in the West.”

We in the “West” are used to taking it for granted, before anticipating the system’s now generally predicted demise. But even at the core of Singapore’s fabulous success story, the darker truth of a dysfunctional system was apparent to those, like Vatikiotis, who took the time to look below the surface.

Now in the West we are beginning to acknowledge it on our own home ground, even though it’s been visible for decades.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, , in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

The post The Decline of the West or the Demise of Pax Americana? appeared first on 51łÔąĎ.

It was pretty humorless as diplomatic gaffes go. After touching down in China for the G20 Summit, US President Barack Obama was not provided a staircase—or the accompanying red carpet—that other world leaders were welcomed with upon arrival.

Instead, the president was forced to leave from the rear exit, or as one China expert put it, from theĚý“.”ĚýAmerican journalists also complained of China’s security forcesĚýĚýto prevent foreign media from watching President Obama embark.

The awkwardness soon boiled into overt hostility as Chinese officials were caught yelling, “This is our country! This is our airport!” at their US counterparts who tried to fix the situation.

Why Do Diplomatic Gaffes Matter?

Does the incident matter? Yes. While the lion’s share of diplomacy is carried out in smoky rooms behind closed doors, it is also about the calculated use of symbols, rituals and ceremonies. The welcoming of a foreign guest is one of the many occasions that require a smooth undertaking. Unlike what goes on in smoky rooms, it will be viewed by millions of people.

The cosmetic side of diplomacy matters because states like to objectify their intentions through symbols and public interactions. Most usefully, it regulates the environment for world leaders participating in diplomatic practice, usually seeking to motivate or encourage them toward a preferred direction. An adversarial is likely to become more agreeable after a generous state banquet. It also allows audiences—local and abroad—to grasp the meaning of international affairs.

Few other states understand the importance of symbolism in statecraft more than China. Consider the disastrous attempt of the Macartney Mission in 1793 to establish diplomatic ties between Britain and China. The emperor refused all of Britain’s proposals after the chief British diplomat, George Macartney, refused to kowtow to his Chinese counterparts.

A happier anecdote cameĚý. Upon realizing their airports lacked an air stair large enough for the American statesman’s Boeing 707—Chinese pilots were still using old Soviet aircraft—Chinese officials had a special stairway hastily built. Even secret meetings demanded protocol. Thus, the embarrassing prospect of Kissinger being unable to leave his plane was avoided. How times have changed.

China’s Image to the World

So far, there is no proof to suggest that Obama’s disorderly arrival was a bizarre stunt designed to undermine the US president. But there is undoubtedly some symbolism behind it. Jorge Guajardo, Mexico’s former ambassador to China, toldĚýĚýhe was convinced Obama’s treatment was part of a calculated snub, as a result of “Chinese arrogance.”

“It’s part of stirring up Chinese nationalism. It’s part of saying: �China stands up to the superpower.’ It works very well with the local audience,” Guajardo said.

It would not be the first time China has tried to make itself look big on the international stage. When President Xi Jinping met Obama in Beijing duringĚýthe , the Chinese leader stood on the right with his open hand on show to photographers. The US president was required to approach him, as if paying tribute, from the left.

Indeed, a simple image search of “Xi Jinping handshake” finds a great majority of photos using the exact same positioning: Xi on the right, receiving the handshake of an approaching foreign leader. It is a subtle expression of power, and a symbol that allows the Chinese audience to visualize international affairs in Beijing’s favor.

Whether intentional or not, the airport episode will make the US look diminished to Chinese audiences. A Chinese official was quick to point the finger at the Americans themselves, citing that the US side “complained that the driver [of the staircase] doesn’t speak English and can’t understand security instructions” before refusing the staircase outright. State-owned media—usually unabashedly nationalist in these situations—.

The appearances were enough. The damage was already done.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: Ěý/Ěý

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post Obama Snub: Why Diplomatic Gaffes Matter appeared first on 51łÔąĎ.

Often feeling insecure from Western-induced barbs, the Chinese Community Party (CCP) is taking its turn for viewing the other side from a pedestal. The rise of Donald Trump and Brexit have allowed the CCP a renewed sense of confidence, given that these two phenomena demonstrate the fallbacks of liberal democracy—and, by default, the success of China’s one-party state.

, a state-owned newspaper, wrote that the rise of Trump opened a “Pandora’s box,” after which the “US faces the prospect of an institutional failure.” Comparing Trump to fascists of the 1930s, the party mouthpiece reminded readers that “Mussolini and Hitler came to power through elections, a heavy lesson for Western democracy.”

And then there is Brexit: the victory of an inward-looking, Little England mindset. Though Beijing will regret the loss of its best ally in Europe, the disastrous impact of Brexit on the British economy—as well as the exposure of exaggerations and lies from the Vote Leave camp—adds to China’s argument that Western-liberal democracy is inefficient and destructive.

Beijing’s case for a one-party state is, of course, self-serving. Since China began getting rich in the 1980s, the CCP sought to legitimize its rule through its economic successes. Now the economy is faltering, the party will inevitably seek other sources of legitimacy. One of these is the failure of Western democracy to prevent self-destructive and nationalist leaders coming to power. Paradoxically, the other source of legitimacy is its own Chinese nationalism.

China’s criticism of liberal democracy is more a finger-wagging exercise against nationalist forces that inevitably arise within liberal frameworks. But China, too, is guilty of exploiting and encouraging these forces. China calls out nationalism elsewhere but actively fosters its own.

The Hague Ruling

To distract ordinary Chinese from the economic slowdown, the party has diverted their attention to the South China Sea. Based on , it uses a “nine-dash line” to mark its territory and seeks to control 90% of the South China Sea, including its encompassing strategic islets and reefs. Chinese state media has aggressively pursued a campaign to reiterate these claims to the population.

On July 12, an international tribunal in The Hague ruled in favor of claims by the Philippines over control of disputed waters in the South China Sea, which Chinese state-owned media were quick to . China’s state news agency, Xinhua, said that “as the panel has no jurisdiction, its decision is naturally null and void.”

, too, joined the nationalist chorus by hastily posting a map of China and the “nine-dash line” on Chinese social media using a viral hashtag that roughly translates to “China, not a single part can be taken out.” It is reasonable to believe some of these celebrities may have been coerced by the government, given that others have seen their .

When asking ordinary Chinese about the ruling, this author found they were likely to reiterate the party line.

“The South China Sea is China’s inseparable territory. Every fish is China’s,” said Liu Lijuan, a journalism student from Tianjin.

Some took an uglier nationalist approach. Lu Miyuan, a nurse from Hebei province, threatened: “If the Philippines claims the South China Sea, then China will claim the Philippines.”

By using nationalism, Beijing is, to use the Chinese idiom, riding a tiger and unable to get off. The use of nationalism may help prop up the CCP in the short term, but the party will find itself unable to quell the increasingly hostile sentiments of its citizenry.

Just like how Brexiters made unrealistic claims about a life outside the European Union, Beijing may disappoint the nationalist forces on which it is riding. If the Chinese government cannot secure territory and meet its citizens’ unrealistic nationalist aspirations, the CCP will lose a source of legitimacy. The people may turn against it.

And beyond the South China Sea, China is having other territorial problems, again thanks to its heavy handedness. Relations with Taiwan—which is included in China’s territorial claims but enjoys de-facto independence—are , with Taiwan showing no appetite to rejoin the mainland. , unthinkable before Xi Jinping’s premiership, are growing. The supposedly autonomous region of Xinjiang is descending into civil war, and .

It is unlikely that China will not be able to secure all these territorial claims and calm nationalist sentiment. Warning against the rise of Trump, : “The US had better watch itself for not being a source of destructive forces against world peace, more than pointing fingers at other countries for their so-called nationalism and tyranny.”

Perhaps China should take its own advice.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit:

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post China is the Pot Calling the Kettle Black appeared first on 51łÔąĎ.

The economy has been breathing fire since Deng Xiaoping initiated market-oriented reforms in 1979. Since 2015, the Chinese economy has sputtered. Its growth rate was a mere 6.9%, a 25-year low. This author predicted that the Chinese slowdown would make the world economy wobble and “.” The wobbling global economy in turn is inflicting much pain on China as “” increase.

Thousands of workers are losing their jobs. Those lucky to retain employment find their wages slashed. Naturally, China is experiencing labor unrest. As per , strikes have increased from eight in January 2011 to 503 in January 2016.

Needless to say, Chinese leaders are nervous. This week, China’s National People’s Congress began its annual meeting. Premier Li Keqiang made global headlines by announcing that China would target a growth between 6.5% and 7% for 2016. It is the first time Chinese leaders are targeting a range instead of a specific figure. Yet most informed observers believe that this figure is a touch too high.

In January, . In the same month, this author explained how the . Ballooning debts, vanishing jobs and growing inequality are leading to turmoil across the world. The rise of Donald Trump and Marine Le Pen reflects the economic malaise afflicting the rich world. Debt-fueled consumption can no longer go on.

Chinese leaders have recognized this fact by setting no trade target. Last year, they set a target of 6% growth only to face humiliation when both exports and imports contracted. Yet Li is guilty of hubris for declaring that . He has gone on to say: “By that time, our economy’s size will have exceeded 90 trillion yuan.” True to form, The Economist remarked with damning irony: “Omniscience is a wonderful thing.”

Chinese growth targets and figures have long been fishy. Since 1990, . This implies either extraordinary foresight on the part of policymakers or crafty massaging of economic data. This time, Chinese leaders are setting a high bar when the global economy is floundering. This means they will have an incentive to overestimate growth to save face.

Such a high target range reveals that Chinese leaders have reposed absolute faith in . They are making big fiscal and monetary decisions to keep growth going. The deficit will increase from 2.3% to 3% of gross domestic product (GDP) that is . This is a huge $330 billion stimulus to keep the economy going.

This stimulus follows hard on the heels of the one after the 2008 Great Recession. On November 9, 2008, . Ten sectors, including health care, education, transport, roads, railways and other infrastructure projects, were earmarked for this largesse. The government opened credit taps for these sectors and China’s rapid growth continued.

Now, growth is slowing down and the party has come to an end. This terrifies the Middle Kingdom where emperors have long been dethroned by rebellions from to . These two rebel forces overthrew emperors roughly 2,000 and 650 years ago. Mao Zedong’s Red Army itself captured power because of peasant support. The in the Chinese Politburo vividly remember what their grandfathers did to those in power.

The new stimulus is an attempt to keep China’s economic engines whirring and avoid unrest. China’s leaders are abandoning grand projects and embracing tax breaks to boost the economy. Supply side economics posits that people spend more when they have more money in their pockets. This will boost entrepreneurial and efficient private companies instead of slothful state behemoths. The only trouble with this assumption is that animal spirits in China are ebbing low.

China’s addiction to stimulus packages has roots in its past. Its leaders are haunted by the failures of Mao, the collapse of the Soviet Union and Tiananmen Square. The princelings know too well that they lack the moral authority of Mao and Deng. They are not revolutionary veterans of . The princelings have led cushy lives, studied at elite universities like Tsinghua and are as privileged as Old Etonians like British Prime Minister David Cameron. Unlike Cameron, they do not preside over the Conservative Party. They are the big bosses of the Chinese Communist Party (CCP) and heirs to a revolution that aimed to create an egalitarian society in a deeply unequal land.

Today, hardly anyone in China believes in that egalitarian ideal. In an , a young girl rebuffed a poor suitor with a quip that she would rather cry in the back of a BMW than smile sitting on a bicycle. Materialism rages in the Middle Kingdom now that Karl Marx’s materialistic philosophy promised a classless society that has failed to materialize. Instead, even the in the Middle Kingdom. Once upon a time, Deng declared that to be rich is glorious and, by some estimates, . Those who are left behind do not feel so glorious.

All the perfumes of Christian Dior still fail to stir Chinese souls. The Cultural Revolution decimated Confucian traditions and there is a spiritual void in Chinese society. Christianity, the supposedly evolved religion of Europe and the US, is filling this void. Devout Christians are starting to throw a gauntlet to the atheists who rule China. This is making CCP leaders nervous.

On February 26, for refusing to remove the cross from his church. This pastor in Zhejiang province was found guilty of embezzling money from his congregation and of inciting people to disturb social order. His wife was also sentenced to prison for 12 years. For many, white Jesus is replacing native Mao as the new god of salvation. The leaders of the CCP have no clue as to what to do.

In an increasingly uncertain world, Chinese leaders are like . Last year, they . They did the same when they bailed out real estate companies, mirroring bank bailouts in the US. In both countries, robber barons took risks and walked away with big profits, while taxpayers provided these barons insurance and absorbed private losses.

In any case, in the land of , those connected to CCP leaders are in pole position to reap rich rewards. If party bosses seize land from peasants for development, their relatives are likely to profit from ensuing construction projects. At its essence, China is suffering from a massive transfer of wealth from the many to the few because of corruption and crony capitalism.

. They are the Middle Kingdom’s worst kept secret and a real threat to the country’s financial system. Those with guanxi with officials and bank bosses are able to get loans easily and then default on them with impunity. The rest of the country lives frugally and saves diligently only for banks to spray its money wastefully. In January, . This is madness. China might end up with just like Japan and Europe.

China has made catastrophic economic choices before. Mao’s Great Leap Forward led to economic regression from 1958 to 1962. Forced collectivization of farms and harebrained schemes of industrialization led to a famine that killed millions. As Beijing-based , even Chinese history textbooks call this time Three Years of Natural Disaster. China’s new stimulus is another economic blunder albeit not quite of the scale of Mao’s.

In 2007, this author observed that . Today this is truer than ever. Air, water and soil pollution are imposing a cost on future generations that cannot be quantified or measured. The catastrophic environmental damage that economists dismiss as externalities is threatening people’s health and wellbeing. Last year, . They demonstrated the dire risks accompanying the biggest and fastest industrialization in human history.

Chinese leaders have to realize that their debt-fueled stimulus is dangerous. They cannot keep kicking the can down the road and delaying the readjustment of China’s economy. To avoid the fate of Chinese dynasties that crumbled in the past, the princelings have to be bold. The Middle Kingdom needs innovative economic models and new political institutions. Only then can the dragon keep breathing fire.

*[You can receive “The World This Week” directly in your inbox by subscribing to our mailing list. Simply visitĚýĚýand enter your email address in the space provided. Meanwhile, please find below five of our finest articles for the week.]

The Presidential Race We Deserve

© Shutterstock

Super Tuesday results on the Republican side show how little attention Americans pay to public policy.

The political discourse of shouting, speaking in platitudes, making vague and nebulous claims, blatant lies, misinformation andĚýxenophobia has dominated the RepublicanĚýside of this election cycle. Individually, none of this is new or unique in politics, but they are combined and accentuated to create the worst political discourse that I can remember. While it is easy to blame particular candidates, demographics or industries, the blame for the degradation of our national politics lies withĚýwe the people.

First, political campaigns react to nothing more strongly than polls, perception and donations. No political candidate could afford repetitious lying or unapologetic scapegoating if there were either financial or electoral consequences.

Relatedly, the ubiquitously vilified American media are largely, at the bottom line, private corporations that aim to turn profits. Contemporary coverage and narratives are more often driven by our desires than by civic…

Maduro’s Time is Running Out in Venezuela

Wikimedia

Faced with electoral setback and rising popular discontent, the Venezuelan president just announced a number of economic reforms.

InĚýVenezuela’s most recent parliamentary elections on December 6, 2015, Chavismo experienced its first political setback since coming to power 17 years ago. The Venezuelan opposition won 112 of the 169 seats in the National Assembly, the country’s legislative branch. According to several analyses, nearly 1.9 million self-identified supporters of the “Bolivarian Revolution” abstained, and the number of opposition voters increased by only 343,000 compared to the presidential election of 2013, when the winner was the current president, Nicolas Maduro.

