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Politics, Religion, Science, Culture and Humanities => Politics & Religion => Topic started by: Crafty_Dog on January 15, 2007, 11:01:37 AM

Title: China
Post by: Crafty_Dog on January 15, 2007, 11:01:37 AM
 





Sunday January 7, 2007

 

New China. New crisis

In the last decade China has emerged as a powerful, resurgent economic force with the muscle to challenge America as the global superpower. But, in his controversial new book, Will Hutton argues that China's explosive economic reforms will create seismic tensions within the one-party authoritarian state and asks: can the centre hold?

For more than 2,000 years, China's conceit was that it was the celestial kingdom, the country whose standing was endowed by heaven itself and whose emperors tried to reproduce heavenly harmony on Earth. All China basked in the reflected glow; foreigners were barbarians beyond the gilded pale who should not be allowed even to learn the art of speaking and writing Chinese.

 

When I first visited China in the autumn of 2003, such articles of Confucian faith seemed very far away, submerged by the lost wars and the 26 humiliating treaties of the 19th century, subsequent communist revolution and now the economic growth to which Beijing's motorway rings and Shanghai's skyline are tribute. This was a new China that had plainly left behind obeisance to the canons of Confucianism and the later cruelties of Mao. More than three years and a book later, I am less convinced.

 

All societies are linked to their past by umbilical cords - some apparent, some hidden. China is no different. Imperial Confucian China and communist China alike depended - and depend - upon the notion of a vastly powerful, infallible centre: either because it was interpreting the will of heaven or, now, of the proletariat. In neither system have human rights, constitutional checks and balances or even forms of democracy figured very much. As a result, China has poor foundations on which to build the subtle network of institutions of accountability necessary to manage the complexities of a modern economy and society. Sooner or later, it is a failing that will have to be addressed.

 

China is both very confident about its recent success and very insecure about its past, a potent mix that breeds a deep-seated xenophobia and shallow arrogance. China's economy in 2007 will be nearly nine times larger than it was in 1978 when Deng Xiaoping won the power struggle with the Maoists and began his extraordinarily sinuous, gradualist but successful programme of market-based economic reforms, groping for stones to cross the river, as he called it. China is now the fourth largest economy in the world - after the United States, Japan, and Germany - and is set to become the second largest within a decade. More than 150 million workers have moved to China's booming cities and 400 million people have been removed from poverty. It is a head-spinning achievement.

 

China is the new factor in global politics and economics, and its rulers and people know it. It now has more than $1 trillion of foreign exchange reserves, the world's largest. It is the single most important financier of the United States' enormous trade deficit. It is the world's second largest importer of oil. Before 2010, it will be the world's largest exporter of goods. It is, comfortably, the world's second largest military power. Last year, the Pentagon's four-yearly defence review stated that China is the power most likely to 'field disruptive military technologies that could over time offset traditional US military advantages'. A new great power is in the making, but one whose pursuit of its self-interest takes the amorality of power to a new plane. It is not just the Chinese who should be concerned about its institutional and moral failings; all of us should be.

 

In China, you can almost smell the new self-confidence: it is in the skyscrapers built in months; it is in the brash and unashamed willingness to rip off and copy Western brands; it is in the well-groomed and inscrutable demeanour of the rich entrepreneurs, self-confident officials and assured academics.

 

I sat in a Beijing bar just over a year ago with a typical member of China's new class of rich businessmen who double up as members of the party, a combination of commercial and political power that China knew well as the old Confucian mandarinate, now strangely reproducing itself in a new guise after Mao tried to eliminate it forever in the Cultural Revolution.

 

In surprisingly fluent English and with his Mercedes waiting outside, he praised China's communist regime and its curious mix of capitalism and communism with all the enthusiasm of a Tory businessmen praising Thatcher. Chinese corruption? Think of Enron and party-funding scandals in London, he declaimed. Double standards between communist rhetoric and practice? What about the US and Britain's invasion of Iraq, and Guantanamo Bay? What I failed to realise, he insisted, betraying both assurance and insecurity, is that China will not surrender again the natural rank that it should never have lost. Western values, institutions and attitudes were being revealed for being straw men, blown away by resurgent China and the pragmatism of its communist leaders.

 

Yet Western values and institutions are not being blown away. The country has made progress to the extent that communism has given up ground and moved towards Western practices, but there are limits to how far the reformers can go without giving up the basis for the party's political control. Conservatives insist that much further and the capacity to control the country will become irretrievably damaged; that the limit, for example, is being reached in giving both trade unions more autonomy and shareholders more rights. It is the most urgent political debate in China.

 

The tension between reform and conservatism is all around. For example, the party's commitment now is no longer to building a planned communist economy but a 'socialist market' economy. The 26,000 communes in rural China, which were once the vanguard of communism, were swept away by the peasants themselves in just three years between 1979 and 1982, the largest bottom-up act of decollectivisation the world has ever witnessed. Hundreds of millions of peasants are, via long leases, again farming plots held by their ancestors for millenniums. China's state-owned enterprises no longer provide life-long employment and welfare for their workers as centrepieces of a new communist order; they are autonomous companies largely free to set prices as they choose in an open economy and progressively shedding their social obligations.

 

Equally amazing, China's communists have declared that the class war is over. The party now claims to represent not just the worker and peasant masses but entrepreneurs and business leaders, whom it welcomes into its ranks. The party refers to this metamorphosis as the 'three represents': meaning that the party today represents 'advanced productive forces' (capitalists); 'the overwhelming majority' of the Chinese (not just workers and peasants); and 'the orientation ... of China's advanced culture' (religious, political and philosophical traditions other than communism).

 

Party representatives say that the country is no longer pledged to fight capitalism to the death internationally, but, instead, wants to rise peacefully. China has joined the World Trade Organisation and is a judicious member of the United Nations Security Council, using its veto largely in matters that immediately concern it, such as Taiwan.

 

But for all that, it remains communist. The maxims of Marxist-Leninst-Maoist thought have to stand, however much the party tries to stretch the boundaries, because they are the basis for one-party rule. Yet the system so spawned is reaching its limits. For example, China's state-owned and directed banks cannot carry on channelling hundreds of billions of pounds of peasant savings into the financing of a frenzy of infrastructure and heavy industrial investment. The borrowers habitually pay interest only fitfully, and rarely repay the debt, even as the debt mountain explodes. The financial system is vulnerable to any economic setback.

 

Equally, China is reaching the limits of the capacity to increase its exports, which, in 2007, will surpass $1 trillion, by 25 per cent a year. At this rate of growth, they will reach $5 trillion by 2020 or sooner, representing more than half of today's world trade. Is that likely? Are there ships and ports on sufficient scale to move such volumes - and will Western markets stay uncomplainingly open? Every year, it is also acquiring $200bn of foreign exchange reserves as it rigs its currency to keep its exports competitive. Can even China insulate its domestic financial system from such fantastic growth in its reserves and stop inflation rising? Already, there are ominous signs that inflationary pressures are increasing.

 

These ills have communist roots. It is the lack of independent scrutiny and accountability that lie behind the massive waste of investment and China's destruction of its environment alike. The pace of desertification has doubled over 20 years, in a country where 25 per cent of the land area is already desert. Air pollution kills 400,000 people a year prematurely. A hacking cough in the Beijing smog or the stench when the wind comes from the north in Shanghai are reminders of just how far China still has to go.

 

Energy is wasted on an epic scale. But the worst problem is water. One-fifth of China's 660 cities face extreme water shortages and as many as 90 per cent have problems of water pollution; 500 million rural Chinese still do not have access to safe drinking water. Illegal and rampant polluting, a severe shortage of sewage treatment facilities, and chemical pollutants together continue to degrade China's waterways. In autumn 2005, two major cities - Harbin and Guangzhou - had their water supplies cut off for days because their river sources had suffered acute chemical spills from state-owned factories.

 

Enterprises are accountable to no one but the Communist party for their actions; there is no network of civil society, plural public institutions and independent media to create pressure for enterprises to become more environmentally efficient. Watchdogs, whistleblowers, independent judges and accountable government are not just good in themselves as custodians of justice; they also keep capitalism honest and efficient and would curb environmental costs that reach an amazing 12 per cent of GDP. As importantly, they are part of the institutional network that constitutes an independent public realm that includes free intellectual inquiry, free trade unions and independent audit. It is this 'enlightenment infrastructure' that I regard in both the West and East as the essential underpinning of a healthy society. The individual detained for years without a fair trial is part of the same malign system that prevents a company from expecting to be able to correct a commercial wrong in a court, or have a judgment in its favour implemented, if it were against the party interest.
Title: Part Two
Post by: Crafty_Dog on January 15, 2007, 11:02:21 AM
The impact is pernicious. The reason why so few Britons can name a great Chinese brand or company, despite China's export success, is that there aren't any. China needs to build them, but doing that in a one-party authoritarian state, where the party second-guesses business strategy for ideological and political ends, is impossible. In any case, nearly three-fifths of its exports and nearly all its hi-tech exports are made by non-Chinese, foreign firms, another expression of China's weakness. The state still owns the lion's share of China's business and what it does not own, it reserves the right to direct politically.

 

Mark Kitto, a former Welsh Guardsman, has found at first-hand how difficult it is to sustain private ownership in China. He built up three Time Out equivalents in Beijing, Shanghai and Guangzhou but, after seven years of successful magazine publishing, learnt last year that he was about to become a partner of the state. The only terms on which his licence to publish could be retained was if he were to accept a de facto takeover from China Intercontinental Press, controlled by China's State Information Council, the propaganda mouthpiece of the Communist party. It did not matter that he owned the shares, wanted to retain his independence and had been careful to stay within the party's publishing guidelines. The party now wanted control of his magazines and simply took it. It is an example repeated many times over.

 

China must become a more normal economy, but the party stands in the way. Chinese consumers need to save less and spend more, but consumers with no property rights or welfare system are highly cautious. To give them more confidence means taxing to fund a welfare system and conceding property rights. That will mean creating an empowered middle class who will ask how their tax renminbi are spent. Companies need to be subject to independent accountability if they are to become more efficient, but that means creating independent centres of power. The political implications are obvious.

 

China's future is shrouded in uncertainty. My belief is that what is unsustainable is not sustained. Change came in the Soviet Union with the fifth generation of leaders after the revolution; the fifth generation of China's leaders succeed today's President Hu Jintao in 2012. No political change will happen until after then, but my guess is that sometime in the mid to late 2010s, the growing Chinese middle class will want to hold Chinese officials and politicians to account for how they spend their taxes and for their political choices. What nobody can predict is whether that will produce another Tiananmen, repression and maybe war if China's communists pick a fight to sustain legitimacy at home or an Eastern European velvet revolution and political freedoms. Either way, China's route to becoming a world economic power is not going to proceed as a simple extrapolation of current trends.

 

This book has been something of a personal intellectual odyssey. My hypothesis when I began was that China was so different that it could carry on adapting its model, living without democracy or European enlightenment values. I have changed my mind and now see more clearly than ever the kinds of connection I identified in The State We're In between economic performance and so-called 'soft' institutions - how people are educated, how trust relations are established and how accountability is exercised (just to name a few) - are central. They are equally important to a good society and the chance for individual empowerment and self-betterment.

 

Early in my research, I tried out the still-emergent thesis at a small dinner in Lan Na Thai, one of the restaurants in Shanghai's Ruijin guest house, a complex of refurbished old mansions and traditional pavilions in the French quarter where communist leaders reputedly once ate and slept.

 

Over stir-fried curried chicken and crispy fried flying sea bass, the Chinese guests repeated politely and persuasively that China was making up new economic and political rules. Afterwards, I chanced to have a few words alone with one of the local rising government stars as we walked out of the complex. He kept his eyes on the ground. 'Don't allow yourself to be dissuaded, despite what you have heard. You are right that China is not different. I want my children to see a China with human rights and democratic institutions. And I am not alone.' He jumped into a taxi and was gone.

 

I have often thought about that chance exchange. Britain and the West take our enlightenment inheritance too easily for granted, and do not see how central it is to everything we are, whether technological advance, trust or well-being. We neither cherish it sufficiently nor live by its exacting standards. We share too quickly the criticism of non-Western societies that we are hypocrites. What China has taught me, paradoxically, is the value of the West, and how crucial it is that we practise what we preach. If we don't, the writing is on the wall - for us and China.

 

China's quest for oil

 

China's foreign policy is increasingly driven by the need to feed its growing appetite for oil. General Xiong Guangkai, deputy chief of the Chinese general staff, has said that China's energy problem needs to be taken 'seriously and dealt with strategically'.

 

That means less reliance on the Middle East; less transportation of oil via sea-lanes policed by the US navy; more capacity for the Chinese navy to protect Chinese tankers; and more oil brought overland by pipeline from central Asia.

 

Over the past two years, China has pulled off a string of strategic oil deals. In April 2005, Petro China and Canadian company Enbridge signed a memorandum to build a $2bn 'gateway' pipeline to move oil from Alberta to the Pacific Coast. In Venezuela, President Hugo Chavez is to build a Chinese-financed pipeline to the Pacific coast through Colombia, having given China oil and gas exploration rights in 2005. Saudi Arabia surrendered to Chinese courtship in 2004 and accorded exploration rights.

 

In Sudan, a major source of oil, China's blind eye to human rights and mass murder if it hinders its interests is demonstrated by Zhou Wenzhong's comment when Deputy Foreign Minister about the situation in Darfur where more than 250,000 have died.'Business is business,' he said. 'We try to separate politics from business and, in any case, the internal position of Sudan is an internal affair, and we are not in a position to influence them.'

 

Wrong: China has substantial influence on Sudan if it chose to exercise it. It does not, a commentary on China's approach to foreign policy and an awesome warning of the future if an unreconstructed China became yet more powerful.

 

Tiananmen: the legacy

 

The image of a single student halting a tank in Tiananmen Square is one of the most arresting in modern history. But the protests spread well beyond Beijing for six weeks in spring 1989 to encompass demonstrations in 181 cities.

 

The party and army were divided over how to respond; 150 officers openly declared that they would not fire on demonstrators after martial law was declared, and at least a third of the central committee wanted to reach a compromise with the protesters. The party's then general secretary, Zhao Ziyang, proposed a partial meeting of demands for reform. Nobody should be killed.

 

That was not the view of Deng and the party elders - the eight 'immortals', veterans of the Revolution. A 'counter-revolutionary' riot had to be suppressed. But before Deng could act, he had to leave Beijing to ensure that army groups 28 and 29, personally loyal to him, would provide the core of the force rather than the uncertain army groups based around the capital. Once in place, Zhao was then brutally deposed, remaining under house arrest until his death in 2005. Martial law was imposed on 19 May and a fortnight later the tanks rolled into Tiananmen Square. Official estimates were that 5,000 soldiers and police officers were wounded and 223 killed. Civilian losses - 2,000 wounded and 220 killed - were lower. Many still languish in prison.

 

Tiananmen is the event that cannot be discussed in China; websites mentioning it are blocked. It was no 'counter-revolutionary riot' but a demand for freedoms that infected all China and very nearly succeeded.

 

Current leader Hu Jintao and his successors know they are not Deng and cannot command the loyalty of key elements of the army in the same way. Their best strategy is to deliver growth and jobs while trying to keep the lid on China's growing but still disconnected social protests. Whether the policy will carry on working is the open question asked daily in Beijing's inner circles.

 

· An edited extract from The Writing on the Wall: China and the West in the 21st Century to be published by Little, Brown on 15 January, £20.

©Will Hutton 2007
Title: Re: China
Post by: Crafty_Dog on January 24, 2007, 06:03:02 PM
GEOPOLITICAL INTELLIGENCE REPORT
stratfor.com
01.23.2007

Space and Sea-Lane Control in Chinese Strategy
By George Friedman
 

Aviation Week & Space Technology magazine, citing U.S. intelligence sources, has reported that China has successfully tested an anti-satellite (ASAT) system. According to the report, which U.S. officials later confirmed, a satellite was launched, intercepted and destroyed a Feng Yun 1C weather satellite, also belonging to China, on Jan. 11. The weather satellite was launched into polar orbit in 1999. The precise means of destruction is not clear, but it appears to have been a kinetic strike (meaning physical intercept, not laser) that broke the satellite into many pieces. The U.S. government wants to reveal as much information as possible about this event in order to show its concern -- and to show the Chinese how closely the Americans are monitoring their actions.

The Jan. 17 magazine report was not the first U.S. intelligence leak about Chinese ASAT capabilities. In August 2006, the usual sources reported China had directed lasers against U.S. satellites. It has become clear that China is in the process of acquiring the technology needed to destroy or blind satellites in at least low-Earth orbit, which is where intelligence-gathering satellites tend to operate.

Two things about this are noteworthy. The first is that China is moving toward a space warfare capability. The second is that it is not the Chinese who are announcing these moves (they maintained official silence until Jan. 23, when they confirmed the ASAT test), but Washington that is aggressively publicizing Chinese actions. These leaks are not accidental: The Bush administration wants it known that China is doing these things, and the Chinese are quite content with that. China is not hiding its efforts, and U.S. officials are using them to create a sense of urgency within the United States about Chinese military capabilities (something that, in budgetary debates in Washington, ultimately benefits the U.S. Air Force).

China has multiple space projects under way, but the one it is currently showcasing -- and on which the United States is focusing -- involves space-denial capabilities. That makes sense, given China's geopolitical position. It does not face a significant land threat: With natural barriers like the Himalayas or the Siberian wastes on its borders, foreign aggression into Chinese territory is unlikely. However, China's ability to project force is equally limited by these barriers. The Chinese have interests in Central Asia, where they might find power projection an enticing consideration, but this inevitably would bring them into conflict with the Russians. China and Russia have an interest in containing the only superpower, the United States, and fighting among themselves would play directly into American hands. Therefore, China will project its power subtly in Central Asia; it will not project overt military force there. Its army is better utilized in guaranteeing China's internal cohesiveness and security than in engaging in warfare.

Geopolitics and Naval Power

Its major geopolitical problem is, instead, maritime power. China -- which published a defense white paper shortly before the ASAT test -- has become a great trading nation, with the bulk of its trade moving by sea. And not only does it export an enormous quantity of goods, but it also increasingly imports raw materials. The sea-lanes on which it depends are all controlled by the U.S. Navy, right up to China's brown water. Additionally, Beijing retains an interest in Taiwan, which it claims as a part of China. But whatever threats China makes against Taiwan ring hollow: The Chinese navy is incapable of forcing its way across the Taiwan Strait, incapable of landing a multidivisional force on Taiwan and, even if it were capable of that, it could not sustain that force over time. That is because the U.S. Navy -- using airpower, missiles, submarines and surface vessels -- could readily cut the lines of supply and communication between China and Taiwan.

The threat to China is the U.S. Navy. If the United States wanted to break China, its means of doing so would be naval interdiction. This would not have to be a close-in interdiction. The Chinese import oil from around the world and ship their goods around the world. U.S. forces could choose to stand off, far out of the range of Chinese missiles -- or reconnaissance platforms that would locate U.S. ships -- and interdict the flow of supplies there, at a chokepoint such as the Strait of Malacca. This strategy would have far-reaching implications, of course: the Malacca Strait is essential not only to China, but also to the United States and the rest of the world. But the point is that the U.S. Navy could interdict China's movement of goods far more readily than China could interdict American movement of goods.

For China, freedom of the seas has become a fundamental national interest. Right now, China's access to the sea-lanes depends on U.S. acquiescence. The United States has shown no interest whatsoever in cutting off that access -- quite the contrary. But China, like any great power, does not want its national security held hostage to the goodwill of another power -- particularly not one it regards as unpredictable and as having interests quite different from its own. To put it simply, the United States currently dominates the world's oceans. This is a source of enormous power, and the United States will not give up that domination voluntarily. China, for its part, cannot live with that state of affairs indefinitely. China may not be able to control the sea itself, but it cannot live forever with U.S. control. Therefore, it requires a sea-lane-denial strategy.

Quite naturally, China has placed increased emphasis on naval development. But the construction of a traditional navy -- consisting of aircraft carriers, nuclear attack submarines and blue-water surface systems, which are capable of operating over great distances -- is not only enormously expensive, but also will take decades to construct. It is not just a matter of shipbuilding. It is also a matter of training and maturing a generation of naval officers, developing viable naval tactics and doctrine, and leapfrogging generations of technology -- all while trying to surpass a United States that already has done all of these things. Pursuing a conventional naval strategy will not provide a strategic solution for China within a reasonable timeframe. The United States behaves in unexpected ways, from the Chinese point of view, and the Chinese will need a solution within five years -- or certainly within a decade.

They cannot launch a competitive, traditional navy in that period of time. However, the U.S. Navy has a general dependency on -- and, therefore, a vulnerability related to -- space-based systems. Within the U.S. military, this is not unique to the Navy, but given that the Navy operates at vast distances and has sea-lane-control missions -- as well as the mission of launching aircraft and missiles against land-based targets -- it has a particular dependency on space. The service relies on space-based systems for intelligence-gathering, communications, navigation and tactical reconnaissance. This is true not only for naval platforms, but also for everything from cruise missile guidance to general situational awareness.

Take out the space-based systems and the efficiency of the Navy plummets dramatically. Imagine an American carrier strike group moving into interdiction position in the Taiwan Strait without satellite reconnaissance, targeting information for anti-ship missiles, satellite communications for coordination and so on. Certainly, ship-board systems could substitute, but not without creating substantial vulnerabilities -- particularly if Chinese engineers could develop effective jamming systems against them.

If the Chinese were able to combine kinetic ASAT systems for low-Earth orbit, high-energy systems for communications and other systems in geostationary orbit and tools for effectively denying the electromagnetic spectrum to the United States, they would have moved a long way toward challenging U.S. dominance of space and limiting the Navy's ability to deny sea-lanes to Chinese ships. From the Chinese point of view, the denial of space to the United States would undermine American denial of the seas to China.

Conjecture and Core Interests

There has been some discussion -- fueled by Chinese leaks -- that the real purpose of the Chinese ASAT launch was to prompt the Americans to think about an anti-ASAT treaty. This is not a persuasive argument because such a treaty would freeze in place the current status quo, and that status quo is not in the Chinese national interest.

For one thing, a treaty banning ASAT systems would leave the Chinese without an effective means of limiting American naval power. It would mean China would have to spend a fortune on a traditional navy and wait at least a generation to have it in place. It would mean ceding the oceans to the United States for a very long time, if not permanently. Second, the United States and Russia already have ASAT systems, and the Chinese undoubtedly assume the Americans have moved aggressively, if secretly, to improve those systems. Treaty or no, the United States and Russia already have the technology for taking out Chinese satellites. China is not going to assume either will actually dismantle systems -- or forget how to build them fast -- merely because of a treaty. The only losers in the event of an anti-ASAT treaty would be the countries that do not have them, particularly China.

The idea that what China really wants is an anti-ASAT treaty is certainly one the Chinese should cultivate. This would buy them time while Americans argue over Chinese intentions, it would make the Chinese look benign and, with some luck, it could undermine U.S. political will in the area of the military utilization of space. Cultivating perceptions that an anti-ASAT treaty is the goal is the perfect diplomatic counterpart to Chinese technological development. But the notion itself does not stand up to scrutiny.

The issue for the United States is not so much denying space to China as ensuring the survivability of its own systems. The United States likely has the ability to neutralize the space-based systems of other countries. The strategic issue, however, is whether it has sufficient robustness and redundancy to survive an attack in space. In other words, do U.S. systems have the ability to maneuver to evade attacks, to shield themselves against lasers, to continue their missions while under attack? Moreover, since satellites will be damaged and lost, does the United States have sufficient reserve satellites to replace those destroyed and launchers to put them in place quickly?

For Washington, the idea of an ASAT treaty is not the issue; the United States would love anything that blocks space capabilities for other nations. Rather, it is about building its own space strategy around the recognition that China and others are working toward denying space to the United States.

All of this is, of course, fiendishly expensive, but it is still a lot cheaper than building new naval fleets. The real problem, however, is not just money, but current military dogma. The U.S. military is now enthralled by the doctrine of asymmetric warfare, in which nonstate actors are more important than states. Forever faithful to the assumption that all wars in the future will look like the one currently being fought, the strategic urgency and intellectual bandwidth needed to prepare for space warfare does not currently exist within the U.S. military. Indeed, an independent U.S. Space Command no longer exists -- having been merged into Strategic Command, which itself is seen as an anachronism.

For the United States, one of the greatest prices of the Iraq war is not simply the ongoing conflict, but also the fact that it makes it impossible for the U.S. military to allocate resources for emerging threats. That always happens in war, but it is particularly troubling in this case because of the intractable nature of the Iraq conflict and the palpable challenge being posed by China in space. This is not a challenge that many -- certainly not those at the highest levels of military leadership -- have time to think about while concerned about the future of a few city blocks in Baghdad; but U.S. leaders might, in 10 years, look back on 2007 and wonder what their predecessors were thinking about.

© Copyright 2006 Strategic Forecasting Inc. All rights reserved.
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A friend comments:

Interesting piece; thanks for sharing.

I think the geo-political analysis of China and the US is very well done, although I disagree with the author’s conclusion: That the Iraq war has made it impossible for the US to address this crucial issue. I believe that the Pentagon is all over this (in spite of Iraq). One interesting book in this regard is:  http://www.amazon.com/Showdown-China-Wants-United-States/dp/1596980052. Another good one is http://www.amazon.com/War-Footing-Steps-America-Prevail/dp/1591143012. Both these guys are very plugged-in to the Pentagon, and both talk extensively about this threat. Clearly (not just with China) our ability to protect our satellites is a crucial defense issue. That is, I think it to be NOT falling through Iraq's cracks.

 
Title: Disconnect between the American public and reality
Post by: ccp on June 17, 2007, 09:13:12 AM
The American public is underestimating the Chinese threat. As usual there are those who think if we just make nice everyone will love us. (a la Clinton)

http://www.worldtribune.com/worldtribune/WTARC/2007/ea_china_06_15.asp

The US military is well aware of what is going on.  Gertz is keeping us up on this real challenge:

http://www.washtimes.com/national/20070526-120203-2128r.htm
Title: China's Military Build Up
Post by: Body-by-Guinness on August 31, 2007, 04:12:44 PM
Analysis: Military imbalance in the Taiwan Strait
HONG KONG, Aug. 31
ANDREI CHANG
Column: Military Might
During the past seven to 10 years China's rapid buildup of military power has tipped the balance in the Taiwan Strait strongly in its favor.

    Since 1999, when former Taiwan President Lee Teng-hui announced his "two states" theory -- daring to say that the People's Republic of China and the Republic of China are two different states, precipitating the PRC's aggressive stance against the island's independence -- there have been drastic changes in the balance of military power on the two sides. This includes the navies, air forces, and strategic campaign missiles, or ballistic missiles.

    The Taiwanese air force has not added a single new combat aircraft since 1999. It still has 148 F-16 Block 15 MTU, 58 Mirage2000-5 and 130 IDF fighters in service. The total number of its third generation fighters has remained around 336 over the past seven years. On the sea, the navy has added only four Kidd-class DDGs, the largest arms procurement since the Democratic Progressive Party came to power in 2000.

    In terms of the buildup of ballistic missiles (surface-to-surface missiles, or SSMs), China has achieved a great leap forward both in the number of SSMs in its arsenal and in their overall quality. In addition to its DF-15 and DF-11 SSMs, which have been upgraded continuously over the years, television footage released by the official Chinese media shows there are at least one or two new types of short-range ballistic missiles now in operational service.

    As far as the quality of the Chinese SSM is concerned, the export version of its B611M ballistic missile is now equipped with a GPS/GLONASS satellite positioning system, giving it a strike accuracy of around 50 meters (164 feet).

    China's improved position in the air is evidenced by the changes in the quantity and quality of its third generation combat aircraft from 1999 to 2007. In 1999 it had only 48 Su-27SK, two J-11 A/B, a few Su-27 UBK and five J-10A aircraft. In 2007 the figures are 48 Su-27SK, 95 J-11 A/B, 28 additional Su-27 UBK, 100 Su-30 MKK/MK2, 64 J-10A, at least 24 JH-7A, 4 KJ-2000 and at least two KJ-200.

    Based on these figures, the number of third generation combat aircraft in the fleet of the People's Liberation Army Air Force was only a modest 55 in 1999, while in 2007 the number has jumped to 369. In 2008 it will further surpass Taiwan's fleet.

    With the import of Su-30 MKK fighters, China's inventory of H-59ME and H-29TE TV-guided air-to-surface missiles, or ASMs; 1,500-pound Russian TV-guided bombs; H-31A anti-ship missiles; and H-31P anti-radiation missiles has also increased steadily over the last seven years. China has imported more than 1,000 RVV-AE active radar-guided air-to-air missiles, or AAMs, from Russia, while the number of AMR AAMs in the Taiwanese air force is no more than 120 now.

    In addition, China continues to import a substantial number of RVV-AE AAMs every year. The critical change here is that in 1999, the PLAAF did not even have the capability to use such advanced AAMs as the PL-12RVV-AE AAM and the precision guidance land-attack weapons that they have now.

    Given another two to three years, all the pilots of the PLAAF's 369 third generation fighters will have accumulated flight time of more than 1,000 hours. Around 2009 or 2010, the overall quality of the military personnel ready to take to the air over the Taiwan Strait will be fundamentally reversed, in favor of the PLA Air Force.

    In 1999, the PLAAF did not have the capability to engage in aerial early warning operations. In 2007, there are already four plus two AWACS/AEW&C aircraft in operational service. Although these AWACS aircrafts have encountered such problems as electromagnetic disturbances and their training activities are less frequent than before, the PLA at least has the airborne warning and control system. The number of AWACS platforms currently operational in the PLAAF is equivalent to the number in Taiwan.

    The PLAAF also has two refitted Y-8 electronic warfare aircraft, and other supporting electronic reconnaissance and countermeasure aircraft are under development. By contrast, the Taiwanese air force has had only one refitted C130 EW aircraft for years.

    Since 1999, the PLA Navy has prioritized and sped up the building of surface battleships over 4,000 tons, nuclear-powered submarines and conventional diesel submarines. In 1999 the navy had one 7,000-ton class 956E/EM DDG, one 6,000-ton class 051B DDG, four Kilo 887/636 SS and one 039A SS. The 2007 numbers are at least one 094 SSBN, at least two   093 SSNs, four 7,000-ton class 956E/EM DDGs, one 6,000-ton class 051B DDG, two 7,000-ton class 051C DDGs, two 052B DDGs, two 053C DDGs, four 054/A FFGs, 12 Kilo 887/636 SS, and at least 10 039A SS.   

    The most remarkable change is that the PLAN had only one type 051B and one type 956E missile destroyers (DDG), in 1999 that had a full-load displacement of more than 6,000 tons, whereas in 2007 it has 11 large surface battleships with a displacement of more than 6,000 tons, and two type 054A missile frigates (FFG) with a respective full-load displacement of more than 4,000 tons. By contrast, the only surface battleships in the Taiwanese navy with full-load displacement of more than 7,000 tons are the four Kidd-class DDGs.

    In terms of its range of anti-ship missiles, the PLAN is also edging ahead of the Taiwanese navy. The PLAN's stockpile of anti-ship missiles with a range of over 200 kilometers (125 miles) has increased steadily, including the YJ6-2 and 3M-54E anti-ship missiles with respective ranges of 280 kilometers (175 miles) and 220 kilometers (around 135 miles). Those missiles give the PLAN the capability to launch long-range attacks on the sea and underwater as well. Besides, the PLAN has widely deployed the 180-kilometer-range YJ8-3 SSM on its surface battleships.

    The PLAN's RIF-M, HQ-9 long range and HQ-16, Shtil-1 middle range ship-to-air missiles are also already in service. This means the overall range of ship-to-air missiles of the Taiwanese navy can no longer match that of the PLAN.

    Unlike the PLA Air Force's aircraft, however, most of the new battleships of the PLA Navy have only recently gone into operation, and may encounter difficulties in combat applications. For instance, the delivery of 8 Kilo 636 submarines started only in 2005, and the type 052C "Chinese Aegis" DDGs have remained anchored at the Sanya military port for most of this year. This indicates that these new battleships may have encountered problems.

    Particularly, the PLAN has not established an integrated combat system at sea. As for its Type 054A FFGs, they are still under construction, and two Type 054 FFGs were newly delivered in 2005.

    It will take time for China to resolve the problems with its new defense equipment. Nonetheless, the military power balance in terms of quantity and quality of weapons between the two sides of the Taiwan Strait continues to tilt markedly toward the side of the PRC.

    --

    (Andrei Chang is editor-in-chief of Kanwa Defense Review, published in Hong Kong.)

http://www.upiasiaonline.com/security/2007/08/31/analysis_military_imbalance_in_the_taiwan_strait/
Title: Re: China
Post by: Crafty_Dog on September 17, 2007, 09:32:25 AM
This piece from the WSJ goes where others fear to tread:

===========

China's One-Child Mistake
By NICHOLAS EBERSTADT
September 17, 2007; Page A17

If China could take a single decision today to enhance the nation's long-term economic outlook, it would be to recognize that coercive population control has been a tragic and historic mistake -- and to abandon it, immediately.

Such a call might surprise the casual observer, for on its own terms, China's population program has been a superficial success. In the early 1970s, China's then-current childbearing patterns implied nearly five births per woman. At the start of the "one child policy" in 1979, China's total fertility rate was nearly three births per woman. Today, China's fertility rate is far below the "net reproduction rate" -- by many estimates, just 1.7 births per woman nationwide. In some major population centers -- Beijing, Shanghai and Tianjin among them -- the average number of births per woman today has fallen below one baby per lifetime.

This "success," however, comes with immense inadvertent costs and unintended consequences. Thanks to a decade and a half of sub-replacement fertility, China's working-age population is poised to peak in size, and then start to decline, more or less indefinitely, within less than a decade. A generation from now, China's potential labor force (ages 15-64) will be no larger than it is today, perhaps smaller. This presages a radical change in China's growth environment from the generation just completed, during which time (1980-2005) the country's working-age population expanded by over 55%.

"Composition effects" only make the picture worse. Until now, young people have been the life force raising the overall level of education and technical attainment in China's work force. But between 2005 and 2030, China's 15-24 age group is slated to slump in absolute size, with a projected decline of over 20% in store. In fact, the only part of the working-age population that stands to increase in size between now and 2030 is the over-50 cohort. Will they bring the dynamism we have come to expect from China in recent decades?

On current trajectories, China's total population will start to decline around 2030. Even so, China must expect a "population explosion" between then and now -- one entirely comprised of senior citizens. Between 2005 and 2030, China's 65-plus age cohort will likely more than double in size, to 235 million or more, from about 100 million now. And because of the fall-off in young people, China's age profile will "gray" in the decades ahead at a pace almost never before witnessed in human history. China is still a fairly youthful society today -- but by 2030, by such metrics as median population age, the country will be "grayer" than the United States -- "grayer," that is, than the U.S. of 2030, not the U.S. of today.

How will China's future senior citizens support themselves? China still has no official national pension system. Up to now, China's de facto national pension system has been the family -- but that social safety net is unraveling, and rapidly. Until very recently, thanks to relatively large Chinese families, almost every Chinese woman had given birth to at least one son -- under Confucian tradition, their first line of support. But just two decades from now, thanks to the "success" of the one-child policy, roughly a third of women entering their 60s will have no living son.

In such numbers, one can see the making of a slow-motion humanitarian tragedy. But the withering away of the Chinese family under population control has even more far-reaching implications.

In Beijing, Shanghai and other parts of China, extreme sub-replacement fertility has already been in effect for over a generation. If this continues for another generation, we will see the emergence of a new norm: a "4-2-1 family" composed of four grandparents, but only two children, and just one grandchild. The children in these new family structures will have no brothers or sisters, no uncles or aunts, and no cousins. Their only blood relatives will be their ancestors.

It is no secret that China is already a "low trust society": Personal and business transactions still rely heavily upon guanxi, the network of personal relations largely demarcated by family ties. What exactly will provide the "social capital" to undergird commercial and economic development in a future China where "families" are, increasingly, little more than atomized households and isolated individuals?

One final consequence of China's population-control program requires comment: the eerie, unnatural and increasingly extreme imbalance between baby boys and baby girls. Under normal circumstances, about 103 to 105 baby boys are born for every 100 baby girls. Shortly after the advent of the one-child policy, however, China began reporting biologically impossible disparities between boys and girls -- and the imbalance has only continued to rise. Today China reports 123 baby boys for every 100 girls.

Over the coming generation, those same little boys and girls will grow up to be prospective brides and grooms. One need not be a demographer to see from these numbers the massive imbalance in the "marriage market" in a generation, or less. How will China cope with the sudden and very rapid emergence of tens of millions of essentially unmarriageable young men?

All of these problems just described are directly associated with involuntary population control. Scrapping this restrictive birth-control policy would surely ease China's incipient aging crisis, its looming family-structure problems and its worrisome gender imbalances. Some in China's leadership may worry that the end of the one-child policy might mean the return to the five-child family -- but in reality, modern China is most unlikely to return to pre-industrial fertility norms.

In the final analysis, the wealth of nations in the modern world is not found in the ground, or the forests, or in other natural resources. The true wealth of modern countries resides in their people -- in human resources. China's people are not a curse -- they are a blessing. The Chinese people, like people elsewhere, are rational, calculating actors who seek to improve their own circumstances -- not heedless beasts who procreate without thought of the future.

Trusting China's people to act in their own self-interest -- not least of all, trusting their choices and preferences with respect to their own family size -- may very well prove to be the key to whether China ultimately succeeds in abolishing poverty and attaining mass affluence in the decades and generations ahead.

Mr. Eberstadt is a resident scholar at the American Enterprise Institute. This essay is excerpted from remarks delivered at the World Economic Forum's conference in Dalian, China earlier this month.
Title: Re: China
Post by: Crafty_Dog on September 17, 2007, 09:59:36 AM
Second post of the day. 

Let Taiwan Join the U.N.
By BOB DOLE
September 17, 2007; Page A16

Tomorrow the United Nations will consider Taiwan's application for membership. It has formally sought admission every year since 1993, but this year's application is different.

First, the country is applying under its own name ("Taiwan") rather than its official appellation ("Republic of China"). Second, it is applying to the U.N. General Assembly, the organization's comprehensive body of member nations -- despite the rejection of its application this summer by U.N. Secretary General Ban Ki-moon and his legal office. Third, the application may be followed by a national referendum on whether Taiwan should apply for U.N. membership under its own name -- a plan that has elicited a sharp rebuke by the Bush administration.

The U.N.'s lawyers argued that, having transferred China's seat from Taipei to Beijing in 1971, the U.N. should reject Taiwan's latest application because Taiwan "for all intents and purposes" is "an integral part of the People's Republic of China." Taiwan presents a more compelling legal case: It meets all of the requirements of statehood under law.

It is already a full and productive member of international organizations such as the World Trade Organization and Asia-Pacific Economic Cooperation forum. It has never been a province or part of the local government of the People's Republic of China. Taiwan's recent transformation into a modern democratic state supersedes any decades-old determination that gives the PRC a United Nations seat -- even as the U.N. failed to determine that Taiwan is part of the PRC or bestow upon it the right to represent Taiwan.

Taiwan's political case for U.N. membership is equally strong. It is the 48th most populous country in the world. Its economy is the world's 16th largest. Its gross national product totals $366 billion, or $16,098 per capita. With $267 billion in foreign exchange reserves, it is one of the world's three largest creditor states. Taiwan is therefore poised to be a significant contributor to the U.N.'s operations and play a constructive role in the organization.

Unfortunately, the United States and the other major powers discourage Taiwan in its quest for de jure international recognition of its de facto sovereignty. This is because they do not want to raise the ire of the PRC, which, as a member of the U.N. Security Council, can block any significant U.N. action, and, as a global power, can interfere on a host of issues important to the U.S. and Europe.

Thanks to exponentially increased trade with the U.S. and Europe, Beijing feels less compelled than ever to seek political accommodation with Taiwan, or to decrease its military threat against the island nation. Expanding economic relationships may be good in and of itself, but predictions that this would produce political cracks in China's authoritarian regime have proved wrong.

Today, Beijing is using its newfound economic might to isolate Taiwan still further in international organizations and attempt to persuade the two dozen countries that recognize Taiwan diplomatically to switch their ties to China. Meanwhile, the people of the PRC enjoy fewer political rights and civil liberties than in all but a few of the world's countries.

A few short years ago, the U.S. seemed determined to change this. During his 2000 election campaign and the first months of his administration, President Bush and his team vowed to fashion a new foreign policy in which U.S. national interests, particularly in Asia, were advanced less exclusively through the prism of Beijing. In other words, the U.S. wanted to be less beholden to the communist regime.

One of the casualties of 9/11, and the subsequent war in Iraq, was that this policy agenda became less of a priority. Our cooperation with Pakistan in the effort to topple the Taliban, find Osama bin Laden and eradicate terrorism in the region meant that we focused less on developing a higher-tier relationship with India. We also concentrated less on drawing out Japan, by encouraging it to play a more active political and military role on the global stage. Equally important, we were unable to increase our promotion of democracy in the region by fostering closer ties with countries such as Taiwan and South Korea and escalating pressure on Beijing to reform.

The current U.S. administration still has time to correct this omission. Having been an advocate for Taiwan during my time in the Senate, and today as part of a law firm that represents Taiwan's interests in the U.S., I believe that President Bush should support Taiwan's application for U.N. membership. This should be quickly followed by active or tacit support for Taiwan's plans for a popular vote on this issue in March 2008. Our close Asian friend and ally needs and deserves this recognition and support, which would at the same time advance America's regional and global interest in promoting democratization.

Mr. Dole, a former Senate majority leader and the Republican candidate for president in 1996, is special counsel to Alston & Bird.

Title: Re: China
Post by: G M on September 17, 2007, 10:04:56 AM
IMHO, we'll see China move against Taiwan sometime in late 2008-2009. Most likely this will happen while the US is facing issues elsewhere, like major terror attacks CONUS and/or a open shooting war with Iran.
Title: Re: China
Post by: Crafty_Dog on September 17, 2007, 10:49:31 AM
Which could explain why some factions within the Pentagon are pushing strongly for more/faster troop withdrawals from Irag , , ,
Title: Re: China
Post by: Crafty_Dog on September 22, 2007, 04:37:01 AM
The long march to be a superpower

Aug 2nd 2007 | BEIJING AND TIANJIN
From The Economist print edition

The People's Liberation Army is investing heavily to give China the military muscle to match its economic power. But can it begin to rival America?

THE sight is as odd as its surroundings are bleak. Where a flat expanse of mud flats, salt pans and fish farms reaches the Bohai Gulf, a vast ship looms through the polluted haze. It is an aircraft-carrier, the Kiev, once the proud possession of the Soviet Union. Now it is a tourist attraction. Chinese visitors sit on the flight deck under Pepsi umbrellas, reflecting perhaps on a great power that was and another, theirs, that is fast in the making.

Inside the Kiev, the hangar bay is divided into two. On one side, bored-looking visitors watch an assortment of dance routines featuring performers in ethnic-minority costumes. On the other side is a full-size model of China's new J-10, a plane unveiled with great fanfare in January as the most advanced fighter built by the Chinese themselves (except for the Ukrainian or Russian turbofan engines—but officials prefer not to advertise this). A version of this, some military analysts believe, could one day be deployed on a Chinese ship.

The Pentagon is watching China's aircraft-carrier ambitions with bemused interest. Since the 1980s, China has bought four of them (three from the former Soviet Union and an Australian one whose construction began in Britain during the second world war). Like the Kiev, the Minsk (berthed near Hong Kong) has been turned into a tourist attraction having first been studied closely by Chinese naval engineers. Australia's carrier, the Melbourne, has been scrapped. The biggest and most modern one, the Varyag, is in the northern port city of Dalian, where it is being refurbished. Its destiny is uncertain. The Pentagon says it might be put into service, used for training carrier crews, or become yet another floating theme-park.

American global supremacy is not about to be challenged by China's tinkering with aircraft-carriers. Even if China were to commission one—which analysts think unlikely before at least 2015—it would be useless in the most probable area of potential conflict between China and America, the Taiwan Strait. China could far more easily launch its jets from shore. But it would be widely seen as a potent symbol of China's rise as a military power. Some Chinese officers want to fly the flag ever farther afield as a demonstration of China's rise. As China emerges as a trading giant (one increasingly dependent on imported oil), a few of its military analysts talk about the need to protect distant sea lanes in the Malacca Strait and beyond.

This week China's People's Liberation Army (PLA), as the armed forces are known, is celebrating the 80th year since it was born as a group of ragtag rebels against China's then rulers. Today it is vying to become one of the world's most capable forces: one that could, if necessary, keep even the Americans at bay. The PLA has little urge to confront America head-on, but plenty to deter it from protecting Taiwan.

The pace of China's military upgrading is causing concern in the Pentagon. Eric McVadon, a retired rear admiral, told a congressional commission in 2005 that China had achieved a “remarkable leap” in the modernisation of forces needed to overwhelm Taiwan and deter or confront any American intervention. And the pace of this, he said, was “urgently continuing”. By Pentagon standards, Admiral McVadon is doveish.

In its annual report to Congress on China's military strength, published in May, the Pentagon said China's “expanding military capabilities” were a “major factor” in altering military balances in East Asia. It said China's ability to project power over long distances remained limited. But it repeated its observation, made in 2006, that among “major and emerging powers” China had the “greatest potential to compete militarily” with America.

Since the mid-1990s China has become increasingly worried that Taiwan might cut its notional ties with the mainland. To instil fear into any Taiwanese leader so inclined, it has been deploying short-range ballistic missiles (SRBMs) on the coast facing the island as fast as it can produce them—about 100 a year. The Pentagon says there are now about 900 of these DF-11s (CSS-7) and DF-15s (CSS-6). They are getting more accurate. Salvoes of them might devastate Taiwan's military infrastructure so quickly that any war would be over before America could respond.

Much has changed since 1995 and 1996, when China's weakness in the face of American power was put on stunning display. In a fit of anger over America's decision in 1995 to allow Lee Teng-hui, then Taiwan's president, to make a high-profile trip to his alma mater, Cornell University, China fired ten unarmed DF-15s into waters off Taiwan. The Americans, confident that China would quickly back off, sent two aircraft-carrier battle groups to the region as a warning. The tactic worked. Today America would have to think twice. Douglas Paal, America's unofficial ambassador to Taiwan from 2002 to 2006, says the “cost of conflict has certainly gone up.”

The Chinese are now trying to make sure that American aircraft-carriers cannot get anywhere near. Admiral McVadon worries about their development of DF-21 (CSS-5) medium-range ballistic missiles. With their far higher re-entry velocities than the SRBMs, they would be much harder for Taiwan's missile defences to cope with. They could even be launched far beyond Taiwan into the Pacific to hit aircraft-carriers. This would be a big technical challenge. But Admiral McVadon says America “might have to worry” about such a possibility within a couple of years.

Once the missiles have done their job, China's armed forces could (so they hope) follow up with a panoply of advanced Russian weaponry—mostly amassed in the past decade. Last year the Pentagon said China had imported around $11 billion of weapons between 2000 and 2005, mainly from Russia.

China knows it has a lot of catching up to do. Many Americans may be unenthusiastic about America's military excursions in recent years, particularly about the war in Iraq. But Chinese military authors, in numerous books and articles, see much to be inspired by.

On paper at least, China's gains have been impressive. Even into the 1990s China had little more than a conscript army of ill-educated peasants using equipment based largely on obsolete Soviet designs of the 1950s and outdated cold-war (or even guerrilla-war) doctrine. Now the emphasis has shifted from ground troops to the navy and air force, which would spearhead any attack on Taiwan. China has bought 12 Russian Kilo-class diesel attack submarines. The newest of these are equipped with supersonic Sizzler cruise missiles that America's carriers, many analysts believe, would find hard to stop.

There are supersonic cruise missiles too aboard China's four new Sovremenny-class destroyers, made to order by the Russians and designed to attack aircraft-carriers and their escorts. And China's own shipbuilders have not been idle. In an exhibition marking the 80th anniversary, Beijing's Military Museum displays what Chinese official websites say is a model of a new nuclear-powered attack submarine, the Shang. These submarines would allow the navy to push deep into the Pacific, well beyond Taiwan, and, China hopes, help defeat American carriers long before they get close. Last year, much to America's embarrassment, a newly developed Chinese diesel submarine for shorter-range missions surfaced close to the American carrier Kitty Hawk near Okinawa without being detected beforehand.

American air superiority in the region is now challenged by more than 200 advanced Russian Su-27and Su-30 fighters China has acquired since the 1990s. Some of these have been made under licence in China itself. The Pentagon thinks China is also interested in buying Su-33s, which would be useful for deployment on an aircraft-carrier, if China decides to build one.

During the Taiwan Strait crisis of 1995-96, America could be reasonably sure that, even if war did break out (few seriously thought it would), it could cope with any threat from China's nuclear arsenal. China's handful of strategic missiles capable of hitting mainland America were based in silos, whose positions the Americans most probably knew. Launch preparations would take so long that the Americans would have plenty of time to knock them out. China has been working hard to remedy this. It is deploying six road-mobile, solid-fuelled (which means quick to launch) intercontinental DF-31s and is believed to be developing DF-31As with a longer range that could hit anywhere in America (see map below), as well as submarine-launched (so more concealable) JL-2s that could threaten much of America too.

All dressed up and ready to fight?

But how much use is all this hardware? Not a great deal is known about the PLA's fighting capability. It is by far the most secretive of the world's big armies. One of the few tidbits it has been truly open about in the build-up to the celebrations is the introduction of new uniforms to mark the occasion: more body-hugging and, to howls of criticism from some users of popular Chinese internet sites, more American-looking.

As Chinese military analysts are well aware, America's military strength is not just about technology. It also involves training, co-ordination between different branches of the military (“jointness”, in the jargon), gathering and processing intelligence, experience, and morale. China is struggling to catch up in these areas too. But it has had next to no combat experience since a brief and undistinguished foray into Vietnam in 1979 and a huge deployment to crush pro-democracy unrest ten years later.

China is even coyer about its war-fighting capabilities than it is about its weaponry. It has not rehearsed deep-sea drills against aircraft-carriers. It does not want to create alarm in the region, nor to rile America. There is also a problem of making all this Russian equipment work. Some analysts say the Chinese have not been entirely pleased with their Su-27 and Su-30 fighters. Keeping them maintained and supplied with spare parts (from Russia) has not been easy. A Western diplomat says China is also struggling to keep its Russian destroyers and submarines in good working order. “We have to be cautious about saying ‘wow’,” he suggests of the new equipment.

China is making some progress in its efforts to wean itself off dependence on the Russians. After decades of effort, some analysts believe, China is finally beginning to use its own turbofan engines, an essential technology for advanced fighters. But self-sufficiency is still a long way off. The Russians are sometimes still reluctant to hand over their most sophisticated technologies. “The only trustworthy thing [the Chinese] have is missiles,” says Andrew Yang of the Chinese Council of Advanced Policy Studies in Taiwan.

The Pentagon, for all its fretting, is trying to keep channels open to the Chinese. Military exchanges have been slowly reviving since their nadir of April 2001, when a Chinese fighter jet hit an American spy plane close to China. Last year, for the first time, the two sides conducted joint exercises—search-and-rescue missions off the coasts of America and China. But these were simple manoeuvres and the Americans learned little from them. The Chinese remain reluctant to engage in anything more complex, perhaps for fear of revealing their weaknesses.

The Russians have gained deeper insights. Two years ago the PLA staged large-scale exercises with them, the first with a foreign army. Although not advertised as such, these were partly aimed at scaring the Taiwanese. The two countries practised blockades, capturing airfields and amphibious landings. The Russians showed off some of the weaponry they hope to sell to the big-spending Chinese.

Another large joint exercise is due to be held on August 9th-17th in the Urals (a few troops from other members of the Shanghai Co-operation Organisation, a six-nation group including Central Asian states, will also take part). But David Shambaugh of George Washington University says the Russians have not been very impressed by China's skills. After the joint exercise of 2005, Russians muttered about the PLA's lack of “jointness”, its poor communications, and the slowness of its tanks.

China has won much praise in the West for its increasing involvement in United Nations peacekeeping operations. But this engagement has revealed little of China's combat capability. Almost all of the 1,600 Chinese peacekeepers deployed (including in Lebanon, Congo, and Liberia) are engineers, transport troops, or medical staff.

A series of “white papers” published by the Chinese government since 1998 on its military developments have shed little light either, particularly on how much the PLA is spending and on what. By China's opaque calculations, the PLA enjoyed an average annual budget increase of more than 15% between 1990 and 2005 (nearly 10% in real terms). This year the budget was increased by nearly 18%. But this appears not to include arms imports, spending on strategic missile forces and research and development. The International Institute for Strategic Studies in London says the real level of spending in 2004 could have been about 1.7 times higher than the officially declared budget of 220 billion yuan ($26.5 billion at then exchange rates).

This estimate would make China's spending roughly the same as that of France in 2004. But the different purchasing power of the dollar in the two countries—as well as China's double-digit spending increases since then—push the Chinese total far higher. China is struggling hard to make its army more professional—keeping servicemen for longer and attracting better-educated recruits. This is tough at a time when the civilian economy is booming and wages are climbing. The PLA is having to spend much more on pay and conditions for its 2.3m people.

Keeping the army happy is a preoccupation of China's leaders, mindful of how the PLA saved the party from probable destruction during the unrest of 1989. In the 1990s they encouraged military units to run businesses to make more money for themselves. At the end of the decade, seeing that this was fuelling corruption, they ordered the PLA to hand over its business to civilian control. Bigger budgets are now helping the PLA to make up for some of those lost earnings.

The party still sees the army as a bulwark against the kind of upheaval that has toppled communist regimes elsewhere. Chinese leaders lash out at suggestions (believed to be supported by some officers) that the PLA should be put under the state's control instead of the party's. The PLA is riddled with party spies who monitor officers' loyalty. But the party also gives the army considerable leeway to manage its own affairs. It worries about military corruption but seldom moves against it, at least openly (in a rare exception to this, a deputy chief of the navy was dismissed last year for taking bribes and “loose morals”). The PLA's culture of secrecy allowed the unmonitored spread of SARS, an often fatal respiratory ailment, in the army's medical system in 2003.

Carrier trade

The PLA knows its weaknesses. It has few illusions that China can compete head-on with the Americans militarily. The Soviet Union's determination to do so is widely seen in China as the cause of its collapse. Instead China emphasizes weaponry and doctrine that could be used to defeat a far more powerful enemy using “asymmetric capabilities”.

The idea is to exploit America's perceived weak points such as its dependence on satellites and information networks. China's successful (if messy and diplomatically damaging) destruction in January of one of its own ageing satellites with a rocket was clearly intended as a demonstration of such power. Some analysts believe Chinese people with state backing have been trying to hack into Pentagon computers. Richard Lawless, a Pentagon official, recently said China had developed a “very sophisticated” ability to attack American computer and internet systems.

The Pentagon's fear is that military leaders enamored of new technology may underestimate the diplomatic consequences of trying it out. Some Chinese see a problem here too. The anti-satellite test has revived academic discussion in China of the need for setting up an American-style national security council that would help military planners co-ordinate more effectively with foreign-policy makers.

But the Americans find it difficult to tell China bluntly to stop doing what others are doing too (including India, which has aircraft-carriers and Russian fighter planes). In May Admiral Timothy Keating, the chief of America's Pacific Command, said China's interest in aircraft-carriers was “understandable”. He even said that if China chose to develop them, America would “help them to the degree that they seek and the degree that we're capable.” But, he noted, “it ain't as easy as it looks.”

A senior Pentagon official later suggested Admiral Keating had been misunderstood. Building a carrier for the Chinese armed forces would be going a bit far. But the two sides are now talking about setting up a military hotline. The Americans want to stay cautiously friendly as the dragon grows stronger.
Title: Re: China
Post by: Crafty_Dog on September 22, 2007, 05:19:33 AM
Second post of the morning:

WSJ

THE WEEKEND INTERVIEW

21st-Century Monk
Tibet's spiritual leader thanks America for its support.

BY MARY KISSEL
Saturday, September 22, 2007 12:01 a.m. EDT

DHARAMSALA, India--"So, Rupert Murdoch is buying your newspaper?"

It's unclear whether the Dalai Lama's private secretary is making small talk about News Corp.'s impending takeover of Dow Jones, or if he's obliquely reminding me of Mr. Murdoch's oft-quoted reference to his boss as "a very political old monk shuffling around in Gucci shoes." I'm momentarily flummoxed--how does one reply when surrounded by monks?--but I recover as we make our way through clouds to the Dalai Lama's residence here in the Himalayan foothills.

For more than 40 years, the man better known as "His Holiness"--or, if you're in China, the "splittist," "separatist" or--the ultimate slight--"politician"--has been waging a peaceful campaign for a free Tibet, which was invaded by Communist China in 1949 and has been brutally suppressed ever since. His "middle way" diplomacy, a talk-and-talk-some-more approach, has produced distinctly middling results. In the lead-up to next summer's Beijing Olympics, the atrocities in Tibet have barely been mentioned--overshadowed by China's weapons sales in Darfur, a world away.

Over the border, China is tightening its vise. The State Administration for Religious Affairs declared last month that all Buddhist reincarnations must get government approval, a move that sets the stage for Beijing to name its own Dalai Lama once this one passes. The Party's "Go West" campaign is flooding Tibet with Han Chinese, marginalizing the native Tibetans. And a wave of recent political crackdowns has been left largely unnoticed in the Western press.

But the Dalai Lama seems unperturbed, even buoyant. He emerges from the mist, shuffling down a footpath to minister to a waiting line of devotees. He chats with a group of former Tibetan special forces personnel who helped whisk him over the border in 1959 ("let's take a photograph"); then he tends to the sick ("visit a doctor"), and blesses visiting Buddhist pilgrims.

In the line also stand two teenage Tibetan schoolgirls whose father was imprisoned last month for standing up at Tibet's annual Lithang horseracing festival and denouncing the local monks for cooperating with the communists--sparking sympathetic protests and subsequent crackdowns all over the province. "Your father is a brave man," the he tells the ponytailed girls, who look simultaneously awed and sad. (The secretary is translating for me in a jarringly perfect American accent; he spent time in New Jersey as a youth.)

The girls had trekked over the Himalayas to Nepal and, later, to India and freedom. Like many of the approximately 3,000 refugees who come here every year, they may never see their family again. The Dalai Lama, the private secretary whispers in my ear, grants each of them an audience upon his arrival in Dharamsala. Moving into a sitting room, we leave the misty courtyard behind.

There is room for cautious optimism for Tibetans that things will improve in their homeland, but perhaps not in the Dalai Lama's lifetime. As China gets richer and citizens search for spiritual fulfillment, underground religious movements are budding across the country. Last year, more than 500 mainland Chinese trekked to southern India to hear the Dalai Lama preach, according to the Tibetan government-in-exile. Others now come to Dharamsala to learn Buddhism and then return to China. When Zhao Ziyang, China's former premier, passed away, his family asked the Dalai Lama for a blessing.