The results of the parliamentary elections were described as a “punishment vote” due to a lack of effective action by the government to combat the economic and social crisis that has worsened since the second half of 2014, when the price of oil—Venezuela’s main and almost its only export—began to plummet. The crisis, according to President Maduro…

Donald Trump Speaks for the Speechless

Flickr

The Republican frontrunner has managed to channel the inner fascist that lurks at the core of conservative America.

For those of you who continue to believe that America is a great nation deserving of the respect and admiration that much of the rest of the world seems to have forgotten about, the 2016 presidential race to the sewer will provide a plethora of feel good moments.

Mexicans and Muslims are already cowering as campaign crowds acclaim an impenetrable great wall of the Rio Grande and cheer for a search and destroy regimen to keep suspicious religious adherents from our shores and out of our communities.ĚýIf you think this isn’t quite good enough, there has been and will be much more.

For some it is uncomfortable, but for me it is rewarding to see ´ˇłľ±đ°ůľ±ł¦˛ąâ€™s conservative inner core exposed.ĚýIt seems that a significant segment of that populace has been waiting for someone to come along who loudly…

More Puzzling Decision-Making From Saudi Arabia

Flickr

The latest move by Saudi Arabia will do little to curb Hezbollah’s actions in Syria.

Saudi Arabia’s decision to ban its citizens from traveling toĚýLebanonĚýonly raises more questions about the kingdom’s foreign policy in the Middle East. TheĚýtravel banĚýcomes on the heels of previous decisions to cut off aid to Beirut and withdraw deposits with the Lebanese central bank. Riyadh’s move was followed by similar actions from other members of theĚýGulf Cooperation CouncilĚý(GCC), including Bahrain, Qatar, Kuwait and the United Arab Emirates.

These actions come at a bad time for the battered Levantine nation. With its population swelled by nearly 25% by Syrian refugees, the concomitant Syrian Civil War on its eastern border raging into its sixth year, and its presidential selection saga still undecided, Lebanon cannot afford to lose either the GCC funds on which it has depended for so long, nor the many Gulf travelers who come to enjoy and…

Diaspora Offers Nigeria Hope in Fight Against Boko Haram

Flickr

With many middle-class professionals in the diaspora, Nigeria should look to expats on how to combat Boko Haram.

Terrorism is a global phenomenon, but the way it is manifested is regional, local and culturally specific. In Nigeria,ĚýBoko HaramĚýhas been most deadlyĚýin the Muslim north. ForĚýsome in the Christian south, a desire to be free from the terrorist group’s tarnishing of the country’s image has led to an “othering” of the north. It has brought back the feelings of some who always thought that Nigeria should not be one, but two: a Muslim north and a Christian south.

Nevertheless, it is important to explore why theĚýNigerianĚýdiaspora’s involvement in jihadist activity in Europe has been very limited.ĚýReports about Nigerians affiliatedĚýwith Boko Haram and the susceptibility of jihadist cells have been moderate.

Supporters of Boko Haram are poor, marginalized and disenfranchised; people are divided on religious lines; and the domination of Muslim minorities…

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: /

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post The World This Week: Can the Dragon Keep Breathing Fire? appeared first on 51łÔąĎ.

With 42% of people below theĚý, Nicaragua has the weakest social indicators in Latin America. The country’s economic situation is mainly a result of the US embargo following the 1980s Sandinista Revolution. Nicaragua also lacks diversification in its economy and infrastructure, and it has an unskilled workforce.

In July 2013, Nicaraguan President Daniel OrtegaĚýĚýwith Chinese businessman Wang Jing, president of the startup investment firm Hong Kong Nicaragua Canal Development (HKND), to create a transoceanic channel. Competing with the smaller Panama Canal, this Gran Canal initiative includes many sub-projects such as a port on the Pacific and Atlantic coasts, an international airport, free trade areas and an oil pipeline. It would also represent a firm push toward progress, economic growth and social welfare.

Enter China…

Even though the economic and social boost that Nicaraguans could see from with this transoceanic channel, many related issues appear to be underestimated if not concealed, despite warnings from local experts.

The transoceanic channel will extend to 278 kilometers, and its area of influence will affect many protected areas such as natural reserves, wetlands, archipelagos, islands and Lake Cocibolca, in particular. Due to its low depth, the lake will be drained to reach a minimal depth of 30 meters throughout the 105 kilometers of the canal route to allow safe passage for containers up to 500-meters-long. The drenching operation will result in over 1 billion tons of waste—the destination of which remains unknown.

To make this project feasible despite the protected areas, Nicaraguan authorities handed the HKND a land concession of 100 years and approved Law 840, a measure that allows the Nicaraguan constitution to be bypassed, as well as other directives protecting both the national ecological resources and the rights of the inhabitants living in those areas. Among those rights codified in the Nicaraguan constitution is anĚýĚýgranting the inhabitants cultural, economic and property rights, and requiring that any “concessions and contracts of rational exploitation of the natural resources granted by the State in the Autonomous Regions of the Atlantic Coast must have the approval of the correspondingĚý.”

According to Telemaco Telavera, the Canal Commission spokesman, the commission did not choose “the route that costs less economically but the one with the lowest environmental and social impact … We have chosen the route with the lowest population density.”

As no serious official reports or risk analysis have been provided by the Nicaraguan state, many experts are warning about the dramatic and irreversible impact this project would have on the ecosystem, as the drenching and maintenance of the channel would endanger the wildlife and fragile biodiversity of the lake. Among those specialists, Franklin BriceĹ�o, an ecologist and member ofĚý, argues that unless the project is canceled, “Nicaragua would face an ecocide.”

While the Nicaraguan government and the HKND have assured people that anyone displaced by the project will be fairly compensated,ĚýĚýgroups and locals have cried foul, and many demonstrations have sprung up around the country protesting the anticipated forced removal in exchange for financial compensation. They claim that not only does the failure to consult violate the terms of the Nicaraguan constitution, but that it also violates their internationally recognized rights. The people marching have been brutally reprimanded, and anti-canal militants are often sent to prison on exaggerated charges.

Despite this local concern, the general population remains indifferent or in favor of the channel as not only will the HKND have to pay $100 million for the land concession, but also because this project is upheld by the promise of 25,000 new jobs in a country severely hurt by hunger and poverty.

As no actual proof was provided, some observers consider these allegations to be exaggerated and manipulated. Lopez BaltodanoĚýĚýthat the price the HKND paid is ridiculously cheap, as $100 million represents only two months-worth of remittances for Nicaraguans working abroad. From that point of view, the HKND is actually paying a symbolic price to enjoy a century of rights over the most valuable natural resources of Nicaragua: forests, protected areas and Lake Cocibolca—which, as the main source of water for human consumption in Central America, has a value that is impossible to relate strictly in economic terms.

As for the expected creation of 25,000 jobs for locals, the initial promise was originally four times greater but slowly decreased over time. Even if its number was correct, Brice�o argues that most Nicaraguans do not match the basic skill requirements to be hired on the construction project.

Therefore, despite the ecological, social and democratic threat the canal represents, even the proper utility of the channel remains highly doubtful. Indeed,Ěý,Ěýand specialists are identifying a new transoceanic natural route in North America due to melting glaciers.

Despite asserting no connections with the Chinese government, Wang Jing appears to be a proxy forĚýĚýas the HKND is backed by China Railway Construction Corporation, a huge government-owned enterprise that displays a mural of various Chinese military weapons.

The Dragon in Latin America

The US focus on other regions such as the Middle East and Asia for most of the last decade has created an opportunity for to gain a strategic foothold in the Western Hemisphere. Facing local controversy and having been conceived without pertinent economic justifications, the canal construction project has already been postponed to late 2016 (originally scheduled for December 2014) and may even never be completed. In light of those considerations, the Gran Canal may be an alibi for China to obtain the 100-year lease to control and operate in the area. By doing so, China would steadily increase trade and investment in Central America, in order to obtain access to markets and make new political allies along the way.

More than business and trading opportunities, it would give Beijing influence in the region as a key commercial route and maritime asset. This would require military policing activities in the region surrounding Nicaragua, therefore, creating the ability for the Chinese navy to move warships into the Caribbean and the Atlantic. It is also not beyond the realm of possibility that a Chinese-controlled canal—located in an openly hostile nation like Nicaragua—could be used to facilitate staging for unfriendly naval or military forces.

In 1913, the Panama Canal gave the US influence over the Americas, allowing it to enshrine its control over an international route. This led to Washington expanding its influence through infrastructural development projects in otherĚýĚýcountries, but also inĚý. China is taking advantage of such areas that world powers did not let to fully develop.

The Beijing-controlled area in Nicaragua, therefore, represents a challenge not only to the weakened Western primacy, but truly the advent of a new dynamic in the distribution of world power.

*[Martina Rose assisted with research for this article.]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: /

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post China’s Expansion Spells Nicaragua’s Destruction appeared first on 51łÔąĎ.

While stories about ’s economy centers on a slowdown, the country’s passion for movies—at home and abroad—follows a much more optimistic plotline. Its growth has been phenomenal, outperforming China’s traditional industries, such as manufacturing. Many experts believe China is on track to have the largest film audience in the world—and by one estimate as early as 2020.

“The entertainment industry is a sunrise industry in China, while the steel industry is a sunset industry. The growth potential for the entertainment industry is still huge, despite a high growth rate of 17% [per year] in the past five years,” says Z. John Zhang, Wharton marketing professor. Already, the media and entertainment industry is worth $180 billion in China, he adds, and the number is only expected to get larger.

“Many sectors of the Chinese entertainment industry are growing well into double digits on an annualized basis, despite the slowdown in the overall economy. China’s steel industry by contrast is operating at only 70% utilization, with roughly 400 million tons of excess capacity. Neither domestic nor international demand will fill that gap,” says Gordon Orr, senior advisor to McKinsey and Co who is projecting that China’s film audience size will exceed that of the US in four years.

Currently, China’s movie ticket sales are second only to the US. In 2015, box office revenue hit a record $6.8 billion, up 49% from the previous year, according to China’s regulator, State Administration of Press, Publication, Radio, Film and Television. That’s up from $1.51 billion a mere five years ago. North America also saw a record in 2015, hitting an estimated $11 billion for the first time even though it grew at a much slower rate of 7% year-over-year, reported media measurement and research firm Rentrak.

Moreover, China is expected to see a movie cross the $500 million threshold domestically in 2016, according to a McKinsey report. Some Chinese movies have already come close:ĚýMonster HuntĚýgrossed $380 million to date, whileĚýLost in Hong KongĚýgarnered more than $250 million. The record for an American film,ĚýAvatar, was $760 million on US screens.

It wasn’t always this way. From 1979 to the early 1990s, Chinese movies were mainly propaganda films approved by the communist government, according to an October 2015 report by the US-China Economic Security Review Commission. As a result, the film market dwindled, with attendance falling by 79% from 1982 to 1991. To revive its movie business, China brought in its first foreign film in 1994—Warner Bros’ĚýThe Fugitive, starring Harrison Ford and Tommy Lee Jones. The Chinese began importing more American films and, today, allows an annual quota of 34 a year.

© Shutterstock

Catalysts for Box Office Growth

At four times the size of the US, China’s population makes it the golden goose of the film industry. “China’s audience will one day be bigger than the US,” predicts Qiaowei Shen, Wharton marketing professor. Moreover, the average Chinese citizen goes to the movies less than once a year, while the average American goes almost four times a year. “There’s huge potential [for growth] if the average Chinese person [just] goes to the movies two times a year, then box office receipts will increase by two times,” she notes.

Movies also are underpenetrated in China. Extending movie runs to second-, third- and fourth-tier cities should further propel box office receipts. “Big cities are very mature already, says Shen. “Now those smaller cities are becoming very important. [Studios are increasingly] marketing in those small cities. A few years ago, they would concentrate in Shanghai and Beijing,” Shen adds. Now they bring the movie stars to do promotional appearances in more than 20 cities, not just in major urban centers.

The infrastructure for movie-going is also on the rise. Adding movie screens and building cinemas, especially in the smaller cities, will spur growth of the entertainment industry in China, adds Shen. When a new shopping mall is built in China, it’s usually anchored by a theater.

China is building at a rapid rate of 15 new movie screens daily in new and existing cinemas, up from more than three screens a day in 2012, according to the US commission’s report. China currently has 31,627 screens, while North America has approximately 39,000 screens, according toĚýThe Hollywood Reporter. Orr predicts that the addition of screens will lead to growth of more than 20% in China’s box office in 2016. Bloomberg reports that China is expected to have 53,000 screens by 2017.

Rising disposable incomes among the growing ranks of the Chinese middle class also boosts the entertainment industry. According to EY, the disposable income per person jumped nearly five-fold to $3,440 from 2000 to 2011. Orr further adds: “The close to 50% year-on-year growth in the Chinese movie box office in 2015, continuing in 2016, indicates how, if you provide a higher quality service, the Chinese middle class will buy more of the service.”

As such, Hollywood studios with an eye to global box office gold know they cannot ignore the Chinese market—and have devised ways to get around the annual quotas set by the government. “There is not a big movie studio in the world that is not thinking about how to crack the China market from the start of making its movies,” says Zhang.

China Eyes Hollywood

China is also eyeing Hollywood to bolster its entertainment holdings and forge creative collaborations. “Many Chinese entertainment companies have a lot of capital; they may feel short of opportunities to deploy this capital in China and see easier opportunities to do so internationally,” notes Orr.

Hollywood can enter the Chinese market in three ways: through revenue-sharing films, flat-fee movies and co-producing a movie with a Chinese company.

But China looks beyond financial reasons in inking deals. “There’s a concerted effort in China to move into the global entertainment and media industry to build China’s soft power,” adds Zhang. The cultural sector is one of the pillars of China’s Five-Year Plan, meaning the government makes an effort to support Chinese investment in entertainment. “Aside from being good business, it is a way to protect China’s influence in the world.”

In February, China’s Perfect World Pictures completed a $500 million debt-and-equity dealĚýwith Comcast’s Universal Pictures that will last five years or cover the co-financing of 50 films, according toĚýVariety. Perfect World is expected to receive a 25% share of most films released by Universal. It is the first time that a Chinese company invests in a multi-year slate deal.

Recently, the Dalian Wanda Group, a Chinese conglomerate led by China’s richest man Wang Jianlan, paid $3.5 billion for Legendary Entertainment, a major Hollywood studio responsible for theĚýBatmanĚýandĚýJurassic World franchises. It is the first Chinese company to buy a big US studio; it is also Wanda’s largest foreign acquisition. According to Variety, Wang hasn’t ruled out more forays into entertainment, saying “we want to have a bigger position in the global movie industry.”

Wanda, the largest commercial real-estate developer in China, has become the largest movie theater operator in the world after acquiring AMC Entertainment Holdings in 2012 for $2.6 billion. Orr adds: “Chinese business leaders recognize that many elements of the entertainment business are fully global and if they are to maximize their revenues they need to be able to seamlessly access global markets. Making international acquisitions can accelerate their ability to do so.”

Wang is also developing one of the world’s largest movie-production facilities in Qingdao, China, which includes 30 soundstages, a permanent set featuring a New York City street, as well as a theme park and resort hotel to accommodate families and staff of cast and crew. The public announcement of the studio included appearances from actors Leonardo DiCaprio and Nicole Kidman as well as movie studio executive Harvey Weinstein.

Zhang believes more deals will come. Orr concurs: “Early Chinese moves into investing in foreign entertainment are seen to be successful in China, encouraging more to follow.”

© Shutterstock

Getting Around the Film Quota

Hollywood can enter the Chinese market in three ways: through revenue-sharing films, flat-fee movies and co-producing a movie with a Chinese company. The quota of 34 films applies to revenue-sharing films, which lets foreign studios take 25% of the box office receipts or about half the norm for other parts of the world. Flat-fee films, which have a different quota, are not a popular vehicle because Hollywood sells movies for a fraction of their worth, according to the US commission’s report. With co-productions, Hollywood can bypass quotas and receive about half of ticket sales.

Once the Chinese government gains more confidence that Chinese films can compete with Hollywood imports, the 34-film quota might increase, Shen says. “Competition doesn’t kill local movies,” she asserts. “They don’t need protection.” In 2015, most of the top ten films in China were local ones. Hollywood movies grossed 38% of box office receipts in China, a decrease from 46% the previous year.

Meanwhile, Hollywood is actively co-producing movies to get around the restrictions. Legendary is already producingĚýThe Great Wall, starring Matt Damon and Andy Lau fending off aliens bent on invading China. Zhang Yimou is directing the $150 million English-language project, the largest co-production between the US and China, due out in late 2016.

Another big deal involves Lionsgate, makers of theĚýHunger GamesĚýfranchise, partnering with Hunan TV, the second-biggest broadcaster in China. The $1.5 billion deal with will see the Chinese firm paying 25% of production costs of at least 50 Lionsgate films in the next three years in exchange for 25% of all returns.

Even Jack Ma, executive chairman and founder of e-commerce giant Alibaba, is getting into the game. He was an investor in Mission Impossible: Rogue Nation. He also poured $4.8 million into a video platform since online movies are also seeing massive growth, according to a McKinsey report.

Meanwhile, Huayi Bothers Media will co-produce 18 films with STX Entertainment, founded in 2014 by Hollywood veteran Robert Simonds. Disney has a deal with the Shanghai Media Group, and Warner Bros is working with China Media Capital, a private equity firm. China Film Group, a state-run production company that works with imported films, has invested in Hollywood films likeĚýFurious 7, which broke box-office records in China.

DreamWorks believed in the co-production strategy early on. In 2012, CEO Jeffrey Katzenberg saw the Chinese market’s potential and partnered with Chinese state-owned businesses to open Oriental DreamWorks in Shanghai. This co-owned studio is behind the third sequel to the hitĚýKung Fu Panda animated film. WithĚýKung Fu Panda 3Ěýconsidered a local Chinese film, it was allowed to be screened during the popular Chinese New Year holiday period. To qualify as a local film, one-third of the production must be shot in China and one-third of the lead actors must be Chinese.

In a first, the movie’s English and Mandarin Chinese versions were released simultaneously in the US and China. American actor Jack Black played the English-speaking panda and Chinese actor Jackie Chan played his Chinese counterpart. It was a winning strategy. In January,ĚýKung Fu Panda 3Ěýopened to a smashing $57 million first box office weekend in China—a record for an animation there—beating the US opening by $16 million. “Certainly, I believe we will see a considerable number of animated movies released in this fashion,” says Orr.

Zhang notes: “Hollywood looks for [opportunities to make] money and China looks for influence and soft power.” But whatever intentions the government has, the Chinese studio’s priority is the box office. “Almost all the outbound investment by China’s entertainment industry has been made by very successful private-sector entrepreneurs. While they are very aware of the ambitions of the Chinese government, they are absolutely looking to make investments that will earn an attractive return for them,” Orr adds

Interestingly, American movies are sometimes made with the Chinese audience mind, knowing they’ll be subject to Chinese government censors. That leads to strategic creative picks. “You will not see a Chinese communist as a villain in a Hollywood big budget movie anytime soon,” says Zhang.

*[This article was originally published by , a partner institution of .]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: / / Ěý/Ěý

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post China’s Film Industry: A Blockbuster in the Making appeared first on 51łÔąĎ.

China hasĚýĚýto its infamous one-child policy, the restrictive rule that has limited many families to one child—and some to two children—for the past 37 years. The changes will allow all couples to have two children.

China has aĚý. Throughout the 1950s, family planning was encouraged under Mao Zedong to promote economic growth. But only in 1973 did it become a political priority, with the nationalĚýwan, xi, shao—“late marriage, longer spacing, and fewer children”—campaign encouraging two children per couple.

In June 1978, a policy of one child per coupleĚýĚýas the government feared that China would not be able to modernize and support a large population at the same time.

Yet the law was difficult to enforce. Male children were prized and families who first gave birth to a daughter would lack a son to support them in old age. From 1984 onward, responding to societal unrest, rural couples whose first child was a girl were allowed to conceive a second child.

A series of changes took place from 2010 after it emerged thatĚý were on record as being without proof of identity (hukou), because they were denied birth registration as a result of family planning policies.

The National Health Ministry and National Population and Family Planning CommissionĚýĚýin 2013, which signaled a relaxation of birth control as a government priority. In November 2013, theĚýĚýthat citizens were allowed to have two children if either member of the couple was an only child themselves. The new announcement marks the most radical change of all: two children allowed for all couples.

Children with no identity

From forced abortions, sterilization and astronomical fines, the one-child policy led to a plethora of human rights abuses.

From the beginning, there were questions about how best to enforce it. One way was to charge citizens who had more than one child “social compensation fees,” colloquially referred to as “fines,” from two to eight times the annual incomes in rural areas, or annual disposable income in urban areas. With the income derived from these fines, livelihoods and careers of government staff depended on charging fees for unauthorized children. For example,ĚýĚýalone, the Population and Family Planning Commission employed 17,000 administrators and 22,000 nursing and technical staff.

In the early days, mass sterilizations and abortions were particularly rife in the early 1980s. As time went on, great pressure was put on mothers with one child to accept an IUD coil, and mothers with two children were to be sterilized. In many areas, children could not have their birth recordedĚý. Mothers and families whoĚýĚýfor giving birth to unauthorized children would see no choice but to undergo an abortion.

When births could not be prevented, local governmentĚýĚýto children born without permission. This was initially a way to hide unauthorized births. In this way, the child did not exist on government records or population statistics. Even the parents themselves might prefer to lose out on their child’sĚýhukouĚýthan be punished for an unauthorized child.

Over time, as China’s birth rate decelerated andĚý, local governments worried less about fulfilling birthing targets. Later on, denial of theĚýhukouĚýwould be used as leverage to enforce payments of fines. Without it, parents would face their child being barred from obtaining an education and being unable to obtain an ID card, or paying the outstanding fines. Assets could be seized, bank accounts frozen, or a parent detained for 15 days at a time and taken to court when parents refused to pay up.

The legacy of 4-2-1 families

The driving factor behind the relaxations is that control over births is no longer necessary. China’s population is ageing rapidly. Longer life expectancy means that by 2050, itĚýĚýthat for every 100 people aged 20-64, there will be 45 people aged over 65. This has led to the “4-2-1” family where a child of working age could have to care for two parents and four grandparents in retirement.

Equally troubling is China’s skewed gender ratio. In 2014, China now hadĚý—believed to be a consequence of selective abortion and female child abandonment exacerbated by family planning restrictions. Without radical changes, many men (usually referred to as “bare sticks”) will be unable to find wives.

Some will question if China’s abandonment of its one-child policy will really lead to more births, as the previous relaxation in 2013ĚýĚýbirth rates. Others will note that the policy is not really over: couples are still limited to two children. Meanwhile, with giving birth out of wedlock still effectively illegal, some will question if the relaxations go far enough.

*[This article was originally published by .]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: Ěý/Ěý

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post As China Ends the One-Child Policy, What’s Its Legacy? appeared first on 51łÔąĎ.

On June 29, under the leadership of China, 50 founding members signed contracts to create the Asian Infrastructure Investment Bank (AIIB), with its main hub in Shanghai. Its three biggest shareholders are China, India and Russia. Interestingly, some nations that are otherwise close American allies—such as Germany, France, Italy and South Korea—have also become members, although the United States attempted to convince them not to join. For the US, who is still the dominant player in global finances, the creation of the AIIB was thus seen as a heavy diplomatic and financial defeat.

After Chinese President Xi Jinping of the AIIB in 2013, the institution was established in less than two years, an impressively short-term compared to other international projects.

In founding the bank at this moment, China’s government built on a growing sense of frustration among the developing nations in the Middle East and the Asia Pacific. Ever since the Asian Financial Crisis of 1997-98, when the management of the World Bank and the International Monetary Fund (IMF) was and suppressive, negative sentiments toward the world’s most important credit granter lingered on and became even stronger.

It was in this context that the Global Infrastructure Facility (GIF) was supposed to allow for a more balanced evaluation of credit requests. However, establishing GIF within the boundaries of the to be a difficult matter.

As countries like China became ever more and the underrepresentation of Asia in global financial institutions, the idea of an Asia-based bank bore fruit.

For Asian countries, the perspective of an alternative to the World Bank with easier access to funding in a less bureaucratic way support quickly. With over 75% of share votes in the hands of Asia Pacific nations, the AIIB holds a promise of more effective money lending for the region’s infrastructure projects.

Naturally, the creation of the AIIB was accompanied by various levels of American skepticism. The joining of major European nations and other close US allies sparked annoyed reactions from Washington. Indeed, the fast pace of China’s rise from a developing country in the 1980s to a resourceful global player with still huge untapped future potential has .

In the 1990s, the US was the biggest investor in most Asian countries. With the turn of the millennia or shortly afterward, this . The Chinese have now replaced American investments as number one. It is clear that China’s does not mirror that of a developing country anymore, but instead has become more assertive as can be observed in various fields.

Thus, the creation of the AIIB comes with many overt and undoubtedly some hidden implications. Even if the institution will act rather as a supplement and not as a rival to the World Bank, a Chinese-led international financial institution at the beginning of the 21^st century sends a strong signal. Together with other initiatives, the AIIB is part and parcel of China’s “one belt, one road” strategy that is meant to create a “New Silk Road” that links China to Southeast Asia, the Middle East and Europe.

As of yet, it is too early to fully judge the impact these plans will have. However, two things are clear.

First, concerning the AIIB, the decision over whether to partake and how to deal with it, without a doubt, will continue to be a very political one, which can be seen by the “bureaucratic difficulties” the Philippines faces with China over territories in the South China Sea.

Second, although its founders have been careful in their description of their lending institute, the AIIB will effectively be seen as an Asian countermeasure, balancing the weight of institutions such as the World Bank and the IMF, which are perceived as Western-centric. Therefore, with the AIIB, China and its partners have added one more piece to the board that needs to be considered by all players.

While the exact implications will depend on how aggressive China will play this piece and how threatening the US will perceive these moves and react to them in the long-run, it is clear that the creation of an Asia-based international financial institution outside the Bretton Woods system alone makes for a show of strength that fits perfectly in the narrative of Asia rising.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: /

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post China-Based Bank Shows Asia is Rising appeared first on 51łÔąĎ.

Tianjin is the biggest port in northern . It is the maritime gateway to Beijing and the fourth largest urban center in the Middle Kingdom. In 2013, Tianjin handled more than of cargo that included coal, oil products, mineral ores, steel and chemical products. It is a classic example of the ambition of modern China that has enabled the country to achieve the fastest and biggest industrialization in history. The recent explosions in Tianjin are a chilling reminder that Chinese success has come at a price and at huge risk.

The causes of the blast are still unknown, but the BBC that water might have been sprayed on calcium carbide to create the highly explosive acetylene. This acetylene blast might then have detonated ammonium nitrate. The initial explosion on August 12 was the equivalent of detonating three tons of TNT, while the following one was the equivalent of 21 tons. Satellites orbiting the Earth picked up the second explosion and so did the seismometer station in , which is 160 kilometers away.

The explosions destroyed goods worth millions of dollars. More than 100 people have already died and over 700 have been hospitalized. The real risk is air, water and soil contamination. Many fear that toxic chemicals released by the explosions might cause lasting damage to Tianjin residents. Incidents of cancer and birth defects might rise dramatically. Chinese authorities have ordered residents living within a three-kilometer radius of the blast site to leave. Even as an evacuation is taking place, Chinese soldiers of the National Nuclear Biochemical Emergency Rescue Team have a rescue mission at the core area of the explosion site.

The tragic TianjinĚýexplosions are a spectacular example of the catastrophic environmental damage currently taking place in China. As Berkeley Earth , 1.6 million people die every year because of air pollution in the Middle Kingdom. The Chinese Environment Ministry has that about 60% of underground water and a third of surface water in China is unfit for human contact. Heavy metals in China’s soil are now the country’s food supply. What people eat on a daily basis is damaging their health and wellbeing.

It is little wonder that President Xi Jinping has urged authorities to from the “extremely profound” lessons of the Tianjin explosions. He has called for “safe development” and asked authorities to put “people’s interest first.” The truth is that China is going through much soul-searching. As pointed out by this author earlier, Zhu Rongji’s Shanghai has the gross domestic product (GDP) growth target. Furthermore, the current Chinese economic model might have reached its limits. China cannot grow as it used to and the costs of growth have become too high.

China’s dash for growth was inaugurated by Deng Xiaoping. Deng initiated reforms in 1979 after his 1978-visit to Bangkok, Kuala Lumpur and Singapore. He took Lee Kuan Yew’s advice and turned to markets, abandoning communes. In 1992, Deng famously embarked on , which literally means southern tour. During this tour, Deng called for radical reform and the opening up of the Chinese economy. The rest is history.

In 2015, the Chinese economic juggernaut set into motion by Deng has stalled. Chinese property values have dramatically and stock prices have to new depths. Both property firms and stock market investors are deep in debt. Therefore, the government has been bailing out both property firms and the stock market to maintain some semblance of confidence in the economy.

These bailouts have not quite worked. Hence, this week the Chinese decided to devalue their currency. On August 11, the renminbi dropped by 1.9% against the dollar. The next day it fell by a further 1%. The aftershocks of the devaluation are being felt in all parts of the world.

In 2010, Brazilian Finance Minister Guido Mantega that the world was witnessing an “international currency war.” In his view, this game of competitive devaluation in which each country lowered the value of its currency to boost exports was a de facto trade war. His comments came in the aftermath of Japan, Taiwan, South Korea and the US devaluing their currencies. German Finance Minister Wolfgang Schäuble was not happy with the US policy of quantitative easing, which is simply buying assets from commercial banks and financial institutions to release more money into the economy. Schäuble was of the view that the US policy did not make sense and “uncertainty to the global economy.”

Mantega and Schäuble were onto something. If every country was to devalue its currency, then no one would be any better off. Existing asset price bubbles would worsen and inflation would eventually rear its ugly head. Devaluations are only short-term measures that mitigate the immediate blow of a crisis. This is what Chinese authorities are trying to do. By lowering the renminbi, China is obviously attempting to boost exports by making them cheaper. It is also trying to stimulate domestic consumption of its products. For instance, shares of companies making luxury products such as Burberry have fallen because their products will now cost more for Chinese consumers. Authorities hope the Chinese will now buy domestic replacements instead.

The devaluation of the Chinese currency is affecting countries differently. The Federal Foreign Office of Germany that China is the fourth biggest buyer of German exports. The Middle Kingdom will certainly be purchasing less Porsches and other German goods going forward. Latin America, Africa and Australia have flourished recently by sating ravenous Chinese hunger for natural resources. Between 2000 and 2012, Sino-Brazilian trade alone by 2,550%, from little over $10 billion to $255.5 billion. These China-dependent economies will suffer. The Chinese devaluation will hurt other economies seeking to boost manufacturing such as India and Vietnam. With a cheaper renminbi, China has become just a touch more seductive for companies competing to cut costs.

Yet the devaluation has its downsides even for China. Chinese entities have $1.6 trillion in foreign currencies, 80% of which is denominated in dollars. A more expensive dollar could mean companies defaulting on their payments and even going out of business. This would entail either loss of capital for foreign investors or bailouts from the Chinese government to save jobs, or a bit of both. The global economy is now infernally inextricably interlinked. The dragon has sneezed and the rest of the world has caught a cold.

*[You can receive “The World This Week” directly in your inbox by subscribing to our mailing list. Simply visitĚý51łÔąĎĚýand enter your email address in the space provided. Meanwhile, please find below five of our finest articles for the week.]