"Chinese society is now ruled by autocrats," the Dalai Lama says with a laugh, as we start our formal interview. "But the society is still Chinese society." (The New Jersey-infused private secretary sits nearby, helping with translations when necessary.) "Chinese society built many, many Buddhist temples. . . . Now with a little liberalization, or lenient policy, their religious faith is now, khare-zego-re [Tibetan for 'what is the word?'], returning, reviving, including the Buddhist faith." I must have looked surprised at his cheerful optimism. "Mmm," he murmurs, shifting slightly in his chair.

Authoritarian, closed societies are "unpredictable," but the Dalai Lama insists that he's taking the right approach. "We are not seeking independence," he says. "We want a solution according to the Chinese Constitution." The Constitution, as his negotiators often remind Beijing, says "all nationalities in the People's Republic of China are equal," and adds "the state protects the lawful rights and interests of the minority nationalities and upholds and develops the relationship of equality, unity and mutual assistance among all of China's nationalities."





Beijing, of course, insists that this the "splittist" wants "independence," not autonomy. That was true--30 years ago. Through the upheaval of the Great Leap Forward and the Cultural Revolution, there wasn't much dialogue to be had with Beijing. In the early 1970s, as the Cultural Revolution was peaking, the Dalai Lama decided to shift to a call for autonomy, not independence, as a sign of good faith. At the time, he described it as a "middle approach."
Since then, the monk who's never been far from politics has tried to separate himself from the process to give it real legitimacy. The Tibetan government-in-exile founded a parliament in 1960. But in 1991, a new constitution, the Charter of Tibetans in Exile, transferred the power to select its members to the Tibetan people. In 2001, the charter was amended to allow the direct election of the prime minister--Samdhong Rinpoche, a reincarnate lama himself. "I have no longer any political status," the Dalai Lama emphasizes. "I remain just a simple Buddhist monk," he says, "quiet!"

Beijing hasn't responded in kind to these gestures. If anything, the relationship has deteriorated over six rounds of talks. Last year President Hu Jintao's administration launched an intensive round of attacks against the Dalai Lama, calling him "unworthy" of being a religious leader. China's rhetorical venom has created a growing sense of fury in the Tibetan exile community. Many Tibetans worry that the Communist Party is playing a waiting game, stringing along the Tibetan negotiators until the Dalai Lama passes--a fear that the Buddhist leader acknowledges.

"There's certainly more and more signs of frustrations, not only on our side, but inside," the Dalai Lama admits. A Tibetan youth tried to immolate himself when Mr. Hu visited Mumbai last year; another tried last month. In Tibet, violent tendencies have been crushed by the communists, but that doesn't mean they won't surface. "The suicides, the bombings, these things . . . it's possible," the Dalai Lama acknowledges, sighing slightly, with his hands now open. "But then, we always ask people to keep, keep peace."





One way of doing that is to institutionalize the Tibetan cause in the younger generation. Through private donations, the Tibetan government funds the Tibetan Children's Village, a network of schools for refugee children. Others are educated at Indian government-funded institutions. All teach Tibetan language, culture and a version of Chinese history that would never see the light of day on the mainland.
"In the past, Tibetans, particularly the nomads and also the farmers, they simply carried their centuries-old way of life . . . completely ignorant about the current world," the Dalai Lama says. "We Buddhists must be Buddhists of the 21st century." (Maybe that's why the secretary is following Mr. Murdoch's purchases so closely.)

Another way to perpetuate the movement--especially inside China--is to debunk the Communist Party's characterization of religion as a destabilizing force. The Dalai Lama preaches what he dubs "secular ethics"--the idea that there are common experiences that all people, regardless of religious faith, share. In his view, all spiritual traditions talk about basic concepts of love, compassion, forgiveness, tolerance, contentment, self-discipline. While these ideas may come packaged in different philosophies, the message is the same.

"The main thing is some kind of usefulness to others." He pauses. "That's the meaning of life," he says, leaning forward and pointing his finger at me gently.

Despite his optimism, there's little chance that the "middle way" will spark a breakthrough anytime soon. From Beijing's perspective, the Dalai Lama's return to Tibet would galvanize Tibetans to rally behind their leader and push for independence--an example that China, which has suppressed other ethnic groups, such as the Uighurs, could not tolerate.





For the Communist Party, Tibet remains the third rail of politics--a topic so sensitive that it turns mild-mannered Chinese bureaucrats red in the face at a mere mention. The party toyed briefly with liberalization of the region in the 1980s, only to find Tibetans gleefully displaying the Dalai Lama's image and calling for independence. In 1989, a crackdown ensued, overseen by now-President Hu, then the party secretary of the Tibet Autonomous Region. Since taking office, Mr. Hu has installed a loyal hard-liner to oversee the area.
China's economy is increasingly providing political cover for its suppression of Tibet; it's too big and important to let a little bright light shine on human-rights abuses in a faraway land. The Dalai Lama's cause is especially lonely in Asia, given China's economic rise and its rapidly accruing military clout. "Very few" democracies in the region publicly support Tibet, with the notable exception of India--which comes under pressure frequently from Beijing. The silence is deafening, given that many Asian democracies, including those in Japan and South Korea, are home to large populations of Buddhists.

Even Western democratic nations come under intense pressure from Beijing. Belgium cancelled an official visit with the Dalai Lama before an EU-China meeting in May this year. Australian Prime Minister John Howard hesitated to meet the Buddhist leader in June, but, after intense lobbying from Washington, acquiesced. Germany's Angela Merkel is proving braver--she's hosting the Dalai Lama's first-ever visit to the German chancellery on Sunday.

"When we look at Tibet issue locally, then almost hopeless," the Dalai Lama concedes. But from a "wider perspective," the Tibet cause is "always hopeful." Recalling how the Soviet Union changed, he muses for a moment on how China is developing. "China is communist without communist ideology--only power," he declares. "So logically, no future!" The "only future" for China is "democracy, rule of law, free press, religious freedom, free information. China's future depends on these factors." That's something, he adds, that President Hu must know. "I really feel sympathy" for him.





The U.S. has always proved a strong supporter of the Tibetan cause--a close relationship that makes the Dalai Lama feel "proud." America, he says is a "champion of democracy, freedom and liberty. So their full support means they recognize our struggle as a just cause and a moral issue." Next month's Congressional Gold Medal award ceremony has sent the Chinese Embassy into high defensive gear. But that hasn't stopped President Bush from scheduling a private audience with the Dalai Lama.
"Of course, sometimes I have disagreement with . . . President Bush, but as a person, I always made clear, personally, I like him. He's very straightforward," the Dalai Lama recalls, "down to earth." House Speaker Nancy Pelosi is a "close friend of me personally and, I should say, a close friend of Tibet."

As we end, the Dalai Lama drapes a traditional white katag scarf around my neck and presents me with a pin depicting Potala Palace in Lhasa, his ancestral home. Then, like a child might, he throws his arms around me, and whispers into my ear: "We are passing through a difficult period," he says. "One ancient nation, with a unique heritage in a way, dying. So support from the free world is very much appreciated."

But will the free world follow through?

Ms. Kissel is The Wall Street Journal Asia's editorial page editor.
Title: Shifting Thinking, Eroding Advantage
Post by: Crafty_Dog on October 05, 2007, 08:40:24 AM
stratfor
China, Taiwan: Shifting Thinking, Eroding Advantage
October 04, 2007 22 40  GMT



Summary

A potential shift in China's thinking about contingency war planning for conflict with Taiwan could herald some significant alterations in the military dynamic between the island and the mainland. Such a shift would come at a time of eroding technological advantage for Taipei.

Analysis

A new aspect of Chinese contingency war planning for dealing with Taiwan in the event that the island declares independence is emerging from Chinese researchers and semigovernmental think tanks. These sources suggest that if Beijing feels such action against Taiwan is necessary, it will sacrifice even the 2008 Olympic Games, which are of paramount importance for the Communist Party of China. Though an outright declaration of Taiwanese independence is unlikely in the near future, there is still plenty Taiwanese President Chen Shui-bian can do to get creative.

China's potential strategy centers on a punishing bombardment of Taiwan rather than a full-scale amphibious invasion. The combined tonnage of ballistic and cruise missiles, airstrikes and naval gunfire would focus specifically on the Taiwanese military's command-and-control infrastructure, with the objective of obliterating Taipei's ability to meaningfully coordinate a defense of the island. It appears China hopes to accomplish this in less than a week, and possibly as quickly as 24 hours, with the objective of forcing the direct capitulation of the government or compelling the population in general, the Kuomintang opposition in particular or the military itself to force the government into that capitulation. The ultimate goal of such a strategy would be a return to the status quo, rather than reunification.

While there are a number of problems with this strategy, the shift in thinking -- away from occupying the island and bringing it back into the mainland fold and toward bombardment and restoring the status quo -- is significant. And while it is ever-important for Beijing to appear politically firm on all things Taiwan, talk of sacrificing the Olympics is not idle banter in China.

The long-standing objective of an amphibious assault to retake the island has massive operational problems. Chinese ships laden with troops, tanks and supplies would be unlikely to survive the push across the 100-nautical-mile Taiwan Strait -- especially against an enemy that has spent decades preparing for just that. The island's coast bristles with anti-ship missiles.





Meanwhile, Taiwan already has begun to acquire the latest U.S. Patriot air defense system, the PAC-3, which offers a terminal-phase ballistic missile defense capability, in addition to its anti-aircraft heritage. There also is the matter of the island's Republic of China Air Force, which promises to make any assault from the mainland a costly one.

While there are infinite complexities to this dynamic, with the open sea as a buffer, Taiwan is in a good geographic position for its self-defense. But it cannot endure an endless onslaught from the mainland. Taiwan boasts less than a fifth of the combat-capable aircraft of the People's Liberation Army Air Force (PLAAF), though frontline pilots on both sides of the strait reportedly get a very respectable 180 hours of flying per year.

Meanwhile, the mainland's modernization of the PLAAF -- both in terms of air defenses and aircraft -- has evoked strong concerns even from U.S. Lt. Gen. Bruce Wright, commander of U.S. Forces Japan and the U.S. 5th Air Force. Wright said during the week of Sept. 23 that he considered China's air defenses "nearly impenetrable" to all but the most modern U.S. aircraft -- a strong statement from the U.S. Air Force.

The trajectory of this modernization outpaces Taiwan's, in terms of both technology and sheer numbers. The island's F-16s are the Block 20 variant and are a significant asset. But its F-5E Tiger IIs and French Mirage 2000Ei-5s are dated. Its Ching Kuo Indigenous Defense Fighter (a sort of hybrid of the U.S. F-16 and F/A-18 Hornet designs), while an eminently respectable design and production achievement, already is slated for replacement by the newer Block 50 F-16s Taipei hopes to import soon.




The PLAAF already has imported more than 70 of the latest Su-30MKK Flanker fighters from Russia. Using these aircraft, the Indian air force occasionally has outperformed U.S. pilots in fourth-generation aircraft in exercises. Meanwhile, the indigenous production of the J-11, a licensed copy of the earlier Su-27 Flanker design, already has yielded more than 100 airframes. Production of the domestically designed J-10 fighter also is well under way.




Thus, while not true in all regards, Taipei's technological advantage in the realm of fighter aircraft is slowly being eroded. How both the Ching Kuo and J-10 would perform in combat remains an open question, as is the effectiveness of the PLAAF's nascent airborne early warning (AEW) and control aircraft, which might not even be available for operational deployment. Taiwan's E-2 Hawkeye AEW fleet -- which dates back to 1989 -- is far better established and would be of great significance, however.

Advantage in quality is an essential counter to disadvantage in quantity, but Taiwan simply is not in the position it was a decade ago. Meanwhile, the new evidence that China is contemplating more realistic military options for dealing with Taiwan (bombardment not invasion, restoring the status quo rather than reabsorbing the island) means Beijing's focus might no longer be a doomed amphibious assault, which would have represented a massive black hole for People's Liberation Army efforts -- to Taipei's benefit.

However things plays out, the avenues for escalation quickly expand. China and Taiwan could quickly find themselves engaged in the largest two-way air battle since World War II. This would be only one aspect of a complicated dynamic. And of course, U.S. or even Japanese intervention on behalf of Taiwan could radically alter the picture.

Such intervention is nearly guaranteed in the event of a Chinese military incursion into Taiwan, given Washington's legal obligation to come to Taiwan's aid. The USS Kitty Hawk, homeported in Yokosuka, Japan, is never far. Ultimately, the prospect of a short, furious bombardment of the island that does not involve a prolonged Chinese military commitment on the ground might be enticing for Beijing and has significant implications for foreign intervention.
Title: Re: China
Post by: Crafty_Dog on January 02, 2008, 03:23:51 PM
China Flexes Its Muscles
By GORDON G. CHANG
January 2, 2008; Page A11

The U.S. Navy said it was "befuddled" by Beijing's last-minute November denial of a long-arranged port call for the Kitty Hawk carrier group in Hong Kong. This turndown was on top of China's refusal to provide shelter for two U.S. minesweepers seeking refuge from a storm, and its rejection of a routine visit for a frigate, the Reuben James. The Air Force also received a "no" for a regular C-17 flight to resupply the American consulate in Hong Kong.

 
The immediate causes of these rebuffs may be American arms sales to Taiwan, which China regards as sovereign territory, and the award of a congressional medal to the Dalai Lama, with whom Beijing has had a multi-decade spat. But so many turndowns suggest the decisions were made at the highest levels of the Chinese central government -- and at a time when senior leaders are reorienting the country's foreign policy. Washington's relations with Beijing, in short, appear headed for increasing disagreement and tension.

Deng Xiaoping, who turned China away from Maoist revolution, believed that the country should "bide time" and keep a low profile in international affairs. Deng wanted Beijing to "seek cooperation and avoid confrontation," especially with the U.S. China, after a series of disastrous episodes like the Cultural Revolution and the Tiananmen massacre, needed a peaceful environment and the help of outsiders to rebuild its shattered economy.

Deng's successor, Jiang Zemin, followed this general approach even though he wanted Beijing to pursue his "big country" ambitions. Mr. Jiang desired recognition for China's growing status, but he saw his nation working cooperatively with the U.S. and its allies as partners.

Current President Hu Jintao has shifted China in a new direction. Like Mr. Jiang, he believes that the country should assert itself. But unlike his predecessor, he seems to think that China should actively work to restructure the international system to be more to Beijing's liking. In short, the current leader appears to see his country mostly working against the U.S.

The shape of China's grand strategy became apparent after a series of meetings in Beijing in the second half of 2006. In August, the Communist Party convened its Central Work Conference on Foreign Affairs. The meeting, the culmination of a half-year, top-to-bottom review of the country's external policies, brought together for the first time all members of the Politburo, provincial governors and Party secretaries, the State Council and central government ministers, about 60 ambassadors and 30 other diplomats, and key military officers with foreign affairs responsibilities.

Significantly, the public summary of the meeting did not include references to the invariably cited "bide time" strategy of Deng Xiaoping -- an indication of a fundamental change in thinking. Adopting the new tone, that same month Beijing's top U.N. diplomat in Geneva, Sha Zukang, told the U.S. to "shut up" about China's military buildup.

Later in the year, senior leaders met one or more times to confirm the new foreign policy direction. As veteran China watcher Willy Lam has noted, Mr. Hu and the leadership decided "to make a clean break with Deng's cautious axioms and instead, embark on a path of high-profile force projection."

Mr. Hu's reorientation of foreign policy is a consequence of his increasing reliance on the People's Liberation Army as a political base inside the Party. Since the middle of 2004, he stepped up efforts to court senior generals for support of his efforts to assert supremacy over Jiang Zemin, who has been clinging to power and blocking some of his initiatives. The military, for example, appears to have been behind Mr. Hu's partially successful effort, in the run-up to last year's 17th Party Congress, to pick his own successor.

It seems that at the massive conclave, held once every five years, Mr. Hu obtained the assistance of the more hawkish officers of the PLA in return for accelerating increases in military spending, promoting some of them to senior positions -- especially Gen. Chen Bingde to be the chief of general staff -- and steering the country toward a more assertive posture toward other nations in general, and Taiwan in particular.

There are several other incidents consistent with China's new assertive posture. In October 2006, a Chinese submarine for the first time surfaced in the middle of an American carrier group. This episode, occurring in the Philippine Sea southeast of Okinawa, was an obvious warning to the U.S. Navy to stay away. And in January of last year, the PLA, in an unmistakable display of military power, destroyed one of China's old weather satellites with a ground-based missile.

Beijing's military has also started to boast about its new weapons and war-fighting capabilities. Peace Mission 2007, cooperative military exercises in Central Asia in August, was China's first large-scale foreign military deployment, and recent military maneuvers, apparently rehearsals to take Taiwan and disputed islands in the South China Sea, were remarkable in scope and sophistication.

China's new ambitions have been confirmed by Hong Yuan, a military strategist at the Chinese Academy of Social Sciences, who noted a significant departure from Beijing's prior posture. China, he said in October, intended to project force in areas "way beyond the Taiwan Strait."

China's military assertiveness has been matched by tougher diplomacy. Last year, a series of high-level meetings showed that Beijing has moved closer to Moscow to cement their "friendship for generations" and confirm their opposition to American initiatives, especially to stop the Iranian nuclear program.

China's sustained campaign against German Chancellor Angela Merkel for meeting the Dalai Lama in September is also notably intense. China even threatened military and political responses over economic disputes -- such as those relating to market barriers and intellectual property piracy -- at last month's session of the "Strategic Economic Dialogue," the high-level talks between the U.S. and China.

The Kitty Hawk port call fits into this pattern. In the past, this snub would have merely been the product of petulance. Today, it is another indication of a change in China's approach to the world.

Last month, Washington and Beijing agreed to put the Kitty Hawk and similar incidents behind them. Now, the challenge for the U. S. is to recognize that Chinese attitudes have turned a corner, and to craft new policies in response.

Mr. Chang is the author of "The Coming Collapse of China" (Random House, 2001).
WSJ
Title: Re: China
Post by: DougMacG on April 04, 2008, 06:39:15 PM
CCP had an interesting comment under Miliary Science: "...the US military sees China as our number one enemy"

It's true, but it's different from threats or enemies of the past, a very complex relationship.  China is clearly the number one potential threat because of size, military strength, economic strength and contention over certain geopolitical issues, particularly Taiwan. OTOH we don't want to control any inch of their land and they don't want ours. 

We had a couple of close calls that could have escalated but didn't. In May 1999 the US bombed the Chinese embassy in Yugoslavia by mistake. Also the crisis of April 2001 when a Chines bomber plane collided into an American reconnaissance plane that had to make an emergency landing on a Chinese runway.  The Chinese held 24 American crew members for 11 days, then released them, and they held our plane for over 2 months. http://usgovinfo.about.com/blchina0412.htm

In the case of having their embassy bombed the Chinese showed restraint.  In the case of having our Navy flight crew detained, the US showed restraint.  The reason was the fear of war as deterrence but also the complexly intertwined economies IMO.

Title: Re: China
Post by: Crafty_Dog on April 04, 2008, 11:34:15 PM
I like that Doug begins a discussion about the complexity of our relationship with China.

In addition to the well known platitudes, I offer to the mix:

1)  China as a unique demographic profile due to the one child policy.  What are the implications thereof?

2) China is a toxic dump, an ecological disaster;

3)  China's banking industry's books make Enron a paradigm of financial rectitude.  Is there a disaster in the making?  Or will it lead to an even worse version of what happened to former econ juggernaut Japan?

Marc

Title: Re: China
Post by: DougMacG on April 06, 2008, 12:00:52 AM
Responding to three points Crafty made regarding China:

"1)  China as a unique demographic profile due to the one child policy.  What are the implications thereof?"

There is an enormous field of study and thought regarding the effect of birth order on personality and I am no expert on that, but I am raising an only child - now 13.  One observation would be that only child gets the extensive to undivided attention of sometimes 6 adults, counting grandparents, where many of us probably grew up in the opposite situation where children outnumbered adults and competed for or shared attention and received  less.  IMO there are pluses and minuses so I don't draw any big conclusions from that. I  would go a couple of different directions with this.  The one-child policy including the horrific abortion situation and loss of freedom solved the population explosion on this piece of the planet.  One theory that was posted by Karsk says that the limits of physical resources places limits our potential for economic growth. (I owe him a reply that is half-written and partially disagrees on that.) Under that theory the population controls helps the sustainability of China's economic growth. Under other theories of demographics, they will be in big trouble when too few workers in the newer generations need to support too many retirees that likely will live longer and longer with rising costs.  I don't know how these things will resolve themselves.

"2) China is a toxic dump, an ecological disaster"

I don't know why bloody totalitarian regimes don't have more environmental protesters (sarcasm). We saw the toxic mess when communist east Europe was freed.  There is a correlation between prosperity, consensual government and cleaning up our environment.  Right now China is moving toward prosperity without moving toward consensual government.  Uncharted territory as far as I can see.  They have the regulatory authority, they just need the desire from the rulers since there is no electorate.

3)  China's banking industry's books make Enron a paradigm of financial rectitude.  Is there a disaster in the making?  Or will it lead to an even worse version of what happened to former econ juggernaut Japan?

I agree with the premise.  Japan had prolonged stagnation.  China will someday have a real downturn.  My credibility is lousy here.  I predicted since the Tiananmen Square protests of 1989 that their house of cards economy would suffer setbacks and the ruling regime would not survive that.  So far, I'm wrong.

Title: Re: China
Post by: G M on April 06, 2008, 08:27:14 AM
I like that Doug begins a discussion about the complexity of our relationship with China.

In addition to the well known platitudes, I offer to the mix:

1)  China as a unique demographic profile due to the one child policy.  What are the implications thereof?

War. China has a growing wave of males with no chance of ever finding a mate. These tend to be from rural stock, as urbanites, especially China's upwardly mobile tend towards valuing a daughter as much as a son while the peasants are still overwhelmingly "son-centric" and willing to commit infanticide and/or gender selection abortion. The PRC will ensurte the wave of poor, rootless males doesn't threaten it's existance.

2) China is a toxic dump, an ecological disaster;

A story out the other day labled China the most polluted place on the planet. I remember how horrified I was seeing the pollution firsthand. The air in China's cities makes LA look like a ecological paradise. My wife traveled to places in China where plating factories dumped chem waste directly into the rivers that were the water supply for villages downstream.

3)  China's banking industry's books make Enron a paradigm of financial rectitude.  Is there a disaster in the making?  Or will it lead to an even worse version of what happened to former econ juggernaut Japan?

China is running as fast as it can to stay in one place. Sooner or later, this won't be enough.

Marc


Title: Re: China
Post by: G M on April 12, 2008, 03:15:46 PM
11/04/08 - World news section

Why China is the REAL master of the universe
By ANTHONY BROWNE

Cecil Rhodes, the businessman-imperialist of Africa, the creator of Rhodesia, suffered no flicker of doubt about who were the masters.

"To be born an Englishman," he mused, "Is to win first prize in the lottery of life."

It wasn't idle boasting. In the jingoistic triumphalism of the late 19th century, when waving the Union Jack was a simple pleasure, people sang: "Rule Britannia! Britannia, rule the waves" without any irony. It was a statement of fact.

A quarter of mankind lived under the British flag in the largest empire the world had ever known.

And many of those parts that weren't under Britain's rule - such as the U.S. - had been created by Britain.

British missionaries had opened up the Dark Continent almost unchallenged.

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The British Army found it easier to invade troublesome nations - or most of them - than it does nowadays.

Britain was the workshop of the world, dominating science, manufacturing and trade.

To many Victorians, unquestioning of the ideology that underpinned much imperialism, British supremacy was a simple matter of racial supremacy - Europeans, and the English in particular, were fated to be the masters.

The truth is that we are masters of the world no more.

The global power shift from the West to the East is no longer just a matter of debate confined to learned journals and newspaper columns - it is a reality that is beginning to have a huge impact on our daily lives.

What would those Victorian masters of old have made of the fact that Chinese security men were on the streets of London this week, ordering our own police about and fighting running battles with British protesters while bewildered athletes carried the Olympic torch on its relay through the capital?

It was a brazen display of how confident China has become of its new place in the world, just as the British Government's failure to take a firm stand on Chinese abuses of human rights shows how craven we have become.

The dire warnings from the International Monetary Fund this week that the West now faces the largest financial shock since the Great Depression, while the Asian economies are still powering ahead, simply underlines our vulnerability in this new world order.

The desperately weakened American dollar appears to be on the verge of losing its global dominance, in the same way as sterling lost it a lifetime ago.

The credit crunch has brought home to all of us in Britain how over-reliant our country has become on financial services. Meanwhile, the loss of our manufacturing industries to Asia continues unabated.

Last month, an Indian company, Tata, bought up what was once the cream of British manufacturing - Jaguar and Land Rover.

A couple of years ago, Nanjing Automotive, a Chinese company, snapped up MG Rover.

Just as the 19th century was the British century, and the 20th century was the American century, the 21st century is the Asian century.

But the handover of global power from the UK to the U.S. was trivial compared to what is happening now.

The U.S. was Britain's offspring, based on the same values and the same language.

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It, too, was an Anglo-Saxon country, and passing the baton across the Atlantic ensured the continuation of the Anglo-Saxon world order, based on democracy, free trade and a belief in human rights, upheld through international institutions that both powers supported.

But the world order we have grown used to - and comfortable with - over the last century is coming to an end.

Napoleon III compared China to a sleeping giant and warned: "When China awakes, she will shake the world."

After a long hibernation, China, and her 1.3 billion people - twice the population of the U.S. and EU combined - is awaking almost overnight.

And not just China. The world's second most populous country, India, is industrialising at a historically unprecedented pace.

Their economies are growing on a long-term basis about four times the speed of the UK's and that of the United States. Goldman Sachs, the bank, recently predicted that by 2050, China and India would have overtaken the U.S. to be the world's first and second biggest economies.

We have long heard about the benefits this brings, in terms of plentiful cheap goods from toys to TVs, and huge opportunities for Western companies to sell their wares in these booming markets.

But there are also downsides, which are becoming more apparent. Unskilled workers in the West have become unsettled by the threat to their jobs as production moves East.

The most vulnerable Western workers have found their wages stagnate as they struggle to compete in an increasingly global market place.

And competition for raw materials is pitting East against West.

The economic explosion of China, and to a lesser extent India, has given them an almost overpowering hunger for raw materials with which to build their factories, homes and cars.

Wherever you turn, the rise of Asia is making its impact felt on our existence.

Every time you complain about the price of petrol being over £1 a litre, it is to the Far East you have to look to find the culprits.

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There are even reports that manholes in Britain have been disappearing to feed the monstrous appetite for scrap steel in the other side of the world.

China is spending 35 times as much on crude oil as it did eight years ago, and 23 times as much on copper.

As it builds gleaming skyscrapers on its fields, China alone consumes half the world's cement and a third of its steel.

What is happening is so extraordinary that economists have had to invent a new word for it - this is not an economic cycle, but a supercycle, a shift in the world economy of historic proportions.

When demand increases and supply stands still, prices shoot up. Iron, wheat and oil are all at record prices, despite slackening demand in the faltering Western economies.

The cost of living in Britain is now rising faster than wages, making the British on average poorer year on year.

Asia's expansion means that its influence is starting to be felt more directly around the world.

Asian countries are not just buying up foreign raw materials, but as their companies try to become global leaders, they are buying up Western companies.

It is not just Land Rover, Jaguar and MG Rover. The Malaysian company Proton owns Lotus. Indian company Tata owns Corus, once British Steel, as well as Tetley Tea.

The hunger for raw materials is also making China lose its shyness and venture out into the world. Like Germany and Russia, China has traditionally been a land empire, focusing its expansionist energies on countries it had borders with, and it eschewed the world-conquering exploits of Europe's sea-faring maritime nations.

Europeans have, for half a millennium, been unchallenged as the global colonisers, but last month the respected Economist magazine dubbed the Chinese "The New Colonists".

While the Congo in central Africa was once over-run by Belgians, it is now the Chinese that can be found wondering around its mining belts.

In Lubumbashi, the capital of the Congo's copper-rich region Katanga, the Economist reported "a sudden Chinese invasion".

Troubled Angola recently shunned Western financial aid because of the amount of Chinese money pouring into it, in return for commodities.

From Kazakhstan to Indonesia to Latin America, Chinese firms are gobbling up oil, gas, coal and metals.

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Canadian authorities were recently alarmed to find the Chinese interested in exploring the Arctic Ocean, in a bid to get a share of the minerals beneath the thawing icecap.

In eastern Siberia, Russians worry that China is by default taking over their empty land.

The West has long seen Africa as its backyard, but Western diplomats now worry that not just Africa, but South America, too, is being lost to China.

And Western governments are concerned that the rules of the game are changing. Most worryingly, as China's brutal suppression of the once independent Tibet shows, this is not a superpower that respects Western standards on human rights.

From Darfur to Myanmar, China is cuddling up to murderous dictators.

At home, it holds mass executions of criminals with bullets in the back of the head while transplant surgeons stand by to harvest their still pulsating organs.

Yet Western governments have been in such awe of China's looming power that their response has not been to challenge its abuses, but to try to silence their own protesters at home.

From the UN to the IMF to the World Bank, the international institutions that attempt to govern the planet were made in the image of the victors of World War II. Now power is shifting from West to East, the whole liberal democratic world order will face its first serious challenge in decades.

Many fear that things could get ugly.

There is only one thing worse than an unchallenged superpower - it is a superpower with a victim mentality, which feels the world owes it a favour.

And the bitter truth is that, after centuries of humiliation in foreign affairs, there is a nationalist mood in China that the country's time has come again, that it can again claim its rightful place as the world's most powerful country.

Its comparative weakness over the last few centuries is, in fact, but a blip in the last 2,000 years, during which China was the world's most economically and culturally advanced nation.

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It is an accident of history that Europeans took advantage of their window of opportunity in the last half of the second millennium to take over the world.

The cause was a combination of factors such as the development of maritime technology in Europe, the competition between European countries that drove them to look outwards and find new ways to increase prosperity, and the fact China remained firmly locked in its agrarian, introspective past.

Now things have changed, and already the shift in the world economy is starting to have dramatic effects on migration patterns.

The emigration of poor people from China and India to the West is slowing down, as their citizens see more hope in their own rapidly advancing nations.

Instead, their expanding middle classes are paying large fees for their children to enjoy a Western university education, before returning home.

There are now 60,000 Chinese students in Britain, more than from any other country.

Westerners have become accustomed to being the only tourists in the world's tourist hotspots, but the Chinese and Indians want to enjoy the fruits of their labour by expanding their horizons, too.

Chinese tourists are likely to replace American tourists as popular irritants in Britain, and replace the Germans as competitors for the ski lifts.

As the opportunities flow from West to East, so too do the people.

India is luring the global Indian diaspora back, with laws that would be judged racist in Britain, offering visas to anyone living in the West with Indian blood in their veins.

Even some non-Indian Westerners are heading East for opportunities greater than they find at home.

The West's cultural supremacy is likely to be as challenged as its economic supremacy.

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As their economic confidence grows, Asians are discovering pride in their own cultures and are less inclined to mimic Western ones.

There is an infectious confidence in Bollywood, and the price of Chinese antiques is rocketing as the newly rich Chinese decide they want a slice of their history. Western culture, like the dollar, will soon find its heyday behind it.

But Western attitudes will change as well, with a likely shift to the political Right. White liberal guilt, the driving force behind political correctness, will subside as Westerners feel threatened by the global order changing, and their supremacy slipping away.

Anti-Americanism will disappear as Europeans realise how much better it was to have a world super power that was a democracy (however flawed) not a dictatorship.

There is even speculation that the intense economic pressure on countries such as Britain will cause them to trim down their bloated welfare state, simply because it will no longer be affordable at present levels.

Western attitudes of superiority to China and the rest of the East will also subside, as Westerners realise they are no longer the masters of the world.

The U.S. company Orient Express complained when Tata tried to buy it, that any association with the Indian company would damage the Orient Express's premium brand.

Responding, R K Krishna Kumar, a senior Tata executive, thundered that "Indian companies ... will take their rightful place in the international arena.

"Enterprises and individuals must recognise and adapt to these fundamental economic changes. We believe that those with a fossilised frame of mind risk being marginalised."

In a world in which we are no longer masters, it is a warning that we ignore at our peril.


Find this story at http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in_article_id=559133&in_page_id=1811
Title: Re: China
Post by: Crafty_Dog on April 12, 2008, 11:02:57 PM
Of course there are several good points in this piece GM, but IMHO there is a fair amount of hyperventilating too.

China's population is contracting due to the one child policy.  The consequences of this unusual demographic remain to be seen, but are likely to be potent.  How will the few young support the many old?

China is a toxic dump.  The costs are staggering and have yet to be considered.

China's banking system is a giant ponzi scheme-- its bookkeeping is said by sources that seem responsible to me to be an utter fraud.

Freedom is seditious to a system like China and as Chinese mingle in the world, maintaining the old order is going to be a very good trick.

The dollar and the US were in worse shape in the Carter years than now.

The Japanese were feared to be taking over the world in the 80s, yet now they are fcuked-- in part due to demographics of few young supporting many old-- and China will have a worse hand in this regard than the Japanese.

Just some additional points to consider IMHO
Title: Re: China
Post by: G M on April 13, 2008, 06:36:51 AM
Crafty,

Every point you raise is true, still China and India will be shaping the next century.
Title: Re: China
Post by: G M on April 13, 2008, 12:32:41 PM
http://biglizards.net/blog/archives/2008/04/forget_it_its_c.html

"Unrestricted Warfare"?
Title: Taiwan
Post by: Crafty_Dog on April 13, 2008, 11:59:21 PM
Busted!!!

The plot thickens , , ,  Anyway, here's this:

   
Geopolitical Diary: Taiwan's Straitjacket
April 14, 2008
Taiwanese Vice President-elect Vincent Siew met Chinese President Hu Jintao Saturday on the sidelines of the Boao Forum for Asia Annual Conference 2008. It was the first time Taiwan’s incoming government held a formal meeting with the Beijing regime. Siew gave a positive evaluation of his meeting with Hu — quite a contrast to outgoing President Chen Shui-bian’s typically provocative stance against Beijing. However, the meeting itself has not changed, nor will it change, the fundamental bilateral relationship. Not by one iota.

In fact, it is not really a bilateral relationship but a trilateral one. Taiwan remains sandwiched between the two largest geopolitical players of the Asia-Pacific region: China and the United States. Taipei has little if any room for maneuver within this trilateral framework. Despite Chen’s pro-independence posturing and rhetoric, Taipei has never been a free actor in this space between China and the United States. It is consigned to play the role of a pawn in the wider geopolitical interaction between its patron of choice, Washington, and its other aspiring patron, Beijing.

China will not tolerate Taiwan getting too close to the United States. Keeping alive the “one China” myth is important to the Chinese regime — Beijing’s legitimacy is predicated on its ability to hold together a far-flung and geographically diverse country with a strong central authority. Like Tibet, Taiwan is considered a linchpin in the carefully balanced social and political structure of mainland China. In truth, China stands next to no chance of successfully invading and forcibly reabsorbing Taiwan, given that its current naval capabilities are a generation or two behind those of the United States. However, Beijing does need to buffer itself against Washington’s growing influence in Asia — if not in military reality, then in domestic perception at least.

Likewise, the United States will not put up with a Taipei that pursues too close a relationship with China. While defending Taiwan’s democratic integrity plays well with the voters back home, a more fundamental reason behind Washington’s fierce protection of the island revolves around the security of maritime trade routes into and out of the Asia Pacific region. A key source of U.S. geopolitical power is its dominance over the world’s oceans, a supremacy that Washington will not give up voluntarily. That is why American airpower, missiles, submarines and surface vessels have never left Taiwan since the U.S. Navy’s seventh fleet first swept to the island’s rescue in 1950.

So long as China does not invade or physically reclaim Taiwan and Taipei does not formally declare independence, an uneasy half-truth is perpetuated, and both sides go about their business.

Politically and superficially, Siew’s visit to China marks a change from the previous Taiwanese regime. But geopolitically, just as Chen could talk but not walk Taiwan towards independence, neither will Siew or President-elect Ma Ying-jeou be able to change the dynamic. There might be some movement along the spectrum of possibilities between independence and reunification, but the geopolitical reality of the Taiwan Straits is that that movement will be narrow and constrained. Taiwan has nowhere to go.

 
Title: WSJ: Rise and Collide
Post by: Crafty_Dog on May 09, 2008, 01:26:24 PM
Rise and Collide
By MARY KISSEL
May 9, 2008; Page A15

Rivals
By Bill Emmott
(Harcourt, 342 pages, $26)

The rise of China is easy to exaggerate and even easier to fear. China is a vast country of 1.3 billion people, governed by menacing authoritarians who are plowing money into its military complex and managing a stunning economic transformation; before long it will dominate Asia, and someday it will threaten America's place in the world. Or at least that is the argument of certain worried pundits these days.

For a striking counterargument – and some much-needed nuance – look no further than Bill Emmott's "Rivals." Mr. Emmott, a former editor of The Economist and a longtime Asia-watcher, acknowledges that China will continue its remarkable rise for years to come. But he thinks that a modernizing India and a resurgent Japan could end up jostling for Far East supremacy, too, pitting "Asians against Asians." A balance-of-power politics could evolve resembling Europe's in the 19th century.

How this transformation will unfold, and whether it will be entirely peaceful, is anyone's guess. But one thing is certain: All three of Asia's emerging giants are being forced to open up at speeds that none is quite comfortable with. China's Communist Party has freed a wide cross-section of its economy, bringing a new prosperity to much of the population. India is shedding its socialist shackles at whatever pace its vibrant, contentious democracy will allow. Japan's dominant political party, notoriously resistant to change, is still struggling to pull the country out of a decade-long economic nosedive; but the push for reform is becoming ever more urgent as Japan's population ages.

In "Rivals," Mr. Emmott mines the past for clues to the future. Start with China: Most analysts conclude that the 21st century will belong to China because the country's economy is now roaring ahead. But its growth rates aren't unprecedented. Like China today, Japan by the 1970s had reached a high investment-to-GDP ratio (roughly 40%) and enjoyed double-digit, export-led industrial growth. South Korea followed a similar path. By those measure, Mr. Emmott says, China's growth is "excellent, but not exceptional."

China also faces some bumps in the road, not least of which is rising inflation – a problem that Japan once also faced. Capital inflows are pushing up wages and expanding the monetary base, which is in turn inflating asset bubbles in stocks and property. Something has got to give. "The longer a change in economic policy and direction is delayed," Mr. Emmott writes, "the bigger the risk that mere adjustment turns into something more dramatic."

India's trajectory, meanwhile, most closely follows China's – at least at the moment. With the liberalizing of India's economy, its investment and savings have grown along with its standard of living. In 2006, India's exports of goods and services, as a percentage of GDP, had risen to a point that they were "roughly the same as China's in 1996," Mr. Emmott notes. The common view of India – as a land dominated by extremes of wealth and poverty – is simply out of date; in fact, India's income inequality is about the same as Britain's. The question now is whether the government will speed up India's growth by upgrading its shoddy infrastructure and liberalizing its energy industries so that domestic producers can make adequate returns and afford to increase output.

Japan's future is harder to forecast. The crash of the 1990s was bad, though hardly of Depression-like dimensions. That it was not worse, Mr. Emmott says, has a lot to do with Japan's free flow of trade and capital and its fiscal surplus. Oddly (for a writer long affiliated with the laissez-faire Economist magazine), Mr. Emmott praises the Japanese government for its Keynesian interventions in the 1990s. Huge spending programs, he claims, "helped prevent an economic drama from becoming a disaster." Perhaps. But they also prevented Japan from embracing low taxes and liberalizing its markets – surely a speedier means to growth and widespread prosperity.

Mr. Emmott notes that Japan, for all the exporting it does, isn't really a "globalized country." Its trade with the outside world, measured by imports plus exports as a percentage of GDP, is dwarfed by China's. And its level of English proficiency – now essential for global players – is low. If anything, Mr. Emmott says, "Japan needs to emulate America in the 1990s, when the 'new economy' " – that is, the Internet revolution – "brought a sharp and unexpected jump in U.S. productivity." Without doing something "dramatic" to kickstart growth, he argues, Japan's leaders will simply be "managing the country's relative decline," eclipsed by India and China.

Of course, the future of Asia's economies depends in part on the future of its regional politics. India has rocky relationships with its neighbors – and some of them, including Nepal, Pakistan and Burma, are led by unstable regimes. China, meanwhile, has border disputes with Bhutan and India, not to mention disputes over sovereignty with Tibet and Taiwan. Japan has only recently moved to mend ties with South Korea's new leadership. But a nuclear-armed North Korea remains the biggest menace. Mr. Emmott believes that, if "regime change" comes about in North Korea, it will be of the homegrown variety and not imposed from the outside. The result may be "a risky moment," as China, South Korea and factions within North Korea vie for power.

In economics and business, Mr. Emmott notes, competition generally has "overwhelmingly positive results." But "in politics, we cannot be so sure." To separate the two spheres so sharply, though, seems forced, at best. China's economic prosperity increasingly relies on its integration with its rivals and with the rest of the world – a trend that may someday change the way the country is governed, for the better. That is a future to welcome, not to fear.

Ms. Kissel is editor of The Wall Street Journal Asia's editorial page.
Title: WSJ: The Challenge from China
Post by: Crafty_Dog on May 13, 2008, 07:20:51 AM
I have mixed feelings about this piece, but post it as representing one POV:
============

The Challenge From China
By MARK HELPRIN
May 13, 2008; Page A17

Even as our hearts go out to the Chinese who have perished in the earthquake, we cannot lose sight of the fact that every day China is growing stronger. The rate and nature of its economic expansion, the character and patriotism of its youth, and its military and technical development present the United States with two essential challenges that we have failed to meet, even though they play to our traditional advantages.

The first of these challenges is economic, the second military. They are inextricably bound together, and if we do not attend to both we may eventually discover in a place above us a nation recently so impotent we cannot now convince ourselves to look at the blow it may strike. We may think we have troubles now, but imagine what they will be like were we to face an equal.

 
AP 
Beijing: Delegates from China's military attend the annual session of the National People's Congress.
China has a vast internal market newly unified by modern transport and communications; a rapidly flowering technology; an irritable but highly capable workforce that as long as its standard of living improves is unlikely to push the country into paralyzing unrest; and a wider world, now freely accessible, that will buy anything it can make. China is threatened neither by Japan, Russia, India, nor the Western powers, as it was not that long ago. It has an immense talent for the utilization of capital, and in the free market is as agile as a cat.

Unlike the U.S., which governs itself almost unconsciously, reactively and primarily for the short term, China has plotted a long course, in which with great deliberation it joins economic growth to military power. Thirty years ago, in what may be called the "gift of the Meiji," Deng Xiaoping transformed the Japanese slogan fukoku kyohei (rich country, strong arms) into China's 16-Character Policy: "Combine the military and the civil; combine peace and war; give priority to military products; let the civil support the military."

Japan was able to vault with preternatural speed into the first ranks of the great powers because it understood the relation of growth to military potential. A country with restrained population increases and a high rate of economic expansion can over time dramatically improve its material lot while simultaneously elevating military spending almost beyond belief. The crux is to raise per-capita income significantly enough that diversions for defense will go virtually unnoticed. China's average annual growth of roughly 9% over the past 20 years has led to an absolute tenfold increase in per-capita GNP and 21-fold increase in purchasing-power-parity military expenditure. Though it could do more, it prudently limits defense spending, with an eye to both social stability – the compass of the Chinese leadership – and assimilable military modernization.

As we content ourselves with the fallacy that never again shall we have to fight large, technological opponents, China is transforming its forces into a full-spectrum military capable of major operations and remote power projection. Eventually the twain shall meet. By the same token, our sharp nuclear reductions and China's acquisitions of ballistic-missile submarines and multiple-warhead mobile missiles will eventually come level. The China that has threatened to turn Los Angeles to cinder is arguably more cavalier about nuclear weapons than are we, and may find parity a stimulus to brinkmanship. Who will blink first, a Barack Obama (who even now blinks like Betty Boop) or a Hu Jintao?

Our reductions are not solely nuclear. Consider the F-22, the world's most capable air dominance aircraft, for which the original call for 648 has been whittled to 183, leaving, after maintenance, training, and test, approximately 125 to cover the entire world. The same story is evident without relief throughout our diminished air echelons, shrinking fleets, damaged and depleted stocks, and ground forces turned from preparation for heavy battle to the work of a gendarmerie.

As the military is frustrated and worn down by a little war against a small enemy made terrible by the potential of weapons of mass destruction, the shift in the Pacific goes unaddressed as if it is unaddressable. But it is eminently addressable. We can, in fact, compete with China economically, deter it from a range of military options, protect our allies, and maintain a balance of power favorable to us.

In the past we have been able to outwit both more advanced industrial economies and those floating upon seas of cheap labor – by innovating and automating. Until China's labor costs equal ours, the only way to compete with its manufactures is intensely to mechanize our own. Restriction of trade or waiting for equalization will only impoverish us as we fail to compete in world markets. The problem is cheap labor. The solution, therefore, is automation. Who speaks about this in the presidential campaign? The candidates prefer, rather, to whine and console.

We must revive our understanding of deterrence, the balance of power, and the military balance. In comparison with its recent history, American military potential is restrained. Were we to allot the average of 5.7% of GNP that we devoted annually to defense in peacetime from 1940-2000, we would have as a matter of course $800 billion each year with which to develop and sustain armies and fleets. During World War II we devoted up to 40% of GNP to this, and yet the economy expanded in real terms and Americans did not live like paupers.

The oceans have been our battlefields since the beginning; we invented powered flight; and our automobiles still await us on the surface of the moon – our métiers are the sea, air and space. Thus, we have been blessed by geography, for with the exception of South Korea our allies in the Pacific are islands. With Japan, Australasia, our own island territories, and Admiral Nimitz's ocean, we can match and exceed indefinitely any development of Chinese strategic power – which, by definition, must take to the sea and air.

* * *

And there we will be, if we are wise, not with 280 ships but a thousand; not eleven carriers, or nine, but 40, not 183 F-22s, but a thousand; and so on. That is, the levels of military potential that traditional peacetime expenditures of GNP have provided, without strain, throughout most of our lives. As opposed either to ignominious defeat without war, or war with a rising power emboldened by our weakness and retirement, this would be infinitely cheaper.

And yet what candidate is alert to this? Who asserts that our sinews are still intact? That we can meet any challenge, especially when it can be answered with our historical strengths? That beneath a roiled surface is a power limitless yet fair, supple yet restrained? Who will speak of these things in time, and who will dare to awaken them?

Mr. Helprin, a senior fellow at the Claremont Institute, is the author of, among other works, "Winter's Tale" (Harcourt) and "A Soldier of the Great War" (Harcourt). This piece was adapted from a speech given at Stanford University's Hoover Institution.
Title: Re: China
Post by: G M on June 29, 2008, 01:55:10 PM
Christianity is flourishing in China

José M. Osorio / Chicago Tribune
Zhang Ming-Xuan speaks at a church in Shandong province that sued the government for shutting it down. The ruling Communist Party is officially atheist.
The religion, long repressed and often outlawed in the communist nation, appeals to citizens seeking a moral framework amid the chaotic rise of capitalism.
From the Chicago Tribune
June 28, 2008

BEIJING -- The Rev. Jin Mingri peered out from the pulpit and delivered an unusual appeal: "Please leave," the 39-year-old pastor urged his followers, who were packed, standing-room-only on a Sunday afternoon, into a converted office space in China's capital. "We don't have enough seats for the others who want to come, so please, only stay for one service a day."

A choir in hot-pink robes stood to his left, beside a guitarist and a drum set bristling with cymbals. Children in a modern playroom beside the sanctuary punctuated the service with squeals and tantrums. It was a busy day at a church that, on paper, does not exist.

Christianity -- repressed, marginalized and, in many cases, illegal in China for more than half a century -- is sweeping the country, swamping churches and posing a sensitive challenge to the officially atheist ruling Communist Party.

By some estimates, Christian churches in China, most of them underground, have roughly 70 million members, about as many as the party itself. A growing number of those Christians are in fact party members.

Christianity is thriving in part because it offers a moral framework to citizens adrift in an age of Wild West capitalism that has not only exacted a heavy toll in corruption and pollution but also harmed the global image of products labeled "Made in China."

Some Chinese Christians say their faith is actually a boon for the party, because it shores up the economic foundation that is central to sustaining communist rule.

"With economic development, morality and ethics in China are degenerating quickly," prayer leader Zhang Wei told the crowd at Jin's church as worshipers bowed their heads. "Holy Father, please save the Chinese people's soul."

At the same time, Christianity is driving citizens to be more politically assertive, emboldening them to push for more freedoms and testing the party's willingness to adapt. For decades, most of China's Christians worshiped in secret churches, known as "house churches," that shunned attention for fear of arrest on charges such as "disturbing public order."

But in a sign of Christianity's growing prominence, in scores of interviews for a joint project of the Tribune and PBS' "Frontline/World," clerical leaders and worshipers from coastal boomtowns to inland villages publicly detailed their religious lives for the first time.

They voiced the belief that the time has come to proclaim their place in Chinese society as the world focuses on China and its hosting of the 2008 Olympics in August.

"We have nothing to hide," said Jin, a former Communist Party member who broke away from the state church last year to found his Zion Church.

Jin embodies a historic change: After centuries of foreign efforts to implant Christianity in China, the growing popularity of the religion is being led not by missionaries but by evangelical citizens at home. Where Christianity once was confined largely to poor villages, it's now spreading into urban centers, often with tacit approval from the regime.

It reaches into the most influential corners of Chinese life: Intellectuals disillusioned by the 1989 crackdown on dissidents at Tiananmen Square are placing their loyalty in faith, not politics; tycoons fed up with corruption are seeking an ethical code; and party members are daring to argue that their religion does not put them at odds with the government.

The boundaries of what is legal and what is not are constantly shifting. A new church or Sunday school, for instance, might be permissible one day and taboo the next, because local officials have broad latitude to interpret laws on religious gatherings.

Overall, though, the government is allowing churches to be more open and active than ever, signaling a new tolerance of faith in public life. President Hu Jintao even held an unprecedented Politburo "study session" on religion last year, in which he told China's 25 most powerful leaders that "the knowledge and strength of religious people must be mustered to build a prosperous society."

This rise, driven by evangelical Protestants, reflects a wider spiritual awakening in China. As communism fades into today's free-market reality, many Chinese describe a "crisis of faith" and seek solace from mystical Taoist sects, Bahai temples and Christian megachurches.

Today, the government counts 21 million Catholics and Protestants -- a 50% increase in less than 10 years -- though the underground population is far larger. The World Christian Database's estimate of 70 million Christians amounts to 5% of the population, second only to Buddhists.

At a time when Christianity in Western Europe is dwindling, China's believers are redrawing the world's religious map with a growing community that already exceeds all the Christians in Italy.

And increasing Christian clout in China has the potential to alter relations with the United States and other nations.

But much about the future of faith in China is uncertain, shaped most vividly in bold new evangelical churches such as Zion, where a soft-spoken preacher and his fervent flock do not yet know just how far the Communist Party is prepared to let them grow.

"We think that Christianity is good for Beijing, good for China," Jin said. "But it may take some time before our intention is understood, trusted, even respected by the authorities. We even have to consider the price we may have to pay."

Researcher Xu Wan contributed to this report.

Title: WSJ: Taiwan
Post by: Crafty_Dog on July 17, 2008, 04:47:31 PM
Arming Taiwan
By ED ROSS
FROM TODAY'S WALL STREET JOURNAL ASIA
July 18, 2008

Among the many challenges facing the United States in an election year is the issue of arms sales to Taiwan. Before he leaves office, President Bush must decide whether or not to approve various major sales to the island, including 60 additional F-16s, Patriot PAC III missiles and Apache and Blackhawk helicopters. At present, the Department of State and the National Security Council are holding up these sales. This is an issue which deserves President Bush's immediate attention.

A little history helps illuminate what's going on. In 2001, shortly after President Bush took office, he approved in principle several billion dollars in new arms sales to Taiwan. This decision reflected the President's concern for China's military build-up and a continuing U.S. commitment to the Taiwan Relations Act, which obligates the U.S. to provide the island with weapons to defend itself.

 
AP 
During the eight-year tenure of former Taiwan president Chen Shui-bian, political infighting between the ruling Democratic Progressive Party and the opposition Kuomintang stalled the funding for these weapons purchases. At the same time, Mr. Chen's independence-leaning policies angered China's leaders. Washington was displeased by Mr. Chen's inability to push through the arms purchases, and because his actions and outspokenness interfered with improving U.S.-China relations.

The damage those eight years did to U.S.-Taiwan relations was considerable. Taiwan's relative air, missile defense and antisubmarine warfare capabilities fell further behind as important Taiwan military acquisitions were postponed. China, however, purchased advanced weapons from the Soviet Union and increased funding for its own military research and development programs.

Equally important, mutual confidence between Taipei and Washington may have been permanently weakened. U.S. leaders lost confidence in Taiwan's leaders at a time when the U.S. was becoming increasingly dependent on improved U.S.-China relations. In Taiwan, more than ever, domestic political considerations took precedence over national security issues. And although last year the Kuomintang-dominated legislature in Taipei finally passed a defense budget funding many new arms purchases, the damage to U.S.-Taiwan relations already had been done. The U.S. had become increasingly reluctant to take the heat from China over weapons sales it was not confident Taiwan would follow through on.

When Taiwan's current president, Ma Ying-jeou, assumed office in May, he ushered in a policy of Taiwan-China détente and subsequently has expressed his desire for resumed purchases of U.S. arms. Still, the lingering fallout from the previous eight years and President Bush's personal reluctance to anger Beijing continue to hold up various pending arms sales.

Whether or not President Bush approves some or all arms sales after the Beijing Olympics in August -- he will attend the opening ceremony -- remains an open question. High-ranking officials at State and the White House fear major U.S. arms sales, even then, would undermine Taiwan-China détente and do major damage to U.S.-China relations. They also ask why Taiwan needs more weapons packages now. Why not let the next U.S. President address this issue, while the sale of other, less provocative systems, training and spare parts continue?

Herein lies the crux of the problem. How much risk can the U.S. take with Taiwan's security? If it was certain that Taiwan-China détente would go forward without sacrificing Taiwan's young and still fragile democracy, none of this would be of concern.

Beijing has proven all too often, however, that it will demand much and give little and that it sees the use and threat of force as an instrument of diplomacy. Has it demonstrated otherwise? Taiwan democratically elected a president who ran on a platform of détente with China. What has changed on the China side of the equation?

Until Beijing removes short- and medium-range ballistic missiles targeting Taiwan and reduces the number of combat aircraft and troops on its side of the Taiwan Strait, why should the U.S. delay in responding to Taiwan's requests for arms purchases? It will take months for the next administration to sort out its China/Taiwan policies, only delaying important decisions further. In the meantime, China's pressure on the U.S. will only increase as it continues to finance U.S. debt and leaves Washington worried that it won't cooperate with it in the international arena if the U.S. proceeds with major arms sales.

As Taiwan enters this challenging period of détente with China, it needs strong U.S. moral and material support more than ever. By taking action on U.S. arms sales to Taiwan before he leaves office, President Bush would bolster a democratic Taiwan and make it much easier for his successor to withstand pressure from Beijing as arms sales contracts are concluded and weapons systems are delivered. At the same time, President Ma must assure Washington that he is committed to Taiwan's defense and that if Washington approves the sale of F-16s and other major weapons, Taiwan will follow through with signed contracts and adequate funding.

It is time to demonstrate clearly that, while the U.S. supports Taiwan-China détente, it stands firmly behind Taiwan's democracy.

Mr. Ross, a defense consultant, is the former principal director for operations in the Defense Security Cooperation Agency. He writes a weekly Internet column at www.EWRoss.com.
Title: Re: China
Post by: Crafty_Dog on July 19, 2008, 04:32:54 PM
Bush Should Keep His Word on Taiwan
By DAN BLUMENTHAL, AARON FRIEDBERG, RANDALL SCHRIVER and ASHLEY J. TELLIS
July 19, 2008; Page A9

In 2001, President Bush made a bold and principled decision to offer Taiwan a range of military equipment for its security. In 2008, as he prepares to leave office, the president seems to have reneged on that commitment.

On Wednesday, Adm. Timothy Keating, commander of the U.S. Pacific Command, confirmed that the administration has frozen arms sales to the island nation, acknowledging Beijing's displeasure by way of explanation. "The Chinese have made clear to me their concern over any arms sales to Taiwan," he said at a Heritage Foundation forum in Washington. However, the decision to freeze arms sales is mistaken and dangerous.

The People's Republic of China has been expanding its military capabilities at a rapid pace. Included in this impressive buildup are weapons directly intended for use against Taiwan: hundreds of short-range ballistic missiles, scores of new fighter bombers and several types of attack submarines. In accordance with the 1979 Taiwan Relations Act, the Bush administration originally proposed an arms package designed to improve Taiwan's capacity for self-defense. Included were Patriot 3 missile-defense systems, P3C antisubmarine warfare aircraft, Apache helicopters, Kidd-class destroyers, diesel submarines and a modern command, control and communications system.

While defense experts in Taipei and Washington debated the utility of some of these systems for Taiwan's defense, as a package they constituted a powerful signal of America's long-standing commitment to Taiwan's defense and contained important elements of a stronger Taiwanese deterrent against potential Chinese aggression. The offer made good on Mr. Bush's promise that the U.S. would "do whatever it takes" to defend Taiwan.

In addition to the arms package, Mr. Bush also altered policy to normalize security relations with Taiwan, permitting it to request additional weapons systems as its military identified new requirements. Taiwan subsequently asked for 66 F-16 aircraft to replace its aging fighter fleet.

Unfortunately, Taiwan's domestic politics prevented speedy action on elements of the original U.S. offer. While it purchased the Kidd-class destroyers, the P3C aircraft, some elements of a missile defense system and a new command and control system, much of the American package became hostage to partisan bickering in Taipei. After significant delay, last year Taiwan's legislature finally acted, appropriating the money required to purchase most of the rest of the items offered by the U.S. in 2001.

The Bush administration now appears unwilling to follow through on its side of the bargain.

Why the volte-face? Following its initial offer of assistance, the Bush administration came to regard former Taiwanese President Chen Shui-bian as a reckless provocateur, determined to push his self-governing island toward formal independence from Beijing despite the risk of war. Fearful that selling Mr. Chen arms would only embolden him, some administration officials were quietly thankful for the continuing turmoil and indecision in Taipei.

Whatever the validity of these concerns, they no longer apply. In May 2008, the Taiwanese people elected opposition leader Ma Ying-jeou to the presidency. Mr. Ma is dedicated to improving cross-straits ties and eschews Mr. Chen's inflammatory rhetoric. But, like his predecessor, he is committed to strengthening Taiwan's self-defense capabilities.