[seperator style=”style1″]Questioning Sandra Bland’s Unexplained Death[/seperator]

© Shutterstock

A detailed look at the Sandra Bland case raises tens of questions about her arrest and death.

On July 10, the vibrant #BlackLivesMatter activist Sandra Bland was pulled over after changing lanes without using her turn signal. She was threatened and arrested by a police officer. Three days later on July 13, the 28-year-old was found hanging in her jail cell in Waller County, Texas. What followed was the usual cycle of spin: egregious vilification of her behavior and repeated deception of the public.

Unfortunately, we don’t have the time to investigate the 700 Americans killed by police this year—who are disproportionately black—or the five black women who died in jail over two weeks in July. Yet a look at Bland’s case highlights major inconsistencies shared through an all-too-common communications strategy.

Early accounts described her as pulled over for illegally changing lanes, “very combative” and…

[seperator style=”style1″]Doublespeak: Radical Right Rhetoric Today[/seperator]

© Shutterstock

How do radical political movements mask their racist rhetoric?

Let us depart from a truism: Modern politics relies enormously upon shaping “the message” toward targeted groups and constituencies. Whether it’s the Labour Party’s “Controls on Immigration” or the Tories’ “blue collar cabinet,” on either side of the recent 2015 General Election inĚýBritain, reaching beyond a core “base” of activists is now widely recognized as the key ingredient to political success. This is no less true of the radical right in Europe and the United States since 1945, albeit manifested in a much different way.

The issue is ultimately a simple one. RadicalĚýright activistsĚýhave long tended to be racist or xenophobic, sympathetic to fascism and anti-Semitic deceptions likeĚýHolocaust denial. In post-war Europe and the US, these are scarcely vote-winners, meaning that the transnational radical right has had to go much further in manipulating “the message” than mere political triangulation—something perhaps better described as “fifth column discourse,” a radical right rhetoric that…

[seperator style=”style1″]The Real Threat of American Extremism[/seperator]

© Shutterstock

Fundamentalist Christianity is a danger to both the global image and the future development of America.

In the aftermath of theĚýParisĚýattacksĚýin January, the world stage has been rife with discussion about the dangers of Islamist extremism. That fateful word, “extremism,” has always carried a charge, but in the long shadow of 9/11 it has become especially sinister. In many cases, the response to perceived extremism is itself quite radical, often involving violentĚýracismĚýagainst those with alleged connections to extremist groups.

For many, since 2001, the word “extremism” has largely become associated with “terrorism,” and with radical Islam in particular. Due to the tragic events of September 11, 2001, and President George W. Bush’s unforgivable response to them, many Americans equate the words “extremist” and “Muslim.” The unceasing atrocities committed on all sides in the Middle East have fortified this architecture of hatred, strengthening bigoted mindsets with each new act of violence. America has proven itself to be fertile ground for racial hatred…

[seperator style=”style1″]After Iran, is North Korea Next?[/seperator]

© Shutterstock

The Obama administration has concluded deals with Iran and Cuba. Will North Korea round out the trifecta?

During the George W. Bush years, pundits and journalists were constantly speculating over whether North Korea would be next in line for regime change. After all, President Bush had includedĚýNorth KoreaĚýin his “axis of evil” speech in 2002. One year later, the Pentagon invaded Saddam Hussein’s Iraq, a member of the trio of tyranny. Perhaps North Korea would be the next undemocratic domino to fall.

But the Bush administration didn’t invade North Korea. The neoconservatives in ascendance in Washington were largely focused on the Middle East. With its many artillery positions, North Korea could quickly retaliate against any attack by destroying much of the densely populated South Korean capital. And there was no government-in-exile that could plausibly take over in Pyongyang if US troops managed to dislodge the Kim dynasty.

Jump ahead a decade and the question again arises: Will North Korea be next? But this time, pundits…

[seperator style=”style1″]Donald Trump Rescues America and Finds MH370[/seperator]

© Shutterstock

Trump has singlehandedly turned the Republican presidential race into a reality show that stars only him and has a supporting cast of “bit players.”

The ongoing RepublicanĚýpresidential nominationĚýcircus has caused me to delay a trip to Reunion Island to help with the search for parts of the missing Flight MH370 that are not in Kazakhstan.ĚýFaithfulĚýreadersĚýofĚýmineĚýwill remember that early-on, and with good reason, I suggested that the missing plane was in Kazakhstan.

I still believe this to be true.ĚýI think the wily Kazakhs who have the plane decided it was time to throw folks like me off the scent by hurling a “flaperon” from the wing of the plane into the Caspian Sea.

For those of you with an interest in geography, the Caspian Sea borders Kazakhstan and flows nowhere.ĚýBut Iran borders the Caspian SeaĚýandĚýthe Persian Gulf, which flows into the Arabian Sea and on to the Indian Ocean and Reunion Island. The best speculative evidence available…

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: /

We bring you perspectives from around the world. Help us to inform and educate. YourĚýĚýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post The World This Week: Explosions in China Rock the World appeared first on 51łÔąĎ.

The fast rise of China from a developing country in the 1980s to a resourceful global player with still huge untapped future potential has triggered many critical reactions. While some already for the survival of the Western liberal system, others attempt to pour oil on troubled water. There are certainly many variables at play, and exact predictions about future outcomes are very hard to make. However, looking at the mix of measures China has structured its foreign policy on in the 21^st century, three specific areas come to mind in which the country’s behavior is eye-catching.

The first area concerns finances, the flow of money and investments. Back in the 1990s, the United States was the biggest investor in most Asian countries. With the turn of the millennia or shortly afterward, this for many countries, while Chinese replaced American investments as number one. In comparison, the financial commitments of other global players like India, Russia or the European Union are relatively insignificant.

In a second step, in 2013, China announced the creation of the (AIIB) with its main hub in Shanghai, officially due to its frustration with the slow pace of established institutions such as the , the (IMF) and the . Unofficially, observers that it is rather meant as a counterbalance to American financial influence in Asia. Even if the sums handled by this bank are, for now, still relatively small compared to the older institutions, in this regard, China might have succeeded, as the joining of three major European nations—Germany, France and Switzerland—and other close US allies annoyed reactions from the Obama administration.

It is thus clear that China’s foreign policy behavior does not fit that of a developing country anymore. Another example for this can be found in the area of diplomacy. Whenever a natural disaster wreaks havoc on countries that China identifies as within its sphere of direct influence, the Chinese government is quick in sending monetary aid. Notable examples are the 2004 tsunami in the Indian Ocean and the recent earthquake in Nepal, both of which hit the respective populations hard.

However, critical voices this aid was not primarily given out of humanitarian concerns, but rather it was politically motivated. Chinese diplomats were certainly fast in denying any race for political goodwill or influence—especially in the case of Nepal—but, if this was indeed the case, China would not be alone in doing so, as India and Pakistan have both similar behavior.

Finally, there is the area of regional dominance. In general, Chinese military budgets and activities have been significantly for years. As mentioned above, China attempts to secure its influence in every Asian country that it sees as regionally important. Its change in assertive behavior, however, most obviously in the South China Sea.

For the past ten years, in a more and more self-assured manner, China has claimed the Spratley and the Senkaku/Diaoyu Islands as part of its sovereign territory, just to name the most prominent territorial disputes with Japan, the Philippines and Vietnam. It is the fear of observers that this situation could lead to a direct clash between China and the US, as the latter could feel pressured to stand by its Asian allies. Satellite images that show how the Chinese military is an aircraft runway from scratch on one of the disputed islands do not help in calming matters.

China and the United States

As for China’s relations with the United States, can it be described as a “contest for supremacy,” as Aaron L. Friedman ?

Well, yes and no. Yes, because on both sides there are incentives to strengthen one’s one position, while simultaneously hoping to weaken the other’s, as exemplified by the creation of the AIIB, and rising investment into military budgets on the Chinese side, and the often conducted military and exclusive trade with Asian partners on the American side.

On the other hand, both countries have nothing to gain by an outright contest of powers, because although either country is not dependent on each other, their economies and societies are becoming heavily interconnected. Any real clash between the two would lead to both sides , with maybe India or Russia as the lucky third—an outcome that both China and the US certainly would like to avoid. The danger of an actual outright conflict between China and the US is not that high.

Surely much more than meets the observer’s eye is happening below the official surface as news about Internet-based hacker attacks on both sides in the last two years . It is also safe to assume that both sides have their plans in order, if any of the two should risk anything outside of the usual banter, as declarations of preparedness by the US Pacific Command (PACOM) and the Chinese show. Nonetheless, instead of hyping the panic as can often be in the coverage of Chinese foreign policy, some form of careful concern would be more in place.

Compared to its own history, as well as in relation to other examples all around the globe, never before has the rise of an international superpower been as peaceful as the ascendance of China in the 21^st century. This is not to criticism concerning aspects like human rights, sustainable development and others in the wake of China’s rise. Nevertheless, to use the image with which China has most often been characterized, it is rare to witness a dragon rising without him blazing fire.

To summarize, open conflict between the US and China, as by many, cannot be ruled out categorically, but for a global player with that much potential, the mix of measures we have been observing so far—ranging from catastrophe support to increasing its military might—rather resembles a careful probing than an attack on the existing world order. China has as much to lose as any other world power. It will be interesting to see what happens next.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit:Ěý /

We bring you perspectives from around the world. Help us to inform and educate. Your Ěýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post China is a Rising Dragon, But With No Blazing Fire appeared first on 51łÔąĎ.

has published its first white paper on national military strategy. Numerous Western observers see in the paper a new Chinese aggressiveness, especially in connection with tensions in the South China Sea. A careful reading, however, shows the document is not a response to current events, but rather it is a strategic plan of a more fundamental nature.

This white paper resembles several important documents that were published under Chinese President ’s leadership, and at first glance, it does not contain anything new. After a closer inspection, however, one finds remarkable aspects. Indeed, the paper still includes Chinese positions on controversial regional and national topics, including Japan, the South China Sea, Taiwan, separatism in Tibet and Xingjian.

But four aspects deserve special attention: the analytical quality of the white paper; the end of the traditional fixation on land troops; the highlighting of cyber issues; and the elaboration of the “people’s war.”

First, since 1995, China has published nine defense white papers. These basic documents on military strategy and the development of the armed forces were, to a large extent, a mix of propaganda and a list of the army’s state of affairs.

It is for this reason that the analytical quality of the latest white paper is remarkable. Language and style are a testament of the authors’ deep knowledge of Western-dominated military theory. Thus, for the first time, a strategic framework is presented, detailing how China’s armed forces under President Xi should act.

Second, as was the case with the defense white paper in 2013, China’s naval forces are once again the focus of the analysis. While in 2013 the main goal was to show what capabilities the Chinese had, a strategic reorientation is presented in this latest paper: “The traditional mentality that land outweighs sea must be abandoned.” This way, land and naval forces are officially seen as equal, with the latter potentially even seen as more important. This passage can be read as an important victory for the proponents of maritime thinking.

It is possible that behind this lies the idea of protecting China’s foreign economic strategy of the “New Silk Road” at land and sea. This strategy entails transporting Chinese goods across the Indian Ocean to Europe. As Beijing’s real intentions are unclear, Western countries and China’s Asian neighbors—especially —are likely to continue observing the strengthening of Chinese naval capabilities with suspicion.

Third, the white paper also presents a first in the way it analyzes the multifaceted security threats in cyberspace. The authors stress the Chinese government’s efforts to resolutely confront these threats, without elaborating further as to what is meant by this. The paper is not a suitable place for that; one would need to follow China’s domestic debates to under this.

In this regard, the discussion of two current draft laws are key: the new national security law and the anti-terrorism law. Here, it will become clearer as to how China defines digital sovereignty and information security. The laws, which are expected to be passed in spring 2016, will strongly influence China’s room for maneuver in bilateral exchanges and among the international community regarding cyber questions.

Fourth, many Western observers have focused in their analysis of the white paper on the importance of the term “active defense,” which has its roots in Chinese military tradition. But, as was the case in the past, the use of this catchphrase has more of a symbolic value.

More interesting are the passages that hint at an evolution of a “people’s war,” a term stemming from the time of Chairman Mao Zedong, in the context of modern science and technology. Behind this is the idea that in case of conflict, all forces of society (not only the armed forces) would be used to defeat an enemy—from fishing boats that encircle disputed islands, to the strategic use of semi-state hackers. This indicates a comprehensive understanding of warfare, one that could certainly cause headaches for Western military strategists.

Overall, with the publication of this latest white paper, the Chinese government seems to heed demands from Western countries, especially the United States, for more transparency. The document is significantly more informative than just listing the military’s state of affairs of the past. This way, the latest defense white paper partially answers the question of what type of superpower China wants to be.

*[This article was originally published by ’s content partner, , and it was translated from German to English by .]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit:ĚýĚý/Ěý

We bring you perspectives from around the world. Help us to inform and educate. Your Ěýis tax-deductible. Join over 400 people to become a donor or you could choose to be aĚý.

The post Military Strategy Sheds Light on the Superpower China Wants To Be appeared first on 51łÔąĎ.

What does China’s growth slowdown mean to you?

I ask here not about the New World Order, global power shifts or whether the United States retains its position as a global hegemon. Nor do I mean the on the world economy, a colossal actual thing, but still a relatively abstract concept.

No, I mean, what does this slowdown in 2015 mean for you, in the rest of the world, looking to as an export market; or you, in China, seeking employment as your economy’s labor market to its new normal.

In 2014, China’s gross domestic product (GDP) grew byĚý, its slowest rate of increase since 1990. This seems to be a monumental change from when it regularly turned in double-digit growth. The effect of this slowdown on those who sell to China and on those working in the countryĚýmust be extreme.

But maybe not.ĚýWhy? Let’s do the arithmetic.

Suppose the year is not 2015 but 2005, exactly a decade ago, and you’re an exporter, somewhere in the rest of the world, predicting China will grow by around 12% over the coming 12 months. China’s GDP then was $2.3 trillion at market exchange rates; Purchasing Power Parity correction did not matter. What determined the size of China’s footprint in the global market place — and still does so today — was the rate of exchange that saw actual financial value changing hands.

You expect China’s marketplace would have increased by $274 billion (12% of $2.3 trillion). Whatever fraction of that market you sell to, that’s what counts for your bottom line.

Now fast forward to 2015. China’s growth might be as low as 7% in the next 12 months, but it has also become a lot larger than it was in 2005. The ‘sĚý(IMF) World Economic Outlook October 2014 that for 2015, China’s economy, at market exchange rate, will come in at $11.3 trillion. At this scale, growth of a “mere” 7% will increase the size of China’s footprint in the global economy by $790 billion over the next 12 months.

To put matters in perspective, this increase of $790 billion is 2.8 times the size of the increase of $274 billion ten years ago. Thus, even at an expected growth rate, a full five percentage points lower than someone a decade ago might have optimistically forecast, China will generate economic growth in absolute magnitude almost three times larger than it did then.

Flickr

The Global Context

But, wait, the world today overall, not just China, has changed. A representative exporter will gauge prospects for selling to China based not just on the country’sĚýscale, but also that of theirĚýown economy.

Suppose you’re an exporting business in the US. Ten years ago, GDP in America was $13.1 trillion; the IMF reckons that in 2015, the US economy will produce GDP equal to $18.3 trillion. Relative to the size of the US economy, China’s expected 7% expansion in 2015 will be an increase in a potential export market of 4.3%; ten years ago, that same ratio was just 2.1%. Put differently, China’s expansion over the next 12 months – even at only 7% – will represent for a typical US exporter, relative to the economy he lives in, more than a doubling of the increase in size of this potential export market.

And what if you’re not in the US? If you’re in the , China’s expansion is even more of an increased opportunity. Only if you’re a fast-growing economy like the -5Ěýdoes China’s 7% growth mean something not quite so large. But even then, the worst you can say is that China’s 7% growth means you can expect simply the same relative increase in export business with China as you did a decade ago. That’s hardly a catastrophe.

Impact on Employment in China

But finally, what about the capacity of China’s economy to create jobs? In , the latest year reported in theĚýWorld Bank’s World Development Indicators, China’s labor force numbered 793 million. China’s average productivity (using IMF World Economic OutlookĚýGDP numbers) was therefore $11,900; this had grown by 12% from the previous year.

If were to continue to grow at that same rate, then an expansion of China’s GDP by $790 billion will generate 53 million new jobs. Since China’s rural population is about 500 million (slightly less than half of its total population), if all those 53 million new jobs were urban, this would still absorb 10% of the rural population as migrants.

Simply put, China in 2015 is a very different economy from even just ten years earlier. China has changed far more than the world has in this time. A 7% growth rate is obviously lower than an 8% one. So, whatever good comes from a 7% growth rate, at the margin, a growth rate a little higher will be even better. But quantifying the changes that have taken place in the global economy, a 7% growth rate for China today means something even more positive than did a 12% growth rate ten years ago.

One can of course imagine scenarios where China’s slowdown ends up much worse for, say, ASEAN, than that indicated here. If spillovers — not from trade connections but something else — unfurled across the rest of the world as a consequence, then a Chinese shock would come with far more damaging effects on the ASEAN economy.

But just as plausibly, a Chinese slowdown might itself be caused by a resurgence in US manufacturing. Then, the overall effects on ASEAN or anywhere else in the world will depend on the relative strengths of the two opposing effects: the US driving ASEAN exports, against China slowing them.ĚýHowever that unfolds, the final effect on ASEAN will not be caused by just a slowdown in China’s growth.

Finally, if China’s growth slows from having switched to greater reliance on domestic consumption, then export opportunities for the rest of the world will be correspondingly larger.

*[A version of this article was originally published by .]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo credit:ĚýĚý/ Ěý/ĚýĚý/Ěý

We bring you perspectives from around the world. Help us to inform and educate. Your is tax-deductible. Join over 400 people to become a donor or you could choose to be a .

The post We Shouldn’t Be Worried About China’s Slowing Growth appeared first on 51łÔąĎ.

After decades of the fastest economic growth in the world, ’s economy has started to slow down. This is perhaps inevitable, given an average annual growth rate of around 10% wasĚý for almost 30 yearsĚýfollowing the economic reforms introduced by Deng Xiaoping in the late 1970s.

But one area where China continues to develop is in the number of private enterprises being started. China simplified the process for businessesĚýin February 2014, and since then there has been a huge leap in the number of new registrations. According to the State Administration for Industry and Commerce, there were nearly 3.7 million new registrations in 2014, an increase of 46% on 2013.

These private businesses have driven China’s economic growth in recent decades, and their future prospects play an important role in the country’s continued transition toĚý the world’s largest economy.

A Growing Private Sector

Before the recent jump in business registrations, China had already transitioned from having a mostly state sector economy to a private sector one. By 2012, the State Administration for Industry and Commerce, which registers new businesses across China, reported that there were more than 50 million active registered private businesses,Ěý40 million of which smaller “household enterprises.” This is a huge shift from 1978 — the year economic reforms began — when there were only 140,000 registered private businesses, generatingĚýless than 1% of economic .

The private sector now accounts for at least three-quarters of the economy,Ěýand more. Private businesses create 90% of new jobs and are theĚý employer in many parts of China.

Meanwhile, as the private sector has grown, the state sector has shrunk. In China’s cities, where most people now live, the national statistics show that jobs in state-owned enterprises have dropped from over 70% of total employment in 1990 to 25% in 2012.

What is striking about this transformation is that it has been recent. The private sector only really took off in the early 2000s, following widespread privatization of smaller state-owned enterprises and collectively-owned rural township and village enterprises. In the 1980s and much of the 1990s, private entrepreneurs found it easier to register as collective (that is, state-owned) enterprises than private businesses,Ěýdiscouraging open .

© Shutterstock

The emergence of private businesses as the driver of China’s economic growth over the past ten years has been one of the most important structural changes in the country since the start of the current reform period. It constitutes a fundamental restructuring of the economy’s ownership away from the state and into private hands. This is a major shift that removes one of the core tenets of the Chinese Communist Party — that the state owns the means of production.

However, a move from state to private ownership does not mean the government and party have become side players in China’s economy. The state continues to play an important role in shaping markets, supporting state-owned enterprises and in creating the wider conditions within which businesses grow.

Many private enterprises, especially those traded on China’s own stock markets in Shanghai and Shenzhen, are actually controlled by the state through shareholdings and informal means of maintaining influence. Within this context, the Chinese state and Communist Party continue to prefer and support state-owned enterprises, offering them market opportunities, finance, political support and sponsorship that is not available to private entrepreneurs.

Continued private sector development will determine China’s future economic growth. In order to enable this, the Chinese government should encourage private sector development in the following six ways:

1) Create the right macroeconomic conditions. The Chinese government can continue to create the wider conditions for economic growth. For example, the right monetary policy and continued investment in infrastructure will create opportunities for entrepreneurs to grow their businesses. Ensuring continued stimulation of the economy and opening up markets to more and more transparent competition will particularly help the private sector to grow.

2) Put the private sector first. The government can ensure that some of this wider macroeconomic development is targeted specifically at the private sector. For example, more contracts for major projects could be awarded to private rather than state-owned enterprises, and government procurement could be opened up more to the private sector. There is a need to loosen the close relationship between the state and the large enterprises it owns and gives preference to.

3) Support as well as sponsor entrepreneurs. The state can give more targeted support to the private sector, both directly to enable growth and indirectly through policy and regulation that is friendly to private businesses. There is also a role for the state to actively and publicly sponsor entrepreneurship, advocating for start-ups and private ownership as a valuable and positive career option.

4) Protect property. The state can reinforce protection of private property, more actively enforcing theĚý2007 Property Law. In particular, upholding private property rights in the courts, and finding mechanisms to help entrepreneurs clarify and register their rights would be a positive step. In addition, and as part of the current anti-corruption campaign, more could be done to prevent expropriation from private enterprises by officials.

5) Invest in new and growing businesses. Most new jobs and wealth are created by a small group of fast-growing new ventures that scale up soon after start-up. More and better funds could be made available to private entrepreneurs running these types of business. China’s state banks continue to prefer state enterprises and to be less competitive when lending to the private sector. A strong investment system focused on private enterprises would also inject much-needed capital that would stimulate business growth.

6) Support and fund innovation in the private sector. Developing a stronger national infrastructure for innovation that closely involves private enterprises would create a more competitive economy. Much of China’s research and development is funded in state-owned enterprises and government ministries. Opening this up to private businesses and finding ways to fund private enterprises would create a much more innovative economy.

*[This article was originally published by .]

We bring you perspectives from around the world. Help us to inform and educate. Your is tax-deductible. Join over 400 people to become a or you could choose to be a .

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Photo Credit: / /

The post China Can Become the World’s Most Entrepreneurial Economy appeared first on 51łÔąĎ.

I was recently inĚýHangzhou attending a Global Investment Conference organized by Euromoney. At one point in time, Hangzhou was the capital of and the biggest city in the world. It is about 200km from , or an hour’s journey on the high-speed train — a trip I was told costs only €10.

Hangzhou was a center of the silk business and was visited by Marco Polo. Silk from Hangzhou went along the ancient Silk Road all the way to , thereby making the city one of the world’s first globalized economies.

I spoke in Hangzhou just as the Asia Europe Economic Meeting (ASEM) of heads of government was taking place in Milan. As the president of the European Council, I attended the first-ever ASEM meeting in Bangkok in 1996. I met the mayor of Hangzhou and key commercial and political figures.

A Middle-Class Country

Since 2010, there has been a huge surge in outward investment from China in the rest of the world, jumping from €6.1 billion to €27 billion in just three years. This investment is going into buying high-tech companies — those with globally-known brands — and tourist resorts. Just as China’s export drive enabled it to not only gain income but also to increase market knowledge, this wave of investment is also designed to strengthen ’s global competitiveness and sophistication.

Children in Shanghai are getting the highest test results in Math, Science and Reading comprehension in the global Programme for International Student Assessment (PISA) tests, which show they will provide strong competition for European children in the global economy. Irish universities are accepting Chinese students and also investing in developing university facilities in China. This will help China to become a high income economy, with its people enjoying lifestyles that will make similarly exorbitant demands on global resources, like the ones already being made by and consumers.

Wage levels are rising fast in China, as demand for workers is beginning to exceed supply — partly thanks to the one child policy. China is losing low cost jobs to and , so it has no choice but move higher up the value chain.

… people in the developing world are watching European and North American democracies, as we squabble about how to restore dynamism and optimism in the wake of the 2008 economic crisis.Ěý

There is a shift in the allocation of credit away from big, relatively inefficient, state-owned heavy industries, and instead toward privately-owned businesses in the consumer goods sector. While the raw gross domestic product (GDP) growth rates in China may decline as a result, the lifestyle enhancing quality of future GDP will improve.

China is becoming a middle-class country, with middle-class tastes and material aspirations. With wealth comes anxiety, as many Chinese want to invest some of their savings overseas. This provides opportunities for the Irish international financial services industry.

While I was in Hangzhou, the protests in were still under way. Protesters wanted anybody to be eligible for election, not just candidates approved by a single nomination committee. I read an article on this controversy in the China Daily by Professor M.D. Nalapat, entitledĚý “Hong Kong Must Avoid the Democracy Trap,” which challenged the notion that, at every level of economic development, democracy is a guarantor of economic success. He said:

“Political chaos can act as a speed breaker for rising Asian economies, dampening the challenge they pose to western counties. Iraq, Egypt, Libya and Ukraine are examples of countries where hundreds of thousands of youths believed that replacing of existing structures through street protest would result in a better life. Instead what they have got are deteriorating living standards andĚý increasing insecurity.”

This is unfortunately a fair comment, and demonstrates the danger of making exaggerated claims of automatic economic advantages from any change of governmental system. Democracy requires patience and self restraint, sometimes absent in recently liberated societies.

Nalapat went on: “Hong Kong is still moving upward, when the present generation in the US and the EU are worse off than the generations preceding it.”

ThisĚý is aĚý superficial comment. Mature economies will never have — or need to — the same rates of economic growth as economies like China, which are in the “catch up” phase. Indeed, there is a case to be made that, beyond a certain level of economic development, diminishing returns in human wellbeing and environmental quality set in. Five percent annual growth rates cannot continue to infinity — anywhere in the world.

It is unsurprising that an article like Nalapat’s should appear in the China Daily, but it is troubling that it should be written by an Indian — an inhabitant of the world’s largest democracy; a country in which there are 3 million freely-elected legislators at differing levels of government; and with real competition between parties, unlike the tightly-controlled system in China.

But Professor Nalapat shows that people in the developing world are watching European and North American democracies, as we squabble about how to restore dynamism and optimism in the wake of the 2008 economic crisis. People in the developing world are drawing conclusions about our systems of government, and the capacity of those systems to enable us to get our economic act together and democratically reconcile citizen expectations with economic realities.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

/

The post China is Becoming a Middle-Class Country appeared first on 51łÔąĎ.

On September 5, Alibaba Group filed details about its forthcoming Initial Public Offering (IPO), suggesting a mid-range valuation of $155 billion. This would make the Hangzhou-based web retailer the most valuable listed private-sector company headquartered on the mainland, ahead of its Shenzhen-based online rival Tencent Holdings.

Alibaba’s coming of age underlines a continuous trend of the last half-decade. For all the fashionable talk of ’s dominant state capitalism and “Guo Jin Min Tui” — “the state advances, the private sector retreats” — the numbers tell a slightly different story, as illustrated in the chart below.

This chart shows the shares of four categories of companies in the aggregate market value of the largest listed Chinese firms, namely those that feature in the FT Global 500 list of the world’s 500 largest listed companies by market capitalization, which is regularly compiled by the Financial Times. Companies are included irrespective of the location of their main stock market listing, whether , Shenzhen, Shanghai or, in Alibaba’s case, New York.

The three main groups are state-owned enterprises (SOEs) of the People’s Republic of China (PRC), such as Petrochina, Industrial & Commercial Bank of China or China Mobile; companies from Hong Kong and Macao (mostly private-sector but also including municipal companies such as MTR, which operates the profitable Hong Kong metro system), such as Hutchison Whampoa, AIA Insurance, or Sands China; and private-sector companies from the mainland, such as Tencent or Ping An. A smaller fourth group includes banks with hybrid ownership of state and private-sector shareholders (with a public-sector majority), such as China Merchants, Industrial Bank or Shanghai Pudong Development Bank.

The numbers are as of December 31 of each year except in 2014, where the ranking as of June 30 is used. In the right-hand bar, Alibaba is added to the list on June 30 with the notional market value of $155 billion. This inclusion results in a corresponding expansion of the relative share of the mainland private sector. (The other companies’ market values were not adjusted from their June 30 amount, but this would not materially change the overall picture.)

The chart suggests three observations. First, with about two-thirds of the total, the PRC’s government retains a firm control of the “commanding heights” of Chinese business, as has been plain since the massive IPOs of state-owned enterprises in the mid-2000s. Second, however, this measure suggests a continuous erosion of state control for the past half-decade, as new entrants such as Tencent and Alibaba gain ground — and as private firms in Hong Kong and Macao have also comparatively recovered somewhat from their low point of the late 2000s. Third, and for the first time with Alibaba’s addition to the mix, large private-sector companies from the mainland collectively weigh as much as their peers from Hong Kong and Macao when measured by aggregate value.

As always in China, one must keep in mind that the distinction between the public and private sector remains somewhat fuzzy. Ultimate ownership of private-sector firms is often unclear, and the Communist Party of China retains ways to influence the strategy and behavior of many nominally private-sector companies.

Nevertheless, the gradual rise of private-sector companies as compared with the state-owned giants is too continuous to be ignored. Alibaba’s IPO is likely to be remembered as the symbolic moment of this momentous transformation of the Chinese corporate landscape.

*[This article was originally published by and .]

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

/

The post Alibaba IPO Underlines Rise of Chinese Private Sector appeared first on 51łÔąĎ.

At Nottingham University Ningbo China (UNNC), are prepared for to go global. Taught in English according to Western standards and under strict quality control of the campus, they receive an internationally competitive and globally recognized degree. However, while students achieve very good to excellent results in written assessments, one key cultural challenge remains. At the UNNC, active class participation is encouraged, but Chinese students are often shy and passive throughout their education, experiencing difficulties with innovative and critical thinking.

The Issues

China’s current educational system is exam-oriented. Although quality-oriented education has been advocated in educational circles, it is hardly implemented in China. The aim of Chinese education is to answer questions correctly, achieve high marks and pass exams. Therefore, all questions have a standard answer, even so-called “open questions.” Under pressure to prepare students for tests, most teachers will not attach importance to nurturing their creativity and curiosity. As a result, Chinese students are good at rote-learning but lack their own thoughts. They are frequently described as delivering “high scores and low abilities.”

The Chinese educational mode is passive. Teachers instill the minds of young children with fixed ideas. Students are encouraged from early on to accept all knowledge provided by their teachers, to listen carefully in class and to remember all content in exact detail. Moreover, asking questions freely is discouraged, in favor of keeping quiet in class for teachers to better transfer knowledge. Any interruptions are perceived as disrespectful, and doubt may be considered a threat to a teacher’s authority. As one student put it: “If we want to ask questions, we have to hold special postures and raise the right hand [and] then wait for the teacher to ask us. Sometimes a teacher will not give us the chance to ask. Sometimes we will be criticized or mocked by classmates if the question seems stupid.”

The consequence of this Chinese educational culture is that students do not like to ask questions and cannot easily open up in seminars. Most students are not good at critical thinking because they were never encouraged to think critically before, let alone communicate with teachers and their peers.

Influenced by the passive educational mode, most Chinese students have developed a habit of just listening and accepting the instilled knowledge, without independent thinking. Many students keep quiet in class because they may not even understand some questions.