Since Sept. 11, 2001, the Bush administration has been anxious to avoid antagonizing Beijing and eager to win its support on a variety of issues, especially its continuing efforts to denuclearize North Korea. Though the extent to which China has actually been helpful is debatable, the administration has increasingly subordinated many aspects of its Asia policy to the overarching aim of not offending Beijing.

The policy of not offending China, no matter what the costs, does not serve U.S. interests in the Taiwan Straits. First, it undermines Mr. Ma's ability to deal with Beijing from a position of strength, and to that extent it undermines the common objective of peaceful reunification, should the Taiwanese desire it.

Denying Taiwan the minimal capabilities required to cope with China's massive military buildup also increases the burdens on U.S. forces if they should ever intervene in a future cross-straits confrontation.

Moreover, the administration overstates the damage arms sales to Taiwan will do to cross-strait relations and to the overall relationship between the U.S. and China, important as that is. Beijing presumes Washington would move forward with arms it promised to sell to Taiwan some seven years ago. And, after adding several hundred advanced fighters to its own fleet, Beijing has no military reason to complain about the sale of 66 F-16s to Taiwan. None of the elements in the U.S. arms package in any case seriously increases Taiwan's offensive capabilities -- which are inconsequential to begin with.

Meanwhile, time is running out. The funds Taipei has appropriated to buy arms from the U.S. will lapse by the end of the 2008 and become unavailable. The process of Congressional notification necessary to conclude the sale too is lengthy and requires immediate administration action.

The administration should therefore move urgently to supply Taiwan with the capabilities promised in defense against China's growing ballistic missile, air and naval threats. Leaving office without approving these sales would be a strategic failure with far-reaching implications.

At stake is not only the defense of a democratic friend, but the credibility of the Ma government. Also at stake are America's commitment to protect its long-term interests throughout the Asia-Pacific, and Mr. Bush's determination to defend freedom. Failure to act would also set a dangerous precedent. For the first time since its opening to China, the U.S. government would have sidestepped its obligation to assist Taiwan in hopes of appeasing Beijing. Now is the time to change policy and move forward: both principle and pragmatism demand it.

Mr. Blumenthal is a resident fellow at the American Enterprise Institute. Mr. Friedberg is professor of politics at Princeton. Mr. Tellis is a senior associate at the Carnegie Endowment for International Peace. Mr. Schriver is a partner at Armitage International. All served in Asia policy positions under George W. Bush.

See all of today's editorials and op-eds, plus video commentary, on Opinion Journal.

And add your comments to the Opinion Journal forum.

Title: Stratfor: Escalating Internal Crisis
Post by: Crafty_Dog on July 24, 2008, 08:47:51 AM
Geopolitical Diary: The Escalating Internal Crisis of a Changing China
July 23, 2008
Japanese Chief Cabinet Secretary Nobutaka Machimura, speaking at a news conference in Tokyo on Tuesday, noted a recent rise in “incidents” in China as the “dissatisfaction of people in China” turned against authorities. Machimura added that he hoped such incidents would not “become obstacles to a smooth holding of the Beijing Olympics,” and expressed some understanding as Japan faced similar “social turmoil” during its period of rapid economic expansion.

While Machimura may have been using his comments to make a subtle jab at his neighbor’s insecurities regarding image and the Olympics, his comments hit directly at the major crisis facing the government in Beijing: managing the social and security consequences of a changing China.

Beijing is well aware of the “contradictions,” as the Chinese Communist Party would call them, littering China’s economic, social and political landscape. Highlighting this point, the Politburo is holding a special session this week to discuss the state of the Chinese economy, particularly in the coastal growth engines, and security and stability during the upcoming Olympics. For Beijing, the Olympics have been both a blessing and a curse, bringing about impetus for economic and social developments, media openings and a sense of national pride spreading far beyond the mainland, yet also stirring up new and old security issues, providing opportunity for critics of the government at home and abroad, and ultimately exacerbating policy differences among the top leadership.

This year alone, Beijing has been faced with numerous crises. Some of these were natural disasters (though perhaps compounded by human factors), such as heavy snow and floods early in the year hitting the southern croplands followed by the Sichuan earthquake in May; others were security related, such as the attempted downing of a Chinese airliner by suspected Xinjiang Islamist militants, the Tibetan uprising, and bus bombings in Shanghai and Kunming; some were diplomatic, including criticism of support for Sudan, a deferred arms shipment to Zimbabwe, and territorial spats with Vietnam and Japan; and still others, such as numerous public demonstrations, riots, and attacks on government buildings and security forces over economic issues, reflected rising social tensions. Perhaps all of these have been exacerbated by the more open media environment inside China in recent years related both to the pre-Olympic “opening” and to changes in Beijing’s image and information management.

There have been similar occurrences in China in any given year over the past several decades. Natural disasters of one form or another aren’t exactly infrequent and security concerns with Tibet, Xinjiang, or other ethnic, religious, political or social movements spring up fairly often. Balancing its international image is a constant challenge and China admits each year to thousands of security incidents and social instabilities. But in recent years, such things have appeared more intense, more concentrated and more frequent. Whether this is a reflection of an actual intensification, as Machimura noted, or of increased media openness in China is unclear, but that these issues are troubling to Beijing is obvious.

But while these sorts of troubles rise and fall in China, Beijing faces added pressure this year, first from the Olympics (pressure it has brought on itself) and second — and perhaps more significant in the long run — from the rapid rise in global commodity prices and the simultaneous slowing of global economies. With the former, China tried to use the Olympics to highlight its self-proclaimed role as one of the “big” powers, opening up various restrictions at home to divert criticism from abroad while at the same time tightening the screws in other areas to prevent “embarrassing” situations from arising in full sight of the increased international scrutiny.

This is a very difficult balance in the best of times, but when the second factor — the commodity crisis — struck, it became nearly unmanageable as economic strains destabilized some of the carefully balanced contradictions Beijing had set in place. (China’s yuan policy and its simultaneous attempts to drive businesses to the interior and keep the money flowing in from the coast are just two obvious examples.) When social stresses exceeded the expected Olympic patriotism, the newfound openness let information about the troubles inside China spread rapidly, with or without Beijing’s consent, limiting the management options for the leadership. The system has been stressed by this short-term event, but it comes at a critical time in the longer-term view of Chinese national control and management.

Throughout history, China has run through cycles of strong centralized leadership, a devolution of power to a large bureaucracy designed to maintain control over the sheer size of the Chinese nation and population, and the eventual loss of central control over the regional and local leaders and economic elite — which in turn triggers an attempt at re-centralization of power frequently accompanied by social and political upheaval before the re-establishment of a strong center. When Deng Xiaoping talked about black cats and white cats both catching mice and opened up the coasts and ultimately the rest of China to economic growth and its attendant social changes, he was in a sense devolving power out to the local bureaucracies. While this led to the meteoric rise of China economically (though not without its social consequences throughout, including Tiananmen Square, a resurgent Uighur uprising in the mid 1990s, the Falun Gong stand-off and the recent Tibetan rising), it also weakened the central leadership’s ability to change course if necessary.

Like the rest of Asia, China’s economic miracle was not so much a reflection of some profound but long overlooked new way of doing business; rather it was the tried and true Asian method of economic growth — one with much less concern for profits, sustainability or efficiency than for… well… growth. In 1992, when the rest of the world was scrambling to learn Japanese and seeing the United States as a waning economic power in the face of Japan’s rising, Tokyo suddenly realized the consequences of the Asian growth model. It was followed half a decade later by the other Asian tigers, as Thailand, Indonesia, Malaysia and South Korea all stumbled in the Asian economic crisis. China avoided both, but like its neighbors, China’s time is coming, and while they may not want to admit it publicly, it seems China’s leaders have recognized this as well.

The government has been working for several years, slowly at first but now with more vigor, to reclaim centralized control over the economy, to stave off a major economic crisis, or at least reclaim central control to manage the consequences. President Hu Jintao has repeatedly called for a shift from a raw economic growth focus to the creation of a “harmonious society;” a pleasant way of saying the redistribution of wealth from the rich to the poor. Add to that the raft of new security regulations and policies put in place in the lead up to the Olympics, which may well serve to secure the venues for a few weeks in August and to batten down the hatches as a social storm swells. We may well be entering the crunch time in China’s historical cycle, and the confluence of the openness of the Olympics and the crisis of commodities at this critical moment of re-centralization may well be more than Beijing can manage.

If August passes, and September and October, and the new security, social and economic regulations put in place in the past few months don’t revert to their pre-Olympic status, it will be clear that Beijing sees a crisis coming. But seeing the hurricane bearing down on you doesn’t necessarily mean you can avoid it or weather it. China is reaching a critical moment, and as Machimura noted in classic understatement, “I suppose that overcoming such incidents will be a major theme for Chinese society in the future.”
Title: Re: China
Post by: G M on July 29, 2008, 10:49:38 AM
Look, Ma, No Arms   
By Matthew Continetti
The Weekly Standard | Tuesday, July 29, 2008

Early in 2001, President Bush approved the export of arms to democratic Taiwan. At the time, Bush said the United States would do "whatever it takes" to defend its tiny, besieged Pacific ally. That was yesterday. Today, it's looking more like Bush was just kidding.

How else to explain the administration's recent decision to freeze $16 billion worth of the arms deals? Bush approved the sale of Patriot missiles, Apache helicopters, and submarines to Taiwan more than seven years ago. Since then Taiwan has also requested 66 F-16 fighter jets to replace its aging planes. The Taiwanese legislature has appropriated the money with which to buy the weapons. In some cases it has already even put down payments. In return, America has given Taiwan a whole lot of nothing.

On July 16, the head of Pacific Command, Admiral Timothy Keating, told an audience at the Heritage Foundation that the administration has concluded "there is no pressing, compelling need for, at this moment, arms sales to Taiwan of the systems that we're talking about." This must have been news to the Taiwanese government, which says the weapons are needed to defend Taiwan. And it certainly must have been a surprise to the authors of the Pentagon's annual report on Chinese military power, who have for the past several years noted the dangerous shift in the military balance of power between Taiwan and China.

Taiwan president Ma Ying-Jeou took office last May, pledging to improve relations between Taiwan and China while protecting his democracy's sovereignty. To that end, in recent months the two countries have resumed cross-strait talks, allowed direct flights between the mainland and Taipei, and pursued further economic integration.

Yet Ma also understands that he must negotiate from a position of strength. For the United States to renege on its commitments would weaken Ma's hand at a critical time. After all, his government is only a few months old and Beijing is no doubt searching for weaknesses. American self-doubt and lack of follow through--in effect, a lack of American resolve and confidence in Ma's government--may lead Chinese policymakers to think that they can act provocatively.

Beijing has already gotten away with a lot. China is a rising autocratic power that has suffered no consequences for its gross human rights violations and support for rogue regimes. The military buildup on the Chinese side of the Taiwan Strait continues uninterrupted. There are now more than a thousand Chinese missiles pointed at Taiwan. In the last decade the Chinese have deployed more than 300 advanced aircraft across the Strait. China has five ongoing submarine programs. A massive, underground nuclear submarine base was recently detected on Hainan Island.

China has reasons for its buildup. It is meant, among other things, to deter unilateral declarations of Taiwanese independence. The authors of the Defense Department's 2008 report on Chinese military power wrote, the "ongoing deployment of short-range ballistic missiles, enhanced amphibious warfare capabilities, and modern, long-range anti-air systems opposite Taiwan are reminders of Beijing's unwillingness to renounce the use of force." The greater the military imbalance between China and Taiwan, the more likely China is to use military force in a cross-strait dispute. This is another reason the deal is necessary. Taiwan requires arms to serve as a deterrent against the mainland.

Why the delay? The administration has provided only a series of excuses. First the deal was held up because Washington was displeased with Taiwan president Chen Shui-bian's pro-independence rhetoric. Now Chen is gone, replaced by Ma's quietist diplomacy. The new excuse is that fulfilling our end of the bargain would upset China on the verge of next week's Beijing Olympics. Even if this were the case, and it probably is not, the administration has to shoulder much of the blame. Its foot-dragging in years past helped produce this impasse (though Taiwan's then-opposition Kuomintang party was also a problem). And once the Olympics are over, and the weapons still have not been exported, expect the administration to say that it cannot fulfill its commitments to Taiwan because to do so may jeopardize China's participation in the North Korean denuclearization talks.
All of these excuses point to the actual reason for the delay: America's current Taiwan policy is motivated by fear. We are afraid of upsetting China and afraid, in turn, of what an upset China might do in response. And the consequence of this fear is a weakened position for the United States and its East Asian allies.

On a visit to Taipei last week, former Deputy Defense Secretary Paul Wolfowitz told reporters that he expected the arms sales will be approved. We hope he is right. Let's not forget, however, that the Taiwan Relations Act also gives Congress a say in the defense assistance provided to Taiwan. Should the White House continue to drag its feet, it will fall to Congress to speak out in support of a democratically. And the message Congress might deliver is simple: Who is served when America neglects her friends in a misguided effort not to offend her rivals?
Title: Re: China
Post by: Crafty_Dog on July 29, 2008, 02:26:48 PM
Woof GM:

I share the aritcles sentiments, but it would have been nicer if they mentioned that we were ready to perform a couple of years ago and the Taiwanese were not , , ,

Anyway, here's this from Stratfor.  I am curious what you make of your theories after reading it.

M.
================

China, the Olympics and the Visa Mystery
July 29, 2008




By Rodger Baker

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2008 Olympics: Beijing’s Hopes and Hurdles
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Something extraordinary is happening in China, and we are not talking about the Olympics. Rather, Chinese officials have been clamping down on visa applications and implementing bureaucratic impediments to new and renewed visa applications under the guise of pre-Olympic security.

In some ways, Beijing’s plan for a safe and secure Olympics appears based on the premise that if no one shows up, there can be no trouble. But placing restrictions on the movement of managers and employees of foreign businesses operating in China, even if for a limited time as Chinese officials have been at pains to reassure, makes little sense from the standpoint of gaining political and economic benefits from hosting the Olympics. Something just isn’t right.

The Post-’70s Economic Framework
Since China’s economic reform and opening in the late 1970s, China’s economic policy — and thus the basis for the overall development of the nation — has been based on a simple two-part framework. First, draw in as much foreign investment as possible and use the money and technology to strengthen China while using the subsequent economic leverage to secure China. And second, encourage growth for growth’s sake to ensure an ever-increasing flow of money through the system to provide employment and social services to a massive and urbanizing population.

Key to this policy has been creating a very open environment for foreign businesses, which bring money, technology and expertise and use their influence with their own governments to keep stable international relations with China — hence reducing international and economic frictions and increasing the efficiency of the supply chain. For more than two decades, Chinese national strategy has thus revolved around the principle of encouraging investment, joint ventures and wholly-owned foreign enterprises in China. There have been two foundations for this strategy: the evolution of financial facilities for transferring and controlling foreign money with a level of transparency nearing international standards, and the ease of movement of personnel in and out of China.

It is this latter point that recently has been hit the hardest. Over the past several months as the Beijing Olympics drew nearer, the Chinese government has effectively frozen up most financial reform plans. It also has issued a raft of new security measures not entirely unlike other host cities in the post 9/11 security environment. But China has gone several steps further than its predecessor hosts, placing official and bureaucratic impediments on visa applications. This not only has targeted potential “troublemaking” rights advocates, it has also impacted foreign businesses ranging from invited guests to the Olympic games to managers and employees of foreign companies in China.

Business and the New Visa Hassles
The visa restrictions in particular have been a source of angst for foreign businesses and business associations. Many smaller operations may circumvent Chinese regulations and travel on tourist visas (provided they can still obtain them). And there are ways around the tighter regulations or bureaucratic hurdles if one has the right connections or the willingness to apply several times or from different locations. But multinational corporations are less willing to jeopardize their operations by skirting the laws. Instead, they are making their concerns known to Beijing and hoping that restrictions are eased in September, as Beijing has rumored and hinted will occur.

In general, these visa restrictions have been brushed aside by foreign observers as simply paranoia on China’s part regarding protests or terrorist attacks during the Olympics. In many ways, however, this makes little sense. First and most obvious, the Olympics were supposed to highlight the opening of China — not restrict the very people who have made China a key part of the global economy. Second, imposing tight restrictions in Shanghai, the center of the Chinese foreign-domestic economic nexus, makes little sense on grounds of Olympic security since Shanghai is playing only a minor role in the games compared to Beijing and Qingdao. (Think shutting down visas to New York during the Atlanta games in the name of security, though Shanghai admittedly is hosting some soccer matches.)

Shutting down business visas to keep terrorists out makes little sense anyway — it is hard to imagine Uighur militants traveling on business visas as representatives of foreign multinationals. Furthermore, by restricting business visas — even if not across the board in a coherent fashion — China is putting a massive strain not only on the ability of businesses to trust Chinese regulations and business relations with the government, but also on the fluidity of the global supply chain. Shutting down or impeding visas affects much more than delaying the movement of a single individual into China; it impacts the ability of multinational corporations to move, replace or supplement managers and dealmakers in China. A delayed visa applications of just three months still represents an entire quarter that multinational corporations cannot reliably manage their businesses operations in China, and that doesn’t take into account the visa backlog when restrictions are loosened or lifted.

Disrupting an integral part of the global economy for a full quarter because of an international exposition makes little sense. The Germans in 1936 didn’t do it, the Russians in 1980 didn’t — no one has. One doesn’t simply shut down international business transactions for three months or more to stop a terrorist — and particularly not China, which depends on foreign direct investment. This is not simply an inconvenience for some people: It is the imposition of friction on a part of the system that is supposed to be frictionless. And it is not merely individuals who are affected, but the relations between mammoth companies.

A Period of Erratic Policies
China’s behavior has been erratic for several months now, if not for the past few years, with the implementation of new and often contradictory security and economic policies. These have all been brushed aside as somehow related to preparation for the Olympics. But they are in fact anomalous. China’s behavior is not that of a country trying to show its best side for the international community, nor that of a nation simply concerned about potential terrorist or public relations threats to the Olympic games. In another two months, after the Olympics and Paralympics have ended, it will become clearer whether this was a spate of excessive paranoia or a reflection of a much more significant crisis facing the Chinese leadership — and the evidence increasingly points toward the latter.

As mentioned, China’s economic policies in the reform and opening era have been based on the idea of growth. This in many ways simply reflects the Asian economic model of maintaining cheap lending policies at home, subsidizing exports, flowing money through the system and focusing on revenue rather than profits. In essence, it is growth for the sake of growth. This was the policy of Japan, South Korea, Indonesia, Malaysia and Thailand. And it led each of those countries to a final crisis point, striking Japan first in the early 1990s and the rest of the Asian tigers a few years later. But China managed to avoid each of the previous Asian economic crises points, as it was on the lagging end of growth and investment curves.

Following the Asian economic crisis, China fully recovered from the international stigma of Tiananmen Square and became the global economic darling. By the time the 21st century rolled around, China was already taking on the mantle of the Japanese and other Asians. It began to be labeled both an economic miracle and a rising power; a future challenge to U.S. economic dominance with all the political ramifications that brought. Were it not for 9/11, Washington would have squared off with Beijing to prevent the so-called China rise. The reprieve of international pressure that came when U.S. attention turned squarely toward Afghanistan and then Iraq freed China’s leaders from an external stress that could have brought about a very different set of economic and political decisions.

With the United States preoccupied, and no other major power really challenging China, Beijing shifted its attention to domestic issues, and its review quickly revealed the stresses to the system. These did not primarily come from “splittist” forces like the Tibetans or the Falun Gong, but rather from the economic policies that had brought China from the Third World to the center of the global economic system. Beijing is well-aware that should it continue with its current economic policies, it will face the same risk of crisis as Japan, South Korea and the rest of Asia. It is also aware that growing internal challenges — from the spread and invasiveness of corruption to geographic economic imbalances, from rising social unrest to massive dislocation of populations — are causing immediate problems.

Economics from Mao to Hu
Mao Zedong built a China designed to be self-sufficient and massively redundant. Every province, every city, every factory was supposed to be a self-contained unit, making the country capable of weathering nearly any military attack. Deng Xiaoping didn’t get rid of these redundancies when he opened the economy to foreign investment. Instead, he and his successors encouraged local officials to work to attract foreign investment and technology so as to raise China’s economic standard more rapidly. By the time Jiang Zemin was in power it had become clear that the regionally and locally driven economic policies threatened to throw China back into its old cycle of decentralization — and, ultimately, competing centers of power. Attempts by Jiang to correct this through the Go West program, for example, came to naught after meeting massive resistance in the wealthy coastal provinces. The central government accordingly backed off, shifting its attention to reclaiming centralized authority over the military.

Hu Jintao has sought once again to try to address the problem of the concentration of economic power in China’s coastal provinces and cities through his Harmonious Society initiative. The idea is to redistribute wealth and economic power, regain central authority over the economy, and at the same time reduce redundancies and inefficiencies in the Chinese economy. With minimal external interference, Hu was able to test policies that by their very nature were going to sacrifice short-term social stability in the name of long-term economic stability. Growth was replaced by sustainability as the target; longer-term redistribution of economic growth engines would replace short-term employment and social stability.

This was a risky proposition, and one that met strong resistance in China. But the alternative was to sit back and wait for the inevitable economic crisis and the social repercussions thereto. In some ways, Hu was suggesting that China risk stability in the short term to preserve stability in the long run. But Hu didn’t anticipate the massive surge in global commodity prices, particularly of food and oil. This was compounded by increased international scrutiny over China’s human rights record ahead of the Olympics, natural disasters hitting at the availability and distribution of goods, a rise in domestic social unrest triggered by local government policies and economic corruption, several attempted and successful attacks against China’s transportation infrastructure, and the uprising in Tibet. Thus, the already-risky policies the central government was pursuing suddenly looked more destructive than constructive from the point of view of continued rule by the Communist Party of China (CPC).

The global economic slowdown was the external impetus China feared — something that could undermine the flow of capital and leave Beijing unable to control the outcome of a reduction in the inflow of capital. At the same time, the internal social tensions triggered both by Hu’s attempts to reshape the Chinese economy and by the slow pace of those changes created a crisis for the Chinese leadership. It was hard enough internally to control a measured economic slowdown to reshape the economic structure of China, but quite another thing altogether to have such a slowdown imposed on China from outside at the very moment social stability was in a critical state at home.

A Government in Crisis
China’s rapid and contradictory economic and security policies, rising social tensions, and seemingly counterproductive visa regulations appear to be signs of a government in crisis. They are the reactionary policies of a central leadership trying to preserve its authority, stabilize social stability and postpone an economic crisis. At the same time, we see signs that the local governments, and even organs of the central government, are putting up steady resistance to the announcements coming from Beijing. Slapping restrictions on foreign businessmen may make little sense from a broader business continuity sense, but if the point is to begin breaking the backs of the local governments — whose strength lies in their relations with foreign businesses — then the moves may make more sense.

If the central government has reached the point that it is willing to risk its international business role to rein in wayward local officials, however, then the Chinese leadership sees a major crisis looming or already under way. It is one thing to toss out a few local leaders and replace them, quite another to undermine the structure of the Chinese economy for the sake of regaining control over local officials. But if Chinese history since 1949 (and really quite a ways before) is any guide, the core of the CPC leadership is willing to sacrifice social and economic stability to preserve power. One need only look at the Great Leap Forward, the Cultural Revolution or the crackdown at Tiananmen Square for evidence of this. Revolution is not, after all, a dinner party, and maintaining CPC control is paramount to the government.

After each major revolution or crisis, China eventually has recovered. The Cultural Revolution was followed by diplomatic relations with the United States, Tiananmen Square was put aside as China joined the World Trade Organization and surged ahead in gross domestic product (GDP). Certainly, there was change among the leadership and in the way the party dealt with policies at home and abroad. But if there is the likelihood of loss of control due to an impending economic crisis, better to have some role in shaping the crisis to preserve the chance of maintaining a role in the future political structure than to sit by and try to clean up as things fall apart. The Party in fact has a long history of taking a self-generated crisis/revolution over an externally or domestically initiated one.

It may be that the contradictory policies Beijing is tossing around these days will simply fade away after September and things will get back to “normal.” But already, Chinese officials are downplaying the previously hyped political and economic benefits of the Olympic games. They are now warning that economic conditions may not be so strong in the future, and at least internally discussing the distinct possibility that at least certain regions of China are facing the same economic crises faced by their mentors Japan, South Korea and the Asian tigers.

Internal Crises vs. the Economy
A recent article in the Global Times, a paper that addresses myriad topics of domestic and international significance and is read among China’s leaders, discussed how economics is not the best measure of strength. It referred to the overall comparative GDP and the size of China’s military in the late 1800s. Then, China was considered at its weakest, but from an economic or military perspective it could have been considered comparable to the global powers of the day. This hints at the deeper internal debate in Beijing, where true national strength and the role of the economy is under discussion. Assumptions that China is only focused on continued good economic ties with the world shouldn’t be taken as gospel — China has a track record of shutting down external connections when internal crises brew.

Numerous polices are being thrown around in firefighting fashion, including blocking or at least hindering foreign business movement in and out of the country and tightening the flow of foreign capital in both directions. They are coming in reaction to flare-ups in economic, environmental, public relations and social arenas. Energy policies are making less sense, imbalances in supply and demand are growing and seemingly contradictory policies are being issued. Social unrest, or at least local media coverage of such unrest, seems to be increasing; either is a sign of weakening control. Local officials are still failing to fall in line with central government edicts. Strategic state enterprises like China National Petroleum Corp., China Petroleum & Chemical Corp. and the China Development Bank are all defying state-council orders — and the State Council itself is apparently going head-to-head with major policy bodies long given control over economic policies.

Something extraordinary is happening in China. And while not everyone may want that to be the case, and so have sought to use the Olympics to explain things away, the easy explanation simply doesn’t make enough sense
Title: Re: China
Post by: G M on July 29, 2008, 06:03:29 PM
Well, it appears that Stratfor and I agree that something has the Chinese power structure is acting like there is a major crisis looming. Their analysis is more sophisticated and nuanced than mine. If their actions start to affect international investment in China, they could be inducing a major crisis and normally Beijing isn't that stupid.

Something is going on behind the curtain, this much is true.
Title: Re: China
Post by: G M on July 29, 2008, 06:59:55 PM
**My reaction to the article below is "old news".**

http://www.guardian.co.uk/sport/feedarticle/7686896

China spying on Olympics hotel guests-US senator

Reuters
, Tuesday July 29 2008
By Richard Cowan
WASHINGTON, July 29 (Reuters) - China has installed Internet-spying equipment in all the major hotel chains serving the 2008 Summer Olympics, a U.S. senator charged on Tuesday.
"The Chinese government has put in place a system to spy on and gather information about every guest at hotels where Olympic visitors are staying," said Sen. Sam Brownback.
The conservative Republican from Kansas, citing hotel documents he received, added that journalists, athletes' families and others attending the Olympics next month "will be subjected to invasive intelligence-gathering" by China's Public Security Bureau. He said the agency will be monitoring Internet communications at the hotels.
The U.S. senator made a similar charge a few months ago but said that since then, hotels have come forward with detailed information on the monitoring systems that have been required by Beijing.
Brownback refused to identify the hotels, but said "several international hotel chains have confirmed the existence of this order."
Spokesmen at the Chinese Embassy in Washington were not available for comment.
Brownback, who staged an unsuccessful campaign for president this year, released documents that he said were notices to the hotels on Internet security. The authenticity of the documents could not be checked and portions were redacted.
One document said: "In order to ensure the smooth opening of Olympic in Beijing and the Expo in Shanghai in 2010, safeguard the security of Internet network and the information thereon in the hotels ... it is required that your company install and run the Security Management System."
Brownback said the hotels "have invested millions of dollars in their Chinese properties" and "could face severe retaliation from the Chinese government" if they refused to comply.
The senator called on China to reverse its policy, but said the hotels are advising guests that "your communications and Web site activity are not private" and that e-mails and Web sites being visited are accessible to local law enforcement.
More than two years ago, a U.S. House of Representatives committee held a hearing to probe U.S. firms' compliance with China's Internet censorship demands.
Brownback has been a critic of China on human rights issues and has been among U.S. lawmakers calling on President George W. Bush to boycott the Olympics opening ceremonies, largely to highlight allegations of Beijing's supply of arms to Sudan in return for oil. Those weapons have been used to carry out genocide in Darfur, according to China critics.
China has called human rights allegations nothing more than "noise pollution" and is hoping the Olympic Games will boost its international image. (Editing by Doina Chiacu)
Title: "Autocratic" democracy vs "liberal" democracy
Post by: ccp on August 10, 2008, 04:03:50 PM
I thought this is a fascinating thought piece:

Liberal democracy vs. autocratic democracy:

***Patrick J. Buchanan
Democracy -- A Flickering Star?
08/08/2008

In his 1937 "Great Contemporaries," Winston Churchill wrote, "Whatever else may be thought about (Hitler's) exploits, they are among the most remarkable in the whole history of the world."

Churchill was referring not only to Hitler's political triumphs -- the return of the Saar and reoccupation of the Rhineland -- but his economic achievements. By his fourth year in power, Hitler had pulled Germany out of the Depression, cut unemployment from 6 million to 1 million, grown the GNP 37 percent and increased auto production from 45,000 vehicles a year to 250,000. City and provincial deficits had vanished.

In material terms, Nazi Germany was a startling success.
Continued
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And not only Churchill and Lloyd George but others in Europe and America were marveling at the exploits of the Third Reich, its fascist ally Italy and Joseph Stalin's rapidly industrializing Soviet state. "I have seen the future, and it works," Lincoln Steffins had burbled. Many Western men, seeing the democracies mired in Depression and moral malaise, were also seeing the future in Berlin, Moscow, Rome.

In Germany, Hitler was winning plebiscites with more than 90 percent of the vote in what outside observers said were free elections.

What calls to mind the popularity of the Third Reich and the awe it inspired abroad -- even after the bloody Roehm purge and the Nazi murder of Austrian Chancellor Dollfuss in 1934, and the anti-Semitic Nuremberg laws -- is a poll buried in The New York Times.

In a survey of 24 countries by Pew Research Center, the nation that emerged as far and away first on earth in the satisfaction of its people was China. No other nation even came close.

"Eighty-six percent of Chinese people surveyed said they were content with the country's direction, up from 48 percent in 2002. ... And 82 percent of Chinese were satisfied with their national economy, up from 52 percent," said the Times.

Yet, China has a regime that punishes dissent, severely restricts freedom, persecutes Christians and all faiths that call for worship of a God higher than the state, brutally represses Tibetans and Uighurs, swamps their native lands with Han Chinese to bury their cultures and threatens Taiwan.

China is also a country where Maoist ideology has been replaced by a racial chauvinism and raw nationalism reminiscent of Italy and Germany in the 1930s. Yet, again, over 80 percent of all Chinese are content or even happy with the direction of the country. Two-thirds say the government is doing a good job in dealing with the issues of greatest concern to them.

And what nation is it whose people rank as third most satisfied?

Vladimir Putin's Russia.

Moscow is today more nationalistic, less democratic and more confrontational toward the West than it has been since before the fall of communism. Power is being consolidated, former Soviet republics are hearing dictatorial growls from Moscow and a chill reminiscent of the Cold War is in the air.

Yet, wrote the Times, "Russians were the third most satisfied people with their country's direction, at 54 percent, despite Western concerns about authoritarian trends."

Of the largest nations on earth, the two that today most satisfy the desires of their peoples are the most authoritarian.

High among the reasons, of course, are the annual 10 percent to 12 percent growth China has experienced over the last decade, and the wealth pouring into Russia for the oil and natural gas in which that immense country abounds. Still, is this not disturbing? In China and Russia, the greatest of world powers after the United States, people seem to value freedom of speech, religion or the press far less than they do a rising prosperity and national pride and power. And they seem to have little moral concern about crushing national minorities.

Contrast, if you will, the contentment of Chinese and Russians with the dissatisfaction of Americans, only 23 percent of whom told the Pew poll they approved of the nation's direction. Only one in five Americans said they were satisfied with the U.S. economy.

Other polls have found 82 percent of Americans saying the country is headed in the wrong direction, only 28 percent approving of President Bush's performance and only half that saying they approve of the Congress. In Britain, France and Germany, only three in 10 expressed satisfaction with the direction of the nation.

Liberal democracy is in a bear market. Is it a systemic crisis, as well?

In his 1992 "The End of History," Francis Fukuyama wrote of the ultimate world triumph of democratic capitalism. All other systems had fallen, or would fall by the wayside. The future belonged to us.

Democratic capitalism, it would appear, now has a great new rival -- autocratic capitalism. In Asia, Africa, the Middle East and Latin America, nations are beginning to imitate the autocrats of China and Russia, even as some in the 1930s sought to ape fascist Italy and Nazi Germany.

The game is not over yet. We are going into extra innings.****

Title: Re: China
Post by: G M on August 16, 2008, 06:47:51 AM
http://www.pbs.org/wnet/wideangle/episodes/china-prep/aaron-brown-interview-vanessa-fong/2656/


Worth watching.
Title: Re: China
Post by: Crafty_Dog on August 16, 2008, 07:38:28 AM
Fleshing out GM's rather laconic description, his post is of an interview about the Chinese educational system and contrasts it to the US one.
Title: Re: China
Post by: G M on August 17, 2008, 04:16:03 AM
Sorry, I should have added more.

I think that it's important to examine how various nations/cultures educate and socialize their children as this will be a good starting point in attempting to extrapolate the long term trajectories of those cultures/nations.

I'm not sure I agree with all the points made by the professor, but it's an interesting perspective.
Title: Reeducating Septuagenarians
Post by: Body-by-Guinness on August 20, 2008, 09:05:31 AM
August 21, 2008
Two Women Sentenced to ‘Re-education’ in China

By ANDREW JACOBS
BEIJING — Two elderly Chinese women have been sentenced to a year of “re-education through labor” after they repeatedly sought a permit to demonstrate in one of the official Olympic protest areas, according to family members and human rights advocates.

The women, Wu Dianyuan, 79, and Wang Xiuying, 77, had made five visits to the police this month in an effort to get permission to protest what they contended was inadequate compensation for the demolition of their homes in Beijing.

During their final visit on Monday, public security officials informed them that they had been given administrative sentences for “disturbing the public order,” according to Li Xuehui, Ms. Wu’s son.

Mr. Li said his mother and Ms. Wang, who used to be neighbors before their homes were demolished to make way for a redevelopment project, were allowed to return home but were told they could be sent to a detention center at any moment. “Can you imagine two old ladies in their 70s being re-educated through labor?” he asked. He said Ms. Wang was nearly blind.

A man who answered the phone at the Public Security Bureau declined to give out information about the case.

At least a half dozen people have been detained by the authorities after they responded to a government announcement late last month designating venues in three city parks as “protest zones” during the Olympics. So far, no demonstrations have taken place.

According to Xinhua, the state news agency, 77 people submitted protest applications, none of which were approved. Xinhua, quoting a public security spokesperson, said that apart from those detained all but three applicants had dropped their requests after their complaints were “properly addressed by relevant authorities or departments through consultations.” The remaining three applications were rejected for incomplete information or for violating Chinese law.

The authorities, however, have refused to explain what happened to applicants who disappeared after they submitted their paperwork. Among these, Gao Chuancai, a farmer from northeast China who was hoping to publicize government corruption, was forcibly escorted back to his hometown last week and remains in custody.

Relatives of another person who was detained, Zhang Wei, a Beijing resident who was also seeking to protest the demolition of her home, were told she would be kept at a detention center for a month. Two rights advocates from southern China have not been heard from since they were seized last week at the Public Security Bureau’s protest application office in Beijing.

Ms. Wu and Ms. Wang were well known to the authorities for their persistent campaign for greater compensation for the demolition of their homes. Mr. Li said his family had given up their home in 2001 with the expectation that they would get a new one in the development that replaced it. Instead, he said, the family has been forced to live in a ramshackle apartment on the capital’s outskirts.

“I feel very sad and angry because we’re only asking for the basic right of living and it’s been six years, but nobody will do anything to help them,” Mr. Li said.

He said that he and Ms. Wang’s daughter tried to apply for their own protest permit on Tuesday but that the police would not even give them the necessary forms.

The two elderly women were given administrative sentences to re-education through labor, known as laojiao, which seeks to reform political and religious dissenters and those charged with minor crimes like prostitution and petty theft. Government officials say that 290,000 people are detained in re-education centers for terms ranging from one to three years, although detentions can be extended for those whose rehabilitation is deemed inadequate.

Human rights advocates have long criticized the system because punishment is handed down by officials without trials or means of appeal. Last year, the government briefly grappled with revamping the system but backed off in the face of opposition from public security officials.

Although it is unlikely that women as old as Ms. Wu and Ms. Wang would be forced into hard labor, many of those sentenced to laojiao often toil in agricultural or factory work and are forced to confess their transgressions.

Tang Xuemei contributed research.

http://www.nytimes.com/2008/08/21/sports/olympics/21protest.html?_r=1&oref=slogin
Title: iCan't Download Protest Music
Post by: Body-by-Guinness on August 20, 2008, 12:57:44 PM
iTunes Store embroiled in Olympic protest over Tibet
By Charles Jade | Published: August 20, 2008 - 02:19PM CT

As if Apple didn't have enough problems right now with iPhone woes and a MobileMe meltdown, The Sydney Morning Herald is reporting that the iTunes Store has become part of an international incident. The story began shortly before the start of the Olympics when a pro-Tibet organization, The Art of Peace Foundation, cobbled together an album from some 20 artists, Songs for Tibet - The Art of Peace. From superstars and plastic surgery addicts like Madonna to the totally hot Regina Spektor—what pipes hath she!—the music, while not new, really isn't too bad. There's also 15 minutes of video from some guy wearing sheets for those who buy the album. Unless you are in China, that is.

It seems that foreigners living in China have begun to have problems with accessing the iTunes store. The Herald reports what is allegedly the response of Apple customer support to a blogger named JeninShanghai.

"iTunes is not being blocked in China from our end, but access to the iTunes Store IS restricted in some areas in China. This would also explain why it's happening to your friends there as well," the response reads.

"I would advise that you contact your ISP [internet service provider] about this matter. Please also note though that accessing the US iTunes Store outside of the geographic region of the United States is not supported, and that attempting to access it while in China is at your own risk."

The catalyst for this apparent interruption of service may have been a stealth protest instigated by The Art of Peace foundation. Its album was to be given away free to athletes, and "over 40 Olympic athletes in North America, Europe and even Beijing" downloaded it. And for those thinking this is simply a reactionary response from an authoritarian regime, one need only visit the iTunes Store and peruse the reviews. Besides one-star ratings and plenty of hanz, there is no shortage of hilarious broken-English comments.

Tibet is China forever! Taiwan is! We are all Chinese Nation! Chinese people to roar! Chinese is the roar! This genuine peace cheers! Love China!

Dalai Lama = LIAR. Tibet separatists are mainly funded by the CIA. Dalai Lama was biggest slave holder in human history.

Apple Inc is really, really so stupid of putting an album like this on the very position of iTunes Store.
Setting aside whether the Dalai Lama is like Hitler—how do you say Godwin's Law in Mandarin?—the nationalist sentiment is not really surprising, but that last comment is something to think about. Apple just opened its first store in Beijing and is actively pursuing negotiations over bringing the iPhone to China. An issue like this certainly doesn't help. Of course, it's not like Apple will pull the album, but it's an open question whether politically-sensitive albums like a second Songs for Tibet, let alone something like Songs for Palestine, will be debuting at the iTunes Store any time soon.

http://arstechnica.com/journals/apple.ars/2008/08/20/itunes-store-embroiled-in-olympic-protest-over-tibet
Title: Re: China
Post by: G M on August 22, 2008, 12:40:40 PM
China Looks Across the Strait   
By Dan Blumenthal and Christopher Griffin
The Weekly Standard | Friday, August 22, 2008

For Beijing, Russia's invasion of Georgia has been a mixed blessing. Vladimir Putin stole China's limelight during the Olympics' opening ceremonies with a fireworks display of his own in the Caucasus and embarrassed his Chinese hosts. On the other hand, Putin's Olympics offensive has a long-term upside for Beijing: that the West dithered during the invasion of an upstart democracy must have provided comfort to those in China who want to settle the Taiwan issue by force.
The U.S. response to the invasion of Georgia was embarrassing. President Bush chose not to interrupt his Beijing itinerary of watching basketball and beach volleyball, and his administration's lackadaisical actions sent a clear message to his Chinese hosts about waning American will to stand by its allies. The initial call by both presidential candidate Barack Obama and President Bush that both aggressor and victim stand down must have been music to China's ears.
For years China has been selling the argument that Taiwan is a provocateur. Beijing argued throughout the administration of independence-leaning Taiwan president Chen Shui-bian that "separatists" in Taipei had hijacked Chinese "compatriots" on the island who really want unification with the Chinese motherland. Remove the separatists, China's rhetoric went, and Taiwan will return to the motherland--allow them to govern, and China will one day have to attack.
The election of the more accommodationist President Ma Ying-jeou has somewhat stalled China's belligerence, but Taiwan is a democracy and the "separatists" will be voted back in one day. The Taiwanese public, moreover, is itself becoming more separatist--only a tiny and diminishing minority wants to unify with China. This fact may explain why, even after Ma's election, China has not halted its military build-up across the Strait: Over 1,000 ballistic missiles, 300 advanced fighters, dozens of submarines and destroyers are poised to wreak havoc on the small, isolated island. As China grows stronger it is no longer fanciful to imagine it pulling a Putin, trumping up any number of Taiwanese "provocations" as a pretext to attack.
The underlying tensions in the Taiwan Strait bear important similarities to those in the Caucasus. Just as authoritarian Russia objects to a democratic, pro-American Georgia, so too authoritarian China sees a democratic, pro-American Taiwan as a gaping wound on its periphery. The main cause of tensions is domestic politics. An authoritarian China, like authoritarian Russia, needs fervent nationalism to retain its shaky legitimacy. The "sacred goal" of reunifying the motherland serves that purpose well.
America's tepid response to Russia's invasion of Georgia has harmed its ability to act as a global deterrent. If Washington was slow in response to Georgia, a country that it sponsored for NATO membership, whose president it feted at the White House in 2006 and that hosted President Bush in 2005 with great fanfare, Beijing must wonder if the United States would do anything for isolated Taiwan. Unlike Georgia, Taiwan is a pariah in the international community.
Washington's complicity in Taiwan's isolation only tempts Chinese aggression. While Russia's actions have sent a harmful signal to all would-be aggressors, a Chinese invasion of Taiwan is far from inevitable. The United States can recapitalize its maritime and air forces in the Pacific, and make it clear that it will defend Taiwan from attack. America is a $15 trillion economy that can afford the weapons it needs to keep the peace in the Pacific. While Beijing's military threat to Taiwan should be taken seriously, China is a $3 trillion economy with a host of domestic problems.
In the end, though, the true path to peace in the Strait is a reformed and liberalized China focused on its manifold domestic problems rather than on a bellicose nationalism.

Dan Blumenthal is a resident fellow and Christopher Griffin a research fellow at the American Enterprise Institute.
Title: WSJ: Blair on China
Post by: Crafty_Dog on August 26, 2008, 06:19:19 AM
We Can Help China Embrace the Future
By TONY BLAIR
August 26, 2008; Page A21

The Beijing Olympic Games were a powerful spectacle, stunning in sight and sound. But the moment that made the biggest impression on me came during an informal visit just before the Games to one of the new Chinese Internet companies, and in conversation with some of the younger Chinese entrepreneurs.

These people, men and women, were smart, sharp, forthright, unafraid to express their views about China and its future. Above all, there was a confidence, an optimism, a lack of the cynical, and a presence of the spirit of get up and go, that reminded me greatly of the U.S. at its best and any country on its way forward.

These people weren't living in fear, but looking forward in hope. And for all the millions still in poverty in China, for all the sweep of issues -- political, social and economic -- still to be addressed, that was the spirit of China during this festival of sport, and that is the spirit that will define its future.

During my 10 years as British leader, I could see the accelerating pace of China's continued emergence as a major power. I gave speeches about China, I understood it analytically. But I did not feel it emotionally and therefore did not fully understand it politically.

Since leaving office I have visited four times and will shortly return again. People ask what is the legacy of these Olympics for China? It is that they mark a new epoch -- an opening up of China that can never be reversed. It also means that ignorance and fear of China will steadily decline as the reality of modern China becomes more apparent.

Power and influence is shifting to the East. In time will come India, too. Some see all this as a threat. I see it as an enormous opportunity. But we have to exercise a lot of imagination and eliminate any vestiges of historic arrogance.

The volunteer force that staged the Games was interested, friendly and helpful. The whole feel of the city was a world away from the China I remember on my first visit 20 years ago. And the people are proud, really and honestly proud, of their country and its progress.

No sensible Chinese person -- including the country's leadership -- doubts there remain issues of human rights and political and religious freedom to be resolved. But neither do the sensible people -- including the most Western-orientated Chinese -- doubt the huge change, for the better, there has been. China is on a journey. It is moving forward quickly. But it knows perfectly well the journey is not complete. Observers should illuminate the distance to go, by all means, but recognize the distance traveled.

The Chinese leadership is understandably preoccupied with internal development. Beijing and Shanghai no more paint for you the complete picture of China than New York and Washington do of the U.S. Understanding the internal challenge is fundamental to understanding China, its politics and its psyche. We in Europe have roughly 5% of our population employed in agriculture. China has almost 60%. Over the coming years it will seek to move hundreds of millions of its people from a rural to an urban economy. Of course India will seek to do the same, and the scale of this transformation will create huge challenges and opportunities in the economy, the environment and politically.

For China, this economic and social transformation has to come with political stability. It is in all our interests that it does. The policy of One China is not a piece of indulgent nationalism. It is an existential issue if China is to hold together in a peaceful and stable manner as it modernizes. This is why Tibet is not simply a religious issue for China but a profoundly political one -- Tibet being roughly a quarter of China's land mass albeit with a small population.

So we should continue to engage in a dialogue over the issues that rightly concern people, but we should conduct it with at least some sensitivity to the way China sees them.

This means that the West needs a strong partnership with China, one that goes deep, not just economically but politically and culturally. The truth is that nothing in the 21st century will work well without China's full engagement. The challenges we face today are global. China is now a major global player. So whether the issue is climate change, Africa, world trade or the myriad of security questions, we need China to be constructive; we need it to be using its power in partnership with us. None of this means we shouldn't continue to raise the issues of human rights, religious freedoms and democratic reforms as European and American leaders have done in recent weeks.

It is possible to hyperbolize about the rise of China. For example, Europe's economies are still major and combined outreach those of China and India combined. But, as the Olympics and its medal tables show, it is not going to stay that way. This is a historic moment of change. Fast forward 10 years and everyone will know it.

For centuries, the power has resided in the West, with various European powers including the British Empire and then, in the 20th century, the U.S. Now we will have to come to terms with a world in which the power is shared with the Far East. I wonder if we quite understand what that means, we whose culture (not just our politics and economies) has dominated for so long. It will be a rather strange, possibly unnerving experience. Personally, I think it will be incredibly enriching. New experiences; new ways of thinking liberate creative energy. But in any event, it will be a fact we have to come to terms with. For the next U.S. president, this will be or should be at the very top of the agenda, and as a result of the strength of the Sino-U.S. relationship under President Bush, there is a sound platform to build upon.

The Olympics is now the biggest sporting event in the world, and because of the popularity of sport it is therefore one of the events that makes a genuine impact on real people. These Games have given people a glimpse of modern China in a way that no amount of political speeches could do.

London 2012 gives Britain a tremendous chance to explore some of these changes and explain to the East what the modern West is about. One thing is for certain: Hosting the Olympics is now a fantastic opportunity for any nation. My thoughts after the Beijing Games are that we shouldn't try to emulate the wonder of the opening ceremony. It was the spectacular to end all spectaculars and probably can never be bettered. We should instead do something different, drawing maybe on the ideals and spirit of the Olympic movement. We should do it our way, like they did it theirs. And we should learn from and respect each other. That is the way of the 21st century.

Mr. Blair, former prime minister of Great Britain, is teaching a course on faith and globalization at the Yale Schools of Management and Divinity.
Title: China Helps Pakistan w/ Nukes
Post by: Body-by-Guinness on September 05, 2008, 05:58:46 AM
China sees India as a strategic opponent; appears they've decided to give India something to think about, and have been doing so for a while.

China tested nukes for Pakistan, gave design
5 Sep 2008, 1046 hrs IST, CHIDANAND RAJGHATTA,TNN


WASHINGTON: While an assortment of non-proliferation hardliners and hi-tech suppliers treat India with immense suspicion in the matter of nuclear trade predicated on tests, it turns out that the United States and the west were fully aware of Chinese nuclear weapons proliferation to Pakistan, including conducting a proxy test for it, as far back as 1990.

In some of the most startling revelations to emerge on the subject, a high-ranking former US official who was also a nuclear weapons designer has disclosed that ''in 1982 China's premier Deng Xiaoping began the transfer of nuclear weapons technology to Pakistan.''

http://timesofindia.indiatimes.com/articleshow/msid-3447395,prtpage-1.cms

The whistleblower isn't a think-tank academic or an unnamed official speaking on background. Thomas Reed, described as a former U.S ''nuclear weaponeer'' and a Secretary of the Air Force (1976-77) writes in the latest issue of Physics Today that China’s transfers to Pakistan included blueprints for the ultrasimple CHIC-4 design using highly enriched uranium, first tested by China in 1966. A Pakistani derivative of CHIC-4 apparently was tested in China on 26 May 1990, he adds.

Reed makes an even more stunning disclosure, saying Deng not only authorized proliferation to Pakistan, but also, "in time, to other third world countries.'' The countries are not named. He also says that during the 1990s, China conducted underground hydronuclear experiments—though not full-scale device tests—for France at Lop Nur.

Reed’s disclosures are based on his knowledge of and insights into the visits to China by Dan Stillman, a top US nuclear expert who went there several times in the late 1980s at Beijing invitation, in part because the Chinese wanted to both show-off and convey to the US the progress they had made in nuclear weaponisation.

One of Stillman's visit to the Shanghai Institute of Nuclear Research (SINR), writes Reed, ''also produced his first insight into the extensive hospitality extended to Pakistani nuclear scientists during that same late-1980s time period,'' which would eventually lead to the joint China-Pak nuclear test.

Chinese nuclear proliferation to Pakistan, including the supply of hi-tech items like ring magnets in the early 1990s, has always been known to the non-proliferation community (which largely slept on the reports). But this is the first time it has been confirmed by such a senior official.

In the late 1980s, both the Reagan and the George Bush Sr administration repeatedly fudged the issue to certify that Pakistan had not gone nuclear despite obvious evidence to the contrary.

In his assessment of the Chinese nuclear program based on Stillman’s visits, Reed writes admiringly about Beijing’s successes, saying ''Over a period of 15 years, an intellectually talented China achieved parity with the West and pre-eminence over its Asian peers in the design of nuclear weapons and in understanding underground nuclear testing.''

"China now stands in the first rank of nuclear powers," he concludes.

In trenchant observation, Reed writes, ''Any nuclear nation should consider its nuclear tests to be giant physics experiments. The Chinese weaponeers understood that well; other proliferators do not. Many states have considered their early nuclear shots to be political demonstrations or simple proof tests. In China, however, extremely sophisticated instrumentation was used on even the first nuclear test.''

Chronicling the progress of China’s nuclear weapons program, Reed writes: Atop a tower on 16 October 1964, China's first nuclear device, 596, was successfully fired. US intelligence analysts were astonished by the lack of plutonium in the fallout debris and by the speed with which China had broken into the nuclear club, but that was only the beginning.

Eighteen months later, in the spring of 1966, China entered the thermonuclear world with the detonation of a boosted-fission, airdropped device that used lithium-6, a primary source of tritium when bombarded with neutrons. That test, their third, achieved a yield of 200–300 kilotons. By the end of the year, they made the leap to multistage technology with a large two-stage experiment that yielded only 122 kilotons, but it again displayed 6Li in the bomb debris.

The Chinese then closed the circle on 17 June 1967, unambiguously marching into the H-bomb club with a 3.3-megaton burst from an aircraft-delivered weapon. On 27 December 1968, the Chinese bid the Johnson administration farewell with an improved, airdropped 3-megaton thermonuclear device that for the first time used plutonium in the primary.

It is clear from the reactor-to-bomb progression times that by 1968 China had unequivocally entered the European nuclear cartel on a par with the U, says Reed. Furthermore, China had become a thermonuclear power. It had achieved the leap from the initial A-bomb test to a 3.3-megaton thermonuclear blast in a record-breaking 32 months. It had taken the US more than seven years to accomplish that feat.

Title: Re: China
Post by: Body-by-Guinness on September 05, 2008, 06:02:27 AM
2nd post. In view of recent reports of US incursions, this is interesting.

   China to provide Pakistan four AWACS aircrafts
    Updated at: 1510 PST, Friday, September 05, 2008
 
    ISLAMABAD: Air Chief Marshall Tanvir Mahmood Ahmed on Friday said China would provide four AWACS aircrafts to Pakistan for the purpose of aerial surveillance, adding an agreement in this regard has been signed by the two countires.

Talking to Geo News, he said talks were also underway to purchase FC-20 aircrafts from China and added 30 to 40 planes would be provided to Pakistan under the agreement signed by China and Pakistan.

Air chief Marshall further said four such aircrafts were being also acquired from Sweden for aerial surveillance.

http://www.thenews.com.pk/updates.asp?id=54260
Title: Re: China
Post by: Crafty_Dog on September 12, 2008, 05:09:20 PM
http://www.tothepointnews.com/content/view/3332/82/

China vs. the environment/the planet
Title: Re: China
Post by: tankerdriver on September 18, 2008, 09:07:45 PM
China right now is an experiment. Only time will tell if they are right. They have all this structure from the government, but you can't take human nature out of the equation.
Title: Re: China
Post by: tankerdriver on September 27, 2008, 08:27:54 AM
http://www.telegraph.co.uk/news/worldnews/asia/china/3092001/China-space-walk-Astronauts-small-step-hailed-as-giant-leap-for-the-country.html

China has first Space Walk!
Title: China's African Imperialism, 1
Post by: Body-by-Guinness on September 28, 2008, 09:55:40 AM
PETER HITCHENS: How China has created a new slave empire in Africa

By PETER HITCHENS
Last updated at 12:00 PM on 28th September 2008


Narrow escape: Peter Hitchens
I think I am probably going to die any minute now. An inflamed, deceived mob of about 50 desperate men are crowding round the car, some trying to turn it over, others beating at it with large rocks, all yelling insults and curses.

They have just started to smash the windows. Next, they will pull us out and, well, let's not think about that ...

I am trying not to meet their eyes, but they are staring at me and my companions with rage and hatred such as I haven't seen in a human face before. Those companions, Barbara Jones and Richard van Ryneveld, are - like me - quite helpless in the back seats.

If we get out, we will certainly be beaten to death. If we stay where we are, we will probably be beaten to death.

Our two African companions have - crazily in our view - got out of the car to try to reason with the crowd. It is clear to us that you might as well preach non-violence to a tornado.

At last, after what must have been about 40 seconds but that felt like half an hour, one of the pair saw sense, leapt back into the car and reversed wildly down the rocky, dusty path - leaving his friend behind.

By the grace of God we did not slither into the ditch, roll over or burst a tyre. Through the dust we churned up as we fled, we could see our would-be killers running with appalling speed to catch up. There was just time to make a crazy two-point turn which allowed us to go forwards and so out-distance them.

We had pretty much abandoned our other guide to whatever his fate might be (this was surprisingly easy to justify to myself at the time) when we saw that he had broken free and was running with Olympic swiftness, just ahead of pursuers half hidden by the dust.

We flung open a rear door so he could scramble in and, engine grinding, we veered off, bouncing painfully over the ruts and rocks.

We feared there would be another barricade to stop our escape, and it would all begin again. But there wasn't, and we eventually realised we had got away, even the man whose idiocy nearly got us killed.

He told us it was us they wanted, not him, or he would never have escaped. We ought to be dead. We are not. It is an interesting feeling, not wholly unpleasant.

Why did they want to kill us? What was the reason for their fury? They thought that if I reported on their way of life they might lose their livings.

Livings? Dyings, more likely.


Peking power: A Chinese supervisor cajoles local workers as they dig a trench in Kabwe, Zambia
These poor, hopeless, angry people exist by grubbing for scraps of cobalt and copper ore in the filth and dust of abandoned copper mines in Congo, sinking perilous 80ft shafts by hand, washing their finds in cholera-infected streams full of human filth, then pushing enormous two-hundredweight loads uphill on ancient bicycles to the nearby town of Likasi where middlemen buy them to sell on, mainly to Chinese businessmen hungry for these vital metals.

To see them, as they plod miserably past, is to be reminded of pictures of unemployed miners in Thirties Britain, stumbling home in the drizzle with sacks of coal scraps gleaned from spoil heaps.

Except that here the unsparing heat makes the labour five times as hard, and the conditions of work and life are worse by far than any known in England since the 18th Century.

Many perish as their primitive mines collapse on them, or are horribly injured without hope of medical treatment. Many are little more than children. On a good day they may earn $3, which just supports a meagre existence in diseased, malarial slums.

We had been earlier to this awful pit, which looked like a penal colony in an ancient slave empire.

Defeated, bowed figures toiled endlessly in dozens of hand-dug pits. Their faces, when visible, were blank and without hope.

We had been turned away by a fat, corrupt policeman who pretended our papers weren't in order, but who was really taking instructions from a dead-eyed, one-eared gangmaster who sat next to him.

By the time we returned with more official permits, the gangmasters had readied the ambush.

The diggers feared - and their evil, sinister bosses had worked hard on that fear - that if people like me publicised their filthy way of life, then the mine might be closed and the $3 a day might be taken away.

I can give you no better explanation in miniature of the wicked thing that I believe is now happening in Africa.

Out of desperation, much of the continent is selling itself into a new era of corruption and virtual slavery as China seeks to buy up all the metals, minerals and oil she can lay her hands on: copper for electric and telephone cables, cobalt for mobile phones and jet engines - the basic raw materials of modern life.

It is crude rapacity, but to Africans and many of their leaders it is better than the alternative, which is slow starvation.


The Congolese risk their lives digging through mountains of mining waste looking for scraps of metal ore
It is my view - and not just because I was so nearly killed - that China's cynical new version of imperialism in Africa is a wicked enterprise.

China offers both rulers and the ruled in Africa the simple, squalid advantages of shameless exploitation.

For the governments, there are gargantuan loans, promises of new roads, railways, hospitals and schools - in return for giving Peking a free and tax-free run at Africa's rich resources of oil, minerals and metals.

For the people, there are these wretched leavings, which, miserable as they are, must be better than the near-starvation they otherwise face.

Persuasive academics advised me before I set off on this journey that China's scramble for Africa had much to be said for it. They pointed out China needs African markets for its goods, and has an interest in real economic advance in that broken continent.