In China, teachers have a high status, and students often perceive the relationship between a teacher and student as unfair. The teacher is always right. Students are told by parents that a teacher is sacred and whatever they say must be right. Students should accept what teachers say without any doubt or conflict, in order to show respect and get high marks. In many , slogans cited from “Di Zi Gui” — a famous standard for students in ancient China — are put up on the wall to educate students to respect their teachers. A very typical slogan is: “When facing an elder or teacher, do not show off and challenge your teacher.” Therefore, for most students, they have the impression that a teacher’s authority cannot be challenged.

The Chinese educational mode is passive. Teachers instill the minds of young children with fixed ideas. Students are encouraged from early on to accept all knowledge provided by their teachers, to listen carefully in class and to remember all content in exact detail.Ěý

Before answering questions, most Chinese students enter a psychological struggle: Should I answer this question? If so, what will others think of me? Will they think I am showing off? This is a universal phenomenon and remaining “low key” is the prototypical behavior of most Chinese people. In other words, low key is perceived as a virtue — the virtue of humility. Too much activity is perceived as eccentric behavior, and Chinese students do not want to become alienated among classmates.

Most students like to express themselves when they are young. If they always receive praise, they will be more willing to answer questions. If they are always repudiated, it will have a negative effect. In a Chinese class, each question has only one standard answer and it is either right or wrong. As some students reflected, they have been repudiated after expressing their own opinion; although their answer is very similar to the standard one. In this situation, Chinese students are afraid to express opinions. “If I provide a right answer, there are not many benefits, but if the answer is wrong, I will be mocked and lose face — this contains [a] high risk.” So when they are unsure about an answer, they will choose not to speak up to minimize this risk.

Most Chinese students lack confidence in conversing in English. When asked a question, they might not speak up, even if they know the answer. They will organize their response first and only answer a question if they can express it accurately. However, the process of organizing language takes much time, including checking a dictionary and structuring a sentence. Sometimes, they are not confident enough and give up. Most of the time, before they get ready to answer a question, the teacher will already have moved on. However, the language problem is not the main reason. It is simply typical for Chinese students to always keep quiet.

Although taught in English, Chinese students tend to use their native language in class. Similarly, Western foreign exchange students use their own native tongue to communicate. The Chinese integrate little with predominantly international student groups, while international students integrate better into groups of Chinese students. This is because language and cultural differences make communication difficult for Chinese students, since they typically arrive with a lower level of English skills at the university.

Faced with these difficulties, Chinese students choose to escape. Due to the one-child policy in the generation born after the 1980s, most students are the only child in their families. Children receive more love and care than before. Parents use their experience and wisdom to make all decisions for their children, in order to help them avoid failure. However, this may limit a child’s development and deprive them of the right to experience life and make mistakes. As a result, many students become used to depending on their parents and lack independence. When facing difficulties, they tend to escape instead of taking the bull by the horns.

The Solutions

So what are the solutions? Most Chinese students are very careful about what others think of them. It is of crucial importance to show students that language is just a tool for communication, no matter how good one’s proficiency is. The aim is to communicate and exchange ideas, so that no one will mock an accent or grammar mistake. In order to encourage Chinese students to speak, it is key to emphasize content over language and grammar for written assessments. This can effectively encourage students to express their own perspectives.

The new Chinese leadership puts a heavy emphasis on innovation to turn China into a competitive global player, and move away from the economy’s reliance on manufacturing cheap goods as the factory of the world. Educating a generation of Chinese students whoĚýcan innovate in their thinking and be critical is a cornerstone for China’s future success.Ěý

Traditional Chinese education puts a lot of pressure on students when trying to communicate with teachers. In order to change this situation, teachers need to create a lively, friendly and relaxed class atmosphere. Students should feel that having lessons is like conversing with friends. Humor can be a key component of breaking barriers. Using humor to illustrate concepts encourages students to share their opinions. For instance, some students enjoy the education style of “New Oriental,” a famous English training organization. Their teachers are perceived as humorous, friendly, lively and interesting. Students feel no pressure when talking with them and are unafraid of making mistakes.

Teachers need to encourage students to prepare before class. For instance, teachers may ask each student to prepare presentations on relevant topics as part of active class participation. For example, the UNNC graduate course on qualitative methods has almost no teaching materials; the only materials are different articles selected by the instructor to be discussed in a seminar format.

In class, seating is fixed in a circle. Students sit very close to each other, making them feel more comfortable with sharing their perspective. All knowledge is transferred during discussions and learning takes place in a conversational style. Other methods may include discussing videos, theater and role-plays. A great team-building tool can be the use of group simulations with competing teams, since Chinese students are very competitive.

To tackle the students’ fear of making mistakes, teachers need to provide substantial praise and encouragement throughout class. If students believe that answering a question does not have many benefits, they will be deterred from doing so. Even being graded by active class participation may not be tempting enough for them. Arguably, praise or encouragement is a much more powerful type of reward. Respecting students’ answers is crucial to building up their confidence, even if they misunderstand questions. It is helpful to find a friendly way to value each answer and avoid any negation to build self-confidence.

One technique is to encourage students to contradict their teachers and give high marks to any insightful or novel perspective. Students should be willing to freely express their ideas and enter discussions. As one student put it: “Even if we believe the Earth is flat, not round, we can discuss with the teacher because we clearly know that there is no absolute right or wrong answer in his eyes.”

Looking Ahead

The new Chinese leadership puts a heavy emphasis on innovation to turn China into a competitive global player, and move away from the economy’s reliance on manufacturing cheap goods as the factory of the world. Educating a generation of Chinese students whoĚýcan innovate in their thinking and be critical is a cornerstone for China’s future success. The educational experiment of the Nottingham University Ningbo China, the first true joint venture between a Chinese and Western institution of higher education, provides valuable lessons on how to educate the next generation of Chinese leaders.

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

/

The post China’s Educational Challenge When Going Global appeared first on 51łÔąĎ.

By Zhang Hongzhou

As the United States pivots toward the east, China has launched the so-called "Marching West" strategy to avoid a direct confrontation with the Americans — a strategy first articulated by a prominent Chinese scholar, Wang Jisi.

While much attention has been given to the strategic and diplomatic importance of countering the US pivot to Asia and on China's overseas quest for energy resources, food could be an important driver behind Beijing's Marching West strategy.

Diversifying From the US

For decades, self-sufficiency has been the cornerstone of China's food security strategy. Yet facing dual challenges of rapidly growing demand for food and fast-depleting water, land and labor resources, China has to import large quantities of food from other countries. As it relies more on foreign imports to feed itself, an overdependence on US imports, amid deep-seated Sino-US strategic distrust, is drawing serious concern.

To better safeguard the country's food security, China aims to diversify its food imports away from the US and build its own global food supply system by investing in overseas agricultural resources. To secure its food supplies, China is marching west, particularly to Russia, Central Asia and Europe, where food and agricultural resources abound.

Russia

In contrast to China, Russia, especially its Far East region, has wide swathes of unfarmed fertile land. As China faces increasing difficulties to produce enough food to feed its people, the Chinese government opened talks on investing in Russian farmland. 

In 2012, China Investment Corporation contributed $1 billion to a joint Russian-Chinese fund to invest in agriculture and timber in Russia and other former Soviet states. Chinese firms, led by state-owned companies, have leased at least 600,000 hectares of land and 800,000 hectares of forests.

Central Asia

According to the Food and Agriculture Organization (FAO), Central Asia has vast untapped agricultural resources and a vital role in improving world food security. Yet it faces key obstacles in its farming techniques, inputs and agricultural machinery, along with transport infrastructure and storage facilities. This makes Central Asia an ideal target for China's agricultural going-out, particularly given the stable and close relations between China and Central Asian countries.

In 2012, Wen Jiabao announced that China would consider setting up a China-Central agricultural cooperation fund and building several trade zones and agricultural demonstration centers to promote agricultural development in the region. And in 2013, addressing a Shanghai Cooperation Organization (SCO) summit in Kyrgyzstan, Chinese leader Xi Jinping proposed that SCO countries should establish a cooperation mechanism for food security.

Two main Central Asian countries targeted by China are Tajikistan and Kazakhstan. In Tajikistan, China has leased or controlled over 100,000 hectares of land so far. Both countries are also discussing the possibility of establishing a free trade zone in neighboring countries to expand trade in agricultural products.

In Kazakhstan, Chinese companies have already had large presence in the country’s agricultural sector. It is reported that China's state-owned Jilin Grain Group invested in one project covering 1 million hectares of land in Kazakhstan for soybean production.

Also, two countries have taken serious efforts to facilitate cross-border agricultural trade.

In December 2013, China opened its first green channel for agricultural product, connecting its Bakty port and Kazakhstan’s Baktu port. The green channel, which is a significant part of the development of a Silk Road economic zone, helps China meet its growing demand for grains.

Europe

European countries are among the world's leading food exporters. As China looks to diversify its food imports away from the US to strengthen the country's food security, it is interested in expanding agricultural trade with Europe's leading food exporters, such as France, the Netherlands and Germany.

In 2012, China and the European Union (EU) signed the Agriculture Cooperation Plan, which aims to address issues, including food security and the environment, with a goal of expanding trade relations and sustainability.

At the 16th China-EU Summit in November 2013, a Letter of Intent on Research and Innovation Cooperation in Food, Agriculture and Biotechnology was signed between the EU and China, with the hope to enhance cooperation on food security and safety.

China also intends to cooperate with the EU at the multilateral level, notably on global food governance issues dealt with by the G20 and World Trade Organization (WTO), pushing forward the Doha round of negotiations. China and the EU will strive to get WTO members to reach agreement on agricultural trade facilitation.

Turning to Central and Eastern Europe

More prominently, China is turning to central and eastern European (CEE) countries for food. As Prime Minister Li Keqiang stated during his visit to CEE countries in November 2013, CEE nations produce high-quality meat, dairy and wine products and China's urbanization will unleash greater demands for beef, lamb, cheese, wine and other products.

Thus, China wishes to import more food products from CEE countries. Among the CEE countries, Ukraine is attracting huge interest from China. In 2012, China's Export and Import Bank agreed to provide a loan of $3 billion to Ukraine to develop its agriculture; in return, Ukraine will export corn to China.

In the same year, UkrLandFarming signed a memorandum of cooperation with China’s CAMC Engineering Co. for up to $4 billion in investment to build production facilities for an annual output of 400,000 tonnes of pork and 600,000 tonnes of chicken, as well as a grain terminal with handling capacity up to 5 million tonnes in Ukraine.

And in December 2013, during then-Ukrainian President Viktor Yanukovych's visit to China, the two countries tabled a five-year plan to deepen their strategic partnership, while their first priority area for expanding cooperation is agriculture.

Food is becoming a key factor shaping China's international strategies and foreign policy, in a way similar to, if not more profound than, energy.

*[Note: Zhang Hongzhou is an Associate Research Fellow with the China Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. This article was originally published by .]

The views expressed in this article are the author's own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Image: Copyright © . All Rights Reserved

The post China is Marching West for Food appeared first on 51łÔąĎ.

According to Will Durant, the success of religion lies in the “persistent power over the human soul.” Religion helps us connect with reality in a different way; it focuses on experience and enables us to comprehend its transcendental nature.

Much inquiry in the world today suffers from judgments based on narrowly construed interpretations of the experiential reality. Meerten Ter Borg distinguishes between “power of religion” and “religious power.” The former refers to the institutional nature of power, whereas the latter is concerned with the source of power. This source of power may be transcendental, and hence, need not be materialistic in nature.

In the case of Tibet, a combination of the two has taken place to set it apart from other Buddhist societies.

Heart Over Mind

Emotions transcend space and time. In the case of Tibetan Buddhism, the centrality of emotions shapes the ethical character of not only individuals in Tibetan society, but also of Tibet’s national interest. The linguistic expression and practice of the emotions associated with Tibetan Buddhism have earned it international support. The notions of “love” and “compassion” have become metaphors in their struggle for ensuring the survival of their distinct culture. The dominance of structural interpretations blinds us to the degree of which our everyday life is embedded in emotions. Religion performs a role of bridging the gap between these emotions, the individual, and society.

The enlightened mind is integral to the Tibetan culture. The focus on ethical practices is not confined to monks alone and involves the active engagement of lay persons. In , Keneth Liberman notes that the “enlightened mind” is located in the heart in Tibetan thought, in contrast to its location in the head in European philosophy. Ethical transformation, which forms the centerpiece of the Tibetan culture, focuses on the development of the heart over the mind.

Authority and Religion

Tibet faces the challenge of being unable to meet the prerequisites set by the West for recognition. The idea of Tibet as a particular territorial unit was historically enmeshed with  religious fervor, and the most important distinction between people was along the lines of faith. There never existed a distinction between the sacred and the secular, a feature that characterizes the modern state. The idea of a democratic state, which the Dalai Lama has adopted for the Tibetans in exile in India, holds little significance for those who “ is and has always been the only democratic leader of the Tibetan people.” 

A centralized authority had never been established in Tibet except during the 7^th century, when fear of external threat initiated military alliances by the clan-based polities, and during the Mongol entry in the 13^th century. The instability, which ensued due to lack of centralized authority, created a void filled by monasteries. The role the lama played was both spiritual and political in nature. The distinguishing feature of Tibetan Buddhism has been the role of the spiritual teacher that was missing in other variants of Buddhism, with the notable exception of Burma, writes . Power has been historically diffused between the nomadic organizations, the aristocracy, and the monasteries. However, the greatest degree of integration in Tibet has taken place through the monastic tradition.

The Dalai Lama’s government, in line with the West, is working towards establishing a state for a society that, effectively speaking, was always stateless. Even when centralized authority of the monastic system existed, local political structures retained a high degree of autonomy. Hierarchy characterized the society, but religion always proved to be a binding factor. The Chinese invasion in 1950, according to Ashild Kolas, was accompanied by an application of religious persecution as a way of dismantling the Tibetan political system. The situation only worsened with the Cultural Revolution and the systemic attempts at destruction of the Tibetan way of life. Any attack on religion has a direct bearing on the political landscape of a “country” where the distinction between sacred and the secular have been blurred.

Where is Tibet?

If we were to ask – “where is Tibet?” writes , “the future Buddha will locate Tibet in the hearts rather than on a page in an atlas — thus bringing Tibet’s mysteries full circle to a time, before 1950, when it was just a blank space on a classroom globe.” 

Much of the firmness that was expressed with respect to Tibet’s strict territorial boundaries in the Dalai Lama’s book, , dissipated afterwards. “The pull towards independence is mainly moral and emotional in character,” . 

In the case of Tibet, the importance of the value of territorial boundaries was not realized until its cultural identity was attacked. Tibetans always distinguished themselves from others based on beliefs, and in that sense we can identify the cause for the shift in the Dalai Lama’s position with regard to the “question of Tibet” from a demand for independence to an acceptance of autonomy, to his desire to shun violence and preserve its traditions.

For a community faced with a threat to its way of life, infusing its world view with strengthened vigor made it “marketable” in a world plagued by spiritual decay. The experience of the Tibetans also proved to be a blessing in disguise because their struggle was now comprehensible to the world. The Dalai Lama writes: “Tibetans never took any active steps to prove their individuality to the outside world, because it never seemed necessary.” Eventually retaining the Tibetan world view became essential to score an ideological victory over China, and hence, persistent efforts were made to break free from the core area of administration imposed by the Chinese.

Independence of Mind

It can be argued that in the case of Tibet, the demand for independence moved beyond the narrow framework of territorial independence to include independence of the mind. The dangers of the slow death of its culture through change in the education system were a bigger threat than territorial occupation. 

In the hegemonic struggle between the Chinese and Tibetans that ensued after the Dalai Lama’s move to India in 1959, the latter focused on the illegitimacy of the Chinese authority and power over Tibet. This claim was rooted in the major difference that existed between their opposing world views. Where one had adopted the communist path with no role of religion in the affairs of the state, the other intertwined religion and politics.

However, despite the barbarity of the Chinese, the Dalai Lama magnanimously expressed admiration for the party leadership because they held to their communist faith. The Chinese had repeatedly asserted that it was problematic to rest one’s life on religion. 

In his book, , the Dalai Lama spoke favorably of many aspects of Marxism. As a system based on justice and equality, it appealed to him. However, he argued that the theoretical basis of Marxism with its emphasis on a materialist view of human kind was problematic. Despite these differences, he expressed his belief in the two doctrines of Buddhism and communism meeting on a common ground, which would improve the way the two countries conducted politics.

The Dalai Lama’s desire to see Tibet “modernize” along the lines of People’s Republic of China when it came to heavy industries was misconstrued by Mao Zedong, who failed to recognize that the Dalai Lama’s view on scientific matter and material progress was very much in line with the Buddhist teachings. Mao’s belief that “religion is poison” – because it neglected material progress – did not go down well with the Dalai Lama, who did not see the two as antithetical to each other. Mao seemed to ignore the Buddha’s instructions that, as the Dalai Lama writes, stressed the need for “anyone who practices the dharma should test for themselves its validity.” The Tibetan Buddhist way of life was never overpowered by religion and there remained an appreciation for modern science, so long as its usefulness could be tested.

Reaction to Repression

In the case of Tibetans, the reaction to repression by the Chinese in the form of strengthening the potency of the symbols that represent their culture is more viable than engaging in violence. The maintenance of the sanctity of territorial boundaries is desirable, as often these boundaries signify distinctions between “us” and “them.” 

However, notes, the most important distinctions in Tibet were always made according to beliefs. Many tribes did not fit the “gentle Tibetan stereotype” but, Dunham writes: “Although Khampas had no love for Lhasa’s central government, their allegiance to the Dalai Lama was without parallel.” A student belonging to the Khampa tribe argued in an interview that: “My faith in the Dalai Lama is indelible and I would do anything to protect him, even if that means indulging in violence.”

Much of the resilience shown by Tibetan Buddhists is rooted in their belief that nothing is permanent in the world, not even their suffering. The tragedy of Tibet initiated interdependence with the world, which made them more conscious of the Buddhist teaching that their suffering does not exist independent of the suffering of others. 

Thus the Tibetans, with the Dalai Lama as their spiritual and political leader, embarked on a journey to connect with the world on a deeper spiritual plane. The inter-subjective meanings assigned to human experience made the world converge on the centrality of certain emotions that the Tibetans believed had universal value.

A move beyond the materialist conception of relations between countries to formation of ties based on a sharing of universal responsibility to ensure peace, guided the foreign policy of Tibet. The material aspects of life, such as the nature of the state or that of foreign policy, were shaped by the meaning the community gave to them and, in the case of Tibet, it was always colored with religious insights. 

In the words of Albert Camus: “The only way to deal with an unfree world is to become so absolutely free that your very existence becomes an act of rebellion.” The assertion of the Tibetan cultural identity is acquiring a powerful dimension through organized non-violent movements like the , which emerged in Tibet but has spread worldwide among the Tibetan community, and is based on the Gandhian principle of taking pride in everything that resonates of their cultural identity.

For the Tibetans who are deeply-rooted in their history, the potency of their culture has become a “weapon” in their fight for their homeland and, more importantly, in their struggle to retain their unique Tibetan Buddhist identity. 

The Chinese may depart with a thumping victory. Mountains might be riddled by roads. There might be rail lines the Tibetans would have never dreamt of. The Chinese might change the demographics of the region. All this is happening amidst the smoldering ruins of their culture; however, the Tibetans still live in hope. The Chinese will never succeed in destroying the indomitable spirit of their compassion. The politics of the good heart which enables them to remain rooted in history and to gain a moral high ground has connected the Tibetans with the world at a spiritual level, where basic human emotions of love and empathy are invoked to bridge the gap between the individual, his spirit, and the world at large.

The views expressed in this article are the author's own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Image: Copyright © .  All Rights Reserved

The post The Immortal Bodhi Tree: Tibet and the Chinese Occupation appeared first on 51łÔąĎ.

Current statistics showed that China hosted approximately from both internal and international sources. Identified as a source, transit, and destination country for human trafficking, China’s issues of human trafficking have been recognized as forced marriage, forced labor, and sex work, which is also termed sex exploitation and sex trade.  

There is a discrepancy between government and non-government reports and sex work researchers’ findings on sex trafficking. My two-year ethnographic research on sex workers in a metropolitan city in China, found no sex workers who had been forced to engage in sex work. They entered the sex industry for a variety of rational reasons. Indeed, to date, research on human trafficking in China has found little or no evidence of sex workers being forced into sex work. The difference between reports and research findings can be a result of a lack of study in the extreme northern part of China, and a victim script that has been appropriated by voluntary migrant sex workers to cover up voluntary sex work and evade legal consequences.

Definition of Trafficking

According to the United Nations Palermo Protocol to Prevent, Suppress and Punish Trafficking in Persons of 2000, as part of the United Nations Convention against Transnational Organized Crime, “recruitment, transportation, transfer, harboring or receipt of persons” by “the use of force or other means of coercion" with the “purpose of exploitation." The Protocol further explains “exploitation” as, at a minimum, “the sex work of others” and “other forms of sexual exploitation.” According to the Protocol, a person is considered a trafficked victim so long as s/he is involved in the above-mentioned situations, regardless of whether the person consents to it or not. In other words, if a woman makes a voluntary choice to work as a sex worker, she is defined as a trafficked victim as her consent is deemed irrelevant.

Indeed, over the last decade, the dominant discourse on trafficking not only has conflated trafficking with sex work, but also has . Informed by this dominant discourse, research on human trafficking in China rejects distinctions between “forced” and “free-choice” sex work and . In doing so, real persons’ narratives and life experiences were lost in a list of statistics of the so-called “trafficked victims.”

Following this cultural logic, the state has subsumed trafficking under the category of sex trafficking and taken measures such as police raids to enforce rehabilitation or reeducation, or deport voluntary sex workers who are deemed as trafficked “victims.” China’s current anti-trafficking strategies have denied women’s agency to choose to work as sex workers, robbed them of survival strategies, and dismissed other forms of forced, exploitative labor situations.

The reason for the conflation of sex work, migration, and trafficking lies in the lack of understanding of migrants’ real lives by many social workers, policymakers, government representatives, and others. We should not perceive them as passive victims manipulated by others, but as human agents who choose to work in the sex industry as a migration strategy and who fight to control their lives.

Reasons for the Sale of Women into Forced Marriages

A host of cultural and economic factors such as gender imbalance, rural poverty, and the high cost of bride price and wedding are the root causes for the . Due to the long history of devaluing women, an imbalanced sex ratio has been a long-term problem. It was that the sex ratio at birth in 2010 was 118.08 males for 100 females, which was an improvement of 119.45 to 100 in 2009. As a result of this imbalanced sex ratio, many poor men in rural areas are unmarried either because they could not find a partner or because they could not afford the bride price or wedding. In many areas, the high cost of a wedding ceremony and bride gifts exceeds the . Due to the traditional belief that a daughter after marriage will stop providing for her natal family and become the labor force for the husband’s family, the bride’s parents require the bridegroom to provide financial compensation for raising the daughter. Without the appropriate bride price, the parents would not permit the marriage. Since parents’ endorsement is the key to the daughter’s marriage, poor men find themselves unable to afford a bride.

Pressured by the family, many poor men would purchase women from outside into forced marriages. In many rural areas in China, marriage is not an individual issue, but a family business. This is because men are obligated to produce male heirs to continue the lineage through marriage. In times of difficulty to fulfill his duty, a man usually receives help from his entire family to purchase a woman who will be utilized as a reproductive tool to carry on the lineage. When facing the police’s demand to free the woman, the buyer would receive sympathy and may even be protected by villagers because purchasing a wife is considered a morally correct thing to do for an unmarried man.

The low social status and low education of women have also made them an easy target for deception. Most of the women who are sold or deceived into forced marriages are young and live in dire poverty. At times, they are sold by their own parents to a man who offers the highest amount of money as a prerequisite for marriage.

In addition to the deeply-entrenched cultural reasons, relaxed state policies about population mobility, the market economy, and the slogan of “being rich is glorious” also play an important role. Population mobility has created opportunities for women to be lured and bought into forced marriages in faraway rural areas. Guided by the market economy, the sale of women is often legitimized and facilitated by village officials because the sale is considered a lucrative business for villagers and a way to boost the local economy. In some cases, village officials perceive it as an important strategy to solve marriage problems and maintain social order.

Selling and Buying Women

Selling and buying women for marriage has been a widespread cultural practice in Chinese history. Research has shown a diminishing from 2.29 per 100,000 in 1991 to 0.44 per 100,000 in 2002. Despite recent efforts, the sale of women continues to exist in China. It was estimated by the Ministry of Public Security that 10,000 women and children are being abducted and sold each year. Between 2001 and 2005, 1,794 women and children in a remote southwest province in China were sold and more than 2,000 victims were rescued.

It was reported that a lot of women in Yunnan were sold to provinces such as Henan where gender imbalance was severe. Between April and July 2004, police rescued 85 women and children who were abducted from the southwestern part of Yunnan, which was affected the worst. It was also reported that some women from countries such as Vietnam have migrated to China for economic reasons and found themselves sold or kidnapped. In 1995, 2,716 women were freed from kidnappers and deported back to Vietnam.

In these cases, women are kidnapped, abducted, or deceived with a guarantee of well-paid jobs, and subsequently transported to mountainous or inland rural areas into forced marriages. These women often suffer severe mental and emotional problems and have difficulties reintegrating into their family and community. These problems often arise from physical abuse such as violence, sexual abuse, intimidation, and rape to which they are subject. In addition to the physical scars and emotional damage, the cultural stigmatized image of unmarriageable and unwanted women also make parents reject their reintegration into the family after the rescue.

Forced Labor

Although Chinese laws prohibit forced labor, it remains a serious problem in China. Internationally, many in countries such as Mexico, Japan, Australia, the Netherlands, and Argentina. Internally, many men, particularly children, were kidnapped or abducted into enslaved forced labor. For instance, it was reported that over one thousand men were forced to make bricks without payment in hundreds of brick kilns in Shanxi Province. ; some were young as eight. Scantily clad, these laborers were often fed no more than water and steamed buns and forced to work in inhumane conditions that were worse than prisons.

Upon the news about the forced labor at brick kilns, hundreds of parents traveled to brick factories in search of their missing sons. A mother visited over 100 brick factories in Shanxi Province looking for her 15-year-old son. She saw small kids, some as young as 14 or 15, hauling carts of bricks; and the ropes they pulled left tracks of blood on their shoulders and back. Some were moving very hot, heavy bricks from the machine belt very quickly to prevent burns and damage by the machines. A father found his 16-year-old son after a number of visits to brick factories, only to find his son “totally dumb, not even knowing how to cry, or to scream or to call out ‘Father.’” Held in the arms of a crying father, the son, who was in rags and had wounds all over the body, was incapable of emotional reaction.

Despite the virulent issue of forced labor and child labor, authorities and local leaders were not able to help petitioned parents to locate their missing sons and failed to crack down on these illegal factories. Although officials attributed the difficulties to the remote and isolated locations of these factories, many believed that local officials were in alliance with these illegal factories and that local officials, including labor inspectors, resold the children from newly closed kilns to other factories.

Sex Trafficking

There is suspected sex trafficking despite the fact that neither I nor other sex work researchers have come across it. The news about North Korean women being forced into sex work was cited from non-government organizations and government reports in China. Conditions in the Democratic People’s Republic of Korea have driven many North Koreans to voluntarily cross the border and migrate to China in search of a better life. Though many North Korean women choose to illegally migrate into China, . Due to their illegal, undocumented status, they are often at the whim of the Chinese who sell them into sex work, forced marriage, or forced labor. It has been reported by non-government organizations and international organizations that many North Korean women have been forced into marriages or forced to work in the entertainment industry after their entry into China.

I myself cannot corroborate with this data, as I have not encountered anyone forced into sex work among over 200 sex workers I worked with during my fieldwork. Other researchers, such as , also did not find any forced sex work during their intense ethnographic work with Chinese sex workers in eight areas in Asia (Hong Kong, Macau, Taiwan, Thailand, Malaysia, Singapore, Indonesia, and mainland China) and two cities in the US (Los Angeles and New York).

To explain the discrepancy between government and non-government organization reports and fieldwork researchers' findings, I can offer two theories: 1) The areas North Koreans were kidnapped or sold were in the extreme northern part of China, where, to date, no sex work researchers have conducted any fieldwork. 2) Upon arrest, North Korean women were faced with two options. First, they would be severely punished and sentenced by law if they admitted that they knowingly violated the Chinese law by voluntarily crossing the border to do sex work. Two, they would avoid the legal punishment by claiming that they were deceived, kidnapped, and forced into sex work. As victims, they not only would escape criminal punishment, but also would be helped by law enforcements and non-government organizations. Sex workers in my research, upon arrest, would also claim as victims to avoid criminal punishment.

*[Note: Read on August 27. This article was originally published as "Prostitution and Human Trafficking in China," in , and is republished with permission from the author and publisher.]

The views expressed in this article are the author's own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Image: Copyright ©  All Rights Reserved

The post China: Sex Work and Human Trafficking (Part 1) appeared first on 51łÔąĎ.

By Ěý

There has been much talk recently of a potential , and several Ěýand analysts have suggested all is not well. However, the Chinese system is so opaque, it remains difficult to get a clear picture. Much of the talk and debate remains theoretical and hard to prove.

Even the slowdown in Chinese manufacturing and inbound FDI has largely been passed off as a result of the lingering effects of the global economic situation. Yet Shenzhen, a benchmark city in China and the central hub for much IT and hi-tech manufacturing, is experiencing its . That isn’t about any global slowdown, that is about high wages and infrastructure that is expensive to maintain. Paradoxically, the global GDP rate was above two percent last year at a time when GDP growth in China is slowing. Higher costs are now coupled with a realization among many analysts that all may not be sustainable in China’s 20 year manufacturing boom. Their sentiments are beginning to have an impact.

Looking Back in Time

This is not the first time that China has gone through such a crisis, and looking back may provide some clues as to the likely behavior should times get tough in China, as some people are suggesting. We can go back in time relatively recently – although perhaps beyond the time of many foreign invested businesses – when China last defaulted on loans and had banking problems. For that, we need to turn the clock back to 1999 and 2000 to see what occurred then, 13 years ago.

China had been encouraging foreign investment into a number of government-backed and owned financial institutions, including what was, at the time, one of the country’s largest state-owned enterprises – the Guangdong International Trust & Investment Corporation (GITIC). The SOE took significant amounts of foreign capital in the form of bonds, and was to invest the income in many of Guangdong Province’s infrastructure development plans, which made sense as the Provincial growth rates were sky high and it was becoming China’s largest manufacturing hub.

Yet among a plethora of bad investments, multiple white elephants (Zhuhai’s “international” airport among them), and corruption, GITIC went bankrupt with liabilities of US$4.7 billion, and it remains China’s largest corporate bankruptcy to date. China was also experiencing credit problems at the time, and difficulties with its foreign currency reserves. It was not uncommon for fully legitimate profit transfers by foreign investors from RMB earnings into foreign currency to be delayed by the State Administration for Foreign Exchange (SAFE) for periods often in excess of six months. However, the GITIC bankruptcy was too much for the Chinese government to take on – so they reneged on the foreign debt. Chinese creditors in GITIC came first, and foreign holders of bonds went to the back of the queue.

The Chinese government hid behind a technicality that had required all foreign investors to have lodged their investments with SAFE. There was much debate about what this actually meant at the time; however, the general feeling was that China was not acting honorably. Although, to be fair, the majority of foreign investors in the form of financial institutions had not looked closely enough at China’s bankruptcy laws and the problems within that.