For once, they argued, a foreign intervention in Africa might work precisely because it is so cynical and self-interested. They said Western aid, with all its conditions, did little to create real advances in Africa, laughing as they declared: 'The only country that ever got rich through donations is the Vatican.'

Why get so het up about African corruption anyway? Is it really so much worse than corruption in Russia or India?

Is it really our business to try to act as missionaries of purity? Isn't what we call 'corruption' another name for what Africans view as looking after their families?

And what about China herself? Despite the country's convulsive growth and new wealth, it still suffers gravely from poverty and backwardness, as I have seen for myself in its dingy sweatshops, the primitive electricity-free villages of Canton, the dark and squalid mining city of Datong and the cave-dwelling settlements that still rely on wells for their water.

After the murderous disaster of Mao, and the long chaos that went before, China longs above all for stable prosperity. And, as one genial and open-minded Chinese businessman said to me in Congo as we sat over a beer in the decayed colonial majesty of Lubumbashi's Belgian-built Park Hotel: 'Africa is China's last hope.'

I find this argument quite appealing, in theory. Britain's own adventures in Africa were not specially benevolent, although many decent men did what they could to enforce fairness and justice amid the bigotry and exploitation.


Taking over: Chinese building workers in Zambia
It is noticeable that in much former British territory we have left behind plenty of good things and habits that are absent in the lands once ruled by rival empires.

Even so, with Zimbabwe, Nigeria and Uganda on our conscience, who are we to lecture others?

I chose to look at China's intervention in two countries, Zambia and the 'Democratic Republic of the Congo', because they lie side by side; because one was once British and the other Belgian.

Also, in Zambia's imperfect but functioning democracy, there is actual opposition to the Chinese presence, while in the despotic Congo, opposition to President Joseph Kabila is unwise, to put it mildly.

Congo is barely a state at all, and still hosts plenty of fighting not all that far from here.

Statues and images of Joseph's murdered father Laurent are everywhere in an obvious attempt to create a cult of personality on which stability may one day be based. Portraits of Joseph himself scowl from every wall.

I have decided not to name most of the people who spoke to me, even though some of them gave me permission to do so, because I am not sure they know just how much of a risk they may be running by criticising the Chinese in Africa.

I know from personal experience with Chinese authority that Peking regards anything short of deep respect as insulting, and it does not forget a slight.

I also know that this over-sensitive vigilance is present in Africa.

The Mail on Sunday team was reported to the authorities in Zambia's Copper Belt by Chinese managers who had seen us taking photographs of a graveyard at Chambishi where 54 victims of a disaster in a Chinese-run explosives factory are buried. Within an hour, local 'security' officials were buzzing round us trying to find out what we were up to.

This is why I have some time for the Zambian opposition politician Michael Sata, known as 'King Cobra' because of his fearless combative nature (but also, say his opponents, because he is so slippery).

Sata has challenged China's plans to invest in Zambia, and is publicly suspicious of them. At elections two years ago, the Chinese were widely believed to have privately threatened to pull out of the country if he won, and to have helped the government parties win.

Peking regards Zambia as a great prize, alongside its other favoured nations of Sudan (oil), Angola (oil) and Congo (metals).


Title: China's African Imperialism, 2
Post by: Body-by-Guinness on September 28, 2008, 09:56:10 AM
Fighting back: Peter Hitchens with Michael Sata, the opposition politician nicknamed 'King Cobra'
It has cancelled Zambia's debts, eased Zambian exports to China, established a 'special economic zone' in the Copper Belt, offered to build a sports stadium, schools, a hospital and an anti-malaria centre as well as providing scholarships and dispatching experts to help with agriculture. Zambia-China trade is growing rapidly, mainly in the form of copper.

All this has aroused the suspicions of Mr Sata, a populist politician famous for his blunt, combative manner and his harsh, biting attacks on opponents, and who was once a porter who swept the platforms at Victoria Station in London.

Now the leader of the Patriotic Front, with a respectable chance of winning a presidential election set for the end of October, Sata says: 'The Chinese are not here as investors, they are here as invaders.

'They bring Chinese to come and push wheelbarrows, they bring Chinese bricklayers, they bring Chinese carpenters, Chinese plumbers. We have plenty of those in Zambia.'

This is true. In Lusaka and in the Copper Belt, poor and lowly Chinese workers, in broad-brimmed straw hats from another era, are a common sight at mines and on building sites, as are better-dressed Chinese supervisors and technicians.

There are Chinese restaurants and Chinese clinics and Chinese housing compounds - and a growing number of Chinese flags flapping over factories and smelters.

'We don't need to import labourers from China,' Sata says. 'We need to import people with skills we don't have in Zambia. The Chinese are not going to train our people in how to push wheelbarrows.'

He meets me in the garden of his not specially grand house in the old-established and verdant Rhodes Park section of Lusaka. It is guarded by uniformed security men, its walls protected by barbed wire and broken glass.

'Wherever our Chinese "brothers" are they don't care about the local workers,' he complains, alleging that Chinese companies have lax safety procedures and treat their African workers like dirt.

In language which seems exaggerated, but which will later turn out to be at least partly true, he claims: 'They employ people in slave conditions.'

He also accuses Chinese overseers of frequently beating up Zambians. His claim is given force by a story in that morning's Lusaka newspapers about how a Zambian building worker in Ndola, in the Copper Belt, was allegedly beaten unconscious by four Chinese co-workers angry that he had gone to sleep on the job.

I later checked this account with the victim's relatives in an Ndola shanty town and found it to be true.


Evidence of China is never very far away
Recently, a government minister, Alice Simago, was shown weeping on TV after she saw at first hand the working conditions at a Chinese-owned coal mine in the Southern Province.

When I contacted her, she declined to speak to me about this - possibly because criticism of the Chinese is not welcome among most of the Zambian elite.

Denis Lukwesa, deputy general secretary of the Zambian Mineworkers' Union, also backed up Sata's view, saying: 'They just don't understand about safety. They are more interested in profit.'

As for their general treatment of African workers, Lukwesa says he knows of cases where Chinese supervisors have kicked Zambians. He summed up their attitude like this: 'They are harsh to Zambians, and they don't get on well with them.'

Sata warns against the enormous loans and offers of help with transport, schools and health care with which Peking now sweetens its attempts to buy up Africa's mineral reserves.

'China's deal with the Democratic Republic of the Congo is, in my opinion, corruption,' he says, comparing this with Western loans which require strong measures against corruption.

Everyone in Africa knows China's Congo deal - worth almost £5billion in loans, roads, railways, hospitals and schools - was offered after Western experts demanded tougher anti-corruption measures in return for more aid.

Sata knows the Chinese are unpopular in his country. Zambians use a mocking word - 'choncholi' - to describe the way the Chinese speak. Zambian businessmen gossip about the way the Chinese live in separate compounds, where - they claim - dogs are kept for food.

There are persistent rumours, which cropped up in almost every conversation I had in Zambia, that many of the imported Chinese workforce are convicted criminals whom China wants to offload in Africa. I was unable to confirm this but, given China's enormous gulag and the harshness of life for many migrant workers, it is certainly not impossible.

Sata warns that 'sticks and stones' may one day fly if China does not treat Zambians better. He now promises a completely new approach: 'I used to sweep up at your Victoria Station, and I never got any complaints about my work. I want to sweep my country even cleaner than I swept your stations.'

Some Africa experts tend to portray Sata as a troublemaker. His detractors whisper that he is a mouthpiece for Taiwan, which used to be recognised by many African states but which faces almost total isolation thanks to Peking's new Africa policy.

But his claims were confirmed by a senior worker in Chambishi, scene of the 2005 explosion. This man, whom I will call Thomas, is serious, experienced and responsible. His verdict on the Chinese is devastating.

He recalls the aftermath of the blast, when he had the ghastly task of collecting together what remained of the men who died: 'Zambia, a country of 11million people, went into official mourning for this disaster.

'A Chinese supervisor said to me in broken English, "In China, 5,000 people die, and there is nothing. In Zambia, 50 people die and everyone is weeping." To them, 50 people are nothing.'

This sort of thing creates resentment. Earlier this year African workers at the new Chinese smelter at Chambishi rioted over low wages and what they thought were unsafe working conditions.

When Chinese President Hu Jintao came to Zambia in 2006, he had to cancel a visit to the Copper Belt for fear of hostile demonstrations. Thomas says: 'The people who advised Hu Jintao not to come were right.'

He suspects Chinese arrogance and brutality towards Africans is not racial bigotry, but a fear of being seen to be weak. 'They are trying to prove they are not inferior to the West. They are trying too hard.

'If they ask you to do something and you don't do it, they think you're not doing it because they aren't white. People put up with the kicks and blows because they need work to survive.'

Many in Africa also accuse the Chinese of unconcealed corruption. This is specially obvious in the 'Democratic Republic of the Congo', currently listed as the most corrupt nation on Earth.

A North-American businessman who runs a copper smelting business in Katanga Province told me how his firm tried to obey safety laws.

They are constantly targeted by official safety inspectors because they refuse to bribe them. Meanwhile, Chinese enterprises nearby get away with huge breaches of the law - because they paid bribes.

'We never pay,' he said, 'because once you pay you become their bitch; you will pay for ever and ever.'

Another businessman shrugged over the way he is forced to wait weeks to get his products out of the country, while the Chinese have no such problems.

'I'm not sure the Chinese even know there are customs regulations,' he said. 'They don't fill in the forms, they just pay. I try to be philosophical about it, but it is not easy.'

Unlike orderly Zambia, Congo is a place of chaos, obvious privation, tyranny dressed up as democracy for public-relations purposes, and fear.

This is Katanga, the mineral-rich slice of land fought over furiously in the early Sixties in post-colonial Africa's first civil war. Brooding over its capital, Lubumbashi, is a 400ft black hill: the accumulated slag and waste of 80 years of copper mining and smelting.

Now, thanks to a crazy rise in the price of copper and cobalt, the looming, sinister mound is being quarried - by Western business, by the Chinese and by bands of Congolese who grub and scramble around it searching for scraps of copper or traces of cobalt, smashing lumps of slag with great hammers as they hunt for any way of paying for that night's supper.

As dusk falls and the shadows lengthen, the scene looks like the blasted land of Mordor in Tolkien's Lord Of The Rings: a pre-medieval prospect of hopeless, condemned toil in pits surrounded by stony desolation.

Behind them tower the leaning ruins of colossal abandoned factories: monuments to the wars and chaos that have repeatedly passed this way.

There is something strange and unsettling about industrial scenes in Africa, pithead winding gear and gaunt chimneys rising out of tawny grasslands dotted with anthills and banana palms. It looks as if someone has made a grave mistake.

And there is a lesson for colonial pride and ambition in the streets of Lubumbashi - 80 years ago an orderly Art Deco city full of French influence and supervised by crisply starched gendarmes, now a genial but volatile chaos of scruffy, bribe-hunting traffic cops where it is not wise to venture out at night.

The once-graceful Belgian buildings, gradually crumbling under thick layers of paint, long ago lost their original purpose.

Outsiders come and go in Africa, some greedy, some idealistic, some halfway between. Time after time, they fail or are defeated, leaving behind scars, slag-heaps, ruins and graveyards, disillusion and disappointment.

We have come a long way from Cecil Rhodes to Bob Geldof, but we still have not brought much happiness with us, and even Nelson Mandela's vaunted 'Rainbow Nation' in South Africa is careering rapidly towards banana republic status.

Now a new great power, China, is scrambling for wealth, power and influence in this sad continent, without a single illusion or pretence.

Perhaps, after two centuries of humbug, this method will work where all other interventions have failed.

But after seeing the bitter, violent desperation unleashed in the mines of Likasi, I find it hard to believe any good will come of it.


Find this story at www.dailymail.co.uk/news/worldnews/article-1063198/PETER-HITCHENS-How-China-created-new-slave-empire-Africa.html
Title: WSJ
Post by: Crafty_Dog on November 05, 2008, 06:44:05 AM
At a time when global financial risks seem larger by the day, there's one risk that's receding: tension across the Taiwan Strait.

Yesterday China and Taiwan agreed to open new air, sea and postal links. This establishes the hitherto elusive "three links" -- direct trade, transport and mail -- that the two governments have been talking about for years. They also agreed to cooperate on food safety regulation as well as to hold further talks every six months, alternating between Beijing and Taipei.


This is a détente worth celebrating. The direct sea links alone will cut shipping costs by around $36 million a year, according to estimates from Taiwan's Mainland Affairs Council. This is no small change: More than 40% of Taiwanese exports went to China in 2007, and two-way trade was $130.2 billion -- yet the trade and the traders had to travel through a third country, usually Hong Kong. The number of direct charter flights will increase to 108 per week from 36, and new air routes will cut hours off flying times.

But the greatest benefit is the political truce yesterday's deal signals. Although the People's Republic has never ruled the island, China has claimed Taiwan as an integral part of its territory since 1949 and fears doing anything that might tacitly acknowledge Taiwan's independence. As recently as 1996, China fired live missiles into Taiwan's waters, and today China has more than 1,000 missiles aimed at the island.

Credit goes to Taiwan President Ma Ying-jeou for smoothing the waters. Elected in March on a platform of better relations with the mainland, Mr. Ma made it clear he wanted to negotiate on cross-Strait economic, transportation and cultural links on the basis of the "1992 Consensus," under which the two sides agreed to disagree about what constitutes "China." The Chinese delegation's very presence in Taipei this week suggests negotiations on an equal footing. That's a big change.

In Opinion Journal Today
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-- Jeffrey Scott ShapiroMr. Ma also had to overcome significant domestic hurdles to get to this point. The new agreements are not themselves controversial. But about one-third of Taiwan citizens advocate eventual independence for the island, and many of these believe that agreements with China, a country that still considers Taiwan a "renegade province," violate the spirit of Taiwan's independence. Last month, half a million protesters gathered in Taipei to voice their discontent.

It is easier for Beijing to come to the negotiating table, particularly since Mr. Ma has kept a much lower international profile than his predecessor. Beijing's policy makers are eager to promote these talks to the Chinese public as proof for their claim that Taiwan is part of China.

The next step forward may be on banking deregulation. The presidents of Chinese state-owned Industrial and Commercial Bank of China and the Bank of China are part of the official delegation in Taiwan this week. Next year China and Taiwan are expected to sign a memorandum of understanding that would allow Taiwanese banks to open branches in China. Taiwan's minister of the Mainland Affairs Council, Lai Shin-yuan, told us by telephone that more decisions will be made through channels outside the high-level talks -- for example, adding new travel destinations or more flights.

For decades, the Taiwan Strait has been a flashpoint with the potential to destabilize East Asia. Taiwan needs to maintain its defense capability in case politics changes on the mainland, but today's cooperative trend is welcome.
Title: Biz Info Competition in China?
Post by: Body-by-Guinness on November 14, 2008, 07:43:27 AM
Hmm, mayhaps the engines of commerce are loosening things up in China?

November 14, 2008
China Eases a Licensing Rule for Media

By DAVID BARBOZA
SHANGHAI — China agreed on Thursday to loosen restrictions on foreign news and information providers inside the country, settling a trade dispute with the United States, the European Union and Canada.

The agreement, which was signed in Geneva, allows international news and information agencies, like Bloomberg, Dow Jones & Company and Thomson Reuters, to more freely compete and sell their services inside China, where government controls were tightened in 2006.

The United States and European Union had filed a case against China at the World Trade Organization in March arguing that China unfairly required foreign news and financial information providers to be licensed by the Xinhua News Agency, a Chinese state-controlled entity that serves as the official outlet for the Communist Party and also a competitor of the foreign news companies. Canada later filed its own complaint against China.

According to the settlement, China agreed to remove the requirement that financial news providers be licensed by Xinhua and instead will set up an independent regulatory agency to oversee all financial news and information providers.

Foreign news and financial services companies are eager to sell their services into China’s booming financial services market, where a growing number of Chinese companies and government agencies are seeking valuable and timely news and financial information.

The United States trade representative, Susan C. Schwab, called the settlement a major step toward making financial information more widely available.

She said: “I am very pleased we have been able to sign an agreement with China today to allow financial information suppliers like Bloomberg, Dow Jones, Thomson Reuters to operate in China free of unfair restrictions that threatened to place them at a serious advantage.”

http://www.nytimes.com/2008/11/14/business/media/14media.html?_r=2&partner=rss&emc=rss&oref=slogin&oref=slogin

Title: WSJ: Laid off migrant workers returning to countryside
Post by: Crafty_Dog on December 03, 2008, 03:43:43 AM
By SHAI OSTER
SHUANGFU VILLAGE, China -- Fan Junchao has spent most of the past five years living hundreds of miles from his small family farm here. Encouraged by the local government, he leased out his meager plot and worked on construction crews in big cities, making several times what he could have earned on crops.

Laid off migrant workers across China are returning home to villages like Shuangfu, above.

Now his construction project has been halted, and Mr. Fan has returned home. "Right now, I don't have a plan," he says. "I'm just taking it one step at a time."

Mr. Fan is among hundreds of thousands of China's 130 million migrant workers -- known as the "floating population" -- being cast out of urban jobs in factories and at construction sites.

China's roaring industrial economy has been abruptly quieted by the effects of the global financial crisis. Rural provinces that supplied much of China's factory manpower are watching the beginnings of a wave of reverse migration that has the potential to shake the stability of the world's most populous nation.

Fast-rising unemployment has led to an unusual series of strikes and protests. Normally cautious government officials have offered quick concessions and talk openly of their worries about social unrest. Laid-off factory workers in Dongguan overturned patrol cars and clashed with police last Tuesday, and hundreds of taxis parked in front of a government office in nearby Chaozhou over the weekend, one of a series of driver protests.

On Wednesday, workers let go from a liquor factory in northern China mounted a protest in Beijing, at the parent company's headquarters. In the latest sign of economic stress, China's currency fell Monday by its single largest margin on record against the dollar, on expectations the central bank might devalue it to prop up sagging growth.

As the government tries to calm tensions in the cities, it also fears that newly unemployed migrants returning home could upend the already-strained social system in the countryside.

At a train station 30 miles from Mr. Fan's village, officials are keeping 24-hour tabs on arrivals to monitor how many of the surrounding area's two million migrants will return from industrial centers. Around 60,000 have already done so, they say -- and many more are expected, despite Beijing's efforts to persuade workers to stay in cities and train for potential new jobs.

Mr. Fan, a 55-year-old grandfather, helps support his grandchildren as well as himself and his wife -- and one of his two sons, now working as an apprentice after his factory wages were cut. Mr. Fan worries his other son, also a migrant worker, will next be out of a job. He offers guests cups of hot water instead of tea because he is trying to scrimp.

Many of the returning workers, like Mr. Fan, have too little income from the land to support their families. Beijing has been encouraging many to lease out their farms to more profitable cooperatives -- which don't share their increased earnings from the crops with the landholders -- at the same time it encouraged their moves into the cities, by loosening rules for doing both in the past few years. Those rules were formalized earlier this year.

 Chinese Migrant Workers Return Home
2:50
China's work force returns home to rural areas because of the slowing economy, but the land they used to subsist on is now being farmed by larger companies. (Dec. 1)
Others have no farms to come back to, having seen their land gobbled up by decades of previous Chinese urbanization drives, in which unscrupulous developers and corrupt officials often illegally seized peasants' land.

For workers accustomed to a decade of double-digit growth, China's sudden downturn has come as a shock to the system. Migrant workers -- estimated to make up a tenth of the country's population -- have powered China's economic success in the three decades since free-market reforms began.

They supply the low-cost labor for the country's rapidly growing infrastructure and dominant low-priced exports. The wages they send home have helped spread prosperity from the booming cities into the relatively poor countryside. But the global slump threatens a precarious balance if unemployment continues to grow. Already it has caused China's construction industry to seize up and prompted many factories that once churned out toys, electronics and clothing to cut work forces or close up shop.

Meng Jianzhu, China's minister of public security, told a conference of regional government officials late last month that there are "lots of social problems affecting stability under the current circumstances," the official Xinhua news agency reported. Among the major problems to address, Mr. Meng said: "Work should be improved on serving and managing the floating population." Beijing has been warning local officials to take extra efforts to ensure stability, focusing their efforts on re-employment programs.

National statistics on how many migrant workers have been laid off and returned home aren't available, but regional numbers are significant. Yin Weimin, minister of human resources and social security, estimated at a news conference this month that about 300,000 of the 6.8 million migrant workers from one province, Jiangxi, to the south of Mr. Fan's Anhui province, have returned home.

The situation "is continuing to develop, the number of rural migrant workers returning home is gradually increasing, and we are closely following this," he said. Other provinces have reported similar numbers.

Officials in the central province of Hubei estimate that they've also had 300,000 laid off workers come home just in the past two months. In Hubei's capital, Wuhan, officials estimate that the number will eventually total 600,000 in their city alone.

In Fuyang, the city nearest to Shuangfu, officials tracking returnees note that it's not easy for industrial workers to return to country life or work. "These aren't the same peasants like the peasants of yesterday," says an official from the city's Human Resource and Labor Bureau, stamping his foot one recent cold morning during a 12-hour shift outside the train station. "They don't raise crops, they have skills." He and other officials work to interview at least 200 migrants a day to find out their plans, where they're coming from and which they are returning to. The government also has had the chief local party official of each village conduct a regular head count of returnees.

Minutes after stepping off the train in Fuyang, 18-year-old Liang Wenzheng, just laid off from his job of three years on an electronics assembly line in Dongguan, shoulders his bags and surveys the future. "If I can't find a job, I'll have to farm at home. I don't want to do that -- I'm just 18," he said.

Migrant workers left their villages over the years because there was too little land for them to earn a decent living. China has roughly the same amount of farmable land as the U.S., where only 2% of workers are employed in agriculture. But China has some 730 million rural residents -- more than twice the entire American population.

Between 80 million and 100 million rural residents are either completely landless or don't have access to enough land for subsistence, estimates Joshua Muldavin, professor of geography and Asian studies at Sarah Lawrence College. "The increases right now with the large-scale return of peasants could add tens of millions to that," he says. "Its importance can't be exaggerated in China and internationally."

Despite China's recent prosperity, steamroller-flat Anhui province remains poor. The dirt road leading from the simple brick courtyard home Mr. Fan built heads past piles of charred old cloth shoes -- used as a cheap coal substitute for boiling tofu.

The newest change has come as farmers like Mr. Fan have rented their land to new agribusiness in a government-supported bid to boost rural incomes by combining farms into more efficient, modern operations. Mr. Fan two years ago transferred farming rights to three-fifths of his land -- which totals less than an acre -- to a new company established by a local government official to sell expensive, organically grown vegetables in greenhouses to supermarkets and hotels.

Mr. Fan, like others, got a standard price based on harvesting wheat, a staple but also an extremely cheap crop, while the cooperative has gone on to grow exotic vegetables that fetch higher prices from the new urban middle class.

Mr. Fan's rent from the farming company is about one-seventh what he was making in construction. His wife still supervises farming of the other portion. The combined income makes his family better off than some, but couldn't support his two sons, daughters-in-law and grandchildren.

Mr. Fan, a high-school graduate, was slow to leave his village even as others did. He learned how to be a bricklayer between harvests of wheat, soybeans and corn on his land, which was allocated to his and other families after China's farm communes were disbanded in the last 1970s.

In the mid-1990s, the government redistributed more land to farmers. It continued to keep ownership of the land public, but gave farmers long-term leases. Mr. Fan received one mu, a sixth of an acre, for each of the five people in his household -- himself, his wife, two sons and a grandparent. His family has doubled in size since then.

 After watching his neighbors return prosperous from city jobs for years, Mr. Fan in 2003 ventured hundreds of miles to work as a bricklayer in Heilongjiang province, on China's northern border with Russia. He gradually raised his bricklaying income from 30 yuan a day ($4.30) to 70 yuan.

In 2006, a medicine merchant in Shuangfu, Gao Dongfang, had an idea to raise more valuable vegetables on the village's land using techniques that the villagers didn't know about or couldn't afford. "We wanted to change the way things are done here," said his older brother, Gao Haifei. "It's always been wheat and beans, beans and wheat." The younger Mr. Gao obtained a post as village party secretary, and eventually consolidated 200 acres from farmers in neighboring villages. He brought in an expert from another agribusiness, who introduced vegetables like Israeli green peppers and Taiwanese eggplants.

The business, called Orient Modern Vegetable Cooperative, has earned up to 10 or more times the value from a given piece of land than villagers reaped using their traditional techniques and crops. Mr. Fan's wife signed a 10-year contract with the firm in 2006 while he was away working. The lease brings in 3,500 yuan per year, equal to $513.

This fall, Mr. Fan went to a new construction site, this time in Wuxi, a booming lakeside city near Shanghai. Days after he arrived to work on a 15-story, high-end apartment building, he started hearing rumors that the developer was having trouble selling apartments and wouldn't be able to pay his contractors. Two weeks later, the foreman of Mr. Fan's 40-man work team told them to collect their last paychecks and go home.

Mr. Fan now thinks a lot about his two sons, and what will happen if they also lose their current jobs. "I'm really worried," he says. He thought they would never have to farm again. They have worked as migrant laborers all their adult lives.

His younger son continues to work in a furniture factory. Older son Fan Yaxian, 29, is apprenticing as a truck driver after his factory wages were cut. "I don't know how to farm," Fan Yaxian says. He hopes to start his own small business.

Mr. Fan has no such aspirations. "I don't have a head for business," he says. "I can only go down the path of a migrant worker. If I can't be a migrant worker, I don't have any other ideas."

—Ellen Zhu in Shanghai and Andrew Batson in Beijing contributed to this article.
Write to Shai Oster at shai.oster@wsj.com

Title: WSJ: China's Democratic Charter
Post by: Crafty_Dog on December 12, 2008, 09:58:57 AM
China's democracy movement has moved in fits and starts since the 1989 Tiananmen Square massacre. But a manifesto issued this week marks a brave new chapter in the fight for political freedom.

More than 400 Chinese citizens living inside China published "Charter 08" on the Internet. The document calls for a new constitution to establish multiparty democracy and includes a scathing account of Communist rule. It describes its ambition for a political system in which the military, courts, schools and churches are accountable to the constitution rather than to a political party.

In a year that has seen a crackdown on political dissent, especially during the Olympics and March Tibet protests, this is a bold step, and the authors don't mince words: "Our political system continues to produce human rights disasters and social crises." It continues: "[A]s the ruling elite continues with impunity to crush and to strip away the rights of citizens to freedom, to property, and to the pursuit of happiness, we see the powerless in our society . . . becoming more militant and raising the possibility of a violent conflict of disastrous proportions. The decline of the current system has reached the point where change is no longer optional."

An introduction to the charter by American Sinologist Perry Link -- who translated it into English -- likens it to Charter 77, the document signed by Vaclav Havel and other Czechoslovakian dissidents in 1977. Like those dissidents, two signers of Charter 08 were detained by police this week and about a dozen have been questioned, according to Amnesty International.

The Czech dissidents waited 13 years to realize their democratic dream. In China, the reality of self-government also seems far off and Charter 08 won't produce immediate change. But the boldness and bravery of its statement suggest that the democrats' day will come.
Title: Free Speech in China?!?
Post by: Crafty_Dog on January 16, 2009, 10:21:49 PM
   
Geopolitical Diary: Freedom of Speech and Beijing's 'Test'
January 16, 2009
An article promoting freedom of speech in China — published on Wednesday in the Beijing Daily News, a periodical affiliated with the Beijing committee of the Communist Party of China (CPC) — was being circulated and discussed in China on Thursday. The piece, titled “Truth Cannot Be Pursued Without Freedom of Speech; ‘Authoritative Determination of Nature’ Should Be Avoided By All Means” and published in the paper’s “Theory Weekly” column, criticizes authorities who try to act as a “judge of truth” and stifle dissenting opinions. Written by Shen Minte, a professor at the Communication University of China, the article delivers a subtle warning to officials not to quiet alternative voices hastily; it also suggests, however, that tolerance for alternative voices does not justify alternative actions — only ideas.

The article notes that freedom of speech is guaranteed by the Chinese constitution, and cautions that one cannot determine whether speech is absurd, progressive or reactionary if it is never allowed to be vocalized. Shen links his call for freedom of speech to Mao Zedong’s support for “a hundred schools of thought contending” — though in this, Chen appears to be subtly criticizing the ultimate outcome of the ensuing “hundred flowers blooming” movement, in which open debate was finally crushed once it became too critical of the CPC.

Shen says it is only in the open, and through the lens of history, that alternative ideas can be judged. He warns that the biggest threat comes when some “authority” declares itself the “judge of truth” and the masses follow blindly, endorsing or condemning the ideas based solely on the judgment of vocal authorities rather than judging the truth themselves. He raises as examples Ma Yinchu and Zhang Zhixin, two early Party members who raised ideas fundamentally contrary to conventional wisdom or the actions of the Party. Ma warned of the dangers of excessive population growth, and Zhang criticized the Cultural Revolution. Both were criticized, quieted and punished — in Zhang’s case, executed — but years later were proven correct in their assessments and were rehabilitated.

In essence, Shen, in a Party-sanctioned paper, is calling for freedom of speech and debate inside the Party, along with a greater responsibility for the citizens of China to test what their officials say, and for those officials to listen more to the people. Shen makes it clear that he is not advocating freedom of action, but only of speech and debate. But his article is a strong criticism of the way some Chinese officials have acted in the past.

It is also a critique of China’s culture of official corruption. The article was published the same day the CPC Central Commission for Discipline Inspection (CCDI) called for greater efforts to crack down on corruption in 2009 and reported that nearly 5,000 officials above the county-head level had been investigated and penalized in the year ending in November 2008. Then on Thursday, Prim Minister Wen Jiabao, speaking to a conference of central and state agencies of the CPC, warned that China and the Party face a “test” in 2009 amid the global economic crisis. He called on Party members and government officials to be models of proper behavior and not to abuse their power or positions for personal gain, and to work together for economic growth.

For China’s central leadership, Shen’s message is both welcome and dangerous. Encouraging greater citizen oversight and more input is seen as a necessary tool to help rein in corruption and rebuild trust in the Party and government. In addition, the central government has been seeking a wider variety of inputs in policy-making from academia, research institutes and government think-tanks. At the same time, one of the government’s biggest fears is losing control of its citizens: of social unrest and organized opposition rising up and bringing down the Party.

As with the Beijing Daily News’ October 2006 publication of Yu Keping’s influential and controversial article, “Democracy Is A Good Thing,” Shen’s article is designed to stimulate debate, but keep things within manageable parameters. Both Shen and Yu made it a point in their articles to avoid overstating the case. Neither promotes the end of the Party or even radical reform — just gradual change within limits — and both caution that their ideas should not be taken too far. Yu praises democracy but also explains its shortfalls, while Shen warns that freedom of speech goes both ways, arguing that both sides need space to express themselves and that neither side should take action based solely on its own ideas.

The publication of articles such as these sheds light on the way the CPC is trying to cope with its role in a changing China. The CPC, to some extent, has outlived itself. Economic reforms and the social and political changes that go along with them are outpacing the Party. The CPC is no longer at the forefront of the ideology as it once was; it is no longer able simply to promise people economic improvement, as it did through the 1980s and into the 1990s. Instead, the Party is struggling for relevance at the center of a changed China. It has recognized the need to change, but many Party functionaries have devolved from the leaders of the people into a group of individuals who are stuck in a bureaucracy or living in a system of collusion, self-aggrandizement and personal power relationships.

This has left the CPC weak and unable to function as a unit. It also has reduced the stature of the Party as a whole in the eyes of the populace. The people may not be actively trying to overthrow the government, but neither do they have respect for it. When they are not allowed to express their opinions, their frustrations and tensions may explode into protest and violence. Yet when they are allowed to express themselves, that too can become a threat to the Party itself.

This is Beijing’s dilemma. The Party cannot allow open opposition — but neither can it retain the loyalty of the people, and its own authority, if it does not allow the people to keep the officials honest.

Articles like Shen’s are exposing the failures and weaknesses of the Party, and are calling for gradual change (at least in mindset). However, they also are being used to try to revive the Party, and to try to help it adapt to a changed China. Beijing’s hope is to build some sense of public oversight to hold the Party officials accountable, but without actually allowing the people to challenge the authority of the CPC.

It is not an easy balance to strike, and in the end it may not work. But there are those in the CPC who know that if the Party does not change and adapt, it will die.

Tell Stratfor What You Think
 
Title: China Cooks the Books?
Post by: Body-by-Guinness on January 22, 2009, 11:59:10 AM
January 22, 2009
The Truth About China's Growth
by Derek Scissors, Ph.D.
WebMemo #2238
China just announced its economic results for 2008. The headline real GDP growth figure was 9.0 percent, featuring a drop to 6.8 percent, year-on-year, in the fourth quarter.The only thing certain about these figures is that they are wrong.

Almost every year, all Chinese provinces report larger GDP gains than the already-published national "average." This trend held true for the first three quarters of 2008.[1] Over the past decade, all counties within a province have frequently reported larger gains than the provincial "average." Similarly, basic macroeconomic accounting, such as that used to calculate the components of GDP, does not work with China's numbers. For political reasons, the PRC knowingly measures a crucial figure for unemployment incorrectly, understating the amount by a factor of two or three.

Beijing purports to be able to complete its annual economic surveys in less than half the time required by the U.S., despite having one billion more people to account for and much less in the way of resources with which to do so. Not surprisingly, then, China now calculates 2007 real GDP growth at 13.0 percent, having first estimated 11.4 percent. These revisions have important implications for assessing the 2008 data.

Official data on the economy are whatever the Communist Party wants--close to the mark, too low, or too high.[2] While surety is impossible, the available evidence indicates true growth for 2008 is far lower than officially announced. Reasons for general cynicism stem from deliberate obfuscation and internal inconsistency in official statistics. Reason to believe official GDP growth is greatly overstated come from old official statistics on GDP and power consumption.

More Reasons for Cynicism

Official GDP is 30.07 trillion yuan (about $4.4 trillion). The revised figure for 2007 was 25.73 trillion yuan.[3] This is a nominal growth rate of 16.9 percent and, thus, an implicit GDP deflator of 7.9 percent. The latter is considerably larger than the 5.9 percent increase in the official consumer price index but not wildly larger. So far, so good.

For the fourth quarter, official data imply GDP was 9.90 trillion yuan. However, this cannot be directly compared to GDP for the fourth quarter of 2007 because there is no revision available for the individual quarters of 2007 but only for the full year. This has been true since China began revising data in 2005--basic quarterly GDP cannot be verified.

Worse, the same is true for all major parts of the economy. Investment and consumption were presumably revised for 2007 because GDP was revised. But changes in these components were not announced, so their fourth-quarter growth cannot be determined either. For that matter, it is not known if official growth for the first three quarters is still correct, for GDP or anything else. Nor will these figures be released in systematic fashion later. Some follow-on revisions spill out unannounced at random times; some are never made public. Chinese economic data is permanently unverifiable.

Consumption Illusion

On closer inspection, the picture is no better. The benchmark measure for consumption is retail sales. This is followed with great interest within and without China on hopes that consumption will begin to drive the Chinese and even the world economy. In the fourth quarter, global consumption took a heavy blow, but implied (from incomplete revisions) growth in Chinese retail sales was over 20 percent, on-year. For 2008 as a whole, retail sales soared 21.6 percent. This is a 13-year high and considerably faster than the (unrevised) 16.8 percent rise in 2007.[4]

Unfortunately, such an increase is very hard to believe. Passenger car sales added 7.3 percent in 2008, much slower than the 21.7 percent jump registered in 2007.[5] Sales of residential real estate plunged an unprecedented 21 percent through November.[6] What are Chinese consumers buying? Not imports. Import volume--the only verifiable element of consumption--fell 8.8 percent in the fourth quarter.

While all this is disturbing, there is a more fundamental problem. Per capita rural income was said to climb 15 percent in 2008 while per capita urban income climbed 14.5 percent. Real urban income somehow accelerated noticeably in the fourth quarter though GDP decelerated sharply. Even if that is true, incomes trailed sales by a good margin.

This should indicate that personal savings growth was small, as most income went to spending. But household deposits soared 26.6 percent. Individual Chinese are said to be both spending and saving much faster than they earn.[7] Moreover, saving was said to sharply accelerate while the economy slowed--as to be expected--yet retail sales still hardly slipped at all. In this light, it is difficult to credit rapid consumption gains.

Knockout Blow from Power

The Chinese economy's last serious slump was during the Asian financial crisis. It is now widely accepted that official GDP growth for 1998 and perhaps 1999 was heavily exaggerated. Evidence was first found in power consumption growth, which dropped like a stone in the late 1990s while GDP growth merely moderated. Last year was 1998 all over again.

An Official Discrepancy (percent change)[8]

Year

GDP Growth

Power Consumption Growth

2003

10.0

15.4

2004

10.1

14.9

2005

9.9

13.5

2006

11.1

14.0

2007

13.0

14.8

2008

9.0

5.2

The present boom started in 2003. The speed of GDP growth has been catching up to power consumption growth since then. Nonetheless, GDP growth has been below power consumption growth all through the boom, even with the large upward revision in 2007 GDP. In 2008, though, as the economy came under duress, GDP was suddenly much faster than power consumption.[9] The fourth quarter was far starker: GDP growth was said to hold 6.8 percent even while power demand contracted an (unweighted) 6.7 percent.[10]

Electricity consumption cannot be magically slashed from year to year, much less quarter to quarter. If it could, China's excessive coal use would long since have been resolved. Based on power consumption, a reasonable figure for 2008 annual growth is 6 percent with very little growth in the fourth quarter.

Rescuing Official Numbers, Partly

Is there anything useful to be gleaned from official statistics? A simple way to extract some value is to consider them one quarter ahead. In a difficult data-gathering environment, China presses statistics personnel to reach remote areas and adjudicate regional boasts in just three weeks after a quarter ends. Most likely, survey information gathered ostensibly for the quarter in question more accurately reflects the previous quarter.

This would explain much. One quarter's worth of 6.8 percent growth should not have caused six million migrants to lose their jobs already or pushed urban unemployment to 9.4 percent by the end of November.[11] But if growth had already fallen to 6.8 percent in the third quarter then, considering power consumption and imports, fell toward zero in the fourth quarter, the spike in unemployment is sensible. So is the increasingly frantic response of Chinese policy-makers starting in October.

This analysis only goes so far. Official growth for the first quarter of 2009 may better reflect the fourth quarter of 2008, but the Party will never acknowledge it as close to zero. More tea leaves will need to be read three months from now. Nonetheless, a reasonable profile of 2008 growth stands at roughly 10 percent in the first quarter, 9 percent in the second, 7 percent in the third, and 1 percent in the fourth.

The world is going to hear endlessly that, while China is slowing, it is still the fastest-growing economy and other countries would do well to learn from its example. It is closer to the truth that China has suffered more from the financial crisis than any other country in terms of lost growth and jobs.

Among other things, China's economic difficulties have implications for Sino-American trade relations and the Strategic Economic Dialogue (SED), now under review by the new American Administration. Our nation needs a mechanism like the SED, but the U.S. needs to focus it on what are now the most salient parts of the economic relationship, such as Chinese energy price liberalization and access to sheltered industries for foreign companies. Official statistics notwithstanding, China is not a crisis-resistant model of growth and prosperity. The true picture demonstrates continued scope for dialogue grounded in free market principles. 

Derek Scissors, Ph.D., is Research Fellow in Asia Economic Policy in the Asian Studies Center at the Heritage Foundation.

http://www.heritage.org/Research/AsiaandthePacific/wm2238.cfm
Title: Stratfor: China looking grim?
Post by: Crafty_Dog on January 23, 2009, 09:36:34 PM
Geopolitical Diary: For China, Grim Data and a Grimmer Economy

January 23, 2009

China’s National Bureau of Statistics on Thursday released preliminary gross domestic product (GDP) figures for 2008. According to the report, the country’s economy expanded by 6.8 percent in the fourth quarter of 2008, compared to the same quarter a year earlier. This marks a further drop from the 10.6 percent growth year-on-year in the first quarter, 10.1 percent in the second quarter and 9.0 percent in the third quarter. For the whole of 2008, China’s GDP grew just 9 percent — marking the first time annual growth has fallen into the single digits since 2003, and the lowest annual GDP figure since 2001. Moreover, China’s 2007 GDP growth rate was recently revised to 13 percent, the highest in more than a decade.

China needs high growth rates much more than other countries do. The legitimacy of the government is derived primarily from its ability to stimulate and maintain economic growth, which in China is synonymous with employment. Should that fail, the Chinese people tend to take issue with their leaders, as evidenced by the repetition of social revolutions in Chinese history.

Many Chinese policymakers use 8 percent GDP growth as a rule-of-thumb measure for basic stability — the level needed to absorb the roughly 2 million new workers who enter the labor pool every year. Chinese leaders believe this is the level of growth needed to keep social pressures from exploding. So long as everyone has a job, Beijing does not worry overmuch about details like financial efficiency, profitability or transparency.

The same goes for accuracy, and Stratfor tends not to trust Chinese statistics. The regional data that local officials generate is not particularly reliable; stories abound about instances of padding data to make local statistics more impressive. This flawed data is then fed into the national statistics.

Chinese leaders in the late 1990s — particularly then-Premier Zhu Rongji — recognized that China’s economic statistics collection methods were fundamentally flawed. Leaders did not have a true picture of the Chinese economy, leaving them unable to manage growth and economic stability effectively. An effort began in 2000 to use statistical methods recommended by the Organization for Economic Cooperation and Development — but even with a good-faith effort, getting everything straightened out in less than a decade would be (and has proven) nearly impossible.

The Chinese economy is rapidly evolving from an overpopulated, agrarian subsistence economy to a hybridized industrial economy complete with large populations of roving migrants. The type of data that needs to be collected amid such a transformation changes more rapidly than new collection systems can be developed. In such an environment, collecting the right types of information accurately is, at best, a Herculean task, and each change in the process results in massive adjustments to previous estimates.

The severe downturn in the Chinese growth rates — admitted by a country known for massaging numbers — suggests things may be far worse than the headline 6.8 percent figure. Indeed, Stratfor sources peppered throughout China’s electronics, textiles, retail, energy, aviation and manufacturing sectors are painting a sobering picture. Exports to established markets are failing, foreign investors are desperate to find non-Chinese alternatives, protests by unemployed and underemployed workers are being reported by the state-controlled media. In general, the country is under severe stress from top to bottom.

The last time major contractions in China’s growth came in 2001 and 2003, and in those cases, Beijing simply reverted to its tried-and-true methods of subsidization of exports and a focus on gross revenues over profits. In recent years, the Chinese leadership has sought to reshape at least parts of the economic structure — using high growth rates as a way to compensate for the social and financial impact of industrial consolidation, increased labor costs and an attempt to push its exports up the value chain — while also seeking to boost domestic consumption as a component of economic activity.

But with the global economic downturn, China is losing export markets. It is holding onto significantly devalued stockpiles of primary commodities and primary products (such as steel) that were bought and manufactured during a commodity boom. It is slowing imports from regional partners — whose resulting drop in revenues will in return dry up much of China’s incoming foreign investment, another key component of economic growth and job formation.

China’s leadership is facing compounding problems and scrambling — desperately — for solutions. Compared to previous crises, they are off the map.

Title: Re: China
Post by: G M on January 24, 2009, 06:19:23 AM
I think things could get very ugly very quickly in China. All it will take is the right spark.
Title: Bond, Debt, and China
Post by: Body-by-Guinness on January 27, 2009, 12:33:48 PM
January 27, 2009
The U.S.–China Economic Relationship: In Need of Counseling, Not Divorce
by Derek Scissors, Ph.D.
WebMemo #2249
The process of demonizing the U.S.-China economic relationship has begun. It is being called out both as principally responsible for our nation's economic turmoil and as driven largely by devastating Chinese policies. There is certainly bad Chinese policy to be found. The yuan is misaligned and, more important, the People's Republic of China's (PRC's) tight controls on capital movement caused global economic adjustment to be more violent than it should have been.

Unfortunately, bad American economic policy made a proportionally greater contribution to this crisis. It is vital to recall that America's economy is much bigger than China's. The U.S. is the heart of the global economy. Moreover, there are many core benefits of the Sino-American economic relationship, benefits now being recognized even by some of China's harshest critics. On the U.S. side, these benefits include cheaper goods and still-cheap capital, simultaneously, a rare and valuable combination.

Blaming China First

For his congressional confirmation hearings, Treasury Secretary-designate Timothy Geithner submitted written testimony indicating that President Obama considers China to be manipulating its currency.[1] This testimony should be considered the first shot in a trade battle that has been looming since the start of the current economic crisis.[2]

Geithner's comments immediately sparked a debate over the role of Chinese policy in U.S. economic performance, with assessments ranging from principal blame for the PRC to no blame at all for the PRC.[3] One of the reasons for the sharp divergence in views is the availability of easy targets when attacking Chinese economic policy.

From the end of 2004 to the end of 2008, the yuan climbed more than 17 percent against the dollar and more than 14 percent against the euro.[4] In the same period, however, China's overall trade surplus went from $32 billion to $295 billion, an increase of more than 800 percent.[5] The currency movement has been insufficient.[6]

Another source of confusion is the, sometimes belated, recognition that the U.S. gains even from bad Chinese policy. One reason for the dangerous explosion in easy credit in the U.S. was the Chinese buying American bonds with proceeds from their massive trade surplus. This recycling was forced ultimately by the PRC's capital controls, whereby the foreign currency earned from exports cannot be freely used within China. Such currency can only be spent abroad and American bonds are the only market that can absorb $250 billion or more each year.

The closed-capital account has been trumpeted for years in Beijing as a great contributor to stability. As with all state attempts to control the market, it merely postponed the day of reckoning. Rather than addressing the ongoing minor instability of free capital movement across its borders, the closed-capital account and forced recycling contributed to the biggest patch of instability for the PRC since Tiananmen Square.

But Chinese politicians are not the only ones caught on their own hook. The principal advocates of trade action against China may have just recognized that the trade deficit the U.S. runs finances Chinese purchases of American bonds. Consequently, such purchases may now appear indispensable in light of plans to greatly expand the U.S. budget deficit.[7]

Contradictions

There is rhetorical and policy inconsistency on both sides of the Pacific because assigning blame runs headlong into the fact the U.S. and China both want to enjoy the benefits of their irresponsibility.

The inadequate American savings the PRC has harped on for years effectively sustained millions of Chinese jobs--jobs Beijing is desperate to keep.[8] In fact, despite its massive 2008 trade surplus, China is looking to boost exports further, relying on foreign consumption for still more help.[9]

On the U.S. side, Chinese purchases of American bonds will support the "pump-priming" designed by the Obama Administration. But American gains from the relationship go beyond that. Chinese exports to the U.S. are led by consumer electronics--computers, phones, and televisions. Clothing and textiles are the other major component.[10] Competition and products from the PRC have yielded lower prices and higher quality for American consumers, developments that are welcome when times are good and more urgent now that household income is stagnant or dropping.

It is a mistake, though, to translate these gains for the U.S. into a belief that China has disproportionate influence over the American economy. In 2007, the PRC's exports to the U.S. were equivalent to 2.3 percent of American GDP; they were 9.1 percent of Chinese GDP.[11] China's holdings stood at 5.3 percent of U.S. public debt securities on the most recent measure and much less than that when private debt is included.[12]

Just as important is the nature of the bilateral economic relationship. Fannie Mae and Freddie Mac do not sell debt to finance U.S. government intervention in the housing market; China cannot buy that debt, no matter how many dollars Beijing holds. The same is true of the bonds sold to finance U.S. federal deficit. If Americans choose not to buy as many goods, the PRC cannot sell as many, no matter how high production goes. There are plenty of substitutes for Chinese goods and capital, even if, at higher prices, there is no substitute for the American bond market and consumer.

The U.S. has benefited from Chinese over-saving, and China, from American under-saving. Poor policies on both sides of the Pacific led to excess and the current crisis. But it is inaccurate and potentially dangerous to lay most of this at the feet of the Chinese. Yes, the PRC shares blame for the global imbalance that is now unwinding. Given the size and centrality of the American economy, the problem and the solution start in the U.S. To determine otherwise is to trust, mistakenly, our nation's economic fate to others and risk a trade war in the bargain.

Derek Scissors, Ph.D., is Research Fellow in Asia Economic Policy in the Asian Studies Center at the Heritage Foundation.


[1]"China's Yuan 'Manipulation' an Issue--Geithner," Reuters, January 21, 2009, at http://www.reuters.com/article/usDollarRpt/idUSN2148652720090121 (January 26, 2009).

[2]Derek Scissors, "The Coming U.S.-China Trade Conflict," Heritage Foundation WebMemo No. 2172, December 12, 2008, at http://www.heritage.org
/Research/AsiaandthePacific/wm2172.cfm (January 26, 2009).

[3]Sebastian Mallaby, "What OPEC Teaches China," The Washington Post, January 25, 2009, at http://www.washingtonpost.com/wp-
dyn/content/article/2009/01/23/AR2009012303291.html (January 26, 2009); Bret Swanson, "Geithner Is Exactly Wrong On China Trade," The Wall Street Journal, January 26, 2009, at http://online.wsj.com/article/SB123293057464414089.html (January 26, 2009).

[4]"FXHistory: Historical Currency Exchange Rates," Oanda.Com, at http://www.oanda.com/convert/fxhistory (January 26, 2009).

[5]China Monthly Statistics, Vol. 12, 2004.

[6]This is not the same as manipulation. As with so many of its policies, China's currency policy is dictated by obsession with stability. A relatively minor shift in July 2005 aside, the yuan has not changed since the 1994 devaluation. The stability obsession was very useful to the U.S. during the Asian financial crisis. What has changed since then is primarily U.S. goals for Chinese currency policy, not the policy itself.

[7]Joseph J. Schatz, "Geithner Signals Change in Policy on China Currency," Yahoo News, January 22, 2009, at http://news.yahoo.co
m/s/cq/20090122/pl_cq_politics/politics3016257_1 (January 26, 2009).

[8]"Mood Not Bullish as China Greats Year of the Ox," Google News, January 25, 2009, at http://www.google.com/hostednews/afp/article/A
LeqM5ixfonH0Ud6wKGldX4fHpW1spnJxQ (January 26, 2009).

[9]"More Textile Export Rebates Soon," China Economic Net, November 21, 2008, at http://en.ce.cn/Industries/Consumen-
Industries/200811/21/t20081121_17458415.shtml (January 26, 2009).

[10]U.S. Census Bureau, U.S. International Trade Statistics, see "China (mainland)," at http://censtats.census.gov/sitc/sitc.shtml (January 27, 2009).

[11]Eugene P. Sesky and Shelly Smith, "Annual Revision of the National Income and Product Accounts," U.S. Department of Commerce, Bureau of Economic Analysis, August 2008, at http://www.bea.gov/scb/pdf/2008/08%
20August/0808_nipa_annrev.pdf (January 26, 2009); and

"China 2007 GDP Growth Revised up to 13%," China Daily, January 14, 2009, at http://www.chinadaily.com.cn/china/2009-01/14/content_7396604.htm (January 26, 2009), and

U.S. Census Bureau, U.S. International Trade Statistics, see: China (mainland), at http://censtats.census.gov/sitc/sitc.shtml (January 27, 2009).

[12]Wayne M. Morrison, et al., "China's Holdings of U.S. Securities: Implications for the U.S. Economy," Congressional Research Service, January 9, 2008, at http://fpc.state.gov/documents/organization/99496.pdf (January 26, 2009).

http://www.heritage.org/Research/AsiaandthePacific/wm2249.cfm
Title: Re: China
Post by: HUSS on January 27, 2009, 03:08:07 PM
When all else fails, blame China

Timothy Geithner, the nominee for US Treasury Secretary, has risked damaging the global economy even before his confirmation by the full Senate. In a written answer to questions from US senators, Geithner said: "President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency". In the US, the words "currency manipulation" are fighting words. If the US administration were to formally name China as a currency manipulator, a range of trade sanctions could be imposed by the US government.
The threat to world trade comes from the Omnibus Trade and Competitiveness Act of 1988. The section dealing with the exchange rate, bilateral current account balances and the overall current account balance is a monument to economic illiteracy.

Under the Omnibus Trade and Competitiveness Act of 1988, "The Secretary of the Treasury shall analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade."

"If the Secretary considers that such manipulation is occurring with respect to countries that (1) have material global current account surpluses; and (2) have significant bilateral trade surpluses with the United States, the Secretary of the Treasury shall take action to initiate negotiations with such foreign countries on an expedited basis, in the International Monetary Fund or bilaterally, for the purpose of ensuring that such countries regularly and promptly adjust the rate of exchange between their currencies and the United States dollar to permit effective balance of payments adjustments and to eliminate the unfair advantage."
Should the US Treasury officially determine China to be a currency manipulator, the US Administration can unleash a range of remedies, including antidumping measures, countervailing duties, and safeguards. Although the World Trade Organization permits certain retaliatory responses from importing nations which can prove that they suffered material injury due to unfair trade practices, much of what the US Congress and some members of the Obama administration have in mind is likely to be in clear violation of the United States' WTO obligations. It would certainly provoke a response from China. The bilateral trade war that is likely to result could easily spread to the EU, Japan and emerging markets outside China.

Overall and bilateral current account imbalances and nominal and real, bilateral and effective exchange rates

The overall current account deficit of the US is the excess of US domestic investment over US national saving. The overall current account surplus of China is the excess of China's national saving over China's domestic investment. Bilateral trade balances are of no economic interest, unless there are only two countries in the world. Note that the first quote from the Omnibus Trade and Competitiveness Act of 1988 slides seamlessly from overall current account imbalances to bilateral trade imbalances, ignoring the transfer payments and foreign investment income items that are included in the current account but not in the trade balance. Trade balances and current account balances (bilateral or aggregate) can and do move in opposite directions.

There is no reason in economic theory or empirical fact why there should be any reliable correlation, between nominal exchange rates (bilateral or trade-weighted (effective) ) and the bilateral or aggregage trade balance, let alone a clear causal connection from any nominal exchange rate to the trade balance. Certain kinds of shocks and policy actions may produce an empirical association (not a causal relation) between a depreciation of the effective (trade-weighted) real exchange rate and an increase in the aggregate trade surplus. This is the case, for instance, for most aggregate demand shocks, e.g those produced by contractionary Keynesian fiscal policies. But supply shocks may produce the opposite correlation, that is, a depreciation of the effective real exchange rate and a reduction in the aggregate trade balance surplus.

In any case, as Chart 1 below shows, there has been a steady appreciation of the real effective exchange rate of the Yuan since the beginning of 2005. JP Morgan's broad real effective exchange rate index for the Yuan shows a 27 percent real appreciation since December 2004. The from a macroeconomic perspective uninteresting nominal bilateral US$-Yuan exchange rate appreciated 21 percent over the same period. 

http://blogs.ft.com/maverecon/2009/01/when-all-else-fails-blame-china/
Title: China Broadcasting System?
Post by: Body-by-Guinness on February 04, 2009, 09:16:59 AM
First time I've encountered this source, and am suspicious of inside info out of China's politburo, but the piece is intriguing.

China: Beijing Plans to Infiltrate Mainstream Western Media(to buy & control failing MSM)
Boxun ^ | 01/28/09

Beijing Plans to Infiltrate Mainstream Western Media

By chinafreepress.org (translation)

Jan 28, 2009 - 11:06:03 AM

Boxun Exclusive

In mid-January 2009, a week before Chinese New Year, the Politburo of the Central Committee of the Chinese Communist Party held a meeting to discuss its plan for foreign propaganda work in the year to come. It summarized the past decade's progress in co-opting international Chinese-language media into doing the propaganda work of the Chinese Communist Party.

The Politburo decided that in addition to continuing its Chinese-language international image promotion, it plans to infiltrate and influence mainstream Western media. The meeting cited the example of the Russian former KGB officer and present tycoon who has purchase the defunct British newspaper The Evening Standard. This overt an approach is undesirable, the meeting concluded, and instead influential overseas Chinese in the media business should be utilized to purchase and operate mainstream Western media organs.

The spring 2008 coverage of the uprising in Tibet by CNN and other Western mainstream media organs sounded an alarm. China's Politburo concluded that it must counter this by infiltrating and influencing Western coverage of China and China's image in the international media.

The opportunity is presently ripe because of the downturn in the world economy. Many media organizations are in economic difficulty, even going bankrupt, and they can be purchased and it will look like an investment and business opportunity and not the attempt of the Chinese government to infiltrate Western media organs and influence Western popular opinion toward China that it is.

Full Chinese report at:

http://news.boxun.com/news/gb/china/2009/01/200901280838.shtml

http://www.boxun.us/news/publish/chinanews/Beijing_Plans_to_Infiltrate_Mainstream_Western_Media.shtml
Title: The PLAN probes Barry for signs of a spine
Post by: G M on March 09, 2009, 10:05:59 AM
http://www.nypost.com/php/pfriendly/print.php?url=http://www.nypost.com/seven/03092009/news/worldnews/pentagon__chinese_ships_harassing_us_ves_158763.htm

PENTAGON: CHINESE SHIPS HARASSING U.S. VESSELS
By CLEMENTE LISI


March 9, 2009 --
WASHINGTON - Five Chinese vessels "shadowed and aggressively maneuvered'' towards a US Navy ship in the South China Sea -- at one point closing to within 25 feet of the boat, the Pentagon said today.

The US ship was operated by a civilian crew under contract with the Defense Department.

The Chinese vessels "shadowed and aggressively maneuvered in dangerously close proximity" to the USS Impeccable, which was conducting routine operations Sunday in international waters, the Defense Department said.

The Defense Department identified the Chinese vessels as a Navy intelligence ship, a bureau of maritime fisheries patrol vessel, a state oceanographic administration boat and two other small patrol vessels.

Two Chinese vessels surrounded the Impeccable, while two closed to within 50 feet waving Chinese flags and telling the US Navy ship to leave at once. The Navy ship responded by spraying one of the vessels with its fire hoses, but the Chinese ship responded by closing in further to within 25 feet.

US officials said the Impeccable informed the Chinese ships by radio that it was leaving the area and requested a safe path to navigate. That's when two of the Chinese vessels stopped directly in front of the American ship and dropped pieces of wood in its path, according to the Defense Department.

The US ship was eventually allowed to leave.

"We will be certainly letting the Chinese officials know of our displeasure with respect to this careless and reckless, unprofessional ... maneuver," said Pentagon spokesman Bryan Whitman.

U.S. officials said a protest was to be delivered to Beijing's military attache at a Pentagon meeting today.

"The unprofessional maneuvers by Chinese vessels violated the requirement under international law to operate with due regard for the rights and safety of other lawful users of the ocean," said Marine Maj. Stewart Upton, a Pentagon spokesman.

The incident came just a week after China and the U.S. resumed military-to-military consultations following a five-month suspension over American arms sales to Taiwan.

It also comes as Chinese Foreign Minister Yang Jiechi is due in Washington this week to meet with U.S. officials.

And it brings to mind the first foreign policy crisis that former President George Bush suffered with Beijing shortly after he took office - China's forced landing of a spy plane and seizure of the crew in April of 2001.