Faced with large losses, international bankers began readjusting their financial lending policies and China found international banking credit lines drying up. Meanwhile, our team at Ěýwas advising numerous clients who could not repay back their original investment loans to head offices as expected because SAFE had run out of forex. For all, with no exceptions, the Chinese RMB profits just sat in China, and we advised on getting tax breaks and re-investment incentives for China-generated profits that quite patently was not going to be leaving China any time soon.

But another deadline was approaching – China’s accession to the WTO. That soon became a larger priority than worrying about liabilities in Chinese SOEs, and the incident after a lot of moaning and groaning from the affected international lenders died down in the euphoria of China becoming part of the global trade body. And that, for the past 13 years, is where things have pretty much been left in the average foreign investor’s eyes.

Bankruptcy Laws

There have in fact been changes to China’s bankruptcy laws since the GITIC scandal, back in 2007. The China Enterprise Bankruptcy Law in July that year, which will cater for most business liquidations and bankruptcies that foreign investors will face in China. However, it is yet to be significantly tested; the recent Ěýbeing the first major occasion in which its merits or otherwise will be examined.

Of perhaps greater concern is the fact that no effective bankruptcy mechanism exists in China for dealing with its financial services and banking industries – the very institutions that are facing enormous stresses at this time. Such measures are not yet in place and only at the . This is mainly due to the old communist adage that the State cannot go bankrupt; yet as GITIC showed over a decade ago, that no longer holds true.

So what can be learned from the GITIC incident in light of contemporary concerns about China’s banking health? I would suggest the following, should things start to become wobbly:

1. Getting money into China will never be a problem. Getting money out could be. If foreign investors have excess profits in China, now may be a good time to be looking at repatriating those not actually needed in the country.
2. Look at any exposure to company funds reinvested in China’s wealth-management vehicles. Domestic staff have been targeted by the Chinese government to invest foreign company money into such instruments – you need to check your accounting dept and make sure they have not given any exposure to such vehicles. It does not require foreign signatories of FIEs in China to invest in them – your Chinese accountant may have taken the initiative for you and we have found cases where this is so. It would be a good idea to check if your company has invested in such instruments without your knowledge. Despite the name, many of China’s “wealth management” funds actually comprise of distressed banking debt.
3. It is possible that faced with a credit squeeze or problems with liquidity, Chinese banks could call in loans or even property mortgages. That is a higher probability for foreign MNC investors with credit lines than for Chinese businesses or individuals due to the political nuances. It may be prudent to assess the impact of any loans or credit lines being withdrawn and to prepare head offices for making alternative financing arrangements. As I note above, it will not be a problem to send money to China, but “be prepared” is always a useful mantra.

As I mentioned earlier, it is hard to know how things actually stand in China. But in over 20 years of advising clients throughout Asia, one thing always remains true: in times of uncertainty, financial prudence is the best route. I would advise foreign investors in China to be taking steps to lessen risk until the situation becomes clearer.

But all is not doom and gloom. For well-managed companies during any downturn in China, later opportunities always present themselves. In 2000, we began assisting clients on the first of what proved to be many acquisitions over the years involving bankrupt stock and assets, as many MNCs and entrepreneurs positioned themselves to take advantage of the carcasses left over from lesser well-run businesses. Even Chinese bankruptcies can have their upside for foreign investors – the trick is to ensure that during such times, your business remains secure and watertight.

*[Note:Ěýis the founding partner and principal of Ěý– a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. This article was originally published by .

The views expressed in this article are the author’s own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Image: Copyright © . All Rights Reserved

The post Managing Your Business Through a Chinese Banking Crisis appeared first on 51łÔąĎ.

Myanmar has recently become the center of attention in the growing competition between China and the US for influence in South East Asia, dubbed by D. Suba Chandran as the Eastern “Great Game.” Following the relatively successful elections of 2010, Myanmar (Burma) has been praised by Western powers, especially the US, for its commitment to democratization. Call it democracy with Burmese characteristics if you will, but the lingering strength of the military in Burma, as well as consistent fighting in the ethnic autonomous regions, still remains and poses a serious threat to continued reforms. Despite their differences, the population of Myanmar does seem to be united in one regard; that is in the ongoing push back against Chinese investment and development in favor of improved economic cooperation and diplomatic relations with the West.

Fragile Peace

Myanmar’s push back against Chinese influence culminated in August 2011 with the very public closing of the Chinese-funded Myitsone Dam by President U Thein Sein. During the announcement, President Sein indicated that he was merely listening to the "the will of the people.” This statement marked the waning of China’s influence in Myanmar in favor of the new government’s desire to establish its democratic legitimacy. According to , a visiting fellow with the Brookings Institution, China was caught off guard by the announcement and has considerably misjudged the situation in Myanmar. The Chinese had assumed that Myanmar would remain loyal to their investments and funding in exchange for political cover and investment. According to Sun, this serious miscalculation occurred because the Chinese underestimated the strength of the democratic movement in Myanmar and level of anti-Chinese sentiment among the public. 

Following the lifting of Western sanctions, Myanmar has experienced an influx of investment interest and diplomatic attention from formerly unfriendly nations. Landmark visits from former US Secretary of State Hillary Clinton and President Obama, President U Thein Sein’s recent visit to the US, and ASEAN’s commitment to support Myanmar’s position as chair in 2014, display the warm reception the reformist Burmese government is now receiving, going from pariah to role model in just a few short years.

However, the government of Myanmar should be wary of its newfound popularity. The peace in Myanmar is fragile. Fresh rounds of fighting between ethnic Rohingya Muslims and Buddhists in Rakhine State are part of a conflict. The Kachin Independence Organization of Kachin State has been in and out of Chinese mediated talks for some time, while the United Wah State Army in Shan State has reportedly been preparing for an imminent government military . New political freedoms, such as freedom of the press, have also brought a renewed sense of responsibility and added pressure to the Burmese political environment. If any of Myanmar’s numerous internal problems were to escalate, Myanmar’s response would be closely monitored by major regional and global powers. Any response deemed improper by the international community, whether due to the use of force or a reversal of democratic reforms, could lead to Myanmar finding itself on the outside looking in yet again.

International Relevance

Myanmar’s ongoing ethnic and religious conflicts represent a massive threat to its stability and its delicate position within the international community. In similar situations in the past, where internal conflict has led to international condemnation, Myanmar could be forced to turn to the nation it is now choosing to shun: China. The US Japan, South Korea, and the EU should be regarded, at best, as fair weather friends. While the US equation may be different thanks to its "pivot" to the region, and apparent attempts to rebalance influence away from China, it is unlikely that it would be willing to overlook any reversion to the former junta style of . However, if the US is seriously attempting to "contain" the rise of China, as so many in China believe, it may be willing to stick it out in Myanmar for the right price. That price could mean some amount of prolonged military presence as collateral for assistance in stabilizing the nation, among other possible scenarios suggested by Berntil Lintner .

In the former situation, where the US and its allies distance themselves from Myanmar, what other option would the Burmese government have but to turn to China for support? It is fair to say that China has been excessively generous to Myanmar in the past, providing pivotal preferential loans and subsidized infrastructure investment, albeit in the pursuit of resource security, access to the Indian Ocean, and prosperity for Western China. If Myanmar were to become isolated from Western nations, it would be safe to assume that Beijing would not be so charitable this time around. The closing of the Myitsone Dam and anti-Chinese sentiment are fresh wounds in the minds of the Chinese, and would surely influence their diplomatic and economic approach.

By effectually ostracizing Chinese diplomacy and investment in favor of democratization and international approval, Myanmar’s new government is putting itself in a vulnerable position. During President Sein’s visit to China in April, he reiterated that Myanmar . At the same time, public disapproval for Chinese projects in Myanmar is becoming stronger thanks to recent democratic reforms. Increased public participation will put more pressure on U Thein Sein, Aung San Suu Kyi, and their National League for Democracy to deliver on a myriad of political initiatives. News that the joint Chinese-Burmese gas and oil pipelines running to Yunnan may be  due to ethnic conflict and local protests underscores the complications of developing of democracy in an unstable population and the risks it poses for both the government of Myanmar and Chinese investors.

Stability and Risk

While President Sein says that Myanmar respects and accepts Chinese investment and development, the Burmese public does not. Regardless of whatever economic and geostrategic potential Myanmar has, and no matter what the Myanmar government may say, the truth is that the government is incapable of guaranteeing stability or minimizing risk for investors. Soon, it will not be just Chinese companies that find themselves answering to the Burmese public. American, Japanese, and other foreign owned enterprise will also face similar scrutiny.

U Thein Sein’s National League for Democracy Party would be best served by not straying too far from China, keeping the US and its allies at a distance, and concentrating its political capital on solving Myanmar’s complex and numerous internal difficulties. The international interest in Myanmar’s geostrategic importance and economic potential is not going anywhere. However, the terms at which those goals are pursued, with assistance from China, the US, or both, are largely dependent on how the Burmese government handles its domestic responsibilities. Myanmar should adopt a cautious approach to foreign policy so as to not overplay their position between China and the US. The new popularity of the government in Myanmar certainly offers the opportunity to create unprecedented growth and prosperity, but it also presents the opportunity for a serious setback. They should therefore tread very carefully, not get carried away by the Western mystique, and focus on their internal responsibilities.

The views expressed in this article are the author's own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Image: Copyright © . All Rights Reserved 

The post Myanmar: Spotlight Brings New Dangers appeared first on 51łÔąĎ.

Historically speaking, China has problems with the law. The older generation does not see laws as rights but rather as rules that are thrust upon them, to be obeyed without question. Chinese proverbs such as “the one who creates the law dies by the law” or “turbulent times demand harsh laws” make laws sound negative but necessary without any notion of justice. It was the wise judges who interpreted the laws that were praised in literature and folklore instead of the law itself. That’s because the laws were made for and by the ruling elite; so the person who actually interpreted them was the one wielding power.

In the Past

My father once told me: “The rest of the world follows rule of law but in China people make the rules.” That is true. China has never put the rule of law above anyone, even those who make decisions in matters of life and death. What is needed is higher importance to be placed on the enforcement of written law, as opposed to favoritism towards the powerful elite that wield its power. The concept that nobody is above the law – including the emperor himself — dates back thousands of years, but has hardly ever been put to practice. Ironically, in China, only the strong and powerful can push reforms forward effectively; a reality also reflected in  history.

When Doctor Sun Yat Sen was named provisional president of the new Chinese Republic in December 1911, he had great difficulty in reminding people that he wasn't the new emperor and had to refuse the traditional kneeling and kowtow tributes usually reserved for such a dignitary. For nearly 5,000 years, Chinese politics served to preserve dominant and powerful men; only recently did the country introduce a party system of governance, politics and constitutional law. Even then it was a single party with complete control of the country’s reins. Sun was quickly replaced by another mighty challenger, Yuen Sai Hoi. However, after Yuen's unsuccessful bid to crown himself the emperor, China plunged into a period of competing warlords until Chiang Kai Shek was able to unite the Chinese government under his control.

China again changed hands when the Chinese Communist Party, under the leadership of Mao Tse Dong, defeated the nationalists and emerged as the new sun on the country’s political horizon. Under Mao, China made great leaps and introduced reforms, although most of them ended disastrously. Nonetheless, he remained firmly in control of the communist nation. Under the tutelage of Deng Xiaoping, who rose from the ashes of the Cultural Revolution and pushed for open-market reform over the late 1970s to 1980s, the foundation of modern China’s prosperity and growth was laid.

Egypt and the US

In 2012, months before he was to step down from power, Premier Wen Jia Bao gave a speech on how political reforms should be the main theme in the coming years, for the current economic prosperity could not be sustained without taking steps to remedy the present situation. Most people viewed this as a call for democratizing the ancient country through open elections. They all missed the boat. The most important component of all reforms should be to first establish the rule of law.

In this context, Egypt stands as a powerful example of quasi democracy. Even though President Mohammed Morsi of Egypt was elected democratically, his recent disregard for the rule of law by pushing his own mandate reveals how the absence of a robust constitutional framework can still undermine the idea of democracy. On the flip side, the United States has remained powerful, prosperous and innovative much due to its strong foundations based on rule of the law, regardless of ethnicities or religions involved.

Professor He Weifang of Beijing University, an expert in law, understands this and has championed the rule of law in China. In his first book, “In The Name Of Justice: Striving for the Rule of Law in China,” he lays down necessary components in his plan that could pave the way for China to eventually achieve a separate and independent judicial system. He suggests the country must first set up an independent reform committee. Secondly, the government should only nominate judges rather than appointing them directly. This is necessary to set the courts apart from the official reporting system in the government. Judges and lawyers in mainland China have long complained of interference in trials by government officials.

A separation between the government and the judiciary must be established before respect for rule of law can permeate society. It is not just for the benefit of Chinese citizens; it will also instill faith among foreign investors who feel legal contracts signed in the country do not safeguards their interests adequately (although the situation has improved since China joined the WTO). There is no doubt that a more independent judicial system would boost confidence in China's further forays into the international arena. The economic success and models of law in both Hong Kong and Taiwan could serve as a test model for China to move forward.

However it remains to be seen if the ruling party is going to have the will to achieve such a phenomenal change. For example, Professor He's first step is to establish a committee consisting of scholars and law experts to study the existing legal framework. But his proposition cannot take off unless it is supported whole-heartedly by the ruling Communist Party or backed by the collective will of the ruling class. That takes us back to the idea that China needs a determined leader if it is to undertake bold reforms; urgent advice echoed by both Wen Jiabao and Hu Jintao in their last address to the party before leaving office. The examples of Sun Yet Sen and early civilian presidents of nationalist China, who failed to push forth reforms due to lack of political and military will, act as a caution to future Chinese leaders. That was the exact reason why Chiang Zhimin attempted to hold on to his military office a bit longer before passing it on to Hu Jintau.

Xi Jinping

Can Xi Jinping emulate Deng Xiaoping and steer the country towards much-needed reforms? Or will he be like Hu Jintau and opt for the status quo and preserve the harmony of the party? The present signs look promising, for change seems to be on the agenda, even though a recent reshuffle in the standing committee, which left out a few high-profile reformists, does not reflect this sentiment.

There is a great need for reform in China. Words of caution from both Hu and Wen indicate that the Communist Party of China has taken note of the impending action. Also, Hu Juntao's voluntary relinquishment of all his posts to his successor Xi, unlike his predecessor Chiang Zhimin, indicates a willingness to give Xi the opportunity to move forward. Although some noted reformers were not included in the standing committee, there seemed to be consensus among the party on the reform front. Xi was given the mandate to move ahead and secure any reforms to keep the party in power and the country moving forward. The fact that, unlike in the past, high-level party members readily acknowledge the importance of the challenges facing China and the need for change means that they will heed to them. Xi Jinping may not appear as powerful a leader as is required to take China forward, but he will have to play that role nevertheless in order to achieve what China needs.

The most urgent reform he needs to address is the current Chinese judicial systems, because a robust and transparent legal structure is the cornerstone of every just and stable government. The present structure, riddled with abuse and corruption, is not only bad for China’s prospering economy, but also may undermine its global position and hurt strategic partners like the US in the long run. Despite its rhetoric on China’s questionable human rights and lack of democracy, Washington relies on Beijing’s cooperation on a great number of global issues, such as reining in North Korea. There is no doubt that reforms in judiciary and governance to stamp out evils like corruption and abuse of power are long overdue in China. The question, however, is how far and how fast they would be achieved under the new leadership. The answer alone will determine how serious China is about protecting its prosperity and relationship with the rest of the world.

The views expressed in this article are the author's own and do not necessarily reflect 51łÔąĎ’s editorial policy.

Image: Copyright © . All Rights Reserved

The post The Rule of Law in China: Strong Man Politics appeared first on 51łÔąĎ.