The Pentagon said the incident came after several other incidents involving the Impeccable and another U.S. vessel Wednesday, Thursday and Saturday.

It described those as the following:

- On Wednesday, a Chinese Bureau of Fisheries Patrol vessel used a high-intensity spotlight to illuminate the entire length of the ocean surveillance ship USNS Victorious several times as it was operating in the Yellow Sea, about 125 nautical miles (231 kilometers) from China's coast, the Pentagon said, adding that the Chinese ship Victorious' bow at a range of about 1400 yards (1,280 meters) in darkness without notice or warning. The next day, a Chinese Y-12 maritime surveillance aircraft conducted 12 fly-bys of Victorious at an altitude of about 400 feet and a range of 500 yards. (457 meters)

- On Thursday, a Chinese frigate approached USNS Impeccable without warning and crossed its bow at a range of approximately 100 yards (91 meters), the Pentagon said. This was followed less than two hours later by a Chinese Y-12 aircraft conducting 11 fly-bys of Impeccable at an altitude of 600 feet (183 meters) and a range from 100-300 feet. The frigate then crossed Impeccable's bow yet again, this time at a range of approximately 400-500 yards (366 meters-457 meters) without rendering courtesy or notice of her intentions.

- On Saturday, a Chinese intelligence collection ship challenged USNS Impeccable over bridge-to-bridge radio, calling her operations illegal and directing Impeccable to leave the area or "suffer the consequences."

With Post wire services
Title: Re: China
Post by: G M on March 09, 2009, 10:33:18 AM
Clinton Urges Continued Investment in U.S.
By Glenn Kessler
Washington Post Staff Writer
Monday, February 23, 2009; A12

BEIJING, Feb. 22 -- Secretary of State Hillary Rodham Clinton on Sunday urged China to keep investing its substantial foreign-exchange reserves in U.S. Treasury securities, arguing that "we are truly going to rise or fall together."

China is the biggest foreign holder of U.S. debt, which helped finance the spending binge the United States went on before the current economic crisis. Some experts have expressed concern that China's substantial holding of U.S. debt gives it increased leverage in dealings with Washington because any halt in Chinese purchases would make it more difficult to finance the government bailout and stimulus packages.

Clinton, in unusually direct comments during an interview with China's Dragon TV before returning to Washington, said that reality made it an imperative for China to keep purchasing U.S. Treasury bonds, because otherwise the U.S. economy would not recover and China would suffer as well.

"Our economies are so intertwined," she said. "The Chinese know that in order to start exporting again to its biggest market . . . the United States has to take some drastic measures with the stimulus package. We have to incur more debt."

"The Chinese are recognizing our interconnection," Clinton added. "We are truly going to rise or fall together. By continuing to support American Treasury instruments, the Chinese are recognizing" that interconnection.

At a joint news conference with Clinton on Saturday, Foreign Minister Yang Jiechi sidestepped a question about whether China was looking for alternative investments for its foreign exchange reserves. He said China looks for safety, good value and liquidity for its investments.

Treasury bonds are "a good investment [and] a safe investment," Clinton told the interviewer Sunday.
Title: Oh, really? answer the Chinese
Post by: Crafty_Dog on March 09, 2009, 10:45:23 AM
Chinese political advisors propose making yuan an int'l currency
www.chinaview.cn  2009-03-07 20:18:22  Print


NPC, CPPCC Annual Sessions 2009
Special Report: Global Financial Crisis

BEIJING, March 7 (Xinhua) -- China should speed up reforming its financial system to make the yuan an international currency, said political advisors Saturday.

"A significant inspiration to draw from the global financial crisis is that we must play an active role in the reconstruction of the international financial order," said Peter Kwong Ching Woo, chairman of the Hong Kong-based Wharf (Holdings) Limited.

The key to financial reform is to make the yuan an international currency, said Woo in a speech to the Second Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the country's top political advisory body.
That means using the Chinese currency to settle international trade payments, allowing the yuan freely convertible on the capital account and making it an international reserve currency, he said.

China's yuan, or Renminbi, can be freely convertible on the current account but not on the capital account, preventing it from being a reserve currency or a choice in international trade settlement. China has announced trial programs to settle trade in the yuan, a move analysts say will facilitate foreign trade as Chinese exporters might face losses if they continue to be paid in the U.S. dollar. The dollar's exchange rate has become more volatile since the global financial crisis. Economists say the move will increase the acceptance of the currency in Asia, which will help it become an international currency in the long run.

The status of the yuan as an international currency will benefit China by giving it a bigger say in world financial issues and reducing the reliance of its huge foreign reserves on the U.S. dollar, some analysts say.

Other analysts argue a fully convertible yuan will hurt China as it would allow massive capital outflow during a financial crisis.
Meanwhile, Chinese authorities remain cautious.

It's possible that the global financial crisis will facilitate the process of making the yuan internationally accepted, but there's no need to push for that, Yi Gang, vice central bank governor, told Xinhua earlier this month. That process should be conducive to all sides, he said.

Xu Shanda, former vice director of the State Administration of Taxation and a CPPCC National Committee member, urged for faster paces in making the yuan an international currency as a way of increasing national wealth. He said the United States and the European Union have obtained hefty royalties from the international use of their currencies while China has become the biggest source of that income.

A royalty, or seignior age, results from the difference between the cost of printing currency and the face value of the money.
"China's loss due to royalty payment has far exceeded the benefit of not making the yuan an international currency," he said in a speech to the annual session of the CPPCC National Committee, without elaborating. China's State Council, or Cabinet, said last December it would allow the yuan to be used for settlement between the country's two economic powerhouses -- Guangdong Province and the Yangtze River Delta -- and the special administrative regions of Hong Kong and Macao. Meanwhile, exporters in Guangxi Zhuang Autonomous Region and Yunnan Province will be allowed to use Renminbi to settle trade payments with ASEAN (Association of Southeast Asian Nations) members.
Title: Re: China
Post by: G M on March 09, 2009, 10:52:54 AM
China knows that they can push Obamerica around. I wonder what the button Hillary gave them said....

Sorry Taiwan, Hong Kong. You are on your own now.
Title: Re: China
Post by: G M on March 09, 2009, 11:17:06 AM
"U.S. Hegemony Ends"   
By William R. Hawkins
FrontPageMagazine.com | Monday, March 09, 2009

The United States and the People’s Republic of China resumed military-to-military talks February 27-28 in Beijing. The tone of the Defense Policy Coordination Talks (DPCT) showed the same American desire to accommodate China’s rise to peer power status that was shown a week earlier by Secretary of State Hillary Clinton’s trip to the Chinese capital.

Deputy Assistant Secretary of Defense David Sedney, a hold over from the Bush Administration, led the U.S. delegation that included officials from the Defense Department, the State Department, the Pacific Command and the Joint Chiefs of Staff. Among the Chinese participants were mid-level officers from the People’s Liberation Army, navy and air force as well as some civilians termed “military scholars.” Sedney held 13 hours of talks on Feb. 27 with a delegation led by Maj. Gen. Qian Lihua, the Chinese Defense Ministry's head of foreign affairs. A shorter meeting took place the next morning with Lt. Gen. Ma Xiaotian, deputy chief of the General Staff for the PLA.

This was the fifth meeting of the DPTT since its inception in 2005. China had suspended most military contacts last October over Washington's agreement to sell $6.5 billion in advanced weaponry to Taiwan, the self-governing island democracy that the mainland Communist regime claims is a renegade province. When Sedney journeyed to Beijing last December to ask that the DPCT meetings resume, he was turned down. China’s leaders were clearly waiting for the Obama Administration to take office.

Beijing took a hard line towards the talks. China’s state-run news agency Xinhua quoted Maj. Gen. Qian as saying that contacts would remain tenuous unless the U.S. removes remaining obstacles to improvement. “China-U.S. military relations still stay at a difficult period. We expect the U.S. side to take concrete measures for the resumption and development of our military ties,” said Qian.

The Obama administration seems in the mood to make concessions. After the DPCT meeting, Sedney told a news conference, “The focus was not at all on obstacles. The focus was on how we can move forward, how we can make progress, and how we can try to make joint efforts...to achieve common goals.” On major points, it was Beijing’s goals of expanding its influence in key regions that were advanced with American blessings.

Sedney thanked Beijing for hosting the Six Party Talks on North Korea, as had Secretary Clinton during her visit. Yet, two days before the DPCT, China had hosted a delegation from North Korea as part of the celebration of 2009 as the “Year of China-DPRK Friendship” marking 60 years of their alliance. Just as China sent the PLA to fight against the U.S.-led UN forces during the Korean War, China has used the Six Party Talks to diplomatically protect the Pyongyang regime from any concerted action that could endanger its rule. According to the official newspaper The People’s Daily, “Jia Qinglin, chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), told a delegation from the Workers' Party of Korea (WPK) that Sino-DPRK relations, fostered by leaders of older generations, had been continuously developed…but also looking into the future.”

Sedney praised China's contribution to the anti-piracy flotilla patrolling the Gulf of Aden off the Somali coast. Beijing sent two destroyers and a supply ship to the region in December. This naval deployment into the Indian Ocean marks a significant projection of Chinese influence towards East Africa where Beijing has been supporting the Sudan regime’s genocidal rule in exchange for control of its oil fields. The deployment also puts Chinese forces closer to the Persian Gulf and its ally Pakistan as tensions increase in Afghanistan and with India.

Sedney said he discussed possible Chinese contributions to non-military programs in Afghanistan. For what possible reason would the U.S. want to encourage any direct Chinese participation in Afghanistan? When the U.S. invaded Afghanistan, China was working with the Taliban regime building its infrastructure and an air-defense system.

The Taliban was the creation of Pakistan in an attempt to conquer Afghanistan so as to cover its western flank in its confrontation with India to the east. China supported its ally because of its own strategic rivalry with India. As the U.S. has tried to exert more pressure on Islamabad to take action against Taliban sanctuaries on its soil, Beijing has stepped up its diplomatic support for Pakistan, along with investment funds and arms.

President Barack Obama warned Islamabad that it would he held accountable for security along the Pakistan-Afghan border on February 10. The next day, Pakistan Foreign Minister Shah Mahmood Qureshi reaffirmed his country’s "all weather" alliance with China. Last October, newly elected Pakistan President Asif Ali Zardari made as his first foreign trip a pilgrimage to Beijing. Just before he left, he told a press conference, "China is the future of the world. A strong China means a strong Pakistan.”

In a February 23 editorial, The People’s Daily addressed U.S. strategy in Afghanistan, with a focus on improving Pakistan’s position against India. “It is clear that without Pakistan's cooperation, the US cannot win the war on terror. Therefore, to safeguard its own interests in the fight against terrorism in South Asia, the US must ensure a stable domestic and international environment for Pakistan and ease the tension between Pakistan and India.” This means supporting Pakistan’s position on Kashmir, the Indian province against which Pakistan-based terrorists have operated for decades. India-Pakistan tensions have been high since the November 26 terrorist attacks in Mumbai which killed 179 people.

Afghanistan's foreign minister Rangin Dadfar Spanta said on January 21 that India and Afghanistan were both victims of terrorism. “Afghanistan believes there are some entities in our region that are using terrorism as a tool for foreign policy. We have to end this. We share your pain, the pain of the Indian people because Afghanistan is the victim of same terror with same sources," Spanta said after a meeting with Indian Foreign Minister Pranab Mukherjee in Kabul.

China, of course, does not want the U.S. to take this view of the situation, as it would further what Beijing fears most; closer U.S.-Indian ties against a common threat from the Pakistani-Chinese alignment. The Chinese line is that Washington must support Pakistan against India in order to win Islamabad’s cooperation against the Taliban. This would isolate India, a primary goal of Chinese strategy. 

The editorial declared, “the US must make sure that Russia is appeased. The Central Asia region, where Afghanistan lies, used to be Russia's backyard. Following the September 11 terrorist attacks, the US raised its anti-terrorism war banner to move deep into this region and revoked the color revolution in Kyrgyzstan. To Russia, all this feels just like a thorn in the flesh.” The editorial noted that Kyrgyzstan has expelled the U.S. from its Manas air base. 

So, again, why would the Obama administration want China to become more involved in Afghanistan? Larry Wortzel, Vice-Chairman of the U.S.-China Economic and Security Review Commission, a bipartisan panel of experts created by Congress, asked Sedney this question at a hearing on March 4. Sedney’s response was that the U.S-NATO mission in Afghanistan is short on resources, and the Chinese could help by providing economic assistance and expanded trade. The Chinese model of trade would not help the Afghans, and any economic assistance would be used to buy influence with government and tribal elites that would undermine American objectives. Inviting China into Afghanistan is an act of desperation that has not been thought through. 

The day after the Afghanistan editorial (and two days after Secretary Clinton left China), The People’s Daily ran another opinion piece entitled,” The U.S. Hegemony ends, the era of global multipolarity enters.” It started by reveling in the economic crisis that has swept America and “signals a swift reduction of U.S. strength as a unipolar power.” Its conclusion was stark. “Does the decline of U.S. geopolitical hegemony make multilateral global governance more likely? Perhaps it is still too early to rush any conclusion, but at least one thing is certain: the U.S. strength is declining at a speed so fantastic that it is far beyond anticipation. The U.S. is no longer 'King of the hill,' as a new phase of multipolar world power structure will come into being in 2009, and the international order will be correspondingly reshuffled.” 

The opening hands played by the Obama administration with China would indicate that Washington agrees with Beijing’s assessment.

William Hawkins is a consultant on international economics and national security issues.
Title: Re: China
Post by: Crafty_Dog on March 09, 2009, 02:07:47 PM
In that light, there's this:

U.S.: Chinese ships harass Navy
Obama administration officials cite days of 'increasingly aggressive' acts
The Associated Press
updated 8:22 a.m. PT, Mon., March. 9, 2009
WASHINGTON - The Defense Department charged Monday that five Chinese ships shadowed and maneuvered dangerously close to a U.S. Navy vessel in an apparent attempt to harass the American crew.

Obama administration defense officials said the incident Sunday followed several days of "increasingly aggressive" acts by Chinese ships in the region.

U.S. officials said a protest was to be delivered to Beijing's military attache at a Pentagon meeting Monday.

The USNS Impeccable sprayed one ship with water from fire hoses to force it away. Despite the force of the water, Chinese crew members stripped to their underwear and continued closing within 25 feet, the department said.

"On March 8, 2009, five Chinese vessels shadowed and aggressively maneuvered in dangerously close proximity to USNS Impeccable, in an apparent coordinated effort to harass the U.S. ocean surveillance ship while it was conducting routine operations in international waters," the Pentagon statement said.

The Chinese ships included a Chinese Navy intelligence collection ship, a Bureau of Maritime Fisheries Patrol Vessel, a State Oceanographic Administration patrol vessel, and two small Chinese-flagged trawlers, officials said.

"The Chinese vessels surrounded USNS Impeccable, two of them closing to within 50 feet, waving Chinese flags and telling Impeccable to leave the area," defense officials said in the statement.

"Because the vessels' intentions were not known, Impeccable sprayed its fire hoses at one of the vessels in order to protect itself," the Defense statement said. "The Chinese crew members disrobed to their underwear and continued closing to within 25 feet."

Emergency stop

Impeccable crew radioed to tell the Chinese ships that it was leaving the area and requested a safe path to navigate, the Pentagon said.

But shortly afterward, two of the Chinese ships stopped directly ahead of the Impeccable, forcing it to an emergency stop in order to avoid collision because the Chinese had dropped pieces of wood in the water directly in front of Impeccable's path, the Pentagon said.

Defense officials said the incident took place in international waters in the South China Sea, about 75 miles south of Hainan Island.

"The unprofessional maneuvers by Chinese vessels violated the requirement under international law to operate with due regard for the rights and safety of other lawful users of the ocean," said Marine Maj. Stewart Upton, a Pentagon spokesman.

"We expect Chinese ships to act responsibly and refrain from provocative activities that could lead to miscalculation or a collision at sea, endangering vessels and the lives of U.S. and Chinese mariners," Upton added.

Military-to-military consultations resumed

The incident came just a week after China and the U.S. resumed military-to-military consultations following a five-month suspension over American arms sales to Taiwan. It also comes as Chinese Foreign Minister Yang Jiechi is due in Washington this week to meet with U.S. officials. And it brings to mind the first foreign policy crisis that former President George Bush suffered with Beijing shortly after he took office — China's forced landing of a spy plane and seizure of the crew in April of 2001.

The Pentagon said the incident came after several other incidents involving the Impeccable and another U.S. vessel Wednesday, Thursday and Saturday.

It described those as the following:

On Wednesday, a Chinese Bureau of Fisheries Patrol vessel used a high-intensity spotlight to illuminate the entire length of the ocean surveillance ship USNS Victorious several times as it was operating in the Yellow Sea, about 125 nautical miles from China's coast, the Pentagon said, adding that the Chinese ship Victorious' bow at a range of about 1400 yards in darkness without notice or warning. The next day, a Chinese Y-12 maritime surveillance aircraft conducted 12 fly-bys of Victorious at an altitude of about 400 feet and a range of 500 yards.

On Thursday, a Chinese frigate approached USNS Impeccable without warning and crossed its bow at a range of approximately 100 yards, the Pentagon said. This was followed less than two hours later by a Chinese Y-12 aircraft conducting 11 fly-bys of Impeccable at an altitude of 600 feet and a range from 100-300 feet. The frigate then crossed Impeccable's bow yet again, this time at a range of approximately 400-500 yards without rendering courtesy or notice of her intentions.

On Saturday, a Chinese intelligence collection ship challenged USNS Impeccable over bridge-to-bridge radio, calling her operations illegal and directing Impeccable to leave the area or "suffer the consequences."
Title: Stratfor: The naval incident
Post by: Crafty_Dog on March 10, 2009, 10:37:33 PM
China, U.S.: A Naval Incident and Wider Maritime Competition
STRATFOR Today » March 10, 2009 | 1041 GMT

Military Sealift Command
The USNS Impeccable (T-AGOS 23)Summary
Chinese vessels appear to be acting with increasing aggression toward a pair of U.S. ocean surveillance ships in the Yellow and South China seas. Though such aggression is not unprecedented, it is a departure from China’s behavior of recent years, and it could indicate rising maritime tensions among many of the region’s naval powers.

Analysis
Chinese sailing vessels have behaved with increasing aggression toward two U.S. ocean surveillance ships operating in the Yellow and South China seas. Though this recent behavior is not unprecedented, the U.S. 7th Fleet is characterizing it as a departure from normal interactions and the most aggressive behavior the fleet has seen from China in a long time. These aggressive moves might herald things to come as the maritime environment around China becomes increasingly active — and crowded.

Related Special Topic Page
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China: The Deceptive Logic for a Carrier Fleet
On March 4, the USNS Victorious (T-AGOS 19) had an encounter at night with a Chinese Bureau of Fisheries patrol vessel in the Yellow Sea. The USNS Impeccable (T-AGOS 23) was approached more aggressively in the South China Sea the next day, when a Chinese People’s Liberation Army-Navy (PLAN) frigate reportedly crossed the Impeccable’s bow at a range of about 100 yards, and the Impeccable was buzzed nearly a dozen times at low altitude by a Y-12, a Chinese-made twin-engine turbo prop. Reportedly, the ship was threatened verbally over bridge-to-bridge radio on March 7 as well.

But it was the March 8 incident with the Impeccable that garnered the most attention. According to reports, a PLAN intelligence collection ship, a Bureau of Maritime Fisheries patrol vessel, a State Oceanographic Administration patrol vessel and two small Chinese-flagged trawlers were all involved in what the U.S. Navy has characterized as coordinated harassment of the Impeccable. Some of the ships were within 25 feet of the Impeccable at one point and stopped in front of the U.S. ship so close that the crew executed an emergency all stop to avoid a collision.





(click image to enlarge)
The Impeccable is an ocean surveillance ship, part of the Military Sealift Command, and is operated by a mixed crew of civilian and military personnel. Capable of deploying towed acoustic arrays, the U.S. ship was operating within 75 miles of Hainan Island, where a number of sensitive PLAN and other military activities are conducted (reportedly including the deployment of the PLAN’s next-generation nuclear-powered attack and ballistic missile submarines). China would at least be concerned about the United States refining its knowledge of the submarine operating environment, and likely felt compelled to assume that the Impeccable was conducting other surveillance and intelligence-gathering activities.

This is not a new dynamic. It is the same basic dynamic that gave rise to the EP-3 Ares II incident in 2001, in which a Chinese aircraft collided with a U.S. signals intelligence aircraft, forcing the EP-3 to land at Hainan Island. Normally, these activities are routine, and both sides abide by internationally accepted or even unspoken sets of rules. But when one side chooses to escalate the situation, matters can quickly spiral out of control.

Part of this is simply a matter of increased PLAN activity, characteristic of a larger shift in how Beijing employs its navy. But with the PLAN’s 60th anniversary approaching in April (a formal announcement about its plans for an aircraft carrier fleet is anticipated), and the impending return of its first squadron deployed to the coast of Somalia, the Chinese navy is undoubtedly feeling rather confident and accomplished these days.

But internal tensions may also be at play. With the financial crisis in full swing, the PLAN may also be attempting to drum up incidents for budgetary purposes, to forestall major fiscal cuts to its accounts.

More importantly, the March 8 incident is emblematic of broader maritime tensions in the East Asian sphere — and not just between China and the United States. Over the past several months, tensions over long-standing maritime territorial disputes have once again risen across the region. North Korea has once again declared that it does not abide by the Northern Limit Line, the maritime extension of the Demilitarized Zone in the West/Yellow Sea, warning that a clash with South Korean naval vessels patrolling the area could occur. Japan, meanwhile, has launched a 10-year seabed mapping and underwater resource prospecting program, triggering warnings from Seoul and Beijing not to use the operations to lay claim to the disputed Tokdo/Takeshima and Senkaku/Daiyoutai islands respectively. And China’s competing claims over islands in the South China Sea are also resurfacing, provoking counterclaims from the Philippines, Malaysia and Vietnam.

In short, the waters around China are becoming more crowded and the mood increasingly contentious. The March 8 incident could herald increased volatility in the maritime environment — across the region — for years to come.
Title: WSJ: LOST aspect to this
Post by: Crafty_Dog on March 11, 2009, 05:58:44 AM
second post:

So once again we are reminded of why Ronald Reagan sank the Law of the Sea Treaty.

Thanks of a sort here go to China, which last week sent several ships to shadow and harass the USNS Impeccable, an unarmed U.S. Navy surveillance ship, as it was operating in international waters about 70 miles south of Hainan Island. The harassment culminated Sunday when the Chinese boats "maneuvered in dangerously close proximity" to the Impeccable, according to the Pentagon, forcing the American crew to turn fire hoses on the Chinese. Undeterred, two of the Chinese ships positioned themselves directly in front of the Impeccable after it had radioed its intention to leave and requested safe passage. A collision was barely averted.

The Chinese have a knack for welcoming incoming U.S. Administrations with these sorts of provocations. In April 2001, a hotdogging Chinese fighter pilot collided with a slow-moving U.S. Navy surveillance aircraft, forcing the American plane to make an emergency landing on Hainan, where its 24-member crew remained for 11 days. They were released only after the U.S. issued a letter saying it was "sorry" for the incident without quite apologizing for it.

Thereafter, the Chinese kept their distance from U.S. surveillance planes, and Beijing's relations with the Bush Administration were generally positive. But the Chinese military remains strategically committed to dominating the South China Sea, and it has recently built a large submarine base on Hainan. China also makes a contentious claim to the oil-rich Spratly and Parcel Islands -- an endless source of friction with the Philippines, Malaysia, Taiwan and Vietnam, which also have their claims. Following Sunday's incident, the Chinese accused the U.S. of violating Chinese and international law.

Which brings us to the U.N.'s Law of the Sea Treaty -- which the Gipper sent to the bottom of the ocean, but the Chinese have signed and which the Obama Administration intends to ratify, with the broad support of the U.S. Navy. The supposed virtue of the treaty is that it codifies the customary laws that have long guaranteed freedom of the seas and creates a legal framework for navigational rights.

The problem is that, as with any document that contains 320 articles and nine annexes, the treaty creates as many ambiguities as it resolves. In this case, the dispute involves the so-called "Exclusive Economic Zones," which give coastal states a patchwork of sovereign and jurisdictional rights over the economic resources of seas to a distance of 200 miles beyond their territorial waters.

Thus, the U.S. contends that the right of its ships to transit through or operate in the EEZs (and of planes to overfly them) is no different than their rights on the high seas, including intelligence gathering, and can point to various articles in the treaty that seem to say as much. But a number of signatories to the treaty, including Brazil, Malaysia, Pakistan and China, take the view that the treaty forbids military and intelligence-gathering work by foreign countries in an EEZ. Matters are further complicated by the claims China made for itself over its EEZ when it ratified the Law of the Sea in the 1990s.

We don't have a view on the legal niceties here, which amounts to a theological dispute in a religion to which we don't subscribe. But the incident with the Impeccable is another reminder that China's ambitions for regional dominance, and for diminishing U.S. influence, remain unchanged despite a new American Administration; and that the Law of the Sea Treaty, far from curbing ambitions or resolving differences, has served only to sharpen both.

Next time the Impeccable sails these waters -- and for the sake of responding to China's provocation it should be soon -- President Obama ought to dispatch a destroyer or two as escorts.

 
Title: Re: China
Post by: Crafty_Dog on March 11, 2009, 07:13:20 PM
Saw this on another forum-- I have no idea as the the validity of the source, but find the question about the likely dramatic decline of Chinese exports and the domestic consequences thereof to be an interesting one.

=======================



In this Global Guerrillas post John Robb talks about the effect a global depression might have on China.

I've included the comments as well.

Wednesday, 11 March 2009
JOURNAL: Will China Survive a Depression? Don't bet on it...

The surge in China’s exports could prove to be as unsustainable as the rise in US (and some European) home prices. They might end up being mirror images … as Americans and Europeans could only import so much from China so long as they could borrow against rising home prices. Brad Setser, CFR blog.

China's exports cratered in February, a drop of 25.7%, in line with the drops in exports experienced by other mercantilist countries (Japan, Germany, Korea, and Taiwan). However, unlike those countries, China doesn't have an organic source of legitimacy except for its ability to deliver economic growth. As I have said earlier, the real threat from China isn't that is a potential peer competitor (a device used to sell big weapon systems), its that it could collapse:

So, what happens when China's high performance, globally connected capitalist economy which is flying at dangerously high speeds hits the inevitable speed bump? The answer is: it will derail (hollow out and fragment). The chaos it will produce in SE Asia is the real threat we have to deal with. Predicting the black swan that kicks off the death spiral is impossible, but as we have seen in other export-oriented Asian economies the shock will likely be economic. At that point, the dream of upward ascent and rising expectations, reinforced by global media, will be seen as a lie.

In anticipation of this, the Chinese government is following the lead of many other nations by radically improving the capabilities of its paramilitary force for domestic security (to the tune of one million men). However, this many not be enough. Global guerrilla theory indicates that the endemic corruption will combine with the same forces of anti-state guerrilla action we have seen in other places in an attempt to disconnect portions of China from the central government... (it will work).

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Title: Re: China
Post by: G M on March 13, 2009, 06:53:57 AM
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5898650.ece

From The Times
March 12, 2009
US warships head for South China Sea after standoff
Tim Reid in Washington

A potential conflict was brewing last night in the South China Sea after President Obama dispatched heavily armed American destroyers to the scene of a naval standoff between the US and China at the weekend.

Mr Obama’s decision to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. They harassed and nearly collided with an unarmed American vessel.

Washington accused the Chinese ships of moving directly in front of the US Navy surveillance ship Impeccable, forcing its crew to take emergency action, and to deploy a high-pressure water hose to deter the Chinese ships. Formal protests were lodged with Beijing after the incident.

On a day that Mr Obama and his senior officials met the Chinese Foreign Minister, Yang Jiechi, in Washington, Beijing showed no sign of backing down. Its military chiefs accused the unarmed US Navy ship of being on a spying mission.

The US keeps a close eye on China’s arsenal, including its expanding fleet of submarines in the area. Washington says that the confrontation occurred in international waters, but Beijing claims nearly all the South China Sea as its own, putting it in conflict with five other nations that have claims over different parts of the waters.

The episode complicated fragile military relations between the US and China, which appeared to have improved after the two held defence talks in Beijing last month.

Mr Obama yesterday urged more military dialogue with China to avoid similar incidents after talks with Mr Yang, the White House said. “The President also stressed the importance of raising the level and frequency of military-to-military dialogue,” it said.

A hotline was established between the Chinese Defence Ministry and the Pentagon in April last year, but it was not used during or after Sunday’s standoff, defence officials said. The US Government immediately protested to Chinese authorities after the incident, about 75 miles south of Hainan Island.

Beijing has rejected the US account and demanded that the United States cease what it calls illegal activities in the South China Sea. The Chinese maintain the area is part of the country’s exclusive economic zone.

Washington insists that the area is part of international waters and that US ships have a legal right to operate there.
Title: Re: China
Post by: Crafty_Dog on March 13, 2009, 07:15:02 AM
My initial reaction is that it is a pleasant surprise to see BO dispatch the destroyers.

Maybe these incidents will cause him to reconsider signing the LOST?
Title: Re: China
Post by: DougMacG on March 13, 2009, 08:44:32 AM
Crafty: "I find the question about the likely dramatic decline of Chinese exports and the domestic consequences thereof to be an interesting one."

I have long believed that the Chinese rulers would not survive a serous downturn in their economy, but I also have learned over time that I am more offended by the oppressive regime there than the Chinese people are.  I don't know how an uprising would happen nor do I understand how such a small ruling class could contain a billion people over these years as they watched most of the globe move to consensual government.  In any case, they haven't been tested with real economic troubles.  The words of Rahm come to mind - you hate let a good crisis go to waste.

The leaders know to pre-empt upheaval by flexing their military strength and commitment.  As they try to energize nationalism, maybe Obama is of some advantage in this situation.  When they try to play the U.S. as the reason to pull together, maybe the evil, pre-emptive warmonger George W. Bush was a more convincing bogeyman for the masses than the affable, green behind the ears, can-we-talk, Barack.  As they see the disarm, talk and surrender foreign policy of this administration it will be hard try to convince your people that your nation is under a serious threat from afar.
Title: Chinese intelligence defector
Post by: ccp on March 25, 2009, 03:57:14 PM
From Bill Gertz.  A Chinese intelligence officer defects to the US and is seeking asylum tell all (was it water boarding, cash, or idealism, or seeking a better life that did it?):

http://www.washingtontimes.com/news/2009/mar/19/exclusive-chinese-spy-who-defected-tells-all/
Title: China's bluff
Post by: Crafty_Dog on March 25, 2009, 10:31:59 PM
   
Geopolitical Diary: China's Calculated Currency Rhetoric
March 25, 2009
One of the more popular conventional wisdoms is that the United States is in decline and that it is a simple matter to select options that will edge the United States out of its dominant position in the world. In an editorial published Tuesday, Chinese central bank governor Zhou Xiaochuan spoke to one of the more popular financial conspiracy theories in this vein when he wrote that the time had come to establish a new scrip to replace the U.S. dollar as the global reserve currency. The issue is close to Beijing’s heart: The Chinese reserve fund is a significant holder of U.S. debt, with some $750 billion in U.S. T-bills.

China does not purchase U.S. debt out of choice, but out of a lack of choice. China is a state with serious social stability issues that are mitigated only by state intervention in the economic structure to maintain mass employment. Since there isn’t much internal demand for the goods these employed masses produce — due in part to a high savings rate and low incomes — China must peddle its goods abroad. The U.S. consumer market, with annual sales of approximately $10 trillion, is roughly equivalent in bulk to the next six consumer markets combined. Sales to the United States and other countries hardwired into the American supply chain — which includes the bulk of East Asia — are the only reasonable option. And so the Chinese yuan has a de facto peg to the U.S. dollar.

That is hardly the extent to which the Chinese are bound to the dollar, however. Because China lacks the financial and industrial infrastructure needed to metabolize the massive revenues generated by exports, the income must be stored in some sort of non-Chinese asset. Outstanding U.S. T-bills currently total $11 trillion, which — with the notable exception of Japanese government debt, which very few foreigners even touch — is greater than the next five government debt issues combined, by a ratio of two to one. U.S. debt outsizes combined euro-denominated government debt by more than three to one.

Corporate debt isn’t much of an option either, even though the combined global corporate debt market is sufficiently large to absorb China’s currency reserves. Whenever an investor holds a substantial portion of any company’s debt, market liquidity is constrained and trading dynamics are altered. The solution is a highly diversified — and therefore actively managed — portfolio. But the administrative cost of a trillion-dollar portfolio so diversified that it does not affect the value of any particular asset would be staggering. In contrast, U.S. government debt is a one-stop shop that requires — at most — minimal management.

That China’s income is primarily in either dollars or dollar-linked currencies only strengthens the rationale for pouring surplus income into American assets in general, and U.S. government debt in particular. Plainly put, China cannot put its income anywhere else because there is no other option available. There have been some mild attempts to diversify, but a dearth of options means that “mild” is about as dynamic as a diversification program for China can get.

As to a world beyond the dollar, the issue is that a reserve currency is not decided upon; it creates itself. Two things are needed to create a reserve currency. First, there must be sufficient liquidity to support a global system. That requires a central bank with an enormous amount of autonomy from a state government, and the U.S. Federal Reserve is unparalleled on this count. Not even the European Central Bank can compete. Second, the economy upon which the currency is based must be large enough to withstand fluctuations caused by other economies buying and selling its assets in massive amounts. Again, the United States is the only economy that potentially could qualify.

Part and parcel of any replacement of the U.S. dollar would be a large-scale abandonment of U.S. T-bills as the core of Chinese currency reserves, which — as the conventional wisdom holds — would force intractable economic problems upon the United States. But a closer look reveals that this is not the case. First, selling U.S. T-bills en masse simply is not possible. Every seller requires a buyer, and the volumes at hand cannot be exchanged quickly. Second, starting down that road would cause the value of the securities in question to plummet, destroying the savings the Chinese have been building up for years. The so-called “nuclear option” really is not an option at all.

So why are the Chinese bringing this up in the first place? Beijing clearly has done the math already and knows that this idea — even if it had broad support — is a nonstarter. There are two reasons. First, officials in Beijing know that any direct confrontation — whether military or financial — with the United States would end in disaster for Chinese national interests. Therefore, they want to foster anything they can that would create an international structure to restrain American power; failing that, something that just gets people thinking in that direction will have to do. Second, China is more severely affected by the ongoing financial crisis than it would like the world to register. The Chinese need sustained international demand to maintain their export industries and, consequently, their high employment levels. Espousing rhetoric that makes it appear that you have more options than you do, while redirecting attention toward a foreign power, always plays well at home.

 
Title: Re: China
Post by: G M on March 28, 2009, 08:33:15 AM
http://www.timesonline.co.uk/tol/news/article5960010.ece

From The Times
March 28, 2009
One billion souls to save

Christianity in China is booming. With 100 million believers, far more than the 74 million-member communist party, Jesus is a force to be reckoned with in the People’s Republic. We talk to the new faithful who love China – but love God more
Jane Macartney
A murmur of “Amen” echoes softly down a corridor in a luxury Beijing hotel. Dozens of young Chinese are gathered in a beige-carpeted conference room to listen to the word of God. After helping themselves to hot water or tea at the back of the room, they find a seat and chatter with friends. They tuck Louis Vuitton and Prada handbags under their seats, switch their mobile phones to silent and turn to listen to a young woman who takes the microphone to ask for silence and recite a prayer.

A casually dressed, grey-haired Chinese man takes to the podium. “Let us begin with a look at the Gospel of Saint John.” There is a rustling of pages as converts and curious open their Bibles. Almost everyone in the room is scarcely a day over 30. Most look as if they are in their early twenties. They are fashionably dressed – girls with high-heeled boots, men sporting trendy knitted hats. This is Friday night Bible class in Beijing. And it is a weekend venue of choice for growing numbers of well-off middle-class city sophisticates.

The fact that this class is technically illegal, run by pastors lacking approval from the state-sanctioned Protestant church, is not the attraction. These are not young people seeking a frisson of excitement from some underground activity. They are at the forefront of a movement sweeping China – the search for spiritual satisfaction now that Marx is démodé.

No attempt is made to conceal what is, in effect, an underground religious gathering. A sign in Chinese outside the conference room reads: “Hill of Golgotha Church meeting”. A board outside the hotel lift directs visitors to Hall 5. There is not a nod towards secrecy or even discretion. There is no sense of anxiety, let alone fear, that officials could burst in to break up this illegal assembly even though police do still frequently raid house churches run by underground Protestant pastors.

A spectacular success

In fact, across China religion is undergoing a defiant and extraordinary revival. Millions of Chinese are turning to familiar traditional faiths such as Buddhism and Taoism – a mystical belief with about 400 million adherents that is China’s only indigenous creed. Taoist believers, like Buddhists, visit temples across the country to burn incense, present offerings and request readings from fortune tellers. Others are finding comfort in Confucius, but it is Christianity that is leading the battle for China’s 1.3 billion souls.

Many regard religion as a new force, unaware that missionaries – Protestant for the most part but also Roman Catholics – tried to spread Christianity across China in the 19th century and met with fierce opposition during the anti-Western Boxer Rebellion in the early 1900s. But it was former leader Deng Xiaoping, who effectively endorsed freedom of worship, and gave Christianity the chance to take hold, with his sweeping market reforms in 1978.

Today, two Christian faiths are allowed to operate within carefully prescribed limits: the Catholics, who must worship in churches run by the State’s Chinese Patriotic Catholic Association and number about six million, and the Protestants, who operate under the aegis of their government-sanctioned religious body, the Three-Self Patriotic Movement – standing for self-governing, self-teaching and self-supporting. Their numbers are estimated at 21 million – about the population of Australia. All other Christian associations are illegal.

Those who participate in non-sanctioned churches run the risk of police raids, a beating or even jail. The situation is more fraught for the underground Catholic churches than it is for the Protestant get-togethers. An unknown number of Catholic priests, and even bishops, languish in jail, serving lengthy prison terms for their temerity in preaching allegiance to Rome. Beijing’s Communist Party rulers are wary of an organisation that is so well organised and also headed by a leader – the Pope – who can command the loyalty of millions.

But that doesn’t seem to put off the growing congregations. Indeed, official numbers fall far short of the actual total. Recent surveys calculate the number of Christians worshipping independently of the State churches in China to be as high as 100 million. That means that almost one in every ten Chinese may now be a Christian, making Christianity bigger than the 74 million-member Communist Party.

Bring Christianity into the conversation and everyone seems to know someone who is a convert. I heard how many of the executive staff at one smallish Beijing hotel were keen Christians. A manager at an international bank mentioned that many of his employees shared a common faith.

Visiting an elderly woman who had been taken as a child to serve as a “comfort woman” to soldiers of the invading Japanese army in the Second World War, I was astonished to see a cross hanging on the wall of the simple home she shared with her son just across the road from the local Communist Party offices. Without embarrassment or fear, her son explained how each Sunday he attends services in a house church nearby. He proudly pulled out his hymnal and sang for me, while curious neighbours peered through the window.

I learnt of the Communist Party secretary of a village not far from Qufu, the home town of Confucius, who sleeps with a crucifix above his bed. His wife, he explained, was a Christian, as were his sons. Indeed, he went on, pretty much everyone in the village of about 3,000 was a believer. Almost all, it seems, belong to illegal house churches, small congregations that come together in private homes in cities, towns and villages across China.

Why Christianity has such a hold remains something of an enigma. Many Chinese are looking to fill the chasm left by the collapse in Marxist ideology’s credibility in the wake of the disastrous ultra-leftist 1966-76 Cultural Revolution and the Tiananmen Square crackdown. It’s also possible that a religion from the West holds a particular attraction for Chinese looking for a more modern faith to complement the stunning success of capitalist-style economic reforms. But the sense of belonging may be the best way to explain why Christianity has been such a spectacular success story in China in the past few years.

Finding a family far from home

Pastor Ezra Jin heads the Protestant Zion Church, based above a karaoke club in one of the thousands of faceless apartment blocks that populate the suburbs of Beijing.

He prefers not to see Zion as an illegal underground Church but rather as private and independent, and in the two years since its inception, the church has never suffered a police raid. “Our Church offers people a feeling of belonging to a family,” explains Pastor Jin. “There are more and more contradictions in our society as different interest groups emerge and gaps open up between regions and between social groups. Christianity can help by providing comfort and spiritual strength.”

Dressed in a sharply cut dark suit with a white shirt and gold silk tie, Pastor Jin could be just another successful executive. Instead he runs a house church so large he conducts at least three services every Sunday in a room brimming with 300 to 400 people. Toddlers play in a glassed-off crèche while their parents stand to sing hymns and to pray. A choir in hot-pink robes leads the singing and a little band with an electric organ and two guitar players keeps the congregation in tune.

Liu Huan has been playing the guitar in church for nine years. The slight computer engineer in his thirties beams with delight at being asked to explain why he attends a house church. Although in this case sprawling, neon-lit office might be more appropriate. Apart from the main hall, the Zion Church seems to occupy most of the floor of the building with smaller offices and store rooms. “My wife introduced me to God and coming here gives me strength.” He fits one of the models that Pastor Jin described: the out-of-town worker who has found a place in a new community far from home through Christianity.

With his spiky haircut and a single earring, Wang Ye cuts a dashing figure in the congregation. The 21-year-old is a student graduating in online business who hails from the northern coal-mining province of Shanxi. His mother, who had moved to Beijing in search of a better job and was lonely, found comfort when friends introduced her to the church. “She brought me as well. Many of us have family problems and we find warmth here.” He strolls over to join a group of friends gossiping about their plans to celebrate the Chinese New Year.

“The future of Christianity in China is very different from in the West,” believes Pastor Jin. “In the West, Christianity is in retreat, especially in Europe, but in China it is growing by leaps and bounds.” He cites the stability the church offers to a population buffeted by decades of wrenching political change as one of most appealing aspects of the faith.

The first hymn on a wintry Sunday at his Zion Church echoes that refrain. A lay preacher leads the congregation. Projected on a screen on the wall behind him the words scroll down against a background of plum blossoms. Voices are raised in song. “There are many things I don’t know in the future. But I know who will hold my hand and who will be in charge.”

As readings from the Bible and prayers follow more hymns, the atmosphere in the room is charged. A verse reaches a crescendo, women in the congregation one after another raise their arms above their heads and sway. One or two sob quietly. The lay preacher leads a prayer. Each time he mentions “Our Lord”, a chorus of “Amen” swells up from the crowd. Nothing is allowed to disturb their evangelical reverie and there is little sense among these worshippers that they risk arrest.

Pastor Jin believes the most difficult times for house churches such as his may soon be over. He recently took part in the first meeting between government officials and leaders of the banned underground Protestant faith.

It was the most significant step towards reconciliation in decades, and could mark a turning point in the Party’s attitudes.

“I wasn’t surprised,” he said. “It was clear to me that sooner or later God would bring us to this.” In addition, the size of the underground Protestant church has now reached such proportions that it is an increasing challenge for the authorities or the police to control. “China is a very big country so there will still be examples of persecution, but the overall direction is gradually changing.”

He says the talks could be a sign that the Communist authorities have come to recognise that the Protestant church at least can be a force for harmony – the watchword of the administration of President Hu Jintao, the current head of the Party. It was President Hu himself who told an unprecedented Politburo study session on religion in late 2007 that “the knowledge of religious people must be harnessed to build a prosperous society”.

“The Government is anxious to work out the way to go forward,” believes Pastor Jin. “They have understood that the Protestant Church is not an opposition force but a force for stability.”

A constant fugitive

But there are others who would disagree. Pastor Jin may operate in effect outside the law, but he is grudgingly tolerated. Arranging to meet him required little more than a couple of telephone calls. He chatted happily in public over a lunch of spicy Sichuan food in his local restaurant across an alley from the building housing his church.

Pastor Zhang Mingxuan falls into quite another category. Expelled from Beijing before the Olympic Games last August, he is persona non grata in the capital. He attracts police attention wherever he goes and his telephone is constantly tapped. On his first return visit to the capital since his eviction, he got off the overnight train from his home in central Henan province and met me behind a department store near the railway station.

A short, blockish man dressed in a shiny suit and with a tie embroidered with crosses, his first order of business was practical. “We’ve been on an overnight train and we’re hungry. Let’s have lunch.” No sooner had he sat down, intoned grace over the food and gulped down a glass of hot Coca-Cola to counter the bitter chill on one of the coldest days of the winter than he launched into an account of his confrontations with the police. Zhang, who describes himself as a lay pastor, heads what he calls the Chinese House Church Alliance, bringing together a number of diverse congregations. Any form of organisation is anathema to the ruling Communist Party, jealous of any rival power. Beyond the pale is a grouping of illegal underground churches that could challenge its supremacy.

It is small wonder then that he recounts a convoluted tale of eviction from his Beijing flat, from the homes of friends, suburban hotels, even from guesthouses in the province that abuts the capital. Everywhere he tries to lay his head, the police track him in their dozens, moving him out of their jurisdiction. Zhang is undeterred. “My head is here. Let them take it if they want it. But God is in Heaven and he won’t allow them to take my head.”

A poorly educated barber and the product of an atheist Communist system, he had little time for the Christianity in which his wife believed. Or at least that was until a business deal went wrong in 1986 and a failed court case left him deeply in debt. He heard his brother-in-law recite Psalm 38: “They also that seek after my life lay snares for me: and they that seek my hurt speak mischievous things, and imagine deceits all the day long.” The words cut to the heart. “I fell on my knees and in less than five minutes, I became a Christian.”

He was an enthusiastic convert. He does not hide his conviction that his mission now is to spread the word of God far and wide in China. His fervour contrasts with the measured tones of Pastor Jin. Leaping to his feet, he rolls up his trousers and points to scars on one leg. “Look! I was run over and I have two metal pins in my leg. But after 15 days I could walk again because of the Lord.” He spreads his arms wide and gestures to his stocky frame. “When they arrested me I fasted for 25 days. Nothing happened to me because God was with me.”

He does not bother to hide his contempt for the Communist Party. Fuelled with passion, his voice rises. “They hate me but I don’t hate them.” God, he says, is on his side and he will win. That passion must trigger anxiety among officials who for 30 years have guaranteed freedom of worship – but not worship conducted by unofficial ministers like Zhang.

The demolition three years ago of an illegally built Protestant church near the southern city of Hangzhou draws Zhang’s wrath. The building had been constructed on land intended for a commercial centre, and several hundred faithful in the town that is home to tens of thousands of Christians tried to stand in the way of the razing of the building. Secretly filmed video of the incident shows scuffles between worshippers defending their church and the police, with at least four people reportedly suffering broken bones as police wielding batons pushed back the crowd. Several were arrested and eight people were jailed for terms of up to three and a half years. For Zhang, such actions are evidence of the Communist Party’s fear.

“China is a land that has been chosen by God. If the government did not interfere then many more Chinese would become followers. Our hearts are thirsty.” Disturbed to learn that my Chinese colleague remains firmly atheist, Zhang leans forward across the table and tries to persuade her. “You should find faith as soon as possible so that we can all be brothers and sisters in God. God will save you. He makes so many miracles. He will protect you.” A day later, he was picked up by the Beijing police and shipped back to Henan province.

An understanding with the jailers Pastor Shen Quan was trained at an officially approved seminary – as was Pastor Jin – but he too left the government-sanctioned church in search of greater spiritual freedom. It has been more than two years since police last carried out a raid on one his services, during which members of his congregation were intimidated and warned not to attend, while he was taken away and questioned. He is not as optimistic as Pastor Jin that the recent inauguration of tentative talks between government and house church luminaries heralds an end to the persecution. “This is just not possible. As long as the house churches exist, the government must want to try to control them.”

But government raids on house churches have proved somewhat counterproductive. Underground Christians say that as soon as one house church is closed, its members split up and found their own small congregations, further multiplying the numbers.

One of the attractions of these churches is the personal care that a pastor gives to his flock, which is a world away from the more rigid approach of the state-sanctioned Three-Self Patriotic Church. One such – the Kuanjie Church – was full by 9am for a Saturday morning service. A far higher proportion of the congregation were middle-aged or elderly and one woman made it her duty to patrol the aisles making sure that everyone, including curious first-time visitors, fell to their knees on specially provided foam cushions during the lengthy prayers. Even in this church, the tone was evangelical. Two women with microphones on poles moved between the pews, ensuring worshippers had a chance to offer aloud their prayers and to share with the rest of the congregation their stories of individual communion with God.

But such official churches lack the personal touch found in the small house churches, and perhaps because of that are growing more slowly. The challenge now for the government is to determine how it will handle the breakneck spread of the underground churches.

Zhao Xiao is a prominent economist, a professor of the University of Science and Technology and a one-time Communist Party member. He is also a Christian and something of an optimist. He sees the recent groundbreaking talks between the two sides as inevitable. As the Christian population has grown, the Party has recognised that Protestants are making no attempt to form an alternative organisation and are not questioning the rule of the party, he says.

This may have given the leadership greater confidence to liaise with them. It is also common knowledge that huge numbers of the volunteers who raced to help with the aftermath of last year’s devastating earthquake in southwest China were Christians. Many are still there, helping the survivors and, sometimes, preaching.

Familiarity, Professor Zhao believes, is another important factor. “It has taken many years to reach this point. Many meetings have taken place over the years between imprisoned pastors and their police jailers and this has bred a closer understanding. Those changes in attitude meant this day could come.” He adds: “I think that one day the Communist Party will even allow Christians to become members.”
Title: Police State Status Quo
Post by: Body-by-Guinness on April 23, 2009, 06:06:04 AM
Police Swoop on Beijing University

2009-04-22
Comments by a Beijing professor enrage petitioners, who descend on his office and prompt a police crackdown.

Courtesy of a petitioner.
Police in Beijing move in on petitioners in the capital in several locations during a sensitive anniversary year.
HONG KONG—Authorities in Beijing have begun moving to clear large numbers of people from the capital who have a grievance against the government as security tightens, with local residents and petitioners reporting detentions in several sensitive locations.
Hundreds of protesters have traveled from all over China to the capital's prestigious Beijing University following recently reported remarks about petitioners by a professor there.
A number of these were rounded up in recent days, and their details recorded by police after they staged a sit-in in protest at recent comments by university professor Sun Dong Dong, who was reported as saying that 99 percent of long-term petitioners—people who try to lodge complaints about alleged official wrongdoing through official channels—were mentally ill.
Sun has since said his comments, which have drawn widespread public anger and protests from China's thousands of long-term petitioners, were reported out of context by the media, while a health ministry official has said he was exercising his right to freedom of expression.
On Saturday and Sunday the police were detaining a lot of petitioners..."
Shenzhen petitioner
A Beijing-based petitioner surnamed Li said she saw 83 petitioners who had traveled from Shanghai to protest against Sun's reported comments.
"According to the records of the Haidian branch police station, five of them had come back a second time after being removed," Li said.
Detained outside university
Li said both she and petitioners Wang Shenfang and Zhu Jianping were detained for a total of seven days for causing a public disturbance."
"We were then taken out of Majialou [detention center] by our hometown representatives in Beijing, who wanted to know the exact circumstances of our coming to Beijing University, and particularly whether anyone had got in touch to organize the protest," she said.
"They didn't send us back to Shanghai until the evening on the second day."
Sun's comments are particularly sensitive for petitioners, who have been incarcerated in mental institutions and force-fed medication because they refuse to give up after decades of trying to win redress for official wrongdoing, which can include deaths in police custody, forced evictions, and alleged corruption.
Comments 'out of context'
In a telephone interview, Sun acknowledged his remarks but said media reports published his comments out of context.
"The original meaning of my comment was that, of the 'long-time' petitioners who came to me, the result [99 percent of them suffer from mental problems] was based on several tests. But when the comments came out, the media omitted the first part and only published the other part," Sun said.
"Of course I take responsibility for what I said. But the media deleted part of it and triggered this” response, he said.
"The petitioners’ emotions are running so high right now that it will only trigger more contradictions if I talk to them. I will explain [the situation] to them in due course," Sun said.
"I have dealt with great pressure from this incident. But from an objective point of view, it has caused us to learn and to care more about mental problems. This shows progress in society,” he said.
Government officials have indicated publicly that they accept that the majority of petitioners have legitimate complaints.
In practice, however, petitioners are routinely detained, beaten, and sent back to their hometowns if they try to present them in Beijing, especially during times of tightened security.
Elsewhere in the capital, three petitioners, including two pregnant women and a cancer patient, were detained after they handed out leaflets in and around the Beijing official residence of Chinese Premier Wen Jiabao on Monday, witnesses said.
Fliers at Premier's house
Li Chunxia and Zhao Chunhong, both pregnant, and cancer patient Li Shuzhen went to the Premier's house on Monday afternoon, and threw leaflets detailing their complaints against the government into the house, and into the alleyway outside it, according to a Beijing resident surnamed Chen, who saw them detained.
"This afternoon at about 3 p.m. three people were taken away in a police car," Chen said.
"They were throwing fliers at No. 17, Dongjiao Alley. Some of the fliers went into the courtyard, while others landed outside the walls."
"They were taken to the police station by police, national security police, and plainclothes officers. I didn't dare to shoot any video," Chen said.
Police have stepped up their presence in the southern part of the city in recent days, especially targeting areas in the south of the city near the railway station and bus station, petitioners said.
"There are a lot of police vehicles," a petitioner from Shenzhen surnamed Zhao said from the southern Beijing district of Fengtai, temporary home to a large number of people seeking to make complaints against officials in their hometown.

"On Saturday and Sunday the police were detaining a lot of petitioners and taking them straight to Majialou," she said, referring to a holding center where petitioners are detained to await escort back to their respective hometowns.
Raid on railway, bus stations
"I was asking around the southern railway station today, and they told me they probably detained a couple of hundred people," she added.
"There were about 20 people detained in the morning," a petitioner from eastern Anhui province surnamed Wang said, referring to petitioners sleeping in the corridors of the long-distance bus station, not far from the southern railway station.
"Down by the railway station, while I was watching they took away a whole busload of people. That's probably 50 or 60 people," he said.
A petitioner surnamed Li said the authorities were deliberating targeting petitioners who might try to travel to central Beijing to protest outside government buildings.
"I was detained at the police station for a day and night. They don't give you anything to eat," she said.
"If it's after 12 p.m. they take you to Majialou, but they deliberately delay things so that you get there after lunchtime and there is nothing to eat."
Authorities in Beijing are beginning to tighten security through the capital ahead of the 20th anniversary of massive pro-democracy protests, which ended in an armed crackdown on student-led protesters in and around Tiananmen Square.
Hundreds, perhaps thousands, are believed to have died, but the government has ignored repeatedly calls for a reappraisal and public discussion of the incident.
Original reporting in Mandarin by Qiao Long and Ding Xiao, and in Cantonese by Grace Kei Lai-see. Mandarin service director: Jennifer Chou. Cantonese service director: Shiny Li. Translated and written for the Web in English by Luisetta Mudie. Edited by Sarah Jackson-Han.

http://www.rfa.org/english/news/china/petitioners-04222009090751.html
Title: Our CiC in action
Post by: Crafty_Dog on May 06, 2009, 12:46:30 PM
http://news.yahoo.com/s/ap/20090505/ap_on_go_ca_st_pe/us_us_china_incident/print;_ylt=AjLyfz0gzHuivv1xnyC693KWwvIE;_ylu=X3oDMTExdWh0MTF0BHBvcwMxNARzZWMDdG9vbHMtYm90dG9tBHNsawNwcmludA--

US plays down incident at sea with Chinese vessels

By PAULINE JELINEK, Associated Press Writer
Tue May 5, 1:09 pm ET

WASHINGTON – The Pentagon Tuesday played down a confrontation between Chinese vessels and one of its Navy surveillance ships, taking a decidedly more low-key tone than during similar incidents two months ago.
In what has become almost a routine cat-and-mouse game on the seas, there have been four incidents in the past month in which Chinese-flagged fishing vessels maneuvered too close to two unarmed ships crewed by civilians and used by the Pentagon to do underwater surveillance and submarine hunting missions, two defense officials said. They spoke on condition of anonymity to discuss some of the incidents and details that the Pentagon has not yet released, adding that they fear such maneuvers are not just dangerous in themselves but could lead to escalated incidents.
The Pentagon did release a brief statement on the latest confrontation in which two Chinese fishing vessels came dangerously close — to within 30 yards — of the USNS Victorious Friday as it was operating in the Yellow Sea.
The Victorious crew sounded its alarm and shot water from its fire hoses to try to deter the vessels in an hour-long incident, one official said. The vessels didn't leave until the Victorious radioed a nearby Chinese military vessel for help, said Defense Department spokesman Bryan Whitman.
After incidents in March that included similar though apparently more aggressive Chinese maneuvers, the Pentagon protested to Beijing officials and issued a strong public statement calling the Chinese actions harassment.
But on Tuesday, Whitman declined to characterize what the Chinese vessels were trying to do, saying only that their actions were "unsafe and dangerous."
Asked why the tone of the U.S. statement was muted this time, he said: "We will be developing a way forward to deal with this diplomatically."
"USNS Victorious was conducting routine operations on Friday, May 1, in international waters in the Yellow Sea in accordance with customary international law, when two Chinese fishing vessels closed in on and maneuvered in close proximity to the Victorious," the Pentagon said in its statement. "The intentions of the Chinese fishing vessels were not known."
It said the Victorious radioed the WAGOR 17 Chinese government ship, which came and shined a light on one of the fishing vessels. Both of the fishing vessels then moved away.
"WAGOR 17 took positive steps, pursuant to their obligation under Article 94 of the United Nations Convention of the Law of the Sea, to ensure their flagged vessels navigate safely," the statement said.
Friday's incident followed others on Thursday, April 7 and April 8 in which Chinese-flagged fishing vessels approached too close to the Victorious and the USNS Loyal as they operated variously some 140 nautical miles, 185 miles and 200 miles off the coast of China, a defense official said privately.
In the first week of March, the Chinese over several days maneuvered vessels near Navy surveillance ships and sent aircraft to fly over them. In a particularly aggressive incident March 8, the Pentagon said, several Chinese ships surrounded the USNS Impeccable, coming within 25 feet and strewing debris in its path.
Those cases took place in a disputed band of water far off the Chinese coastline but within what Beijing considers a 200-mile economic zone under its control. The zone, under international law, gives a state certain rights over the use of natural resources there. That clashes with one of the cardinal principles of America's doctrine of ocean navigation — the right to unrestricted passage in international waters as long as vessels are not encroaching on the economic interests of the country they pass.
Associated Press writer Anne Gearan contributed to this report.
Title: Stratfor
Post by: Crafty_Dog on May 07, 2009, 09:06:53 AM
Summary

China has chosen short-term responses to the global economic crisis. While these may buy Beijing time, they only delay — and possibly undermine — real structural change. And that could portend a bigger Chinese crisis in the coming years.


China registered 6.1 percent gross domestic product (GDP) growth for the first quarter of 2009, down from the 6.8 percent growth rate for the fourth quarter of 2008. While this may appear fairly robust compared to the 6.1 percent decline in GDP registered in the United States for the same quarter (a number that was a slight improvement over the 6.3 percent decline in the fourth quarter of 2008), comparing these numbers is not comparing apples to apples. The United States, along with many other countries, notes GDP changes from quarter to quarter (the Q1 number is in comparison to the preceding Q4), whereas China counts changes year on year (Q1 is in comparison to the previous Q1).

By some estimates, as measured comparable to the U.S. system of accounting, China’s economy sunk to zero growth in Q4 2008, or even went negative — and that decline continued into Q1 2009. But even looking just at the year-to-year numbers, Chinese economists have quietly admitted that at least 4 percentage points of their growth figure are attributable to government stimulus monies, and that economic growth was really in the 1 or 2 percent range, far below government targets. Other observers of Chinese statistics agree with the 4 or so percentage points attributable to stimulus, but also suggest that some 2 or 3 percentage points are also exaggerations reported up the chain from lower levels of the bureaucracy to avoid falling too short of central government expectations, meaning that growth again was at zero or negative in the first quarter.

Amid a global economic crisis, even zero percent growth is not all that bad. But it is a significant problem for the Chinese leadership, which has placed excessive importance on the specific growth numbers, in part due to concern that a flagging economy could stir social instability and in part due to Communist Party legitimacy being linked to economic growth these days.

Beijing’s response has been a reversion to the tried-and-true methods of:

supporting export industries,
encouraging, via rewards or threats, the maintenance of employment levels by companies (even if this is unprofitable, contributes to overproduction, and delays or avoids the weeding out of the weak and inefficient in the Chinese economy), and
large-scale state spending (directly from government coffers or indirectly through a loan surge from major state-backed banks) designed to boost infrastructure development and underwrite a rise in domestic consumption of large items like automobiles and major appliances.
These measures may give Beijing some control over China’s looming unemployment problem, which is something officials fear but are still far behind in addressing, with social security and health care initiatives still largely in the formative stages, rather than well developed in preparation for the combination of a sustained economic slowdown and an aging population. But Beijing largely has stalled or reversed initiatives from the past several years that were designed to reform the economy into a less redundant, more efficient and flexible system better able to adapt to global change. In short, China’s short-term solutions to the global economic crisis are buying time, but they are delaying, if not undermining, real structural change. And that could portend a bigger Chinese crisis in the coming years.

The Chinese Bank Spending Spree
In the first quarter of 2009, Chinese banks went on a massive state-mandated lending spree. The so-called big three — the Industrial and Commercial Bank of China (ICBC), the China Construction Bank (CCB) and the Bank of China (BOC) — issued some 4.58 trillion yuan ($670 billion) in new loans during that quarter. Much of this purportedly was issued for major infrastructure projects as part of the government’s $586 billion stimulus package, though anecdotal reports suggest much went to state-owned enterprises (SOEs). The SOEs may have used the loans for market speculation, paying off earlier loans or maintaining payroll during the economic downturn rather than spending capital improvements and efficiency programs.

The first-quarter loans accounted for more than 90 percent of the initial government yearly loan targets, prompting concerns that after the initial flood of loans, liquidity would dry up for the rest of the year. But Chinese officials have now said new loans will not stop at the 5 trillion yuan (about $732 billion) target, and it has been suggested that total lending may be closer to 8 trillion or 9 trillion yuan (about $1.1 trillion or $1.3 trillion) for the year, and initial estimates put April new lending at 400 billion to 600 billion yuan (about $58 billion to $87 billion).

While lending has helped Chinese companies maintain employment levels during the economic slowdown, it also brings about renewed risks to the Chinese banking sector and undermines earlier nascent moves to try to drive Chinese businesses to be more profitable and efficient rather than to rely on state bailouts and loans to stay afloat. As the big three were issuing record quantities of new loans in the first quarter, their net profits were falling; the CCB reported an 18.2 percent decline for the quarter, and the BOC reported a 14.1 percent decline. Only the ICBC reported a net growth in profits (of some 6.2 percent), but according to the bank, this was due to a significant hike in fees and a dip in operating costs.

For each of the big three, loan interest makes up by far the bulk of operating income (79.5 percent for the ICBC, 77.5 percent for the CCB and 73 percent for the BOC). And the banks are noting narrowing margins on loan interest as the cause for their net profit declines. It is also likely that hidden within these numbers is a growing problem of loan repayment, particularly given reports of thousands of companies that have been shutting their doors since the fourth quarter of 2008 or turning unprofitable in the current economic environment.

While the lending spree is designed to give the economy a boost and maintain a system flush with liquidity to avoid the U.S.-style economic crunch, it is also increasing the risks of nonperforming loans (NPLs). This risks weakening the banks, which already were bailed out more than a decade ago to the tune of some $325 billion in transfer of bad debt to asset management corporations, thus cleaning the banks’ balance sheets.

It also reduces the pressure on Chinese companies (particularly state-owned companies) to reform their business practices and become more efficient and profitable rather than rely on government loans and incentives to operate. In addition, with most loans targeting state firms, China’s private companies remain on the back burner. This is another reversal of earlier initiatives to push for a greater role for the private sector aimed at making the system more susceptible to market forces, and thus more likely to weed out inefficient and outdated companies.

Avoiding the Oversupply Issue
One issue the government keeps coming back to (and keeps running away from just as quickly) is the massive oversupply of production in certain sectors of the Chinese economy. Much of the Chinese economy is made up of redundant, small, inefficient production facilities, the remnants of the old Mao-era encouragement of self-sufficient provinces and cities. Many of these redundancies remain because while inefficient on a national scale, they still provide employment, tax revenues and economic output numbers for the provincial and local officials. Few are willing to see their local industries shuttered to satisfy a national need to become more streamlined and efficient for the long run.

The new pressures building on China’s banks could not come at a worse time. In the mid-1990s, the run-up of bad debt was beginning to cause significant problems for the Chinese financial sector, and a bailout program was launched in 1999. The government took mounds of bad loans from the Chinese state banks, transferring them to new firms called asset management corporations (AMCs). In exchange, the AMCs issued bonds worth the full face value of the NPLs back to the banks, despite the fact that the NPLs were worth — at most — one-third of that. In one wave of the accounting wand, the state banks went from being anchored down by dud assets to being flush with cash.

Those bonds provided a huge boost to the banks’ balance sheets, as they were backed by China’s central bank, the People’s Bank of China, and so were as good as cash when determining how healthy the institutions were. This made the Chinese banks rather attractive with their initial public offerings, gaining foreign investment and expertise and limiting competition in the Chinese banking sector as it opened due to World Trade Organization regulations.

But the NPLs were never disposed of. These AMCs were supposed to follow the model of previous “bad bank” programs, disposing of the bad debt by forcing indebted firms to pay up or — if push came to shove — liquidating the firms for whatever salvageable assets might be sold off to pay the debt. But closing firms down, obviously, would mean adding to the ranks of the unemployed. So the AMCs instead simply held the bad debt — for 10 years — while the state banks used their shiny new cash-equivalent bonds to issue even more loans.

As 2009 rolls on, this strategy is coming back to haunt the government. The NPL bonds are structured so that the AMCs only need to pay interest, not principle and interest as with normal bonds. With the bond rates at approximately 2 percent, this has been a barely manageable task. (Remember, the AMCs have been disposing of very few actual dud companies, so their income has been tiny, though supplemented by some good assets also transferred at the time of their creation.) But all of the bonds in question are 10-year bonds, with the entire value of the principle due around the end of the year. Because very few NPLs actually have been disposed of, and because NPLs generally are worth less than one-third of their face value, the only way these bonds could be redeemed would be if the Ministry of Finance doled out the cash itself. After all, the AMCs were designed to do little more than simply hold the loans, not actually rehabilitate them.

When the Chinese economy was growing at double-digit rates, the banks could stay ahead of the potential problem of NPLs. But with the economy effectively stalling at the same time banks are being asked to significantly increase the issuance of new loans, a major problem may be brewing. This means one of three things has to happen:

The banks will have to write off these bonds, seeing a massive drop in their balance sheets.
The Ministry of Finance will have to step in and recapitalize.
The bonds will be rolled over, pushing the problem further out in the hopes that it either simply goes away or that the Chinese economy will have grown enough by that time to simply absorb the losses.
With the latter choice the most likely, and with the addition of some 5 trillion - 9 trillion yuan in new loans this year (with questionable performance on much of it), the Chinese are heading toward another future banking crisis. And the flight of foreign investors from Chinese banks certainly will not help this crisis.

In short, like many others, the Chinese are using short-term measures to deal with the current economic downturn. But these measures not only are building in renewed risks (like the compounding NPL problems), they also are reversing the small steps toward economic reform necessary for more stable and continued Chinese economic development. The government was able to boost domestic consumption in the first quarter of 2009, but this was primarily through coupons and incentives focused mainly on rural purchases of large appliances and automobiles. These are not sustainable efforts. Many Chinese economists have criticized the moves as building new dangers as rural consumers spend their meager savings on big-ticket items, leaving them with a car and refrigerator but no job or health insurance.

A Missed Opportunity
The surge in bank lending to Chinese companies, both for infrastructure projects and to cover old loans and payroll, also is not sustainable, particularly as bank profits fall, margins thin and the risk of a new surge in bad loans rises. And the strength of the Chinese economy remains undermined by allowing weak companies to be kept alive through loans and government incentives. The debate in Beijing is whether the financial crisis has offered China the opportunity to fundamentally make its economic system more profitable, efficient and able to adapt to changes in market forces, or whether the crisis is another moment when the government needs to do what it can to shore up the old system.

Beijing has chosen the latter path, which it deems less socially destabilizing, and thus greater government involvement in the economy will be expected. But the pent-up pressures on the Chinese economy, and on the Chinese leadership, are likely to be worse in the long run. And with the economy unlikely to return to double-digit growth anytime soon (if at all), the day of reckoning may come sooner rather than later.
Title: Re: China
Post by: DougMacG on May 07, 2009, 10:30:16 AM
"China registered 6.1 percent gross domestic product (GDP) growth for the first quarter of 2009, down from the 6.8 percent growth rate for the fourth quarter of 2008."

That's a bit hard to believe for an export-based economy with falling exports.  Considering all the false economic statistics bandied around here in the U.S., makes me wonder how accurate theirs are.  Strat goes on to question those numbers as well.  Their analysis is excellent IMO. 

The Chinese economy is less that one third of the US, with more than 4 times as many people to support.  The people's acceptance of the government comes from a) coercion and b) a sense of security including economic.  Not exactly positioned for large downturns or turmoil.

If a Chinese citizen wants accurate economic data I suppose they could just 'Google' it?  No, Google works with the oppressive government to ensure consistent censorship. http://news.bbc.co.uk/2/hi/technology/4645596.stm
Title: Re: China
Post by: G M on May 07, 2009, 01:22:15 PM
The economic numbers released by China are even less truthful than those from the Obama administration. If the scumbags in Beijing get desperate enough, the whole world will feel it.
Title: Riot at Chinese Hospital?
Post by: Body-by-Guinness on May 21, 2009, 09:53:52 AM
An interesting source documenting unrest in China. A list of recent incidents can be found here:

http://www.hkhkhk.com/english/indexen.html

Some 10,000 people storm hospital, clash with police in China's Chongqing

618 ¦r
2009 ¦~ 5 ¤ë 17 ¤é 00:32
BBC Monitoring Asia Pacific
^¤å
(c) 2009 The British Broadcasting Corporation. All Rights Reserved. No material may be reproduced except with the express permission of The British Broadcasting Corporation.
Text of report by Hong Kong Information Centre for Human Rights and Democracy on 14 May
[Report: "Some 10,000 People Stormed a PLA Hospital for Refusing To Save a Dying Person and Clashed With Police, Resulting in 10 People Injured"]

According to information obtained by this centre, yesterday a retired soldier who had participated in the 12 May rescue task accidentally fell down from the fifth story of a building. He was sent to the PLA's No 324 Hospital in Chongqing for emergency treatment. But the hospital refused to give him emergency treatment because his relative did not bring enough money to pay the required expense. As a result, the 23-year-old retired solider died. This matter aroused popular indignation.Yesterday, some 10,000 people stormed No 324 Hospital and clashed with the riot police. Ten people were injured when the police were beating the masses. To prevent more serious clashes, armed and riot police, numbering several hundreds, stayed in the vicinity of the hospital today to take precautions.

As this centre has learned, the retired soldier was doing cleaning work on the fifth floor of a building when he lost his footing and fell down. He was first sent to Chongqing's Nanqiaosi Hospital and then transferred to the No 324 Hospital for emergency treatment. At that time, because his relative did not bring enough money to pay the 20,000-yuan emergency treatment expense, the Emergency Centre of No 324 Hospital refused to give him emergency treatment. Despite repeated requests made by the relative, saying that the injured was a demobilized and retired soldier, the hospital still refused to do anything. Two hours later, when the relative came back with enough money, the 23-year-old lad had died. Extremely enraged, his family members came out in the afternoon to protest at the door of the hospital, holding a picture showing this young soldier in uniform. This news quickly spread in Chongqing, triggering indignation among the residents. By 6 pm, when people were going home from their workplaces, thousands of people had gathered in Jianxin East Road to stage a protest, blocking the traffic. By 8 pm the number of protestors had reached 10,000 and was still growing. They carried a banner bearing words that criticized the government and tried to break into the hospital. The riot police seized the pictures of the dead held by his family and the masses as well as the protesting banner, and a clash between the masses and police ensued. Ten people were injured when the police were beating the masses. At 10 pm the masses began to leave, while the family of the dead were taken away by several mini-buses. Even today they could not make contact with other people. Presumably, they are under house arrest. In response to our inquiry, the Guanyinqiao Police Station confirmed this incident. A worker of Boai Hospital, which faces No 324 Hospital across the street, confirmed that last night's protest involved more than 10,000 people. According to a doctor of that hospital, the family of the dead told the supporting masses that last year this retired soldier had rushed to rescue victims of the 12 May earthquake at the risk of his own life.

No 324 Hospital is a unit of the Chengdu Military Region. It is open to the public as a designated medical facility in Chongqing Municipality. It is also an emergency treatment centre in Chongqing's Jiangbei District.

14 May 2009, 2:30 pm

Source: Information Centre for Human Rights and Democracy, Hong Kong, in Chinese 14 May 09

aa139f29

http://www.hkhkhk.com/english/indexen.html
Title: Phantom Earnings?
Post by: Body-by-Guinness on June 03, 2009, 04:00:32 PM
China's dubious earnings numbers

Red flags
May 28th 2009 | HONG KONG
From The Economist print edition


Investors appear to have little faith in company accounts
CHINA’S stockmarket has been one of the best performing in the world this year, and the country’s firms have so far steered through the global financial crisis better than many of their global peers. Partly they may have been buoyed by robust business conditions in China. But two recent studies, which raise serious questions about the credibility of China’s corporate earnings, suggest that companies may also have had an artificial boost.

(http://media.economist.com/images/20090530/CFN518.gif)


The less damning of the two is issued under the auspices of the Hong Kong Monetary Authority and written by Giovanni Ferri, of Italy’s University of Bari, and Li-Gang Liu of BBVA, a bank. It argues that the profits of China’s large state-owned companies are entirely a product of subsidised financing by state banks, which lets them borrow much more cheaply than private or foreign firms (see chart).

To reach that conclusion the authors sifted through government data from 1999-2005. Mr Liu believes that such subsidies may have even increased since last summer, because the big state-owned enterprises have been the main beneficiaries of China’s economic stimulus. In the short term the subsidies will have boosted profits, not least compared with the firms’ credit-starved private peers. But in the longer term Mr Liu believes that the political component of the loans will mean capital is being allocated inefficiently, raising the prospect of future losses.

At least the academics are convinced that the profits are genuine, even if they are subsidised. But an exhaustive working paper by TJ Wong and Danqing Young, of the Chinese University of Hong Kong, and Xianjie He, of Shanghai University of Finance and Economics, reaches a more alarming conclusion. It suggests investors have little faith in the numbers.

To measure this they looked at Chinese firms before and after the country broke with its accounting traditions in 2007, adopting something akin to international accounting standards, which base valuations on market prices. They then dissected earnings in three ways. First, they compared how shifts in earnings correlated with shifts in share prices under the old accounting system and the new. An improvement in accounting practices should have meant a closer correlation between earnings and the performance of the share price. Not only did this not happen—there were some signs that things got worse.

Nor were there correlations between the share price and the shift in reported value of investment instruments, goodwill and the impairment of assets—all typically critical to an investor’s analysis. Lastly, the academics examined a nuance in the new standards that allowed Chinese firms to book profits by restructuring debt that was owed to affiliated companies. Before the change in accounting standards, this kind of debt restructuring was rare. Afterwards, it was common: more than 200 companies, or over 15% of those in the study, did it in 2007. This resulted in clear gains to earnings but no impact on share prices. So is there anything in the company reports that investors do consider to be meaningful? That, says Mr Wong, is the subject of the next study.

http://www.economist.com/finance/displaystory.cfm?story_id=13751636
Title: China's Smoot Hawley Moment Nears?
Post by: Body-by-Guinness on June 28, 2009, 04:53:44 PM
China's banks are an accident waiting to happen to every one of us
Fitch Ratings has been warning for some time that China's lenders are wading into dangerous water
 
By Ambrose Evans-Pritchard
Published: 5:38PM BST 28 Jun 2009

China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.
Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.
 
Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.
"With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said.

"Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear."
Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al). This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".

The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree".
Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate.

Fitch traces the 2009 bubble to the central bank's decision to cut interest on reserves to 0.72pc. Bankers responded to this "margin squeeze" by ramping up the volume of lending instead. Over half the new debt is short-term. Roll-over risk is rocketing. China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye.

Under the Taylor Rule, US policy remains tight (for the US). China's policy is loose (for China). New loans doubled in May from a year earlier, almost entirely to companies.
China's Banking Regulatory Commission fired a warning shot last week. "The top priority at the moment is to stop explosive lending. Banks should carefully monitor the process of credit approval and allocation, and make sure that loans flow into the real economy," it said.

Unfortunately, 40pc of the "real economy" consists of exports, mostly to the US and Europe, the consequence of a mercantilist export model that has qcrashed and burned. Chinese exports were down 26pc in May.

World trade may be stabilizing at last after contracting at faster rate than during the early Great Depression. But it will not rebound fast in a world where the US savings rate has risen to a 15-year high of 6.9pc. A trade policy based on the assumption that debtors in the Anglosphere and Europe's Club Med can ruin themselves for ever is absurd.

Andy Xie, a Sino-bear and commentator for Caijing, said Western analysts are in for a rude shock if they think that China's surging demand for raw materials implies genuine recovery.
Commodity speculators have been using cheap credit to play the arbitrage spread between futures and spot on the oil markets. They have even found ways to trade lumber to iron ore by sheer scale of leverage. "They've made everything open to speculation," he said.

Mr Xie thinks the spring recovery is an inventory spike, to be followed a double-dip downturn into next year as stimulus wears off.

Reformers know what must be done to boost consumption. China needs a welfare revolution. But creating a social security net takes time, and right now Beijing is facing a social crisis as 20m jobless workers retreat to the rural hinterland.

So the regime is resorting to hazardous methods to keep excess factories humming: issuing a "Buy China" decree: using a plethora of export subsidies; holding down the price of coke, bauxite, zinc and other resources to lower production costs (prompting a complaint from America and Europe); and suppressing the yuan, again.

Protectionism is a risky game for a country that lives off global trade and runs a surplus near 10pc of GDP. Mr Pettis said he fears China is nearing its "Smoot-Hawley moment", repeating the US tariff blunder of 1930 that brought the world crashing down on Washington's head.

Two facts stand out about China's green shoots. While the Shanghai composite index is up 70pc since November, Chinese imports are down 25pc from a year ago. China is still draining real stimulus from the global economy.

If the world's biggest surplus state ($400bn) is too structurally deformed to help offset the demand shock as Western debtors retrench, we are trapped in a long deflation slump.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5675198/Chinas-banks-are-an-accident-waiting-to-happen-to-every-one-of-us.html
Title: Re: China
Post by: Admin on June 29, 2009, 04:45:44 PM
Posted for Guro Crafty.

 This house was nearly finished already and  - one morning it tipped over. An earthquake? No - "made in China", Shanghai.

(http://dogbrothers.com/images/chinese_building.jpg)

(http://dogbrothers.com/images/chinese_building_01.jpg)

(http://dogbrothers.com/images/chinese_building_02.jpg)

(http://dogbrothers.com/images/chinese_building_03.jpg)
Title: Re: China
Post by: G M on July 12, 2009, 03:02:40 PM
http://www.ndtv.com/news/india/china_could_attack_india_by_2012_defence_journal.php

China could attack India before 2012, claims analyst

Press Trust of India, Sunday July 12, 2009, New Delhi


 
A leading defence expert has projected that China will attack India by 2012 to divert the attention of its own people from "unprecedented" internal dissent, growing unemployment and financial problems that are threatening the hold of Communists in that country.

"China will launch an attack on India before 2012. There are multiple reasons for a desperate Beijing to teach India the final lesson, thereby ensuring Chinese supremacy in Asia in this century," Bharat Verma, editor of the Indian Defence Review, has said.

Verma said the recession has "shut the Chinese exports shop", creating an "unprecedented internal social unrest" which in turn, was severely threatening the grip of the Communists over the society.

Among other reasons for this assessment were rising unemployment, flight of capital worth billions of dollars, depletion of its foreign exchange reserves and growing internal dissent, Verma said in an editorial in the forthcoming issue of the premier defence journal.

In addition to this, "The growing irrelevance of Pakistan, their right hand that operates against India on their behest, is increasing the Chinese nervousness," he said, adding that US President Barak Obama's Af-Pak policy was primarily Pak-Af policy that has "intelligently set the thief to catch the thief".

Verma said Beijing was "already rattled, with its proxy Pakistan now literally embroiled in a civil war, losing its sheen against India."

"Above all, it is worried over the growing alliance of India with the US and the West, because the alliance has the potential to create a technologically superior counterpoise.

"All these three concerns of Chinese Communists are best addressed by waging a war against pacifist India to achieve multiple strategic objectives," he said.

While China "covertly allowed" North Korea to test underground nuclear explosion and carry out missile trials, it was also "increasing its naval presence in South China Sea to coerce into submission those opposing its claim on the Sprately Islands," the defence expert said.

He said it would be "unwise" at this point of time for a recession-hit China to move against the Western interests, including Japan. "Therefore, the most attractive option is to attack a soft target like India and forcibly occupy its territory in the Northeast," Verma said.

But India is "least prepared" on ground to face the Chinese threat, he says and asks a series of questions on how will India respond to repulse the Chinese game plan or whether Indian leadership would be able to "take the heat of war".

"Is Indian military equipped to face the two-front wars by Beijing and Islamabad? Is the Indian civil administration geared to meet the internal security challenges that the external actors will sponsor simultaneously through their doctrine of unrestricted warfare?

"The answers are an unequivocal 'no'. Pacifist India is not ready by a long shot either on the internal or the external front," the defence journal editor says.

In view of the "imminent threat" posed by China, "the quickest way to swing out of pacifism to a state of assertion is by injecting military thinking in the civil administration to build the sinews. That will enormously increase the deliverables on ground -- from Lalgarh to Tawang," he says.
Title: Re: China
Post by: Crafty_Dog on July 12, 2009, 04:52:08 PM
Intriguing , , ,
Title: China v. India
Post by: Body-by-Guinness on July 13, 2009, 04:22:17 PM
Fear of influence
By James Lamont and Amy Kazmin
Published: July 12 2009 23:06 | Last updated: July 12 2009 23:06
Hambantota, in southern Sri Lanka, was a sleepy seaside village devastated by the 2004 tsunami. Famous for salt flats and a searing climate, it’s most celebrated building was a British-built watchtower, now home to a fisheries museum.

Gwadar, likewise, until seven years ago, was a fishing town in Baluchistan on Pakistan’s south-western shoreline. An enclave on the Arabian Sea given to Islamabad by the Aga Khan, it was not much thought of as a key staging point between central Asia and the Gulf.

Below: A military message from the new player on the block
Today these little-known towns are fast emerging on to a bigger political and economic map thanks to Chinese finance and engineering, which is upgrading their ports into world-class facilities. They are part of China’s so-called “string of pearls” – the ports, staging posts and hubs that analysts say describe expanding Chinese interests and diplomatic initiatives in south Asia. The outreach – or, to some, apparent encirclement – is underpinned by infrastructure projects, arms supplies, energy routes and diplomatic protection.

Nowhere is this development causing more disquiet than in India. As energy dumps and refineries, jetties and gantries emerge on neighbouring shores, New Delhi fears that Beijing is extending its power to control shipping lanes in the Indian Ocean and Arabian Sea – waves that it prefers to rule. The moves have the potential to intensify the competition – and scramble for resources – between the world’s fastest-growing big economies, both nuclear-armed powers.

EDITOR’S CHOICE
China accused of ‘predatory pricing’ tactics - Jun-14
China blocks ADB India loan plan - Apr-10
India follows China’s path in Africa - Apr-08
Chinese dragon roars over Indian industry - Jan-16
Analysis: India and China’s taste for luxury - Jan-10
The right questions on India and China - Feb-06
Arundhati Ghose, India’s former ambassador to the UN, says Beijing’s manoeuvring in south Asia is “causing us a lot of disquiet”. China is “flexing its muscles,” she says. “What they want to do is say ‘We are the big boys here and Asia can only afford one power’ ... The message is that the power in Asia is China, and this is her periphery, and China is the one which will determine what is going to happen here.”

Beijing insists that its intentions are peaceful, aimed at development.

Relations between the two sides have never recovered since a short-lived border war almost half a century ago. In June 1962, Chinese forces overran mountain regions in a bitter, high-altitude conflict.

The episode brought an abrupt end to the vision of Jawaharlal Nehru, India’s first prime minister, of brotherhood between the two countries. It also deeply wounded India’s confidence that it could defend itself.


Today, the cool relationship across the Himalayas continues to do harm. Trade between Asia’s two most powerful emerging markets may have grown, yet distrust allows neither to drop its guard. The territorial dispute still rankles, emblematic of a broader, and potentially more dangerous stand-off stirred by economic dynamism and rising military might.

While the People’s Daily, the mouthpiece of Chinese Communist party, claims Indians view China’s accomplishments with “awe”, Manmohan Singh, India’s prime minister, and his country’s corporate leaders boast that India’s democracy has more staying power than China’s one-party rule.

Friction has risen recently with the two sides sparring over multilateral loans, India’s civil nuclear deal with the US, and trade.

One of the most striking disagreements is China’s holding up approval of the Asian Development Bank’s loan assistance plan to India, on the grounds that it involved finance to territory it claims in India’s north-east. The Chinese opposition to the $2.9bn (€2.1bn, £1.8bn) plan – which earmarked $60m for flood management in the disputed region – is unusual and has left bank officials aghast at the treatment of India, its largest borrower. The Chinese have expressed “strong dissatisfaction” with the ADB saying it had no chance of changing “immense territorial disputes.”

Similarly, China sought to block India’s access to the nuclear supplies as the US administration of former president George W. Bush pursued a civil nuclear deal with New Delhi. That deal brought India’s nuclear programme out of decades of international isolation and was a milestone in its coming of age as a big power.

New Delhi has found ways to hit back. One weapon is trade. India has imposed bans on Chinese-made toys and mobile telephones. Another is troop deployment. It has recently aggravated China by bolstering its forces on the Himalayan border.

But while India can stem the tide of goods, it can do little about what it sees as regional encroachment in newly triumphant Sri Lanka, military-ruled Burma and arch rival Pakistan, and even the former mountain kingdom of Nepal.

Indian defence officials eye China’s activities in Sri Lanka with particular concern. – not least as the island overlooks important shipping lanes that carry much of the world’s oil trade.


Special relationship: Chinese and Pakistani troops on a drill in Karachi. The two nations share a common regional rival in India
Chinese military ordnance was decisive in the final stages of Colombo’s war against the Tamil Tigers, defence experts say. Beijing has increased its aid to Sri Lanka fivefold to $1bn a year and stepped up supplies of sophisticated weapons such as Jian-7 fighter jets, anti-aircraft guns and air surveillance radar.

As well as an arms supplier, China also served as important diplomatic ally to Sri Lanka, helping to deflect western criticism at the United Nations of Colombo’s human rights record in defeating the Tamil Tigers, which cost thousands of civilian lives.

“On both counts – diplomacy and arms supply – China has rendered invaluable help to Sri Lanka in its war effort against the Tamil Tigers,” says R. Hariharan, a retired colonel turned political analyst. Sri Lanka’s president, Mahinda Rajapaksa, cemented relations in 2007 by awarding Chinese companies the contracts for developing the Hambantota port, in his home constituency. The port, deeper than the one at Colombo, the capital, would provide docking and refuelling facilities for, among others, Chinese merchant and naval ships.

Such efforts, says Col Hariharan, could see Sri Lanka emerge as “a friendly cockpit” from which to keep an eye on key shipping lanes – yet another concern for India, which sees the island is the southern vanguard of its strategic defence.

To India’s east, China has emerged as the closest ally and international protector of Burma’s isolated military junta, which is shunned by most western governments and subjected to sanctions. China is Burma’s largest trading partner, and was long rumoured to have a listening post in southern Burma on the Bay of Bengal.

“I don’t think there is some nefarious Chinese scheme on Burma, but with western sanctions, there has been a vacuum in Burma and China has been happy to fill that vacuum,” says Thant Myint-U, an authority on the relationship between Burma, China and India.

Beijing, which has repeatedly shielded Burma in the UN Security Council, is being repaid with access to some of Burma’s rich trove of natural gas at “friendship” prices, according to some Burmese analysts. China is beginning the construction of a pipeline that will carry oil from Sittwe, on the Bay of Bengal, to China.

For Indian policymakers – some of whom still recall when Mandalay, Burma’s second city, was the eastern-most city in British India – Beijing’s close ties to the Burmese generals are a cause of deep concern.

“In Burma, the most atrocious and evil government is supported by China, and India has no choice but to do something about it so we are not totally zero there,” said one senior retired Indian diplomat, who asked not to be identified. “But we can’t be party to people [China] wounding and needling an animal in our forest and then leaving us to handle the wounded tiger.”

China is also allied to what many Indians consider their greatest threat: nuclear-armed Pakistan. Beijing provides financial and technical support to Islamabad and is described by some western diplomats as the Islamic republic’s most special relationship. Relations have deepened over the 40 years since Pakistan was slapped with US economic and military sanctions following its 1965 war with India.

“Pakistan considers China a well-trusted friend. There are virtually no issues between us,” says a Pakistani foreign ministry official.

The Gwadar port project, one of the highest-profile examples of Chinese assistance, envisages a naval anchor, and transport and energy transhipment links reaching all the way to Xinjiang province in China’s west.

China has also emerged as Pakistan’s largest supplier of defence hardware, and is helping renew the country’s jet fighter strike force.

Such links have prompted India’s more hawkish commentators, traditionally focused on the threat from Pakistan, to turn their attention to their more powerful neighbour. Some warn that China is an unstoppable results-driven business machine with little time for democratic niceties. “Each mayor and party secretary has objectives relating to investment, output and growth, which are aligned to national goals,” says Gurcharan Das, a Delhi-based political analyst and former chief executive of Procter & Gamble India.

Naresh Chandra, India’s former ambassador to the US and former cabinet secretary, says Beijing has little interest in partnering with New Delhi to develop a common regional approach.“They fail to recognise their own power to do good in Asia. Their entire thinking is based on the People’s Liberation Army” he says.

New Delhi’s anxieties have been exacerbated by growing deference to Beijing by western powers, particularly the US, who look to China’s economic dynamism to rescue the global economy from its current crisis.

“We are not in a position to take them on militarily, economically and now not even politically,” says Ms Ghose. “The only option we’ve got is diplomatic. At the moment, the US is of no help. ”

Many Indian officials prefer to be more bland in their comments about China, and its “string of pearls”. Kamal Nath, a senior cabinet minister and former trade negotiator, says India and China follow two different models but need not be antagonistic in pursuit of growth and power.

“It cannot be India versus China. It has to be India and China,” he says.

Additional reporting by Joe Leahy and Farhan Bokhari

A MILITARY MESSAGE FROM THE NEW PLAYER ON THE BLOCK

After the return of the Chinese naval expedition to fight piracy off the Somalia coast in May, Rear Admiral Du Jingchen, the commander of the fleet, declared the mission accomplished. “It was safe, smooth and satisfactory,” he said.

In truth, for China and the countries clustered around the Indian Ocean, the mission was much more, writes Richard McGregor.This was the first time Beijing had used its navy to escort vessels sailing under its national flag at such a distance from its homeland. The fact that Chinese ships transited through the Indian Ocean, an area New Delhi regards as its backyard, gave the event an extra geopolitical edge.

“The Indian Ocean is very important – it gives [China] a broader space,” says Bud Cole, a professor at the National War College, and an expert on the Chinese navy.

Like most displays of Chinese power, the naval mission said more about the future of Beijing’s influence than its authority today. The navy has little capability to conduct sustained missions far from home. As Mr Cole points out, it has only a handful of supply ships essential to such missions, and is not rushing to build many more.

But there is little doubt Beijing harbours long-term ambitions to build a navy with a capability that matches both its ambitions to be a great power and its swelling global economic interests.

The People’s Liberation Army and its naval wing moved beyond a singular focus on Taiwan “several years ago”, according to Alex Huang, of the Center for Strategic and International Studies in Taipei. “They are sending a message that the Chinese navy is going places, and that they are the new player on the block.”

Rear Admiral Yin Dunping, the vice-commander of the anti-piracy expedition, said in an interview on the mission’s conclusion that China needed a strong navy to safeguard its national interest.

“It is important to accelerate and improve the navy’s abilities to cross the ocean [to] escort, rescue and evacuate Chinese nationals abroad, maintain peace, and a variety of other military tasks,” he told Xinhua, the state news agency.

It is not just India and its neighbours that are feeling the effects of China’s rise. The US and its allies in the Pacific, including Japan, Australia and the Philippines, have all been forced to adjust their strategic outlook to take account of Beijing’s ambitions.

But few regions have been so methodically mapped out by China as the Indian Ocean and its environs, where Beijing has built or financed ports from Burma to Pakistan to draw a line of influence – the so-called “string of pearls” – from south-east Asia all the way to the Middle East.

Every new display of the navy’s latest hardware is accompanied by a statement from the Beijing leadership reassuring neighbours about China’s desire for peace and co-operation.

But as military strategists have long known, China’s mere presence in the region is a statement in itself. Once it is accompanied by military hardware, the power of the message will only be redoubled.

http://www.ft.com/cms/s/0/84a13062-6f0c-11de-9109-00144feabdc0,Authorised=true.html?nclick_check=1
Title: Re: China
Post by: G M on July 13, 2009, 07:18:33 PM
"Enough shovels of earth -- a mountain. Enough pails of water -- a river."

"A journey of a thousand miles begins with a single step."

"With time and patience the mulberry leaf becomes a silk gown."

China has been positioning it's pieces for decades. America's current weakness and China's internal pressures may well force China's hand.
Title: China - A little power struggle goiing on at the top?
Post by: DougMacG on July 16, 2009, 10:45:14 AM
I found this report interesting.

http://www.boxun.us/news/publish/chinanews/Hu_Jintao_Protege_Li_Keqiang_s_Two_Secretaries_Arrested_Cause_of_Hu_Jintao_s_Emergency_Return_From_G8.shtml

 Hu Jintao Protege Li Keqiang's Two Secretaries Arrested, Cause of Hu Jintao's Emergency Return From G8
By chinafreepress.org (translation)
Jul 9, 2009 - 12:47:29 PM

Hu Jintao Protege Li Keqiang's Two Secretaries Arrested, Cause of Hu Jintao's Emergency Return From G8

Boxun reports that most people assumed Hu Jintao left the G8 meeting in Italy early to return home because of the ongoing violence in Xinjiang. In fact he rushed back because He Guoqiang--head of the Central Commission for Discipline Inspection--had taken the opportunity of Hu's absence to detain Li Keqiang's two secretaries on corruption charges. In fact Li's assistants have accepted bribes to the tune of tens of millions of dollars. But this is a common phenomenon.

He Guoqiang took advantage of Hu's absence to spring his trap, having Premier Wen Jiabao sign off on the incriminating evidence and arrest warrant. Hu used the excuse of the events in Xinjiang to rush home to attend to this threat to his desired heir to the Party leadership position.
Title: Re: China - Much ado
Post by: DougMacG on August 27, 2009, 09:21:54 PM
The world's second largest, fastest growing economy and most populated country, but the inevitability that it will soon overtake the US as we enter the 'Age of China' deserves a little skepticism.  I don't agree 100% with this author but appreciate his key points including the historical perspective and the conclusion that our focus should be on getting our own house in order and then competition with China will go just fine for the U.S.

http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/08/22/conrad-black-much-ado-about-china.aspx

Much ado about China

Overblown announcements heralding the supposed coming of the Age of China have become a staple of journalistic futurism in recent years. When Maclean's magazine banners across the top of its cover "When China Rules the World," as it did last month -- and it is not a Monty Python send-up of swarms of incomprehensible people in Mao suits -- I know it is time to raise a peep of dissent.

Does any of this sound familiar? It was not even 20 years ago that the same was being said about Japan, when U. S. president George H. W. Bush went to Tokyo and was patronized by the Japanese prime minister for being at the head of a declining power. At an official dinner, the president vomited and returned to his embassy in an ambulance (but explained privately that his indigestion was the consequence of eating plain fish while facing Chrysler chairman Lee Iacocca for two hours).

And it was only 15 years before -- during the Carter doldrums, following the Kennedy assassinations and the debacles of Vietnam and Watergate -- that the world was abuzz with predictions that the U. S. S. R. would surpass the United States.

In fact, the most serious threat came from the Nazis. The official borders of Germany at the end of 1940, including Austria, Bohemia (the Czechs), Moravia, most of Poland, Denmark, Norway, Benelux and the Atlantic coast of France, gave the Reich 130 million people, the same population as the United States, and almost equivalent industrial potential. This was why Roosevelt ran for a third term, determined to help keep Britain (and Canada) in the war, and to assist all who resisted the Nazification of Europe. The Nazi threat was so serious that it required the entire combat strength of the British Commonwealth, the U.S. and the U.S.S.R. to defeat it.

In the Cold War that followed, the Soviet challenge simply imploded, crumbled, after 40 years of containment by a U. S.-led alliance, in which no fire was exchanged between the major powers. As for Japan, it simply ran out of steam, lost a whole decade in financial stagnation while its stock market declined by 90% -- even though it continued, to this day, to be a brilliant manufacturer and marketer of automobiles and many sophisticated products from cameras to television equipment.

None of this means that China won't continue to rise, or that the U. S. won't again have to prove its staying power as a world force. But matter-of-fact assertions, complete with timetables, of an imminent Chinese assumption of world leadership, are rubbish.

The takeaway message on the failure of the brief era of U. S. unipolarity that followed the demise of the U. S. S. R. is not that the U. S. is finished as the world's leading country, but that multipolarity, not the hegemony of a sole superpower, will replace the bipolarized Cold War. There are about 40 reasonably important countries in the world (of a total of 192), and the major powers will compete to build relations within that group.

The theory of the inevitable rise of China is similar to the recent theory of the inevitable end of the U. S. as a mainly Caucasian country: It is based on the extrapolation of current statistics that will not continue, and that in the case of the Chinese economy, are a fiction anyway.

China has a centrally directed economy, and calculates growth rates as a function of production, not spending; and production is deemed to occur when it is commissioned by the state. Thus, all Chinese predictions of economic growth are self-fulfilling: The central economic leadership orders production of toasters or submarines and announces construction of roads and sports stadiums, and the anticipated costs are added to the GDP at once. (In western countries, by contrast, GDP is the sum of consumption, investment, government spending and exports.)

The government monitors the progress of state construction and inventory levels, but doesn't release these numbers. It regularly claims 15% annual retail sales increases, but that reflects shipments to retail outlets, not sales, and even less, sales revenue. Such a system preserves some aspects of the catastrophic Soviet-style command economy. There are reports of consumer goods being virtually given away at point of sale, i. e., at below their cost of production.

All outsiders can do to judge the progress of demand is to see what the central bank does with credit and the money supply. The country has had a 21% decline in exports this year, so to achieve its 8% economic growth for 2009, there will have to be a 15% to 17% increase in domestic economic activity. There has been a strenuous effort to increase domestic demand, and the much-ballyhooed US$586-billion Chinese stimulus plan was really an excuse for the relaxation of credit and the redesignation of categories of already approved expenses.

The money-supply increase for this year is a very audacious 34.5%, to stimulate domestic demand. The two Shanghai stock exchanges almost doubled (before a recent 20% downturn) and major city residential prices are up around 13% so far this year. So bubbles are clearly developing. The country's claimed savings rate of 50% is not real, because it includes provision for all health care, retirement benefits and other social spending that is provided by the state in most western countries.

China claims to be expanding health care and other social services, but has not allocated realistic amounts to accomplish this. The country also has no credible legal system, and is rife with corruption (as evidenced by the shoddily built schools -- used as shelters during the recent earthquakes -- which were built on the cheap with no structural steel, and then collapsed, killing thousands of people). It has one billion peasants who largely live as they did 3,000 years ago. Almost every great urban development attracts swarms of expropriated people throwing rocks at bulldozer drivers, and the Chinese navy regularly steals the catches of commercial fishermen. The one-child-per-couple policy is creating an ageing and male-unbalanced population. It is a rough country, oscillating between near chaos and Tiananmen-like exertions of authority.

The rise of China is impressive and an objectively good thing, and the United states is labouring. But the U. S. has a functioning, if conspicuously imperfect, political and legal system, formidable resources, an incomparably productive work force, nearly four times China's GDP, and a popular culture that dominates the world. It must put its house in order, which will be painful, but a trifle compared to the challenges facing China. The United States has seen off greater challenges than this.
Title: Re: China
Post by: G M on August 28, 2009, 06:39:56 AM
Despite the problems within China, as articulated above they are educating a lot of children to be at the cutting edge of technology while our schools are churning out illiterates with overinflated self images and a vague loathing of America.
Title: Re: China
Post by: DougMacG on September 07, 2009, 07:28:03 PM
A story linked below says China is nervous about the US printing money.  That, I assume, is a world class understatement - they hold $2 trillion already and must feel like they are in quite a box to have to keep buying to protect their previous investments.

As I read the article, the meaning quickly turned upside down for me.  The US is in a lousy position economically right now, but China it seems to me is in an even more precarious situation because their bubble has continue to inflate even further and has yet to burst or correct.

From the story: "Mr Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China. "If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.  Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."

http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html
Title: Re: China
Post by: ccp on September 18, 2009, 11:40:09 AM
More China vs us - from Gertz.  They are going to beat us eventually.

http://www.washingtontimes.com/news/2009/sep/17/inside-the-ring-22287426/?page=2
Title: Biting the Hand the Bails your Dumb @$$ Out
Post by: Body-by-Guinness on September 25, 2009, 06:43:43 AM
Obama’s Great Chinese Bank Snobbery
The president foolishly disses America’s Chinese bankers.

By Deroy Murdock

In one of today’s richest ironies, America’s fiscal health — such as it is — hinges on the generosity of the Chinese Communist party. Annoying Beijing’s mandarins could prompt them to skip our Treasury auctions. If China stops lending the Treasury money to underwrite Uncle Sam’s spendaholism, the Federal Reserve will need to print even more dollars to nudge the day of reckoning back over the horizon.

The Chinese have urged Washington to stop spending and printing so much money, lest inflation turn China’s $800.5 billion in Treasuries into a giant misfortune cookie. Chinese officials have grown increasingly vocal — and decreasingly diplomatic — in asking the U.S. government to start practicing fiscal discipline.
“If they [the Fed] keep printing money to buy bonds, it will lead to inflation, and after a year or two the dollar will fall hard,” predicts Chen Siwei, former vice chairman of the Standing Committee of the Chinese National People’s Congress and now its green-energy guru. “Most of our foreign reserves are in U.S. bonds, and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies.” Ambrose Evans-Pritchard of London’s Daily Telegraph reported September 6 on Siwei’s remarks at the European House-Ambrosetti’s economic forum in Cernobbio, on Italy’s breathtaking Lake Como.

“Gold is definitely an alternative, but when we buy, the price goes up,” Siwei continued. “We have to do it carefully so as not to stimulate the markets.”

In other words, like a panda bear in a jewelry shop, China is tiptoeing away from the dollar and into gold, and doing so quietly enough not to rattle commodity and currency traders. This month, China also bought $50 billion in Special Drawing Rights, the International Monetary Fund’s brand-new Esperanto currency that blends euros, pounds, yen, and dollars.

“The U.S. spends tomorrow’s money today,” Siwei’s bluntly added. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

Siwei is absolutely right. The Bush-Obama administration’s fiscal incontinence is staggering, unprecedented, and potentially lethal. Fiscal year 2010’s budget deficit likely will reach $1.4 trillion. Far worse, the Heritage Foundation’s Brian Riedl estimates, President Obama will generate $13 trillion in fresh deficits by 2019, swelling publicly held national debt to $20 trillion, or 99 percent of gross domestic product.

(http://www2.nationalreview.com/dest/2009/09/24/bamabudgetdeficitsreach99percentofgdp.jpg)

Obama should shift into reverse. He should use his formidable persuasive skills to secure an immediate spending moratorium, slash the budget across the board by, say, 20 percent, and set future expenditures at or below inflation. If he cannot do this, America will have little choice but to keep the Chinese Communists cheerful and eager to buy U.S. bonds.


But rather than pursue the fiscal conservatism counseled by Siwei and other sober Chinese — or just keep Beijing calm and cooperative — Obama did something supremely idiotic: On September 11, he launched a trade war with Beijing.

For the next three years, Chinese tires will face a 35 percent import duty. This is like slashing your banker’s steel radials just before handing him your home-mortgage application. Fiscal recklessness aside, this is dreadful trade policy.

First, no surprise, the target of protectionism retaliated. China immediately commenced anti-dumping actions against U.S. chickens and auto parts. Americans in those industries soon will suffer.

So, too, Cooper Tire and Goodyear. These U.S. companies manufacture tires in China and now will pay a 35 percent tariff on each one they ship home.

Finally, poor Americans will lose as low-cost Chinese tires, some 17 percent of the U.S. market, suddenly dwindle. “I think within the next 60 days, you’ll see some pretty significant price increases,” Del-Nat Tire Corporation president Jim Mayfield predicted in September 14’s Wall Street Journal. He believes “entry level” tire costs will zoom 20 to 30 percent.

In yet another irony, Obama promised to be the multilateral, consensus-building antidote to the venomous George W. Bush and his allegedly go-it-alone, my-way-or-the-highway diplomacy. Today, Barack Obama looks like quite the unilateralist.

— Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution at Stanford University.

National Review Online - http://article.nationalreview.com/?q=ODYzM2Y5MDUwMWI0ZDc1ZGQ2ODNiMWRkZmQzNmVlZmY=
Title: Re: China
Post by: DougMacG on October 09, 2009, 09:39:44 PM
Copied here for follow up.  "For China I think the situation is the opposite of Russia.  They are highly dependent on the US economy, the dollar and the value of their already sunken investment."

GM:"I disagree Doug. China has us by the short and curlies. They couldn't build a military that could defeat ours for the amount of money they used to buy our debt. Now, they are using their financial leverage to bend us to their will. Unrestricted warfare, financial edition."
----

That's good.  We haven"t had enough disagreement around here since the French supermarket uprising.  :-)

Based on the size of the Chinese investment in the dollar already and the importance that US purchases of Chinese goods plays in their economy and based on my personal conjecture that their economic growth is built partly on a house of cards...

I just have to believe they are more worried than we are about whether the economic scare of the past year could turn sharply further for the worse and whether their political system, with a hundred people ruling a billion, would survive the chaos of a severe and prolonged economic crisis.  jmho

That said, they are of course our competitor and arch-rival in every other market in the world and somewhere between annoyance and enemy on nearly all matters of geopolitics.

But they don't win by crushing us economically.  They win more like a parasite feeding off of us as I see it.
Title: Re: China
Post by: G M on October 10, 2009, 07:05:31 AM
I'd agree with your parasite metaphor. China doesn't want us dead, just subservient to them.

Does internal instability scare the politburo? Yes, but that's why they have a police state that has made clear since 1989 that they will kill as many Chinese citizens as needed to retain control. There is no alternate government waiting in the wings, and given the rise of China in the new era of American weakness, Hong Kong, and especially Taiwan have much to fear.
Title: Re: China
Post by: G M on October 10, 2009, 07:47:17 AM
http://www.breitbart.com/print.php?id=CNG.35512cbc2c2778646bd8bce1a73746c8.1e1&show_article=1

Chinese dissidents let down by Obama Nobel
Oct 9 11:18 PM US/Eastern

China's dissidents are voicing unease about President Barack Obama's Nobel Peace Prize, saying that the award could have been effective in promoting human rights in their country.
Some in China's democracy movement are outraged at what they see as a weak stance on rights by Obama, who the same week as Friday's announcement avoided a meeting with Tibet's exiled Dalai Lama that would have upset Beijing.

Chinese activists had been tipped as Nobel contenders on this year of anniversaries, when China marked 60 years of communist rule, 50 years since the Dalai Lama's flight and 20 years since the crushing of the Tiananmen Square democracy uprising.

Potential laureates included Hu Jia, locked up since December 2007 after exposing government abuses and the plight of China's AIDS sufferers, and Wei Jingsheng, a onetime electrician who spent 18 years in prison after brazenly challenging former leader Deng Xiaoping to bring democracy.

Huang Ciping, an engineer turned activist who is executive director of Wei's Washington-based foundation, said that China "has come to such a turning point that the prize might have helped."

"The Nobel Peace Prize committee has the full right to decide to give coal to those who suffer and struggle or to present flowers to the powerful," she said.

But she said of the decision: "It is both a pity for the Chinese people and a danger to world peace."

Rebiya Kadeer, the exiled leader of China's Uighur minority, congratulated Obama but called on him to use the added prestige to put pressure on "dictatorships like China."

"I am very happy that he got it. Now he has to do something with the award. It raises expectations on him to stand up for oppressed nations," she told AFP.

Some 200 people died in July in clashes between Uighurs and China's majority Han in the country's worst ethnic bloodletting in decades.

Harry Wu, who spent nearly two decades toiling as a political prisoner and now tries to publicize the "laogai" prison camp system, said the Norwegian Nobel committee's decision was premature.

"Maybe at this moment, Obama's actions on peace and human rights do not seem too bad, but so far I do not think it is enough to prove that he is qualified as the Peace Prize winner," Wu said.

Obama nearly said as much in his humble statement on the award, in which he said: "To be honest, I do not feel I deserve to be in the company of so many of the transformative figures who have been honored by this prize."

But some exiled Chinese said the prize was not only premature but undeserved, pointing to the Obama administration's statements that human rights concerns will not hold back a growing relationship with China.

James B. Chen, a cancer researcher at the University of Arkansas, feared that the award could be seen as affirmation of focusing on economic ties with China or of Obama's decision to avoid the Dalai Lama.

"For nearly all of my friends, their first reaction was that they were very, very disappointed," Chen said. "They thought this is a major setback for human rights."

The White House has denied it snubbed the Dalai Lama, saying Obama will meet him after the president visits China next month.

The Dalai Lama is paying his first visit to Washington since 1991 that does not include a meeting with the president. But he said he had no hard feelings and sent a congratulatory letter to Obama.

The Tibetan monk, who won the Nobel Peace Prize in 1989 despite strong Chinese protests, told Obama that "the founding fathers of the United States have made this country the greatest democracy and a champion of freedom and liberty.

"It is, therefore, important for today's American leaders to adopt principled leadership based on these high ideals," he said.

"Such an approach will not only enhance the reputation of the United States, but also contribute tremendously to reducing tension in the world."
Title: Re: China
Post by: G M on October 10, 2009, 05:28:12 PM
http://money.cnn.com/galleries/2009/fortune/0910/gallery.china_shopping_list.fortune/index.html

Interesting.
Title: Re: China
Post by: Crafty_Dog on October 11, 2009, 04:46:24 AM
I note that Japan, which ran huge surpluses in the 1970 and 80s, similarly diversified off-shore-- and then it crashed and has not really recovered since then.

I'm not looking to be glib here, but I also think it important we not panic.  China's books are seriously cooked.  Due to its one child policy, it has a unique demographic profile where the old increasing outnumber the young-- and the disproportion between  male and female children is the highest in the world (due to abortions of girl babies because of the one child policy)-- if the TV piece I recently saw is true, the ratio is something like 13/10!
Title: Re: China
Post by: G M on October 11, 2009, 07:18:55 AM
1. Japan crashed because it tried massive "stimulus" spending rather than take a legitimate economic downturn as a natural part of the business cycle. God help any country that tries that.

2. Know what that 13/10 ratio means? A big army that will readily engage in attrition warfare without hesitation. I just hope it's pointed towards the 'stans rather than the pacific.

3. China could be managed if we had competent leadership. So much for that.....
Title: Re: China
Post by: Crafty_Dog on October 11, 2009, 08:43:41 AM
"1. Japan crashed because it tried massive "stimulus" spending rather than take a legitimate economic downturn as a natural part of the business cycle. God help any country that tries that."

Agreed.  Question:  Is China/Will China be doing that?

"2. Know what that 13/10 ratio means? A big army that will readily engage in attrition warfare without hesitation. I just hope it's pointed towards the 'stans rather than the Pacific."

A valid point to add to the mix-- but still, what are the implications of age demographics heavily weighted towards the old?

"3. China could be managed if we had competent leadership. So much for that....."   And there is the matter of wondering whose best interests BO and the people around him have at heart.
Title: Re: China
Post by: G M on October 11, 2009, 08:53:45 AM
China isn't just trying "cash for clunkers" vote buying like we are. They are positioning chess pieces on the global board. Our leadership is thinking "bread and circuses" to buy votes for 2010/2012. China is thinking generations ahead on their timeline.

Unlike us, the old don't have a vote in China. No need for the bastards in Beijing to appease them. China, above all will act to preserve stability, no matter the cost in lives.

BO and his ilk believe that their charisma and kumbayas will make the world a safe place. We will pay for this delusion in blood, possibly we will cease to exist as a result. Other countries most certainly will.

Title: Re: China
Post by: Crafty_Dog on October 16, 2009, 04:56:13 AM
I suppose I could put this in the Book Review thread, but I put it here:

By MATTHEW REES
It says something about the precarious state of the global economy that the world's most important economic relationship—between the U.S. and China—has been described by a leading economist as one of "codependency," akin, he has suggested, to that of a drug dealer and an addict.

According to this scenario, China (the dealer) exports low-priced goods to America (the addict), which can't stop consuming them. To keep the cycle going, China uses the dollars it accrues from its exports to buy billions of dollars in U.S. Treasurys. (As of September 2008, China became the largest holder of U.S. debt.) The infusion of foreign money helps to keep U.S. interest rates low, which in turn encourages more consumption. The arrangement worked for a while, but then (the scenario goes) the U.S. overdosed and suffered a breakdown. Now China is wondering about the wisdom of being a supplier. "We have lent a huge amount of money to the U.S.," said China's premier, Wen Jiabao, earlier this year. "Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried."

The relationship sounds rather dysfunctional, when put that way. But is it? In "Superfusion," Zachary Karabell notes certain tensions, but his focus is really on how the two economies became so intertwined and on why it is important to strengthen the bonds between them. Mr. Karabell rightly identifies this as "the crucial issue for the 21st century."

China and America are two of the world's three largest economies (alongside Japan). They traded $410 billion worth of goods in 2007, up from just $5 billion in 1980. Together they can sometimes account for more than half of the world's economic growth in a given year. An economic slowdown in either country can affect the entire global economy.

Yet the relationship—something each country should manage with extra care—is fraught with conflicts and misunderstandings and is threatened by domestic pressures. Mr. Karabell is critical of what he sees as the U.S. determination to "contest the rise of China every step of the way." He insightfully shows how fears of China's growing economic might are used as a battering ram against companies like Walmart—China's low labor costs are held to blame for the success of big-box stores, with their low-price goods. And of course China is a perfect villain for any lobbyist or politician who is eager to protect a U.S. manufacturer by curtailing trade.

In the past 18 months, however, the terms of the relationship have shifted dramatically. While the U.S. economy has been in recession, and the U.S. financial sector on the brink of collapse, China has managed to keep its own economy relatively stable. Its growth rate, though lower than usual, still came in at a robust 8% in the second quarter of 2009. And China's banking sector has experienced little of the turmoil of America's.

View Full Image
.Superfusion
By Zachary Karabell
Simon & Schuster, 340 pages, $26
.So who is now the senior partner, so to speak? For years China has been on the receiving end of lectures from U.S. officials—its undervalued currency, inefficient banking system and high saving rate are perennial scolding points. But China is now the one doing the lecturing. Last year, the chairman of the country's banking regulatory commission asked in a speech: "Does money-making or doing business justify the regulators in ignoring their duty for prudential supervision and their job of preventing misbehavior?" Senior Chinese officials have also been chatting up the idea of displacing the dollar as the world's reserve currency. And China has been on a buying spree. Its acquisitions of foreign companies, or investments in them, totaled $56 billion last year. As recently as 2002, the annual total was just $140 million.

Alas, these developments get short shrift in "Superfusion." Instead, there are chapters rehashing how U.S. companies like Kentucky Fried Chicken, Avon and Federal Express made their inroads into China. There is an odd chapter on the shortcomings of Chinese data collection that only briefly touches on the U.S.-China relationship. Mr. Karabell gives China's banking sector a careful analysis, but he treats many other topics superficially. In a discussion of last year's U.S. market turmoil, he simply speculates about what was said in conversations between the U.S. Treasury secretary and China's premier. Most of the book's material seems to be drawn from secondary sources.

Still, the question at the heart of "Superfusion" is a pressing one: What will happen next? Mr. Karabell says that the U.S. must turn its thinking away from the military and security challenges of the 20th century and focus more on the economic challenges of the 21st. If it does so, one key "metric"—for the U.S. and the rest of the world—will be China's growth rate. Can it be sustained?

That depends. With a meager welfare state, Chinese consumers save and save. The consumption rate is only about 35% of gross domestic product—down from 49% in 1990—and the lowest of any major world economy (the U.S. rate is 70%). At some point China will have to consume more, if only to be less dependent on exports for its prosperity. Other changes are needed, too. A 2007 property-rights law may stimulate the economy, assuming that it is enforced, but China still needs to undo an array of obstacles that face foreign investors and domestic entrepreneurs. In the World Bank's most recent study on the ease of doing business in 183 countries, China scored only 89th—and 151st in the category of "launching a business."

But there is reason for optimism. On a visit to London earlier this year, Wen Jiabao, China's premier, claimed to have brought a copy of Adam Smith's "Theory of Moral Sentiments"—not quite "The Wealth of Nations" but still better than Mao's "Little Red Book."

Mr. Rees is the president of Geonomica, a speech-writing and consulting firm in McLean, Va., and has worked for the Office of the U.S. Trade Representative.
Title: Re: China
Post by: G M on November 07, 2009, 08:50:24 AM
http://www.spiegel.de/international/business/0,1518,658977,00.html

Rare earth and intellectual capital forge the path to 21st. century dominance.
Title: Re: China
Post by: DougMacG on November 08, 2009, 08:01:42 AM
"http://www.spiegel.de/international/business/0,1518,658977,00.html
Rare earth and intellectual capital forge the path to 21st. century dominance."

Very interesting article, however I do not buy your conclusion.  As much as giving away precious metals didn't make sense, hoarding and keeping them from an already over-priced market does not maximize the return either IMHO.

I have looked at the quality of our economic competitors and believe the only thing stopping unimaginable prosperity in America this century is the enemy within.
Title: Re: China
Post by: G M on November 08, 2009, 12:48:03 PM
China is positioned to have a Saudi-like economic grasp on a vital natural resource. It will be another card in their deck to be played as needed.
Title: Re: China
Post by: Crafty_Dog on November 09, 2009, 08:29:40 PM
Related to GM's and Doug's posts?



Stratfor
---------------------------

 

CHINA, THE U.S. AND GLOBAL TRADE TENSIONS

THE UNITED STATES, THE EUROPEAN UNION AND MEXICO asked the World Trade Organization
(WTO) on Wednesday to establish a dispute settlement panel and investigate China's
restrictions on exports of nine key raw materials. The parties had sought formal
consultations during the summer, but with the U.S. Trade Representative spokesperson
saying that consultations have been unsatisfactory, they now are moving on to the
next level in their protests. The request for a settlement panel is the latest
evidence of rising trade tensions as governments strive to recover from the global
recession. And  more importantly, it draws attention to growing trade frictions
between the United States and China.

China claims the export restrictions are part of its pro-environmental resource
preservation policies. But the practice in question reveals something more integral
to China's economic system.

"A problem with this practice arises if one happens not to be China."

With a population of 1.3 billion people, China’s greatest fear is social
instability; therefore, the government goes to great lengths to keep employment
levels up. This requires maintaining production levels even in periods of low global
demand, rather than cutting back on excess capacity and creating hordes of
unemployed workers who might turn to protests. Hence, in the case of the raw
materials in the WTO situation, the central government directs industries to
stockpile massive amounts of raw materials for inputs and implements export
restrictions to ensure that the domestic supplies are high and domestic prices are
low. This cuts down on costs for producers, while subsidies are applied where needed
to make up for the lack of profits.

With a deluge of Chinese products pouring across the globe, competing manufacturers
are wiped out and China wins greater market share.

A problem with this practice arises if one happens not to be China. Prices for the
same raw materials are high because China is hoarding them, so manufacturers
elsewhere see costs rise and markets evaporate. This explains the unity in U.S., EU
and Mexican demands that China cease this practice. Export restrictions (not to
mention a variety of other charges against China) clearly violate WTO protocols --
and though Beijing did secure a list of exceptions when it joined the WTO, the
materials in this dispute are not included. According to WTO procedures, the four
countries will have 60 days to try to resolve the disputes through the consultation
process. It might be years before the trade body adjudicates a case like this. But
at present, it's the threat that counts.

Nevertheless, the timing of Washington's move seems counterintuitive. Next week,
U.S. President Barack Obama embarks on his first tour of Asia since taking office,
including a much-hyped three-day visit to China. Tensions are flaring on trade
issues ranging from tires, steel and chickens to intellectual property rights,
climate change policy, and broader economic matters like exchange rates and
deficits. Meanwhile, the Americans are concerned about China's stance on possible
U.S.-led sanctions against Iran, not to mention its expanding naval presence in the
South China Sea. At the meetings, both sides will seek to smooth out the ruffles:
Pledging cooperation despite differences and denouncing protectionism will be the
order of the day. So why would Washington want to escalate tensions now?

The answer lies in Obama's domestic situation. The president has come up against a
series of intractable problems that easily could spiral into crises for his
administration -- from the pending decision on U.S. strategy in Afghanistan, to the
showdown over Iran's nuclear program, to relations with Russia. Domestic woes, too,
have piled up, including unemployment and the debate over health care reform.

But there is one sure way that the Obama administration can unify its core
constituency -- from union workers to human rights activists -- and galvanize
support when needed. And that is to take aim at China.

Copyright 2009 Stratfor.

Title: Re: China
Post by: G M on November 11, 2009, 06:42:25 AM
http://www.politico.com/news/stories/1109/29330.html

If true, this will shake the world.
Title: Re: China
Post by: DougMacG on November 11, 2009, 09:36:44 AM
Between the China bulls and bears, I think the truth is somewhere in between.  There has been amazing growth but within that growth are numbers that wouldn't survive serious audit as well as a foundation built partly on a house of cards like bank loan portfolios etc.

Speaking of supply side, they actually lowered their corporate income tax rate in Jan. 2008 right while we were transitioning into Marxism.

It is actually good for the US economy to have the rest of the world strong economically.  In the case of China, my wish is for them to collapse to the point of breaking the regime, and then survive and grow as a free and strong economy that would challenge us to get our own economic house in order.  (Is that too much to ask?)
Title: Re: China
Post by: Crafty_Dog on November 12, 2009, 03:44:16 PM
How do you get 8% GDP?


Build cities where there are no residents. http://chinadigitaltimes.net/2009/11/chinas-empty-city/
Title: Re: China
Post by: G M on November 15, 2009, 08:15:11 AM
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/13/AR2009111303151_pf.html

And now for a somewhat alternate take.
Title: WSJ
Post by: Crafty_Dog on January 09, 2010, 07:00:04 AM
Can we get confirmation on this?  :-o
==================================

President Obama did right by Taiwan this week, allowing the sale—over Beijing's loud protests—of sophisticated antimissile batteries to the island democracy. We'll take that as a sign that there's a limit to how far the Administration is willing to go to improve relations with China at the expense of America's democratic allies.

The Bush Administration originally proposed the sale of an advanced Patriot ballistic missile interceptor system, or PAC-3, in 2001, as part of a package that included helicopters, submarines and technology upgrades. But Taiwan was eventually only offered about half of the deal, thanks to political bickering in Washington and Taipei. The formal request to Congress for the sale was only submitted in October 2008.

Meantime, the People's Liberation Army has more than 1,000 missiles pointed at Taiwan's 23 million people, and the Pentagon says it is adding about 100 missiles every year. Then there are the over 60 submarines China has patrolling the waters, plus its development of cyberwarfare capabilities and other asymmetrical threats. Taiwan itself can't possibly win an all-out war against China, but with U.S. help it can make the costs of a Chinese attack too prohibitive to contemplate seriously.

The argument against U.S. arms sales is that it clouds prospects for better relations between Taiwan and the mainland. But as Taiwanese President Ma Ying-jeou—a vocal advocate for a rapprochement with Beijing—has argued, the arms sales help the Taiwan-China dialogue by allowing Taipei to negotiate from a position of strength. Washington's own relationship with Beijing has hardly suffered over the three decades in which the U.S. has been selling arms to Taipei under terms of the 1979 Taiwan Relations Act.

None of this has prevented China from denouncing the deal, as it has previous sales. A Chinese government spokeswoman said Thursday the PAC-3 sale would cause "serious harm." China is also worked up about Taiwan's request to buy 66 F-16s to bolster its aging air force. The latter is still outstanding, as is about $6 billion worth of items that the Bush Administration didn't put forward for sale, such as Black Hawk helicopters, minesweepers and diesel submarines.

President Obama would be wise to approve those sales. As he has learned in recent months, his overtures to China—including his refusal to meet with the Dalai Lama—haven't been reciprocated in better cooperation on North Korea, Iran and other vital U.S. interests. The sooner Beijing learns this Administration will stand up for its friends, the friendlier it will itself become.
Title: Re: China
Post by: G M on January 09, 2010, 07:41:18 AM
http://www.reuters.com/article/idUSTRE6080DQ20100109?type=politicsNews

China again denounces U.S. arms sale to Taiwan
BEIJING
Fri Jan 8, 2010 11:32pm EST

Fri, Dec 4 2009
BEIJING (Reuters) - China on Saturday again denounced U.S. arms sales to Taiwan, saying they were an intrusion in Chinese internal affairs that risked undermining its relations with the United States.
Title: Re: China
Post by: G M on January 09, 2010, 07:43:41 AM
Nice to see Barry show a little spine. Of course the PRC will not let this go unaddressed.
Title: Re: China
Post by: Crafty_Dog on January 09, 2010, 07:58:48 PM


For those of you who haven't seen this yet:

http://www.zimbio.com/Barack+Obama/articles/fthL9FEqPPn/SNL+Obama+Skit+Shows+Economic+Crisis+China
Title: Google Quitting China?
Post by: Body-by-Guinness on January 13, 2010, 09:51:51 AM
What Google's Threat to Pull Out of China Really Means 28 comments
January 13, 2010 | about: GOOG / FXI / BIDU / YHOO   
Patrick Chovanec

An important news story is unfolding today in China. In the wee hours of this morning (Beijing time), David Drummond, Google’s (GOOG) Senior Vice President for Corporate Development and Chief Legal Officer, posted a statement on his blog. The gist of that statement is a business bombshell: Google, faced with what it sees as an intolerable level of censorship and harassment, has effectively decided to pull the plug on its China operations.

Drummond begins by describing the incident that immediately sparked this decision:

In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident … was something quite different … we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists.

Although Drummond does not explictly point the finger at the Chinese government as the perpetrator, it’s hard to read his words as implying anything else.

He goes on to note that when Google entered the Chinese market in 2006, it believed that the potential benefits outweighed some of the uncomfortable compromises it was forced to make. If this proved mistaken, the company pledged, it would reconsider its strategy. The recent cyberattacks, Drummond concludes, combined with China’s tightening controls over Internet access, have tipped the balance. As a result:

We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

I hear from reliable sources that, as of this morning, Google.cn has unilaterally lifted all of its censorship blocks and is running unfiltered in China. (A more recent report says that the famous “tank man” photo can be accessed, a major no-no as far as Chinese censors are concerned).

Tellingly, Drummond notes that Google’s decision was made in the U.S. “without the knowledge or involvement of our employees in China” — an effort, no doubt, to shield them from retaliation. In light of China’s arrest of four Rio Tinto employees last year on espionage charges following a series of commercial disagreements, Google’s concern is certainly understandable.

Although its statement is couched in diplomatic and open-ended language, make no mistake: Google has crossed the Rubicon. In the U.S., a statement like this might be just a tough-talk negotiating tactic, to see if the other side will blink. But in China, nobody issues an ultimatum — especially not to the government — unless they are fully expecting a final and irreconcilable break. As long as you have some hope of a favorable outcome, you bite your tongue. That’s precisely why Facebook, YouTube, and Twitter have uttered not a word of complaint, even as a six-month ban on accessing those sites has left their Chinese market share in ruins. Google’s decision to publicly throw down the gauntlet — a move sure to be seen by the Chinese government as a virtual declaration of war — is a sign the company has already written off China and is ready to pack its bags.

Some observers wonder whether Google is just using “human rights” as an excuse to fold a failing business, noting that its main Chinese competitor, Baidu (BIDU), has built up a 75% market share, leaving Google with just 18%. It’s certainly true that striking such a pose would win the company kudos from Congress, which was sharply critical of Yahoo (YHOO) when it handed over information to Chinese police that resulted in the arrest of a journalist.

Still, a company with Google’s resources doesn’t just abandon a huge market like China — even if it ranks a distant #2 — without good reason. There’s widespread feeling among foreign companies in China that the issues Google is complaining about are real, and serious. A senior person with a leading global tech company here in Beijing who I talked to, described Google’s announcement as “unprecedented,” and said it will make everyone rethink the way they do business in China. A diplomatic contact told me that the privacy and security issues raised were so serious that “the U.S. government’s response, or lack of response, will send a profound message” not just to China, but the entire world. Already, U.S. Secretary of State Hillary Clinton is demanding an explanation from China for the alleged cyberattacks.

If it does leave, to my knowledge, Google will be the first major U.S. company to quit China explicitly for reasons of political interference — and that marks a very significant development. China has always operated on the assumption that, no matter how they might grumble, foreign investors will ultimately accept whatever strictures China dishes out because nobody, in the end, is willing to walk away from the Chinese market. Google’s decision seriously undermines that assumption. There is a breaking point.
Update: The latest news I'm hearing over Twitter is that

Google is alternatively denying that you can access "tank man" photos through its Chinese site, or saying you always could, while some are reporting it has turned its censoring filters back on again

China has had a remarkably cautious initial response, saying it needs "to study" the Google allegations. I can confirm that, at this moment, Google.cn and Gmail.com are still accessible from China, which really surprises me.

These developments raise two possibilities I did not previously entertain. The first is that Google has the unique size, visibility, and prestige to really play hardball with China, and that turning its censorship filters off and on again was a way to send a message to China that it is willing to hit the "nuclear" button, but is open to talking. The second is that the Chinese government is not completely unified on this issue, that the elements that (allegedly) attacked Google have created an unwelcome mess for other elements concerned that China's business reputation would be damaged if Google picks up its toys and goes home. It is quite possible that both scenarios are true, or neither. The story unfolds ... and is well worth monitoring closely. How it plays out will shape business-government relations in China in significant ways.

http://seekingalpha.com/article/182275-what-google-s-threat-to-pull-out-of-china-really-means?source=email_most_popular
Title: POTH: Google shows more b*lls than BO
Post by: Crafty_Dog on January 15, 2010, 06:31:45 AM
By DAVID E. SANGER and JOHN MARKOFF
Published: January 14, 2010
SANTA CLARA, Calif. — Last month, when Google engineers at their sprawling campus in Silicon Valley began to suspect that Chinese intruders were breaking into private Gmail accounts, the company began a secret counteroffensive.

It managed to gain access to a computer in Taiwan that it suspected of being the source of the attacks. Peering inside that machine, company engineers actually saw evidence of the aftermath of the attacks, not only at Google, but also at at least 33 other companies, including Adobe Systems, Northrop Grumman and Juniper Networks, according to a government consultant who has spoken with the investigators.

Seeing the breadth of the problem, they alerted American intelligence and law enforcement officials and worked with them to assemble powerful evidence that the masterminds of the attacks were not in Taiwan, but on the Chinese mainland.

But while much of the evidence, including the sophistication of the attacks, strongly suggested an operation run by Chinese government agencies, or at least approved by them, company engineers could not definitively prove their case. Today that uncertainty, along with concerns about confronting the Chinese without strong evidence, has frozen the Obama administration’s response to the intrusion, one of the biggest cyberattacks of its kind, and to some extent the response of other targets, including some of the most prominent American companies.

President Obama, who has repeatedly warned of the country’s vulnerability to devastating cyberattacks, has said nothing in public about one of the biggest examples since he took office. And the White House, while repeating Mr. Obama’s calls for Internet freedom, has not publicly demanded a Chinese government investigation. Secretary of State Hillary Rodham Clinton, who had been the most senior U.S. official to talk of the seriousness of the breach, discussed it on Thursday with a Chinese diplomat in Washington, however, and a senior administration official said there would be a “démarche in coming days” — a diplomatic move.

On Thursday, China’s Foreign Ministry deflected questions about Google’s charges and dismissed its declaration that it would no longer “self-censor” searches conducted on google.cn, its Chinese search engine. A ministry spokeswoman said simply that online services in China must be conducted “in accordance with the law.”

In interviews in which they disclosed new details of their efforts to solve the mystery, Google engineers said they doubted that a nongovernmental actor could pull off something this broad and well organized, but they conceded that even their counterintelligence operation, taking over the Taiwan server, could not provide the kind of airtight evidence needed to prove the case.

The murkiness of the attacks is no surprise. For years the National Security Agency and other arms of the United States government have struggled with the question of “attribution” of an attack; what makes cyberwar so unlike conventional war is that it is often impossible, even in retrospect, to find where the attack began, or who was responsible.

The questions surrounding the Google attacks have companies doing business in China scrambling to confirm that they were victims. Symantec, Adobe and Juniper Networks acknowledged in interviews that they were investigating whether they had been attacked. Northrop and Yahoo, also described as subjects of the attacks, declined to comment.

Besides being unable to firmly establish the source of the attacks, Google investigators have been unable to determine the goal: to gain commercial advantage; insert spyware; break into the Gmail accounts of Chinese dissidents and American experts on China who frequently exchange e-mail messages with administration officials; or all three. In fact, at least one prominent Washington research organization with close ties to administration officials was among those hacked, according to one person familiar with the episode.

Even as the United States and companies doing business in China assess the impact, the attacks signal the arrival of a new kind of conflict between the world’s No. 1 economic superpower and the country that, by year’s end, will overtake Japan to become No. 2.

It makes the tensions of the past, over China’s territorial claims or even the collision of an American spy plane and Chinese fighter pilots nine years ago, seem as outdated as a grainy film clip of Mao reviewing the May Day parade. But it also lays bare the degree to which China and the United States are engaged in daily cyberbattles, a covert war of offense and defense on which America is already spending billions of dollars a year.

Computer experts who track the thousands of daily attacks on corporate and government computer sites report that the majority of sophisticated attacks seem to emanate from China. What they cannot say is whether the hackers are operating on behalf of the Chinese state or in a haven that the Chinese have encouraged.

The latest episode illuminates the ambiguities.

For example, the servers that carried out many of the attacks were based in Taiwan, though a Google executive said “it only took a few seconds to determine that the real origin was on the mainland.” And at Google’s headquarters in Mountain View, there is little doubt that Beijing was behind the attacks. Partly that is because while Mr. Obama was hailing a new era of cautious cooperation with China, Google was complaining of mounting confrontation, chiefly over Chinese pressure on it to make sure Chinese users could not directly link to the American-based “google.com” site, to evade much of the censorship the company had reluctantly imposed on its main Chinese portal, google.cn.

“Everything we are learning is that in this case the Chinese government got caught with its hand in the cookie jar,” said James A. Lewis, a senior fellow at the Center for Strategic and International Studies in Washington, who consulted for the White House on cybersecurity last spring. “Would it hold up in court? No. But China is the only government in the world obsessed about Tibet, and that issue goes right to the heart of their vision of political survival and putting down the separatists’ movements.”

Over the years, there have been private warnings issued to China, notably after an attack on the computer systems used by the office of the defense secretary two years ago. A senior military official said in December that that attack “raised a lot of alarm bells,” but the attacker could not be pinpointed. The administration cautioned Chinese officials that attacks seemingly aimed at the national security leadership would not be tolerated, according to one American who took part in delivering that message.

David E. Sanger reported from Santa Clara, and John Markoff from San Francisco. Mark Landler contributed reporting from Washington.
Title: China Mulls Overseas Bases
Post by: Body-by-Guinness on January 29, 2010, 04:01:24 PM
Chinese Security Scholar Calls for Overseas Basing to Counter U.S.

Posted by Justin Logan

Dr. Dingli Shen, a scholar of security studies and Chinese and U.S. foreign policies at Fudan University, had an interesting op-ed yesterday that merits attention.


Dr. Dingli Shen

According to Shen, China should consider developing “overseas military bases,” which he says people define in today’s context as “supply bases for the navy escorting the ships cruising in the Gulf of Aden and Somalia.”  Shen lists four main interests that justify overseas bases: “the protection of the people and fortunes overseas; the guarantee of smooth trading; the prevention of the overseas intervention which harms the unity of the country and the defense against foreign invasion.”

The lay reader should be clear that the United States does not look favorably on China’s developing the ability to guarantee its own smooth trading; we like having the leverage to determine, ultimately,whether we will allow foreign countries to trade.  The reader should also be aware that the third interest Shen lists is a diplomatic phrasing of “being able to prevent U.S. intervention in Taiwan,” perhaps in addition to some much smaller concerns about Tibet.  The Chinese do not need to do anything to pursue the fourth listed interest, preventing foreign invasion of China.  So what’s left is protecting Chinese people and money overseas; wresting control of China’s sea lines of communication from the United States; and preventing U.S. intervention in ways that would “harm the unity of the country.”


The piece really goes out of its way to make clear that this is all about countering American military power.

For instance, his first example justifying a greater role for China abroad is the Korean War.  According to Shen, “China had no option but to call up volunteer soldiers to fight against the overseas intervention in its northern neighbor.”  Later in the piece he makes clear that although he believes in each of the four interests above,

[t]he real threat to us is not posed by the pirates but by the countries which block our trade route.

The threats also include secessionism outside the Chinese mainland. The situation requires us be able to hit the vulnerable points of our potential opponents by restricting their international waterway.

In closing, he acknowledges three potential obstacles to successfully developing these overseas bases: “relations between base troops and the host countries,” “the relationship between the base troops and the countries neighboring to the host country,” and “the relationship between the big countries in the world.”  With respect to the latter, Shen notes,

It is inevitable for some countries to suspect our good intention in maintaining the world peace, but their suspicion shall not become an obstacle to our military base strategies. Currently, America, France and Britain own a majority of troop bases in the world. Yet China seldom felt being threatened by the military bases set up by Britain and France. Therefore, we have no reasons to feel that the military bases we set up will agitate other countries. (emphasis mine)

Note the shift from the three countries who have the majority of overseas bases at present to the two countries whose bases don’t concern China.

A few thoughts:

1) How did this debate start?  Shen refers to debates “online,” but presumably this issue has been taken up in greater detail recently in Chinese strategic studies journals.  I’d be interested to see the trajectory of this discussion both there and in public.

2) Why such an expressly anti-U.S.-hegemony tone?  This sort of thing is not exactly conducive to cloaking China’s growing military power in mystery.  The rhetoric about “peaceful rise,” remember, was viewed as too provocative because it included the word “rise,” so it got switched to “peaceful development,” which was viewed as sufficiently diplomatic.  But just coming out and saying “we need overseas bases to counter the U.S. military” like this is running, not walking, in the opposite direction.  This analysis sounds positively Mearsheimerian.  Why is this debate being carried out in this manner, in public and now in English?

3) How does this (or doesn’t it) tie in to prospective Chinese aircraft carrier capabilities?  As one recent article noted,

A PLAN carrier would have the effect of extending Chinese air capabilities without requiring overseas air bases. Nonetheless, while a nuclear carrier may be homeported in China, supplying it with jet fuel, food, ammunition, and other consumables becomes harder with distance. The U.S. Navy solves this problem with an extensive series of overseas logistics bases and large, fast replenishment ships that support the operations of carriers, themselves operating largely from the continental United States. Lacking such support mechanisms, a Chinese carrier is likely to stay closer to home, but it may still require a Chinese support presence overseas.

So then should we interpret such a call for overseas basing as reflecting a continuation of the “string of pearls” orientation of the PLAN, or as laying the groundwork for allowing carriers to operate farther away from Chinese ports?

http://www.cato-at-liberty.org/2010/01/29/chinese-security-scholar-calls-for-overseas-basing-to-counter-us/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Cato-at-liberty+%28Cato+at+Liberty%29
Title: Strat's take on the same piece
Post by: Crafty_Dog on January 29, 2010, 09:44:42 PM
China's Planned Evolution of Naval Capabilities
THE CHINA INTERNET INFORMATION CENTER, an online outlet for news and information run by the Chinese central government, published a commentary on Thursday discussing China’s right to build overseas bases to support naval operations and protect Chinese interests abroad. The article, written by Fudan University’s Institute of International Studies executive dean Shen Dingli, is a response to debates inside China and abroad over whether Beijing should establish naval bases, supply depots and related facilities overseas to support China’s naval participation in anti-piracy operations off the coast of Somalia, and ultimately defend China’s broader maritime interests.

The article comes a day after Captain Chris Chambers, director of operations for the U.S.-led Combined Maritime Forces (CMF), which jointly heads the Shared Awareness and Deconfliction (SHADE) working group that helps coordinate multinational anti-piracy operations off of the Somali coast, told a conference in Singapore that China would soon be enhancing its participation in SHADE, and would take on the rotating leadership role in the working group in a few months. Currently SHADE leadership rotates between the CMF and European Union maritime forces and coordinates operations among these and other independent anti-piracy forces in the area.

China will be the first nation participating in the anti-piracy operations to take a leadership role in SHADE, and will expand its naval contribution above its current three-ship task force and take responsibility for patrolling an area with more active piracy. The expansion of China’s contributions and coordinating role are currently awaiting final approval in Beijing, and the extended mission is raising the discussion of a resupply base in the Indian Ocean basin to ease logistics for maintaining China’s fleet. China has kept an anti-piracy task force in the area since December 2008 and has not indicated it is leaving anytime soon. This makes a more local supply depot something that would ease the logistical burden of maintaining the small fleet so far from mainland China.

“The idea of Chinese bases abroad, particularly in the Indian Ocean, immediately raises concerns that China is growing more active and aggressive in its naval activities.”

Beijing has used the anti-piracy operations to demonstrate its growing participation in international operations and develop capabilities to deploy Chinese naval forces far from home for an extended period of time. A natural outgrowth of this is the discussion of establishing overseas naval bases, or at least arranging docking and resupply agreements at other countries’ ports to sustain Chinese maritime operations. But the idea of Chinese bases abroad, particularly in the Indian Ocean, immediately raises concerns in India and elsewhere that China is growing more active and aggressive in its naval activities.

In some sense, these perceptions are accurate, at least so far as China’s planned evolution of capabilities are concerned. China’s economic growth has led to a major shift in the country’s resource needs. China now imports large amounts of raw materials, including oil and minerals, from the Middle East and Africa. As China grows more dependent upon the steady flow of these supplies, it has also grown concerned about the security of its supply lines.

China has long been a land power and its forays into international waters have been few and far between, despite a series of explorations along the Indian and African coasts in the 15th century. Redesigning and training its navy to take a more active role in maritime security is now a major focus of its recent military reforms and a key area is the ability to protect one of its main supply arteries through the Indian Ocean. Beijing has been cautious in this task as it faces opposition from India and the United States, both of which have a much stronger and more secure presence in the region, and both of which have little interest in seeing China significantly expand its naval capabilities.

The anti-piracy operations have given Beijing the perfect opportunity to test and refine its capabilities in a non-threatening manner, and talk of resupply bases — and thus a more permanent Chinese naval presence — is something Beijing is considering carefully but seriously. China is years, if not decades, away from having the ability to sustain a true blue water naval capability and even further from being able to truly challenge U.S. maritime dominance, but each step Beijing takes gives it the skills and experience necessary to make the next move forward. Taking a leadership role in SHADE also gives China a valuable opportunity to observe and learn the protocols and operations of other nations’ fleets — lessons it can apply to its own operations.

Beijing may be far from floating a blue water navy in any sustainable way, but China has recognized the vulnerability of its dependence on overseas resources and is actively working to improve its ability to protect its own supply lines. But when these lines match those of others with equal or even more severe dependencies, like Japan, or pass through competitor’s areas of strategic interest, like India or the United States, even a defensive intent can be perceived as potentially aggressive preparation or action. It is this sort of perception of capabilities that can quickly escalate into competition or an arms race and keep tensions high. It also creates room for misunderstandings and accidents — as we have already seen in China’s more active operations in the South China Sea, and in the U.S. moves to temper Beijing’s advances.
Title: Re: China
Post by: prentice crawford on January 29, 2010, 10:10:30 PM
 With Guro craftydog's previous post in mind.
www.orwelltoday.com/chinapanamaattack.shtml

                          P.C.
Title: Re: China
Post by: prentice crawford on January 30, 2010, 02:36:42 AM
China suspending military exchanges with the U.S.
msnbc.com news services

Beijing - China will suspend mutual military exchanges with the U.S. over its arms sales to Taiwan, state news agency Xinhua said on Saturday.
 "Considering the severe harm and disgusting effect of U.S. arms sales to Taiwan, the Chinese side has decided to suspend planned mutual visits," Xinhua quoted the Defense Ministry as saying.

Earlier, China angrily warned the U.S. that the plan to sell 6.4 billion in arms to Taiwan would seriously harm already-strained ties. One Chinese expert said the sale would give Beijing a "fair and proper reason" to accelerate weapons testing.

The U.S. is "obstinately making the wrong decision," China's Foreign Ministry said in a statement on its Web site.

'Consequences'

It said Vice Foreign Minister He Yafei warned the U.S. Embassy that the planned sale would "cause consequences that both sides are unwilling to see" and "seriously harm U.S.-Sino relations" He urged that it be immediately canceled, it said.

A spokeswoman for the U.S. Embassy, Susan Stevenson, confirmed that China expressed its views, and said the Embassy had no comment.

A notification of the planned sale posted Friday on a Pentagon Web site said it would include 60 UH-60M Black Hawk helicopters,114 Patriot Advanced Capability-3 missiles, mine hunting ships and information technology. U.S. lawmakers have 30 days to comment on the proposed sale; without objections, it would proceed.

Taiwan is the most sensitive issue in U.S.-China relations, with the potential to plunge into conflict two powers increasingly linked in security and economic issues. China claims the selfgoverning island as its own, while the U.S. is Taiwan's most important ally and largest arms supplier.

China vehemently opposes U.S. arms sales to Taiwan, and has threatened to invade should it ever formalize its de facto independence.

The U.S., which told China of the sale only hours before the announcement, acknowledged that Beijing may retaliate by temporarily cutting off military talks with Washington, which happened after the former Bush administration announced a multibillion-dollar arms sale to Taiwan in 2008.

No F-16 fighters

"Maybe the People's Liberation Army will accelerate weapons testing, because this time we have a fair and proper reason to do so," said Jin Canrong, a professor of international studies at China's Renmin University.

The package, however, dodges a thorny issue: the F16 fighter jets that Taiwan covets are not included.

The Pentagon's decision not to include the fighters and a design plan for diesel subs - two items Taiwan wants most - "shows that the Obama administration is deeply concerned about China's response," said Wang Kao-cheng, a defense expert at Taipei's Tamkang University.

China has more than 1,000 ballistic missiles aimed at Taiwan. The U.S. government is bound by law to ensure the island is able to respond to Chinese threats.

 www.msnbc.msn.com/id/35146506/ns/world_news-asiapacific

                               P.C.
Title: Re: China
Post by: Rarick on January 30, 2010, 06:20:55 AM
With Guro craftydog's previous post in mind.
www.orwelltoday.com/chinapanamaattack.shtml

                          P.C.

We could always take it back in something less than a couple days if we needed to, say in the case of this company wanting to do some sort of denial of service attack.   The ability of china to project power is still devweloping and they would not be able to do anything aside from a trade embargo and that would hurt them more than us.
Title: Re: China
Post by: Crafty_Dog on January 30, 2010, 07:19:10 AM
With our accumulating and seemingly accelerating economic, political, and military weakness there is going to be more and more of this.

My guess is that BO looks for an exit from Afpakia, he has already committed to an exit from Iraq, Iran will get the bomb, and Russia already retakes the Ukraine (and prepares Georgia) and the confidence of the Poles and the Czechs in our work is minimal.  Seeing this Turkey will not place much value on our friendship.

But I digress-- this thread is about China.  On our current path, China is preparing to retake Taiwan.
Title: Re: China
Post by: Body-by-Guinness on January 30, 2010, 07:29:40 AM
China thinks in terms of generations; we can barely think past the next election cycle. I fear what our shortsightedness will bring.
Title: Re: China
Post by: prentice crawford on January 30, 2010, 05:42:05 PM
 But isn't that the plan, knock the U.S. out of super power status, level the playing field to make globalisation of government possible? It doesn't seem to matter to these ideologically insane lunatics that this could lead to China and Russia reemerging as super powers and leaving us so weak that they will seek our end. We are screwed guys. Some Leftist have suffered an ideopsychotic break and actually think that their theories work in reality.
                                   P.C.
                                
Title: China's new tone
Post by: Crafty_Dog on January 31, 2010, 05:30:36 PM
The meaning of the last sentence is not clear to me, but an interesting read nonetheless.
=================

China's strident tone raises concerns among Western governments, analysts
By John Pomfret
Washington Post Staff Writer
Sunday, January 31, 2010;

China's indignant reaction to the announcement of U.S. plans to sell weapons to Taiwan appears to be in keeping with a new triumphalist attitude from Beijing that is worrying governments and analysts across the globe.

From the Copenhagen climate change conference to Internet freedom to China's border with India, China observers have noticed a tough tone emanating from its government, its representatives and influential analysts from its state-funded think tanks.

Calling in U.S. Ambassador Jon Huntsman on Saturday, Chinese Vice Foreign Minister He Yafei said the United States would be responsible for "serious repercussions" if it did not reverse the decision to sell Taiwan $6.4 billion worth of helicopters, Patriot Advanced Capability-3 missiles, minesweepers and communications gear. The reaction came even though China has known for months about the planned deal, U.S. officials said.

"There has been a change in China's attitude," said Kenneth G. Lieberthal, a former senior National Security Council official who is currently at the Brookings Institution. "The Chinese find with startling speed that people have come to view them as a major global player. And that has fed a sense of confidence."

Lieberthal said another factor in China's new tone is a sense that after two centuries of exploitation by the West, China is resuming its role as one of the great nations of the world.

This new posture has befuddled Western officials and analysts: Is it just China's tone that is changing or are its policies changing as well?

In a case in point, one senior U.S. official termed as unusual China's behavior at the December climate conference, during which China publicly reprimanded White House envoy Todd Stern, dispatched a Foreign Ministry functionary to an event for state leaders and fought strenuously against fixed targets for emission cuts in the developed world.

Another issue is Internet freedom and cybersecurity, highlighted by Google's recent threat to leave China unless the country stops its Web censorship. At China's request, that topic was left off the table at this year's World Economic Forum in Davos, Switzerland, Josef Ackermann, chief executive of Deutsche Bank and co-chairman of the event, told Bloomberg News. The forum ends Sunday.

China dismisses concerns

Analysts say a combination of hubris and insecurity appears to be driving China's mood. On one hand, Beijing thinks that the relative ease with which it skated over the global financial crisis underscores the superiority of its system and that China is not only rising but has arrived on the global stage -- much faster than anyone could have predicted. On the other, recent uprisings in the western regions of Tibet and Xinjiang have fed Chinese leaders' insecurity about their one-party state. As such, any perceived threat to their power is met with a backlash.

A spokesman for the Chinese Embassy in Washington said China's tone had not changed.

"China's positions on issues like arms sales to Taiwan and Tibet have been consistent and clear," Wang Baodong said, "as these issues bear on sovereignty and territorial integrity, which are closely related to Chinese core national interests."

The unease over China's new tone is shared by Europeans as well. "How Should Europe Respond to China's Strident Rise?" is the title of a new paper from the Center for European Reform. Just two years earlier, its author, institute director Charles Grant, had predicted that China and the European Union would shape the new world order.

"There is a real rethink going on about China in Europe," Grant said in an interview from Davos. "I don't think governments know what to do, but they know that their policies aren't working."

U.S. officials first began noticing the new Chinese attitude last year. Anecdotes range from the political to the personal.
At the World Economic Forum last year, Premier Wen Jiabao lambasted the United States for its economic mismanagement. A few weeks later, China's central bank questioned whether the dollar could continue to play its role as the international reserve currency.
And in another vignette, confirmed by several sources, a senior U.S. official involved in the economy hosted his Chinese counterpart, who then made a series of disparaging remarks about the bureau that the American ran. Later that night, the two were to dine at the American's house. The Chinese representatives called ahead, asking what was for dinner. They were informed that it was fish. "The director doesn't eat fish," one of them told his American interlocutor. "He wants steak. He says fish makes you weak." The menu was changed.

Tone with Europe, India

With Europe and India, China's strident tone has been even more apparent. In autumn 2008, China canceled a summit with the European Union after French President Nicolas Sarkozy met with the exiled Tibetan leader, the Dalai Lama. Before that, it had denounced German Chancellor Angela Merkel over her contacts with the Tibetan spiritual leader. And in recent weeks, it has engaged in a heated exchange with British officials over its moves to block a broader agreement at the climate conference.
At the Chinese Embassy, Wang differed on the climate issue. "China is strongly behind the idea of meeting the issue of climate change," he said, "but at the same time we think that there are some people who want to confuse the situation, and we feel the need to try to let the rest of the world know our position clearly."

China also suspended ties with Denmark after its prime minister met the Dalai Lama and resumed them only after the Danish government issued a statement in December saying it would oppose Tibetan independence and consider Beijing's reaction before inviting him again.

"The Europeans have competed to be China's favored friend," Grant said, "but then they get put in the doghouse one by one."
China's newfound toughness also played out in a renewed dispute with India over Beijing's claims to the Indian state of Arunachal Pradesh, which borders Tibet. Last summer, China blocked the Asian Development Bank from making a $60 million loan for infrastructure improvements in the state. India then moved to fund the projects itself, prompting China to send more troops to the border.

David Finkelstein, a former U.S. Army officer at the Defense Intelligence Agency who now runs the China program at the Center for Naval Analyses, said the new tone underscores a shift in China. "On the external front," he said, "we will likely see a China that is more willing than in the past to proactively shape the external environment and international order rather than passively react to it."
An example would be events that unfolded in December when 22 Chinese Muslims showed up in Cambodia and requested political asylum. China wanted to hold seven of them on suspicion of participating in anti-Chinese riots in the Xinjiang region in July.

Under intense pressure from Beijing, Cambodia sent the group home, despite protests from the United States. Two days after the group was repatriated, China signed 14 deals with Cambodia worth about $1 billion.

What the future holds

Whether this new bluster from Beijing presages tougher policies and actions in areas of direct concern to the United States is a key question, Lieberthal said. What China does after the United States sells Taiwan the weapons may provide some clues.
Even before the United States announced its plans Friday, at least six senior Chinese officials, including officers from the People's Liberation Army, had warned Washington against the sale.
 
Once the deal was announced, China's Defense Ministry said it was suspending a portion of the recently resumed military relations with the United States. China also announced that it would sanction the U.S. companies involved in the sale.
 
What happens next will be crucial. China quietly sanctioned several U.S. companies for participating in such weapons sales in the past. However, it would mark a major change if China makes the list public and includes, for example, Boeing, which sells billions of dollars worth of airplanes to China each year.

He, the vice foreign minister, warned that the sales would also affect China's cooperation with the United States on regional issues. Does that mean China will continue to block Western efforts to tighten sanctions on Iran? Bonnie S. Glaser, a China security analyst at the Center for Strategic and International Studies, said the answer will probably come soon.

France takes over the presidency of the U.N. Security Council on Monday and is expected to push for a rapid move in that direction.
Title: Stratfor: Unsustainable Model
Post by: Crafty_Dog on February 03, 2010, 09:12:00 PM
China's Unsustainable Economic Model
CHINA RELEASED THE BREAKDOWN of its economic growth statistics on Tuesday. Bottom line: falling exports weighed heavily on growth and nearly canceled out the GDP gains of domestic consumption. Investment — mostly in infrastructure and public services — comprised over 90 percent of growth.

These results capture the essence of everything STRATFOR has said about the Chinese economy over the past year. Like many countries affected by the recent economic crisis, China resorted to government stimulus to make up for the sudden loss in private demand. But unlike other states that use such measures in emergencies, China’s growth has always been fueled by massive infusions of government funds and credit from a state-controlled banking system. The endless stream of loans nourishes the businesses that employ China’s enormous population. Exports play an important role because they bring in new money to be redistributed by the banks as directed by the government.

Of course, the redistribution process creates divisions between the haves and the have-nots, but such divisions can be elided when times are good. It is only when exports slump that it becomes evident that China’s consumers are too poor to buy all the goods the country produces, and the weight of maintaining growth falls squarely upon the financial system. This setup is particularly problematic because a centrally controlled financial system that endlessly transfers wealth from efficient internationally-linked sectors to inefficient state sectors will eventually collapse under the weight of bad loans.

“Chinese leaders rarely have the coincidence of political and economic momentum necessary to launch major reforms more than once.”
Chinese leaders are well aware that this economic model is unsustainable and have periodically pushed for major restructuring. The primary goal is to increase domestic consumption, shifting reliance off exports, and transitioning into a consumer-driven economic model that is more capable of steady and long-term growth, albeit at a slower pace. Prominent leaders are now calling for such reforms. Knowing that the stimulus cannot last forever, Beijing is attempting to find ways to slightly moderate lending, lower provincial growth targets and cool down the real estate sector while reinvesting government funds in rural areas to boost consumption.

The problem is that the first steps are exceedingly painful, because they involve weaning state businesses from their addiction to cheap credit. A period of slower growth is the price for reforming an economy, and slower growth is exponentially more troublesome in a country with China’s regional differences, wealth disparities and large population. Such reforms are also always obstructed by the inertia in the system then cut short before the finish, usually due to the onset of a new emergency. Chinese President Hu Jintao initiated restructuring reforms in the mid-2000s, but the financial crisis erupted in late 2008, forcing him back into the time-tried solution of credit expansion.

Chinese leaders rarely have the coincidence of political and economic momentum necessary to launch major reforms more than once. With the Communist Party preparing for a leadership transition in 2012, Hu does not have time for another major reform push. No leader in his final years in power wants to mar his legacy with dramatic changes that could destabilize the system.

Moreover, China’s primary export markets have not recovered to the point that China can securely phase out its stimulus programs. Exports only showed positive signs in December 2009, and it is not yet clear where they will go in the coming months. Demand in Europe remains weak due to its own economic woes. The United States is seeing economic life return, but a weak labor market has ensured that households continue to save rather than spend. The United States has also begun pressuring Beijing on a host of disagreements and is brandishing a big stick when it comes to trade protections. In other words, exports are Beijing’s only short-term hope, and they are highly uncertain.

All of this leaves China with little option but to continue using the financial tools it has for as long as they will work, and recentralizing power where necessary to prevent instability. This may mean a China that is more sensitive to perceived external threats, and more reactive politically. It may also mean that foreigners will start thinking twice before doing business in China.
Title: Warning shot across our bow
Post by: Crafty_Dog on February 09, 2010, 03:45:02 PM
http://www.reuters.com/article/idUSTRE6183KG20100209
Title: Re: China
Post by: ccp on February 09, 2010, 05:13:47 PM
I really think its time to suggest we raise soc sec and all retirement ages to 70.
No one should get soc sec till then. No gov employee should be on pension till then.
We all work till then unless one is independently able to pay for their OWN retirement or they worked for a private company that can/will do that (and not forced by labor unions into it).
The dole must go.
We are flushing this country's future down the toilet.
The debt will never be paid off.

We can't tax and spend our way out of it like the ONE thinks.
We can't grow our way out of it with endless regulations and taxes.
We have to be free to work our asses off to get out of this mess.

Someone recently told me "f..k" future generations.  He has kids too!  This is a sad commentary of the thinking of some Americans.

It is so hard to be optimistic.


Title: Re: China
Post by: Crafty_Dog on February 18, 2010, 10:00:38 AM
Summary
Relations between the United States and China have come under increasing stress during the past year. While many of the issues at the root of the tensions have existed for some time, China’s resistance to the U.S. push for sanctions on Iran has become the most urgent and potentially disruptive dispute between the two countries. China believes sanctions could jeopardize its energy security, and that its accession to such a move could harm its international image. However, China will not be able to stop sanctions and will have few options to retaliate against the United States in a way that does not harm Beijing even more.

Analysis

The United States has intensified its public courting of Beijing’s support for a potential sanctions regime against Iran in recent days. U.S. Secretary of State Hillary Clinton visited Saudi Arabia on Feb. 15-16 where she encouraged a deal in which the Saudis would increase oil exports to China to guarantee China’s oil supply amid the tensions with Iran. On Feb. 14, U.S. Vice President Joe Biden said he expected the Chinese to provide support for sanctions, while National Security Adviser Jim Jones said the same day that China has supported nuclear nonproliferation efforts against North Korea and that as a “responsible world power” it would also do so with Iran. This followed U.S. President Barack Obama’s statement the previous week saying that while the Russians have become “forward leaning” on the sanctions issue, China’s support remains a question.

Washington’s focus on China over the Iranian issue comes in the midst of a rocky patch in overall Sino-American relations. China has consistently resisted the push for sanctions, as they could put Beijing’s energy security at risk and curtail its growing bilateral relationship with Tehran. Ultimately, the Chinese do not have to make a final decision on sanctions until the U.N. Security Council (UNSC) takes a vote. But China has few tools to use against the United States to resist sanctions — and to do so would run the risk of provoking American reactions that China would rather avoid.


The Root of Sino-U.S. Tensions

The Chinese and American partnership has undergone several strains since American financial troubles became global financial troubles in late 2008. Inherent characteristics of the two economies, and their mutual dependence, made it inevitable that economic and trade tensions would arise. China’s single-largest customer is the United States, to which it exported $220.8 billion worth of goods and services in 2009, 18 percent of China’s total exports. By contrast China is the United States’ third-largest export market, importing $77.4 billion in total in 2009. In the process of running large trade surpluses, China has racked up $2.39 trillion in foreign exchange reserves and invested about one third of that into U.S. Treasury debt, thereby helping the U.S. Federal Reserve to maintain low interest rates that perpetuate U.S. consumption of Chinese goods.

U.S.-Chinese economic and financial interdependency has called attention to vulnerabilities and disagreements. The Obama administration slapped tariffs on Chinese-made tires in September 2009, and a host of other disputes have arisen at the World Trade Organization (WTO). While these disputes are mainly political efforts meant to release domestic social pressure, both states are aware that there is potential for protectionist tactics to spiral out of control, making the relationship inherently uneasy and suspicious.

Economic tensions are coupled with military ones. There is already lack of trust between China and the United States on the question of defense. Beijing’s military power has increased as its economic success has enabled greater reforms and better weaponry, and Beijing’s rising military profile has caused concern among states that doubt its intentions. Meanwhile the United States is the world’s leading military power by far, and not only dominates the oceans with naval power (implicitly threatening China’s vital supply lines) but also maintains strong alliances with states on the Chinese periphery, including Japan, South Korea and Taiwan, a territory Beijing claims as its own. Military-to-military talks were canceled in 2008 when the Bush administration agreed to a new arms package to Taiwan, and briefly restarted when China canceled them again in 2010 following the Obama administration’s approval of the deal.

These broader national security issues have become entangled with the trade spats. China has threatened sanctions on American arms manufacturers for making the weapons that Washington is selling to Taiwan in the most recent U.S. arms package. China’s threat to introduce retaliatory sanctions marks a harsher reaction to such arms deals than in the past. On a separate front, a conflict has erupted over China’s Internet control policies and American cybersecurity. China has also reacted sharply against American criticism of its policies in dealing with ethnic minorities and separatism in Xinjiang and Tibet, which has created another diplomatic row in light of President Obama’s plan to meet with the Dalai Lama on Feb. 18.


Resistance to Iranian Sanctions

While trade and defense tensions have long been present in the Sino-U.S. relationship, the controversy over the Iranian nuclear program — and the U.S. push for sanctions — have introduced a new, urgent and potentially destabilizing element into the dynamic. China has rejected the idea of new sanctions since the Obama administration launched negotiations in mid-2009, and the Chinese have shown increasing displeasure with the U.S. sanctions drive since late December 2009 by postponing and sending lower-level officials to negotiations with the P-5+1 group, which consists of the five permanent members of the UNSC (China, the United States, the United Kingdom, France, and Russia) plus Germany. China’s foreign ministry has continued its rejection of sanctions in 2010.

China’s position on Iran follows from its concerns for energy security. China imported about 51 percent of its oil in 2009, and Iran was the third-largest supplier, providing about 11.4 percent of its imports — after Saudi Arabia (20.5 percent) and Angola (15.8 percent). While the current batch of proposed sanctions do not target Iranian oil exports, they would escalate tensions in the Persian Gulf overall. China fears that a military conflict could erupt that would threaten supply lines from other Gulf providers, such as Saudi Arabia or Oman, since the Iranian retaliation might target the Strait of Hormuz through which roughly half of China’s total oil imports transit. Without a steady stream of Gulf oil, China’s ability to maintain economic growth would be threatened. And China is not willing to take such risks with its energy supply.

Moreover, China’s exports of gasoline and refined oil products to Iran have grown in recent months. Iran’s dysfunctional domestic energy situation forces it to import these goods, and China has excess refining capacity. This growing area of trade would specifically be targeted in international sanctions, as the Americans have long signaled that Iran’s dependency on external sources for gasoline is its Achilles’ heel. Sanctions against Iran would also interfere with China’s investments in Iran’s energy sector — including China National Petroleum Corp’s (CNPC) planned exploration of Iran’s massive South Pars natural gas field in March, as well as deals for oil production involving CNPC in Iran’s North Azadegan and Sinopec in the Yadavaran oil field. In other words, while China will not base its decisions solely on its exports to and investments in Iran, those considerations are substantial and will not be ignored.

China also has a reputation to uphold. Especially in recent years, China has positioned itself as a global leader, seeking to complement its economic power with rising military and political status. Beijing has made its voice heard at the United Nations, the G-20 and other global forums as a leader of the developing countries and a counterweight to the developed countries. Simultaneously, China has sought to play a more active role in international security operations, including peacekeeping and disaster relief, and has taken a leading role in the international anti-piracy efforts off the coast of Somalia, all with the intention of enhancing its prestige and developing powers outside the economic sphere. These efforts are also meant to present China as a potential alternative global leader to the United States, and to earn supporters and followers. A substantial amount of credibility thus rests on China’s defending of states like Iran that are antagonistic toward the United States — if China turns its back on Iran, then countries in Latin America, Africa and Southeast Asia that might have thought they could count on Beijing in a pinch will have to rethink their policies. On the contrary, if Beijing can prolong negotiations and delay serious action on Iran, it can extend the time in which the United States is bogged down in the Middle East, winning more room to maneuver toward meeting domestic and international objectives.


Limited Options

Beijing’s problem is that it has very few tools with which to influence the United States’ behavior in general, not to mention toward Iran. China’s only tools to pressure the United States are economic — specifically through trade disputes and purchases of U.S. debt — and they would backfire. Beijing is also not able to directly affect negotiations between the United States and Russia on sanctions. And if sanctions are proposed in the UNSC, China can veto them only if it is prepared for the blowback from the United States.

China’s chief weakness lies in the fact that it cannot escape economic troubles until its export sector revives, but the United States has the ability to put pressure on this sector. The Obama administration has shown a willingness to exercise Section 421, an American law that China admitted into its WTO accession agreement in 2001 that gives the United States the right to enact barriers when it perceives that a dramatic increase in Chinese imports into the American market could disrupt domestic producers. The significance of the September tire tariffs was primarily to warn China that Washington is willing to use this prerogative and there is little China can do about it. If Beijing should seek to retaliate through its own tariffs, it risks provoking a trade war with the United States that it could not win, since its economy is too fragile to sustain the shocks that could be caused by a more aggressive use of Section 421, or more drastic measures.

Even China’s great advantage of being the United States’ primary creditor does not provide as much leverage as one might think. At the latest tally (in December 2009), China held around $755 billion in U.S. Treasury debt, about 6 percent of total U.S. government debt. Slowing or stopping the purchase of U.S. Treasury bonds could have an effect on the U.S. economic recovery, were it feasible for China to do so. But selling off large chunks of American debt would not only require finding lots of very rich buyers, but would leave Beijing with nowhere to invest its surplus dollars month after month, since the other deep debt markets are unsafe (Japan), vulnerable to exchange rate risk (Europe) or too small (everyone else). Investing that much cash into commodities would both roil global debt markets and drive commodity prices sky high. Even if Beijing could successfully diversify away from U.S. debt, the move would cause interest rates to rise in the United States and disrupt U.S. consumption patterns crucial for China’s economy (and global economic stability).


A Russian Turn?

Recently, prominent Russian authorities have made statements implying that Moscow was becoming more willing to endorse sanctions. As long as Russia appears intransigent on the U.S. call for sanctions, it provides China with diplomatic cover. But if a Russian shift is in fact under way — and there is no hard evidence yet that the United States has offered the concessions necessary to win Russia over — then it will have an impact on China’s strategy.

Moscow is critical to the efficacy of any sanctions regime because it can circumvent sanctions by means of its communication and transportation routes through the Caucasus and Central Asia to Iran. Without Russia, international sanctions will not work. Unlike Russia, however, China is not capable of making or breaking sanctions covertly through its participation or lack thereof — its links to Iran go over sea routes, making them vulnerable to American naval power (while the land routes from China to Iran are logistically unfeasible and still hinge on Russian influence). Finally, the United States and European allies are not likely to bring sanctions to a vote at the UNSC unless they have already gained the assurances they need from Russia — and China has no ability to impact these negotiations.

If a resolution authorizing sanctions goes to the UNSC, China will have to determine whether to approve, abstain or to exercise its veto (and China has only vetoed sanctions once, sanctions against Zimbabwe in 2008). Voting for sanctions, China will be stuck with enforcing them (and all that enforcement entails) and managing the domestic and international blow to its reputation for caving to American demands despite its much-vaunted rising-power status. Still, this is a path that China has taken before, and is also likely to take in the event that sanctions are watered down. But even if China abstains from voting to register its displeasure, it will be bound by law to enforce the sanctions, or else it will be publicly exposed for undermining them and subject to a harsh reaction from the United States.

Alternately, if the Chinese were to veto a sanctions resolution, they would risk marginalizing the UNSC’s role in dealing with Iran. The United States has shown before that it is willing to act with an international coalition outside of the United Nations, and Iran presents just the type of scenario in which the United States can do so with broad international support, including all the leading European powers and possibly even Russia. Since the UNSC is a key arena for China in attempting to expand its global influence, Beijing would suffer the effects of both isolating itself from the American coalition and seeing the influence of its UNSC seat dwindle.


Looking Ahead

With little impact on the international negotiations, and limited ability to challenge the United States, Beijing can only attempt to play the diplomatic game and stall. The Russians have not yet signed onto sanctions, and as long as they remain in limbo, Beijing does not have to commit. Nevertheless, exposure to the United States is the reason that China’s Communist Party leadership has become consumed with furious internal debate over the country’s path forward. Beijing is fully aware that the United States plans to withdraw from the Middle East in a few years, which raises the frightful question of where the superpower will focus its attention next. China is afraid that it is the next target, and sees renewed U.S. attention to Southeast Asia as the beginning of a full-scale containment policy. The problem for China is that to decrease its vulnerability to foreign powers will require difficult reforms, and at a time when the Communist Party is approaching a leadership transition in 2012 and the course ahead is uncertain. With these considerations in mind, China must weigh whether it can afford to break with the United States now over Iran, or whether it could better spend its energies fortifying against what it sees as a likely onslaught of geopolitical competition from the United States in a few short years.
Title: Stratfor: China's challenge
Post by: Crafty_Dog on March 09, 2010, 04:49:03 AM
By Jennifer Richmond and Rodger Baker

China’s National People’s Congress (NPC) remains in session. As usual, the meeting has provided Beijing an opportunity to highlight the past year’s successes and lay out the problems that lie ahead. On the surface at least, China has shown remarkable resilience in the face of global economic crisis. It has posted enviable gross domestic product (GDP) growth rates while keeping factories running (if at a loss) and workers employed. But the economic crisis has exposed the inefficiencies of China’s export-dependent economic model, and the government has had to pump money into a major investment stimulus package to make up for the net drain the export sector currently is exacting on the economy.

Related Special Topic Page
China’s Economic Imbalance
For years, China’s leaders have recognized the risks of the current economic model. They have debated policy ideas to shift from the current model to one that is more sustainable in the long run and incorporates a more geographically equitable growth and a hefty rise in domestic consumption. While there is general agreement on the need for change, top leaders disagree on the timing and method of transition. This has stirred internal debates, which can lead to factionalization as varying interests align to promote their preferred policy proscription. Entrenched interests in urban areas and the export industry — along with constant fears of triggering major social upheaval — have left the government year after year making only slight changes around the margins. Often, Beijing has taken one step forward only to take two back when social instability and/or institutional resistance emerge.

And this debate becomes even more significant now, as China deals simultaneously with the aftermath of the global economic slowdown and preparations for a leadership transition in 2012.

The Hu Agenda
Chinese President Hu Jintao came into office eight years ago with the ambitious goal of closing a widening wealth gap by equalizing economic growth between the rural interior and coastal cities. Hu inherited the results of Deng Xiaoping’s opening and reform, which focused on the rapid development of the coastal areas, which were better geographically positioned for international trade. The vast interior took second billing, being kept in line with the promise that in time the rising tide of economic wealth would float all ships. Eventually it did, somewhat. But while the interior saw significant improvements over the early Mao period, the growth and rise in living standards and disposable income in the urban coastal areas far outstripped rural growth. Some coastal urban areas are now approaching Western standards of living, while much of the interior remains mired in Third World conditions. And the faster the coast grows, the more dependent China becomes on the money from that growth to facilitate employment and subsidize the rural population.

Hu’s predecessor, Jiang Zemin, also recognized these problems. To address them, he promoted a “Go West” economic policy designed to shift investment further inland. But Jiang faced the same entrenched interests that have opposed Hu’s efforts at significant change. While Jiang was able to begin reform of the bloated state-owned enterprises, he softened his Westward economic drive. Amid cyclical global economic downturns, China fell back on the subsidized export model to keep employment levels up and keep money flowing in. Concern over social instability held radical reform in check, and the closer Jiang got to the end of his term in power, the less likely he was to make significant changes that could undermine social cohesion. No Chinese leader wants to preside over a major economic policy that fails out of fear of being the Chinese Mikhail Gorbachev.

For those like Hu who have argued that rapid reform is worth the risk of potential short-term social dislocation, the global downturn was seen as validating their policies — and as confirming that the risks to China of not changing far outweigh the risks of changing now. The export industry’s drag on GDP has forced Beijing to enact a massive investment and loan program. By some accounts, fixed investments in 2009 accounted for more than 90 percent of GDP. Those arguing for faster reform have noted that the pace of investment growth is unsustainable in the long run, and that the flood of money into the system has created new inflationary pressures.

Much of this investment came in the form of bank loans that need to be serviced and repaid. But as the government tries to cool the economy, the risk of companies defaulting on their loans looms. Cooling the economy also threatens to burst China’s real estate bubble. This not only compounds problems in related industry sectors, it could also trigger massive social discord in the urban areas, where housing has taken the place of the stock market as the investment of choice.

Beijing’s Ongoing Dilemma
Chinese leaders face the constant dilemma of needing to allow the economy to maintain its three-decade long export-oriented growth pattern even though this builds in long-term weaknesses, but shifting the economy is not something that can be done without its own consequences. Social pressures are convincing the government of the need to raise the minimum wage to keep up with economic pressures. At the same time, misallocation of labor and new job formation incentives in the interior are causing shortages of labor in some sectors in major coastal export zones. If coastal factories increase wages to attract labor or appease workers, they run the risk of going under due to the already razor-thin margins. But if they don’t, the labor fueling these industries at best may riot and at worst might simply move back home, leaving exporters with little option but to close shop.

Looming demographic changes around the globe also impact the Chinese situation, and the government can no longer rely on an ever-increasing export market to drive the Chinese economy. Some international companies operating in China already are beginning to consider relocating manufacturing operations to places with cheaper labor or back to their home countries to save on transportation costs Chinese wages are no longer mitigating.

With its export markets unlikely to recover to pre-crisis levels any time soon, competition and protectionism are on the rise. The United States is growing bolder in its restrictions on Chinese exports, and China may no longer avoid having the U.S. government label it a currency manipulator. While this may be an extreme measure in 2010, the pressures for such a scenario are rising.

Amid its domestic and global challenges, Chinese leaders are engaged in economic policy debates. It appears that internal criticism is being directed against Hu as social tensions over issues like rising housing prices and inflation grow. In some ways, this is not unusual. National presidents often bear the brunt of dissatisfaction with economic downturns no matter whether their policies were to blame. In China, however, criticism against economic policy falls on the premier, who is responsible for setting the country’s economic direction. The focus on Hu reflects both the depth of the current crisis and the underlying political tensions over economic policy in a time of both global economic unpredictability and preparations for the end of Hu’s presidency in 2012.

To bridge the gulf between the urban coast and the rural interior, Hu and his supporters have pursued a multiphased plan. First, they sought to rein in some of the most independent of the coastal areas — Shanghai in particular, which served as a center of power and influence not only in promoting the continuation of unfettered coastal growth but also of Hu’s predecessor, Jiang. Second, a plan was put in motion to consolidate redundancies in China’s economy and to shift light- and low-skilled industry inland by increasing wages in the key coastal export manufacturing areas, reducing their cost competitiveness. And Beijing added an urbanization drive in traditionally rural and inland areas. Together, this represented a joint attempt to bring the jobs to the interior rather than continue the pattern of migrant workers moving to the coast.

The core of the Hu policies was an overall attempt to re-centralize economic control. This would allow the central government to begin weeding out redundancies left over from Mao’s era of provincial self-sufficiency, which the Deng and Jiang eras of uncoordinated and locally-directed economic growth often driven by corruption and nepotism exacerbated. In short, Hu planned to centralize the economy to consolidate industry, redistribute wealth and urbanize the interior to create a more balanced economy that emphasized domestic consumption over exports. However, Hu’s push, under the epithet “harmonious society,” has been anything but smooth and its successes have been limited at best.

Hu Meets Resistance
Institutional and local government resistance to re-centralization has hounded the policy from its inception, and resistance has grown with the economic crisis. Money is now pouring into the economy via massive government-mandated bank lending to stimulate growth through investments as exports wane. Consequently, housing prices and inflation fears now plague the government — two issues that could lead to increased social tensions and are already leading to louder questioning of Hu’s policies. With just two years to go in his administration, Hu already is looking to his legacy, weighing the risks and rewards between promoting long-term economic sustainability or short-term economic survival. The next two years will witness seemingly incongruent policy pronouncements as the two opposing directions and their proponents battle over China’s economic and political landscape.

Hu’s rise to the presidency was all but assured long before he took office. From a somewhat simplified perspective, the PRC has had only four leaders: Mao Zedong, Deng Xiaoping, Jiang Zemin and Hu Jintao. When Mao died, his appointed successor, Hua Guofeng (who was settled upon after several other candidates fell out of favor), lasted only a short time. Amid the political chaos of the post-Cultural Revolution era, Deng rose to the top. Both Mao and Deng were strong leaders who, although contending with rivals, could rule almost single-handedly when the need arose.

To avoid the confusion of the post-Mao transition, Deng created a long-term succession plan. He ultimately settled on Shanghai Mayor Jiang Zemin as his successor. But in an effort to preserve his vision and legacy, Deng also chose Jiang’s successor, Hu Jintao. Barring some terrible breach of office, Hu was more or less guaranteed the presidency a decade before he took office, and there was little Jiang could do to alter this outcome. Jiang, however, made sure that he left his mark by lining up Hu’s successor, Xi Jinping. Despite Jiang’s support, Xi has not risen through the ranks in the same manner as Hu did, raising speculation of internal disagreements on the succession plan.

Vice President Xi is considered one of the “princelings,” leaders whose parents were part of the revolutionary-era governments under Mao and Deng who mainly have cut their teeth through business ventures concentrated in the coastal regions. Hu, on the other hand, is considered among the “tuanpai” or “tuanxi,” leaders who come primarily from the ranks of the Communist Youth League and interior provinces. While these “groups” are not in and of themselves cohesive factions, and China’s political networks are complex, Hu’s and Xi’s backgrounds reflect their differing policy approaches. As such, the question of the next Chinese leader is shaped by opposing economic plans.

On one hand are those like Hu who support a more rapid and immediate refocusing on rural and interior economic growth, even at the cost of reduced coastal and urban power. On the other hand, those like Jiang and his protege Xi have an interest in maintaining the status quo of regionalized semi-independence in economic matters and continued strong coastal growth. They are proceeding on the assumption that a strong coastal-led economy will both provide more immediate rewards for themselves and strengthen China’s international position and its national defense.

It is important not to overstress the differences. Each has the same ultimate goal, namely, maintaining the CPC as the central authority and building a strong China; it is just their paths to these ends that differ. But the economic policy differences are now becoming key questions of Party survival and Chinese stability and strength. Factional struggles that in normal circumstances can be largely controlled, or at least would not get out of hand, are now shaping up in an environment where China’s three-decade economic growth spurt may be reaching its climax. Meanwhile, social pressures are rising amid uncertainties and instabilities in Chinese economic structures.

Beijing has emerged from the economic crisis bolder and more self-confident than ever. But this is driven more by a recognition of weakness than a false assessment of strength. China’s leadership is in crisis mode, and at this time of economic instability and uncertainty, the leadership must also manage a transition that is bringing competing economic policies into stark contrast. And this is the sort of pressure that can cause the gloves to come off and throw expectations of unity and smooth transitions out the window.

Everything may pass smoothly; two years is a long time, after all. But if there is one thing certain about the upcoming change of presidents, it is that nothing is certain.
Title: BO & China's Exchange Rate
Post by: Crafty_Dog on March 12, 2010, 09:49:29 AM

SAUL LOEB/AFP/Getty Images
U.S. President Barack Obama speaks during the the U.S. Export-Import Bank’s annual conference in Washington, D.C., on March 11Summary
U.S. President Barack Obama on March 11 called for China to institute a “more market-oriented” exchange rate. This statement will hit a nerve in Beijing, which already faces major economic challenges and is concerned about the possibility of a U.S. containment policy targeting China.

Analysis
U.S. President Barack Obama spoke about the Chinese currency’s exchange rate while addressing the U.S. Export-Import Bank’s annual conference March 11. Among other things, Obama called for China to institute a “more market-oriented” exchange rate. Such talk will hit a raw nerve in China, where the leadership is already facing major economic challenges and is anxious about the prospect of increasing pressure from the Americans.

Obama’s speech, “Powering Jobs, Sales and Profits through Exports,” centered on his National Exports Initiative, the administration’s strategy to boost U.S.-made exports. With high unemployment a pressing problem as the U.S. administration attempts to manage an economic recovery during a year that includes mid-term congressional elections, Obama is promoting U.S. exports as a means of increasing job availability and making up for reduced consumption’s effects on growth. The U.S. Export-Import Bank is an agent of this strategy and has targeted Brazil, China, Mexico and India as countries with massive populations whose households and businesses could buy America’s high-value added goods, from specialized machinery, vehicles and equipment to entertainment products and Internet services. New free trade initiatives also are a component of this strategy, hence Obama’s call for the United States to press forward on free trade agreements with South Korea, Colombia and Panama that have been signed but not yet ratified.

In addressing ways to increase U.S. exports, Obama deliberately chose to enter into the intense debate over China’s currency policies, as they have long been a point of contention between the two states. Beijing uses a variety of internal controls to ensure currency only fluctuates within a narrow band in relation to a basket of foreign currencies, where the dollar is the most heavily weighted. The reason for fixing the exchange rate to the dollar is to provide favorable conditions for Chinese exporters when selling to the United States, the world’s largest consumer market and the destination for nearly 18 percent of China’s total exports.

Before 2005, the fixed exchange rate was a means by which China facilitated its export-driven economic growth and gained market share in the United States and several other markets. From 2005 to 2008 China allowed its currency to gradually appreciate by 20 percent against the U.S. dollar in an attempt to alleviate inflationary pressures, restructure the economy (by increasing domestic purchasing power and weeding out uncompetitive enterprises) and deflect foreign criticism that the currency was undervalued to give Chinese businesses an unfair advantage over foreign rivals. But since the global financial crisis in late 2008, China has essentially “re-pegged” its currency to the U.S. dollar to preserve the best possible conditions for its exporters during a time of trouble due to weak foreign demand.

From the U.S. and European point of view, however, China’s maintaining the de facto currency peg is an unfair advantage for Chinese exporters, and this — not to mention Beijing’s other subsidies and rebates for exporters — is especially problematic during an economic downturn. The United States and Europe claim China’s practices are aggravating problems for American and European manufacturers and hurting employment. They also point out that China’s economy is growing rapidly and exports have shown growth since December 2009. In February, exports grew by nearly 45.7 percent compared to February 2009, the trough of the global recession, and by 8.2 percent compared to February 2008.

Moreover, Obama’s campaign to boost American exports has specifically targeted China, with bilateral trade negotiations ongoing despite the rhetorical harping on trade disputes. Obama wants to reduce the U.S. trade deficit with China and open more of the 1.3 billion-person Chinese market. Chinese currency appreciation would not only ease competition against American manufacturers but also increase Chinese imports of American goods (since a stronger currency increases Chinese people’s purchasing power).

Even the Chinese themselves have emphasized repeatedly the need to promote domestic consumption, especially household consumption, as a means of restructuring the economy to reduce dependency on exports and develop more self-sustaining growth. However, the problem is complicated. A stronger currency will hurt export businesses and export-related employment — and the last thing China needs at the moment is slower growth and higher unemployment in the coastal manufacturing hubs that drive the rest of the economy (even though currency appreciation would benefit Chinese businesses that are reliant on imports or want to invest abroad). Though recent export growth has caused some in China to fear inflationary pressures and call for currency appreciation, Chinese leaders have stated repeatedly — most especially during the ongoing annual National People’s Congress session — that they intend to keep the exchange rate stable, lest they weaken the export sector, delete the government stimulus package and undercut economic recovery and growth. Hence the Chinese are moving very cautiously on the problem of currency appreciation.

For this reason, Obama’s comments will strike Chinese leaders as a direct attack. Not that it comes as a surprise. Beijing has been wary of the Obama administration’s stance on this issue — and other trade issues — since U.S. Treasury Secretary Timothy Geithner first said China was “manipulating” its currency (a phrase laden with legal ramifications) during his talk to the Senate before his approval as treasury secretary. Then, in September 2009, the Obama administration imposed tariffs on Chinese-made tires, invoking Section 421, a measure allowing U.S. protections against Chinese goods that China agreed to when it joined the World Trade Organization. With U.S. elections coming during a period of high unemployment, and trade disputes and deeper disagreements over economic policy already flaring, Beijing has begun to fear that Washington is planning to bring more pressure to bear, and is watching intently for the Treasury Department’s report on April 15 which could officially name China a “currency manipulator,” escalating tensions.

But Chinese anxieties have a still deeper source. Beijing fears the United States is making early movements to contain China’s economic power and prevent its military and political power from increasing. In particular, China has observed recent U.S. moves to expand relations with East Asian states on China’s periphery and sees this as the nascent period of a containment policy against China. Trade appears to be an important component of this strategy, for instance with the United States formally opening up avenues for investment with Cambodia and Laos, or initiating diplomatic contact with Myanmar, in 2009. More importantly, Obama is traveling to Australia in March to launch the Trans-Pacific Partnership — a trade zone that would include Australia, Brunei, Chile, New Zealand, Peru, Singapore and Vietnam and counter China’s trade agreements with the Association of Southeast Asian Nations. Obama is also traveling to Indonesia on the same trip, to strengthen bilateral ties.

From the Chinese point of view, U.S. pressure on its currency policy can be seen as only one aspect of what could be an overall assault on China’s rising economic power and influence. However, Beijing knows Washington is constrained in its foreign policy as long as it remains tied up in wars in the Middle East. It will therefore move quickly to prepare itself for more direct U.S. competition, diversify away from dependency on exports (especially exports to the United States), secure its lines of supply for critical goods and solidify its influence in its near abroad.
Title: Re: China
Post by: Rarick on March 13, 2010, 03:31:53 AM
China is to us what we were to Europe after WW2.   A new and potentially powerful nation coming into its own, when the older kids on the block were out of play due to serious injury or other "attention occupying issues".  Obama is trying to get China to give us a mini Marshall plan?  Won't work, China is way past that charity to fellow humans paradigm........(if they ever had it)

China is actually probably our next major military threat, they need resources just like we do, and they may be willing to take them by force of arms.  I think russia is feeling pretty nervous about Siberia, unless there is a treaty already in place..........

Economically, if you are in debt to the bank deeply enough, you own the bank in a weird codependancy way- not healthy.  I think China is sort of realizing this.
Title: China's potential shift on sanctions against Iran
Post by: Crafty_Dog on March 18, 2010, 05:08:27 AM
China's Potential Shift on Sanctions Against Iran
AHANDFUL OF EVENTS BROUGHT STRATFOR’S ATTENTION to China on Tuesday, suggesting that China may be contemplating a shift in its position on the United States’ effort to impose a new round of sanctions on Iran for its secretive nuclear program.

First, the Chinese foreign minister told his British counterpart, who was arguing on behalf of Iranian sanctions, that while sanctions are not a “fundamental solution,” China is growing “more concerned” about the current situation. While the statement was ambiguous, it differed in tone from previous remarks, and may suggest a greater willingness on the part of the Chinese to entertain the possibility of endorsing — or not actively obstructing — sanctions. Second, the Iranian Foreign Ministry called Western visits to convince China to join the sanctions coalition “ineffectual,” adding that China was “independent enough” to resist Western policies. Iran’s rhetoric — though it may be nothing but rhetoric — could also reveal that Iran is growing more worried about losing Chinese support. Third, former Secretary of State Henry Kissinger — a renowned figure who played an integral role in breaking the ice between the United States and China in the early 1970s, and who commands respect in China — visited China’s top foreign policymaker Dai Bingguo, presumably to discuss Sino-U.S. tensions and Iran. Taken together, these events not only reveal the ongoing concentrated effort by the West to win over Chinese support, but also the possibility that the Chinese are considering a shift.

While China has long held that Iran must adhere to the international nuclear non-proliferation scheme and not pursue nuclear weapons, it has also resisted attempts by the United States to gather international consensus behind a new round of sanctions to punish Iran, especially “crippling” sanctions called for by Israel. China receives about half of its oil imports from the Persian Gulf, and about 11 percent from Iran. It exports gasoline to Iran, its state energy companies invest in Iranian energy production projects, and Iran’s sizable population offers a market for Chinese goods. As such, Beijing has resisted any sanctions that could break off bilateral ties, or cause tensions to escalate or conflict to erupt in the region. Moreover, Iranian nuclear weapons do not in themselves threaten China’s security. And China is attempting to position itself as an independent power in global affairs and cultivate relationships with states based on its own interests rather than those of the United States. For these reasons, Beijing has flatly and repeatedly stated that sanctions are not the solution.

“China knows that its options are poor, and so has pushed for prolonged diplomacy as the sole solution to the nuclear question.”
Nevertheless, China is also aware that it is limited in its ability to counteract the U.S. drive for international sanctions. China’s first option would be to exercise a veto against a sanctions resolution at the U.N. Security Council, but it seldom uses its veto alone, and is aware that the United States and its allies can take action outside the United Nations, which would render China even less able to affect the course of events. Its second option would be to attempt to circumvent sanctions by assisting Iran. But unlike with Russia, this option is geographically difficult, and to do so would leave China open to opprobrium and reprisals from the U.S.-led coalition. China knows that its options are poor, and so has pushed for prolonged diplomacy as the sole solution to the nuclear question.

But China knows that far more important than Iran are its vulnerabilities and limitations in dealing with the United States. Washington and Beijing have seen relations grow sour since the global recession began, namely with a series of trade disputes. Recently, however, the disagreements have emerged from deeper differences over the two countries’ economic structures. In particular, the United States has ramped up criticism of China’s currency policy, which keeps the yuan pegged to the U.S. dollar at an undervalued exchange rate so as to make Chinese exports to the United States more attractive. This practice undercuts American producers in competition with China and has become a subject of increasing criticism as the United States is struggling to manage the economic recovery — and reduce unemployment — during a year that will see midterm elections in Congress. U.S. President Barack Obama recently called for China to shift to a more “market oriented” exchange rate, a call his spokesman reiterated Tuesday. Meanwhile, a bipartisan group in the U.S. Congress has been forming to demand that the Treasury Department officially accuse China of currency manipulation, which would help clear the way for Congress to levy tariffs — perhaps even a blanket tariff — on Chinese imports to force China to change policies.

For China, these circumstances are incredibly alarming. After all, Beijing’s paramount focus remains internal — namely, managing its rapidly expanding economy so as to prevent an overheating or slowdown that could cause social frustrations to erupt into unrest. A critical component of this strategy is China’s export sector after the shocks of 2008-2009. The United States remains China’s biggest single market — and its most promising going forward. Beijing’s means of deterring the United States are inadequate. The theoretical option of selling off American debt is not only inherently limited by the need to find enough buyers (which, incidentally, could always be the U.S. Federal Reserve), but also self-destructive because it would negatively affect American consumption and Chinese exports. China’s anxieties are all the greater because U.S. pressure on China is springing from domestic political logic in the United States, rather than purely economic matters. This means that even policy changes to address U.S. complaints could be unsuccessful in calming the United States.

Yet the United States is in need of help on sanctions. Its effort to gather momentum continues to be challenged not only by Chinese resistance, but also (and more critically) by Russia’s reluctance to join. This has led Washington to attempt to water down the sanctions to get support, as well as to downplay Iranian progress on obtaining nuclear weapons. These moves have created tensions with Israel — which has the most to lose in the advent of an Iranian bomb and the least patience for diplomacy — but have not yet won more support for sanctions.

Which means China may have something to gain by altering its stance. STRATFOR sources in Beijing indicate that China may be willing to support sanctions if the United States were to reciprocate, for instance, by not labeling China as a currency manipulator. In other words, rather than considering whether to defend their interests with Iran at a time when the United States is showing a more confrontational attitude, the Chinese may be searching for ways to trade away Iran to gain assurances from the United States that it will not push too hard on the economic front. While it cannot be confirmed that a U.S.-China deal is in the works, Beijing is aware of Washington’s changing mood and is planning its response carefully, keeping its priorities in mind.
Title: Crunch Time
Post by: Crafty_Dog on March 30, 2010, 03:12:35 PM
China: Crunch Time
March 30, 2010
By Peter Zeihan



The global system is undergoing profound change. Three powers — Germany, China and Iran — face challenges forcing them to refashion the way they interact with their regions and the world. We are exploring each of these three states in detail in three geopolitical weeklies, highlighting how STRATFOR’s assessments of these states are evolving. First we examined Germany. We now examine China.

U.S.-Chinese relations have become tenser in recent months, with the United States threatening to impose tariffs unless China agrees to revalue its currency and, ideally, allow it to become convertible like the yen or euro. China now follows Japan and Germany as one of the three major economies after the United States. Unlike the other two, it controls its currency’s value, allowing it to decrease the price of its exports and giving it an advantage not only over other exporters to the United States but also over domestic American manufacturers. The same is true in other regions that receive Chinese exports, such as Europe.

What Washington considered tolerable in a small developing economy is intolerable in one of the top five economies. The demand that Beijing raise the value of the yuan, however, poses dramatic challenges for the Chinese, as the ability to control their currency helps drive their exports. The issue is why China insists on controlling its currency, something embedded in the nature of the Chinese economy. A collision with the United States now seems inevitable. It is therefore important to understand the forces driving China, and it is time for STRATFOR to review its analysis of China.

An Inherently Unstable Economic System
China has had an extraordinary run since 1980. But like Japan and Southeast Asia before it, dramatic growth rates cannot maintain themselves in perpetuity. Japan and non-Chinese East Asia didn’t collapse and disappear, but the crises of the 1990s did change the way the region worked. The driving force behind both the 1990 Japanese Crisis and the 1997 East Asian Crisis was that the countries involved did not maintain free capital markets. Those states managed capital to keep costs artificially low, giving them tremendous advantages over countries where capital was rationally priced. Of course, one cannot maintain irrational capital prices in perpetuity (as the United States is learning after its financial crisis); doing so eventually catches up. And this is what is happening in China now.

STRATFOR thus sees the Chinese economic system as inherently unstable. The primary reason why China’s growth has been so impressive is that throughout the period of economic liberalization that has led to rising incomes, the Chinese government has maintained near-total savings capture of its households and businesses. It funnels these massive deposits via state-run banks to state-linked firms at below-market rates. It’s amazing the growth rate a country can achieve and the number of citizens it can employ with a vast supply of 0 percent, relatively consequence-free loans provided from the savings of nearly a billion workers.

It’s also amazing how unprofitable such a country can be. The Chinese system, like the Japanese system before it, works on bulk, churn, maximum employment and market share. The U.S. system of attempting to maximize return on investment through efficiency and profit stands in contrast. The American result is sufficient economic stability to be able to suffer through recessions and emerge stronger. The Chinese result is social stability that wobbles precipitously when exposed to economic hardship. The Chinese people rebel when work is not available and conditions reach extremes. It must be remembered that of China’s 1.3 billion people, more than 600 million urban citizens live on an average of about $7 a day, while 700 million rural people live on an average of $2 a day, and that is according to Beijing’s own well-scrubbed statistics.

Moreover, the Chinese system breeds a flock of other unintended side effects.

There is, of course, the issue of inefficient capital use: When you have an unlimited number of no-consequence loans, you tend to invest in a lot of no-consequence projects for political reasons or just to speculate. In addition to the overall inefficiency of the Chinese system, another result is a large number of property bubbles. Yes, China is a country with a massive need for housing for its citizens, but even so, local governments and property developers collude to build luxury dwellings instead of anything more affordable in urban areas. This puts China in the odd position of having both a glut and a shortage in housing, as well as an outright glut in commercial real estate, where vacancy rates are notoriously high.

There is also the issue of regional disparity. Most of this lending occurs in a handful of coastal regions, transforming them into global powerhouses, while most of the interior — and thereby most of the population — lives in abject poverty.

There is also the issue of consumption. Chinese statistics have always been dodgy, but according to Beijing’s own figures, China has a tiny consumer base. This base is not much larger than that of France, a country with roughly one twentieth China’s population and just over half its gross domestic product (GDP). China’s economic system is obviously geared toward exports, not expanding consumer credit.

Which brings us to the issue of dependence. Since China cannot absorb its own goods, it must export them to keep afloat. The strategy only works when there is endless demand for the goods it makes. For the most part, this demand comes from the United States. But the recent global recession cut Chinese exports by nearly one fifth, and there were no buyers elsewhere to pick up the slack. Meanwhile, to boost household consumption China provided subsidies to Chinese citizens who had little need for — and in some cases little ability to use — a number of big-ticket products. The Chinese now openly fear that exports will not make a sustainable return to previous levels until 2012. And that is a lot of production — and consumption — to subsidize in the meantime. Most countries have another word for this: waste.

This waste can be broken down into two main categories. First, the government roughly tripled the amount of cash it normally directs the state banks to lend to sustain economic activity during the recession. The new loans added up to roughly a third of GDP in a single year. Remember, with no-consequence loans, profitability or even selling goods is not an issue; one must merely continue employing people. Even if China boasted the best loan-quality programs in history, a dramatic increase in lending of that scale is sure to generate mountains of loans that will go bad. Second, not everyone taking out those loans even intends to invest prudently: Chinese estimates indicate that about one-fourth of this lending surge was used to play China’s stock and property markets.

It is not that the Chinese are foolish; that is hardly the case. Given their history and geographical constraints, we would be hard-pressed to come up with a better plan were we to be selected as Party general secretary for a day. Beijing is well aware of all these problems and more and is attempting to mitigate the damage and repair the system. For example, it is considering legalizing portions of what it calls the shadow-lending sector. Think of this as a sort of community bank or credit union that services small businesses. In the past, China wanted total savings capture and centralization to better direct economic efforts, but Beijing is realizing that these smaller entities are more efficient lenders — and that over time they may actually employ more people without subsidization.

But the bottom line is that this sort of repair work is experimental and at the margins, and it doesn’t address the core damage that the financial model continuously inflicts. The Chinese fear their economic strategy has taken them about as far as they can go. STRATFOR used to think that these sorts of internal weaknesses would eventually doom the Chinese system as it did the Japanese system (upon which it is modeled). Now, we’re not so sure.

Since its economic opening in 1978, China has taken advantage of a remarkably friendly economic and political environment. In the 1980s, Washington didn’t obsess overmuch about China, given its focus on the “Evil Empire.” In the 1990s, it was easy for China to pass inconspicuously in global markets, as China was still a relatively small player. Moreover, with all the commodities from the former Soviet Union hitting the global market, prices for everything from oil to copper neared historic lows. No one seemed to fight against China’s booming demand for commodities or rising exports. The 2000s looked like they would be more turbulent, and early in the administration of George W. Bush the EP-3 incident landed the Chinese in Washington’s crosshairs, but then the Sept. 11 attacks happened and U.S. efforts were redirected toward the Islamic world.

Believe it or not, the above are coincidental developments. In fact, there is a structural factor in the global economy that has protected the Chinese system for the past 30 years that is a core tenet of U.S. foreign policy: Bretton Woods.

Rethinking Bretton Woods
Bretton Woods is one of the most misunderstood landmarks in modern history. Most think of it as the formation of the World Bank and International Monetary Fund, and the beginning of the dominance of the U.S. dollar in the international system. It is that, but it is much, much more.

In the aftermath of World War II, Germany and Japan had been crushed, and nearly all of Western Europe lay destitute. Bretton Woods at its core was an agreement between the United States and the Western allies that the allies would be able to export at near-duty-free rates to the U.S. market in order to boost their economies. In exchange, the Americans would be granted wide latitude in determining the security and foreign policy stances of the rebuilding states. In essence, the Americans took what they saw as a minor economic hit in exchange for being able to rewrite first regional, and in time global, economic and military rules of engagement. For the Europeans, Bretton Woods provided the stability, financing and security backbone Europe used first to recover, and in time to thrive. For the Americans, it provided the ability to preserve much of the World War II alliance network into the next era in order to compete with the Soviet Union.

The strategy proved so successful with the Western allies that it was quickly extended to World War II foes Germany and Japan, and shortly thereafter to Korea, Taiwan, Singapore and others. Militarily and economically, it became the bedrock of the anti-Soviet containment strategy. The United States began with substantial trade surpluses with all of these states, simply because they had no productive capacity due to the devastation of war. After a generation of favorable trade practices, surpluses turned into deficits, but the net benefits were so favorable to the Americans that the policies were continued despite the increasing economic hits. The alliance continued to hold, and one result (of many) was the eventual economic destruction of the Soviet Union.

Applying this little history lesson to the question at hand, Bretton Woods is the ultimate reason why the Chinese have succeeded economically for the last generation. As part of Bretton Woods, the United States opens its markets, eschewing protectionist policies in general and mercantilist policies in particular. Eventually the United States extended this privilege to China to turn the tables on the Soviet Union. All China has to do is produce — it doesn’t matter how — and it will have a market to sell to.

But this may be changing. Under President Barack Obama, the United States is considering fundamental changes to the Bretton Woods arrangements. Ostensibly, this is to update the global financial system and reduce the chances of future financial crises. But out of what we have seen so far, the National Export Initiative (NEI) the White House is promulgating is much more mercantilist. It espouses doubling U.S. exports in five years, specifically by targeting additional sales to large developing states, with China at the top of the list.

STRATFOR finds that goal overoptimistic, and the NEI is maddeningly vague as to how it will achieve this goal. But this sort of rhetoric has not come out of the White House since pre-World War II days. Since then, international economic policy in Washington has served as a tool of political and military policy; it has not been a beast unto itself. In other words, the shift in tone in U.S. trade policy is itself enough to suggest big changes, beginning with the idea that the United States actually will compete with the rest of the world in exports.

If — and we must emphasize if — there will be force behind this policy shift, the Chinese are in serious trouble. As we noted before, the Chinese financial system is largely based on the Japanese model, and Japan is a wonderful case study for how this could go down. In the 1980s, the United States was unhappy with the level of Japanese imports. Washington found it quite easy to force the Japanese both to appreciate their currency and accept more exports. Opening the closed Japanese system to even limited foreign competition gutted Japanese banks’ international positions, starting a chain reaction that culminated in the 1990 collapse. Japan has not really recovered since, and as of 2010, total Japanese GDP is only marginally higher than it was 20 years ago.

China’s Limited Options
China, which unlike Japan is not a U.S. ally, would have an even harder time resisting should Washington pressure Beijing to buy more U.S. goods. Dependence upon a certain foreign market means that market can easily force changes in the exporter’s trade policies. Refusal to cooperate means losing access, shutting the exports down. To be sure, the U.S. export initiative does not explicitly call for creating more trade barriers to Chinese goods. But Washington is already brandishing this tool against China anyway, and it will certainly enter China’s calculations about whether to resist the U.S. export policy. Japan’s economy, in 1990 and now, only depended upon international trade for approximately 15 percent of its GDP. For China, that figure is 36 percent, and that is after suffering the hit to exports from the global recession. China’s only recourse would be to stop purchasing U.S. government debt (Beijing can’t simply dump the debt it already holds without taking a monumental loss, because for every seller there must be a buyer), but even this would be a hollow threat.

First, Chinese currency reserves exist because Beijing does not want to invest its income in China. Underdeveloped capital markets cannot absorb such an investment, and the reserves represent the government’s piggybank. Getting a 2 percent return on a rock-solid asset is good enough in China’s eyes. Second, those bond purchases largely fuel U.S. consumers’ ability to purchase Chinese goods. In the event the United States targets Chinese exports, the last thing China would want is to compound the damage. Third, a cold stop in bond purchases would encourage the U.S. administration — and the American economy overall — to balance its budgets. However painful such a transition may be, it would not be much as far as retaliation measures go: “forcing” a competitor to become economically efficient and financially responsible is not a winning strategy. Granted, interest rates would rise in the United States due to the reduction in available capital — the Chinese internal estimate is by 0.75 percentage points — and that could pinch a great many sectors, but that is nothing compared to the tsunami of pain that the Chinese would be feeling.

For Beijing, few alternatives exist to American consumption should Washington limit export access; the United States has more disposable income than all of China’s other markets combined. To dissuade the Americans, China could dangle the carrot of cooperation on sanctions against Iran before Washington, but the United States may already be moving beyond any use for that. Meanwhile, China would strengthen domestic security to protect against the ramifications of U.S. pressure. Beijing perceives the spat with Google and Obama’s meeting with the Dalai Lama as direct attacks by the United States, and it is already bracing for a rockier relationship. While such measures do not help the Chinese economy, they may be Beijing’s only options for preserving internal stability.

In China, fears of this coming storm are becoming palpable — and by no means limited to concerns over the proposed U.S. export strategy. With the Democratic Party in the United States (historically the more protectionist of the two mainstream U.S. political parties) both in charge and worried about major electoral losses, the Chinese fear that midterm U.S. elections will be all about targeting Chinese trade issues. Specifically, they are waiting for April 15, when the U.S. Treasury Department is expected to rule whether China is a currency manipulator — a ruling Beijing fears could unleash a torrent of protectionist moves by the U.S. Congress. Beijing already is deliberating on the extent to which it should seek to defuse American anger. But the Chinese probably are missing the point. If there has already been a decision in Washington to break with Bretton Woods, no number of token changes will make any difference. Such a shift in the U.S. trade posture will see the Americans going for China’s throat (no matter whether by design or unintentionally).

And the United States can do so with disturbing ease. The Americans don’t need a public works program or a job-training program or an export-boosting program. They don’t even have to make better — much less cheaper — goods. They just need to limit Chinese market access, something that can be done with the flick of a pen and manageable pain on the U.S. side.

STRATFOR sees a race on, but it isn’t a race between the Chinese and the Americans or even China and the world. It’s a race to see what will smash China first, its own internal imbalances or the U.S. decision to take a more mercantilist approach to international trade.
Title: Re: China
Post by: G M on March 30, 2010, 04:10:13 PM
**China and the NorKs are as close together as "teeth and gums". This is one tool they'll use to control Obama quite a bit, IMHO.**

http://formerspook.blogspot.com/2010/03/what-happend-to-cheonan.html

Monday, March 29, 2010
What Happend to the Cheonan?

UPDATE/9:30 am EDT. In a rather dramatic about-face, South Korea is now pointing the finger of blame squarely at Pyongyang. The ROK Defense Minister now says a mine from North Korea may have caused the blast that sank the Cheonan. Additionally, President Lee Myung-bak has placed the South Korean military on alert, to respond to further "moves" by the DPRK.

As ROK Navy teams continue their rescue and salvage operations, a North Korean defector raised the possibility of a suicide attack. Chang Jin-seong, who worked for Pyongyang's spy agency before fleeing in 2004, said some DPRK naval units have trained for suicide missions.

But Washington is still downplaying the possibility of North Korean involvement. Monday, a senior State Department official said the U.S. still has no firm evidence that Pyongyang was behind the attack.

American reluctance to blame North Korea promises to create a potential rift between Washington and Seoul and set the stage for a possible crisis in the coming days. If South Korea determines that Pyongyang was behind the Cheonan disaster, there will be a demand for revenge, both publicly and officially. At that point, the Obama Administration will be forced to admit North Korean complicity, and attempt to dissuade South Korea from taking military action.

And, if you don't believe South Korea would take such steps, consider the hours following the Rangoon bombing in 1983. After learning of North Korea's attempt to kill the South Korean president (and his cabinet) in Burma, some ROK Army units began mobilizing for war. One U.S. officer, stationed in Korea at the time, reports that some mechanized and armored battalions actually left their garrisons and were heading towards the DMZ--without notifying the United States.

The military preparations received little attention in the west, but they were indicative of the shock and outrage that followed the assassination attempt. Needless to say, there were some tense days in Seoul and Washington, as U.S. officials cautioned their South Korean counterparts against any hasty action. Similar discussions will likely occur in the coming days, but it may be more difficult to deter Seoul this time around. South Korea is far more powerful --militarily, politically and economically--than it was in the early 1980s, and has every right to defend its interests. If Mr. Obama and his advisors believe the Cheonan affair will quickly blow over (with little diplomatic or military fallout), they are sadly mistaken.
****
Three days ago, it was dominating world headlines. But almost as quickly as it sank into the Yellow Sea, the South Korean naval vessel Cheonan has disappeared from the 24-hour news cycle.

And that's clearly by design.

The sudden loss of the Cheonan was stunning, to say the least. On patrol near the disputed Northern Limit Line with North Korea, the 1,200-ton corvette was suddenly struck by a mysterious explosion that ripped the vessel in half. Three hours later, the last section of the ship went down, leaving more than 40 sailors dead or missing.

It was South Korea's worst naval calamity in more than 30 years; as rescue operations began, suspicions were immediately cast on the DPRK--and with good reason. The two Koreas have fought a series of naval engagements in the area over the past decade (with North Korea taking the worst of it), and Pyongyang has been spoiling for payback.

But in the hours following the disaster, officials in Seoul (and, to a lesser extent, Washington) tried to refocus global attention on other scenarios. As naval and coast guard vessels were pulling sailors out of the water, sources at the South Korean defense ministry suggested the Cheonan was the victim of an internal mishap, caused (perhaps) by an ammunition or engine explosion.

At the U.S. State Department, spokesman P.J. Crowley was quick to point out that American officials "had no direct evidence" of North Korea involvement, and referred reporters to the ROK government for more "definitive" information.

Meanwhile, Pyongyang was quiet--a little too quiet. Normally, a scandal or blunder in South Korea becomes gist for the DPRK propaganda machine--an opportunity for Kim Jong il to tout the "superiority" of his regime. But this time, there was none of the usual bluster. In fact, North Korea seemed to go "out of its way" to avoid mentioning the maritime disaster.

Seoul and Washington also seemed reluctant to mention the tragedy, beyond the initial statements. Oddly enough, that strategy may have been the best approach, because few western observers were buying explanations of an internal explosion on the Cheonan, or U.S. claims that we "knew nothing" about possible North Korean activity in the area.

The internal failure theory was shredded almost as soon as surviving crew members reached land. They told of a routine night patrol, suddenly punctuated by a massive blast that tore the corvette in half. There were no reports of a weapons accident or engine mishap just prior to the explosion. In fact, survivor accounts--and descriptions of the damage--were consistent with a torpedo or mine attack.

As for U.S. surveillance of the area, that subject has received less attention. But Mr. Crowley's statement is little more than a carefully-worded, verbal two-step. The waters on either side of the NLL are some of the most closely-monitored on earth. The massive U.S. SIGINT complex at Osan AB, Korea (along with other sites in the Far East) monitors activity throughout North Korea, including naval traffic. U.S. and South Korea recce aircraft criss-cross the skies daily, and satellites keep close tabs on key military complexes, including those of the DPRK navy.

To be fair, the U.S. might have missed the deployment of a small number of mines, or a single torpedo shot from a North Korean submarine. But we almost certainly had a picture of naval activity along the NLL in the hours leading up to the Cheonan tragedy, and we have detailed knowledge as to how the DPRK conducts mine-laying, submarine and surface combatant operations. If North Korea recently engaged in mine-laying activity (or training), there's pretty good chance it was detected. How the information was handled is another matter, but readers will note that Mr. Crowley's response artfully dodged that type of context.

Which brings us back to the essential, unanswered questions: first, why would North Korea pull a stunt like this, and secondly, why are the U.S. and Seoul so reluctant to point the finger?

The first one is easy enough. North Korea has a long history of deadly provocations towards South Korea and the U.S. From the capture of the USS Pueblo in 1968 (and the subsequent downing of an EC-121 reconnaissance aircraft the following year), to the infamous "tree-chopping" incident in the DMZ, Pyongyang has killed dozens of American servicemen over the past 40 years.

During the same period, South Korea has suffered even greater casualties. A 1968 raid by DPRK commandos on the ROK presidential mansion in Seoul killed at least 68 South Korean soldiers, police officers and civilians. Fifteen years later, North Korea attempted a similar decapitation of ROK leadership, during the infamous Rangoon bombing (while several cabinet officials were killed the South Korean leader survived only because he was running behind schedule.

Four years later, DPRK agents (acting on the personal orders of Kim Jong-il) planted explosives on a Korean Airlines jet that blew up over the Andaman Sea, killing all 115 people on board.
It remains the worst terrorist act perpetuated against a South Korean target.

Beyond casualties--and North Korean involvement--these events have something else in common, a muted response from both Seoul and Washington. There were never any retaliatory attacks against the DPRK, fearing that an increase in military activity might lead to a renewed Korean conflict. The "official" responses to these deadly attacks have been a mixture of diplomatic protests, various forms of sanctions and (on rare occasions) a military demonstration.

Against that backdrop, is it any wonder that Pyongyang continues to thumb its nose at the international community and stage "incidents" when they serve the intended purpose. Even if South Korea and the U.S. determine that the Cheonan was sunk by an enemy mine or torpedo, North Korea has little to fear, in terms of possible consequences. Better yet, the DPRK has often used such incidents to pry concessions out of the U.S. and its allies in Seoul. We can almost hear the demand this time around: "Send us more food aid and we'll guarantee that your ships don't blow up along the NLL."

What else does the DPRK gain from this? A propaganda victory (should they decide to claim it), and a tactical advantage in future clashes along the NLL. With the Cheonan disaster fresh in everyone's mind, ROK Navy commanders will be less aggressive in responding to future maritime incidents, fearing the loss of more surface vessels. Additionally, South Korean fishermen may be reluctant to return to the crab beds of the Yellow Sea, worried about the possibility of more mines in local waters, and the ability of the ROK Navy to defend them from possible DPRK attack.

As a result, you'll probably see fewer South Korean boats (and ROKN escorts) along the southern edge of the NLL this summer. It's a move that will cost the ROK economy millions--and it will make a lot of fishermen angry--but officials Washington and Seoul clearly want to avoid a confrontation with Pyongyang. In their view, North Korea is a problem to be "managed" until the communist regime eventually implodes. That's why we may never know what happened to that South Korean corvette or if we do, the news will be dribbled out on a Friday night or a holiday, to minimize media coverage.

Then, when North Korea pulls a similar stunt in the future, the same "leaders" will offer the same, feigned outrage. Once the furor dies down, they'll cave again to Pyongyang's newest demands. And the cycle will only repeat itself.
Title: Re: China
Post by: Crafty_Dog on March 31, 2010, 05:52:42 AM
Any reactions to the Stratfor piece I posted yesterday.  Its hypothesis seems to me to be quite an eye-opener that turns things upside down.
Title: Re: China
Post by: G M on March 31, 2010, 06:32:56 AM
China wil use the NorKs and others to counterbalance any attempt by the US to become more advisarial in economic issues.
Title: Re: China
Post by: Rarick on March 31, 2010, 08:17:16 AM
Japan and South Korea can handle NorK without breaking a sweat.  They have the same tech that we do as far as anti ICBM and Japan has Aegis equipped ships for the other airborne threats.  A few runs by both Japanese and Korean airforces with the bombs we used to take out that republican guard brigade in Iraqi Freedom would turn that army Kim Jung Il has built into mulch.  NorK is getting treated/ ignored because they are impotent for the most part, a distraction at best.  Not big enough to be a legit. threat, but enough to be used as a strawman for the press.

China is only a threat on the asian continent right now, until they build some carriers/sea control ships, and an amphibious fleet their threats are to Russia and India.  Chinas only threat to us is "we will sell of your debt cheap to ruin the dollar as a world currency",  that doesn't kill people or take territory.  Heck, it may be the best thing to happen to us, we would be forced to regrow our manufacturing sector.  A pissed off America without the usual leashes to rein us in once we recover?
Title: Stratfor: Currency Debate
Post by: Crafty_Dog on April 01, 2010, 05:43:07 AM
China's Currency Debate
THE WAR OF WORDS BETWEEN CHINA and the United States on the subject of China’s currency, the yuan or renminbi, saw a momentary reprieve on Tuesday, when two out of three newly appointed members of the People’s Bank of China monetary policy committee entered the debate. Just one day after being appointed, Li Daokui said China should adjust its exchange rate on its “own initiative” before September, so that the currency does not get caught up in the politics of U.S. midterm elections. Xia Bin said China should resume its policy of permitting the yuan to gradually appreciate, as was done from 2005 to 2008. Separately, U.S. President Barack Obama met with China’s new ambassador to the United States and called for a “positive relationship” with China, only hinting at the underlying economic strains by saying the two should work together on sustainable and “balanced” global economic growth.

On the surface, Li’s statement was absurd. The question of China’s fixed exchange rate — its peg to the U.S. dollar, giving it an advantageous position in U.S. markets — has been thoroughly entangled in U.S. domestic politics since Treasury Secretary Timothy Geithner used the word “manipulation” during his confirmation hearings in early 2009, and has become more so in recent months. Although the U.S. economy has emerged from recession, unemployment remains lodged at nearly 10 percent, a fact that gnaws on the Democratic Party as it approaches already contentious elections in November. Not only are the Democrats historically linked to U.S. manufacturers and more inclined to use protectionist policies to defend them, but also they traditionally have fewer qualms about pushing back on America’s East Asian trade partners.

Congress has already leapt into action, proposing a bill that would force the U.S. Treasury Department to take a strict interpretation when it assesses whether to accuse China of formally “manipulating” its currency in a report due April 15. The bill would clear the way for punitive measures as well. Bottom line, few issues could be more politicized. Having passed a major domestic hurdle with health care, Obama has set his sights on a foreign policy victory. But sanctions on Iran have already been watered down, and the surge is only beginning in Afghanistan. In other words, playing hardball on China’s currency is one foreign policy issue where Obama can boost his party in elections. And joblessness — not Iran’s nuclear program — is the American public’s number one concern.

“Few today are willing to accept the idea that a country with a $4.9 trillion economy — a country that recently surpassed Germany as the world’s leading exporter and will soon surpass Japan as the second biggest economy overall — deserves to skirt international rules.”
The proper way to interpret Li’s remarks, then, is to focus on his emphasis on China not succumbing to U.S. pressure, but changing its currency policy on its “own initiative.” With the U.S. government bearing down, Li’s statement appears crafted to begin the process of saving face. Domestically, the Chinese government cannot be seen as caving in to American demands. But for months China has internally debated the merits and flaws of removing the currency peg. What Li is doing is reaffirming that currency appreciation would assist in China’s badly needed economic restructuring by boosting domestic purchasing power, weeding out inefficient industries and making others more competitive, and fighting inflation expectations. He is arguing that appreciation is not some foreign imposition, but rather a Chinese policy implemented for the good of the Chinese people.

China is thus signaling to the United States that there is no need to get overexcited or overaggressive. The currency will move. The only questions concern magnitude and timing. For the Chinese, it is critical to limit and prolong the currency’s appreciation, since they argue each percentage point increase in the yuan’s value will shave the already razor-thin profit margins of China’s all-important exporters. The last time Beijing allowed the yuan to strengthen, in 2005, it ascended about 20 percent over the course of three years. The situation now is more delicate as it does not come amid one of the biggest credit and consumption booms in history, but amid a period of recovery from global recession in which China’s major export markets have begun to increase savings and cut back on spending. In short, Beijing knows that if it allows the yuan to rise it will do so during a time of weaker external demand than before — not to mention the problem of creeping wage inflation on China’s coasts, which will also eat away at exporters’ profits.

What is surprising is the extent to which the debates over the exchange rate adopt China’s rationale. In governments and institutions, among academics and experts of every stripe, in the United States, Europe and Japan, an increasingly abstruse debate has circulated around the precise expectations, limits, measures and effects of each degree of yuan appreciation. Some say the currency is undervalued by 20 percent, others say 40 percent. Getting China to revalue the yuan by X amount would save Y jobs and reduce the trade deficit by Z.

But the flurry of discussion masks the central problem. China’s policies assume that the world will graciously allow it to break the norms of international trade by strictly controlling the value of its currency, as many developing countries do. They ask the developed world to patiently suffer the evisceration of its own manufacturing sector until such time as Beijing believes it can wean its industries off a weak currency, and push them out of the nest to try their wings. For decades this assumption was economically beneficial for almost everyone. But circumstances have changed. Few are willing to accept the idea that a country with a $4.9 trillion economy — a country that recently surpassed Germany as the world’s leading exporter and will soon surpass Japan as the second biggest economy overall — deserves to skirt international rules. Not to mention the elephant in the room: China’s apparent exemption from full currency convertibility.

The United States, for one, does not appear willing to grant these favors any longer, and sees this fundamental point — China’s deviation from set standards — as true regardless of midterm elections. Washington sees China’s position as ludicrous, and while it may not immediately demand full convertibility, it is showing every sign of attacking the yuan peg. Beijing sees the currency peg as anything but ludicrous, since strengthening the currency inherently threatens social instability. Which would explain why the Chinese are reaffirming their own reasons for gradually strengthening the yuan, negotiating to allay Washington’s agitation and rushing to prepare for the economic fallout at home.
Title: Re: Stratfor China - Crunch Time
Post by: DougMacG on April 02, 2010, 12:26:58 AM
I finally took the time to go through this. Thanks Crafty for posting. A synopsis and a few comments:

They see the Chinese economic system as "inherently unstable.", basically a house of cards. Economy held up by exports, but exports are down 20%.  Exports won't recover until 2012 (if then), held up by subsidies until then. 

The state tripled its infusion to banks for lending. A third of GDP is from propped up loans.  A fourth of that lending is for non-productive uses (most of the rest questionable too).

The US may 'force' China to both appreciate their currency and accept more exports which, in Japan, caused a collapse and long term stagnation.

They only wonder which will bring down China first, its own internal imbalances or the U.S. decision to take a more mercantilist approach (export orientation) to international trade."
-----------------
The China economy as we know it hasn't had to survive a downturn.  Downturns have a good sides, easing bubbles and clearing out dead wood to make room for new, healthier growth.  Politically, China's ruling party hasn't gone through bad times.  Their 'legitimacy' comes from the security they bring, including economic.

Real numbers are probably worse / far worse than the ruling parties published data.

From a previous Strat, the (silly) tire issue with tariff imposed in Sept. was a warning shot from the Obama administration to the Chinese of what powers are at his disposal and what his willingness is to use them. 

The US, presumably in recovery, could instead dip downward again and further.  US consumers have more disposable income than all of China's other markets combined.  If our dip is long term, chances are China can't keep pretending things are fine and subsidize their way out of it.

If China quit buying our debt, it would force fiscal discipline in the US government.  If the US either tanks or heads into protectionism or both, China could collapse economically, leading also to a political crisis IMO.

OTOH, all previous reports of their demise have been premature.
Title: Re: China
Post by: Crafty_Dog on April 02, 2010, 04:12:00 AM
Sec'y of the Treasury Geithner has recently been talking a bit about how the Chinese should revalue the renimbi (sp?).  Coincidentally we now begin to hear that the Chinese may get on board for some lesser level of sanctions against Iran.

(Not that sanctions are really a meaningful strategy.  I agree with Stratfor that they are more a way to pretend to be doing something.  Basically I think we have already decided on some sort of containment strategy.  I suspect the ensuing nuclear arms race throughout the region and much of the world will cause us to deeply regret this.)
Title: Re: China
Post by: Crafty_Dog on April 02, 2010, 04:37:50 AM
Coincidentally enough, here's this from Pravda On The Hudson (POTH a.k.a. the NYT) so read between the lines:

WASHINGTON — Tensions between China and the United States have ebbed significantly in recent days, with the countries now working together to deter Iran’s nuclear ambitions and with the Obama administration backing off a politically charged clash over China’s currency.

The warming trend was evident in the Chinese government’s announcement on Thursday that President Hu Jintao will attend a nuclear security summit meeting in Washington later this month. American officials had feared that Mr. Hu would skip the talks to express China’s anger over recent diplomatic clashes, including a White House decision to sell arms to Taiwan and President Obama’s meeting with the Dalai Lama, the exiled Tibetan leader.

But this week, the drumbeat of bad news — and an underlying narrative of a rising China flexing its muscles against a debt-laden United States — has suddenly given way to talk of collaboration.

On Thursday night, President Obama spoke with Mr. Hu for about an hour by telephone, a chat that lasted so long that Air Force One had to be held for 10 minutes on the tarmac at Andrews Air Force Base after landing so that Mr. Obama could finish up the conversation. Chinese television reported that Mr. Hu expressed a desire for healthier ties, while stressing Beijing's sensitivity about Taiwan and Tibet.

For now, the United States is setting aside potentially the most divisive issue in the relationship, deferring a decision on whether to accuse China of manipulating its currency, the renminbi, until well after Mr. Hu’s visit, according to a senior administration official. That decision, the official said, reflects a judgment that threatening China is not the best way to persuade it to allow the renminbi to appreciate against the dollar.

Many economists expect China to act on its own to loosen the tight link of the renminbi to the dollar — a policy that keeps the currency’s value depressed and makes China’s exports more competitive in global markets.

Still, the administration’s decision not to force the currency issue now could carry political risks at home. Lawmakers on Capitol Hill have introduced legislation calling for trade sanctions against China if it does not change its currency policy. And unions and manufacturers cite the undervalued Chinese currency as a major culprit for lost jobs.

The White House would not comment on the currency issue, but an official said that if China did not take action on its own, the administration could raise the issue again at the Group of 20 summit meeting in June. The White House welcomed Mr. Hu’s visit as proof that its policy of engaging with China on strategic issues of common interest had paid off.

“We have an important relationship with China, one in which there are many issues of mutual concern that we work on together,” said a White House spokesman, Bill Burton. “But there also will be times where we disagree. I think this proves the point that despite those disagreements, we can work together on issues like nuclear proliferation.”

The relationship between the countries was also affected last week when Google, citing Chinese censorship, began redirecting users in China to its uncensored Hong Kong search engine.

On Wednesday, China appeared to throw its support behind new United Nations sanctions aimed at putting pressure on Iran over its nuclear program. The Security Council has been stymied by China’s insistence on diplomacy over sanctions.

American officials said they expected China to wrangle over the wording of a United Nations resolution, with a goal of watering down the measures against Tehran. Indeed, on Thursday, Iran’s nuclear negotiator, Saeed Jalili, arrived in Beijing for talks with China’s foreign minister, Yang Jiechi. The ministry appeared to steer clear from any commitment for sanctions.

Still, earlier this week, Mr. Obama expressed optimism that the major powers could unite this spring behind a resolution that would apply new pressure on Iran over its nuclear program.

The administration has engaged in intensive talks with Chinese officials to demonstrate to Beijing the destabilizing effect of a nuclear-armed Iran. A crucial advance, officials said, came in early March when an American delegation, led by Deputy Secretary of State James B. Steinberg and the National Security Council’s senior director for Asia, Jeffrey A. Bader, visited Beijing.

Mr. Hu’s visit will take place only two days before the Obama administration faces a deadline to decide whether to label China a “currency manipulator,” meaning that it intervenes in currency markets to gives its exporters an artificial advantage. Pressure in the United States has been building to take that step, which could initiate a Congressional process that would lead to slapping tariffs on Chinese imports.

But given the potential for embarrassing Mr. Hu — and for sending bilateral relations into another tailspin — the administration decided not to report on April 15, one of the deadlines set by Congress and the Treasury Department to issue a report on possible currency manipulation.

Nicholas R. Lardy, an economist at the Peterson Institute for International Economics in Washington, said the Treasury Department could delay the deadline for weeks. “As a practical matter, they’ve got a lot of wiggle room,” he said. Mr. Lardy added that he thought it was unlikely that China would have agreed to a visit by Mr. Hu unless there was at least an informal assurance by the Treasury that China would not immediately be named a currency manipulator.

Lawmakers signaled that they would not be easily mollified if the administration gave Beijing a pass on its currency.

“The most important issue in the Chinese-American relationship is currency,” said Senator Charles E. Schumer, Democrat of New York, who introduced a bill threatening China with trade sanctions. “It relates to American jobs, American wealth and the future of this country. This issue should not be traded for another.”

Relations between the countries began to fray in November, soon after Mr. Obama went to China on a state visit that was more circumscribed than American officials would have liked.

In the months that followed, tensions increased. American officials accused China of thwarting a climate change deal in Copenhagen and Chinese leaders threatened to punish the United States for a $6 billion weapons deal for Taiwan. In February, China’s Foreign Ministry called in the American ambassador for a scolding about Mr. Obama’s meeting with the Dalai Lama, whom China calls a separatist.

But then came a thaw. In recent days, public statements in Beijing and Washington hinted at fading tensions. Mr. Steinberg, the deputy secretary of state, declared that United States did not support independence for Taiwan and Tibet. And Mr. Obama, at an event on Monday for China’s new ambassador to Washington, offered generous praise for China.
Title: Re: China
Post by: Rarick on April 02, 2010, 06:57:58 AM
Incident created by N. Korea allows for facesaving kowtow in China propoganda, allowing Chinese .gov to make a magnanimous gesture to the big noses of the west.   Nothing new, that is the protocoll for years!  Behind the scenes tho' other issues are generating pressures too, like I mentioned in my other post.
Title: Re: China
Post by: DougMacG on April 04, 2010, 09:35:18 AM
"Sec'y of the Treasury Geithner has recently been talking a bit about how the Chinese should revalue the renminbi.  Coincidentally we now begin to hear that the Chinese may get on board for some lesser level of sanctions against Iran." 

The Geithner report trashing China over currency manipulation was supposed to come out Apr 15.  Hu visits the 12th. Geithner 'delays' the report trashing China.  China presumably will agree not to fully block watered down sanctions which we all agree are just symbolic, not effective.  This pressures Israel not to strike because the international 'community' is 'doing something'.  And then what? We all live happily ever after?

No one can say ever again that the Obama administration doesn't have experience with this type of negotiations, not after healtcare via the Louisiana purchase, the Cornhusker kickback, the federal hospital for Connecticut and the State Bank of North Dakota.  These guys know how to put a deal together!
------------
http://www.bloomberg.com/apps/news?pid=20601087&sid=azQRzn_a9eP8
 April 4 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner delayed a scheduled April 15 report to Congress on exchange-rate policies, sidestepping a decision on whether to accuse China of manipulating the value of the yuan.

Geithner in a statement yesterday urged China to move toward a more flexible currency and said a series of meetings over the next three months will be “critical” to bringing policy changes that lead to a stronger, “more balanced” global economy. The delay comes as Chinese President Hu Jintao is scheduled to visit Washington for a nuclear summit April 12-13.
Title: Re: China
Post by: Crafty_Dog on April 04, 2010, 01:43:04 PM
Well, if there is a quid pro quo then it seems not improper to me not to make it apparent to all the world to the embarassment of the Chinese.
Title: Re: China
Post by: G M on April 04, 2010, 04:11:54 PM
Keep in mind that causing the Chinese to "lose face" will create "blowback" at some point. Forgiveness is not a Chinese cultural trait.
Title: Hong Kong challenges the non-electoral dictates of Beijing
Post by: DougMacG on May 17, 2010, 09:45:52 PM
Hong Kong by-elections a test for democracy camp AFP
by Peter Brieger  – Sun May 16

HONG KONG (AFP) – Hong Kong on Sunday held by-elections triggered by pro-democracy lawmakers seeking to pressure Beijing into speeding up the pace of electoral reform in the territory.

The election, which has angered Beijing and divided the city's democracy movement, comes after five lawmakers from the Legislative Council quit in January in a bid to force a de facto referendum on reform.

Frustrated by what they say is China's intransigence, the lawmakers had hoped that the move -- which will likely see them all re-elected -- would send the strongest message yet to Beijing since Hong Kong returned to Chinese rule in 1997.

However, the outcome of the vote is seen as academic since all pro-Beijing political parties have boycotted the process.

Under the current electoral system, only half of Hong Kong's 60-seat legislature is directly elected while the rest is selected by the pro-China business elite. Campaigners want the entire parliament to be directly elected.

They also want voters to be able to choose the city's chief executive, who is currently appointed by a Beijing-friendly election committee.

Beijing has said that, at the earliest, Hong Kong's chief executive can be directly elected by 2017 and the legislature by 2020.

Chinese officials have openly denounced the "referendum", calling it a "blatant challenge" to Hong Kong's Basic Law, the city's mini-constitution that guarantees certain civil liberties for citizens of the former British colony.

Democracy figurehead Martin Lee condemned a decision by Donald Tsang, Hong Kong's chief executive, not to cast a ballot. "This is absolutely ridiculous," the founder of Hong Kong's Democratic Party told AFP on Sunday.

"It is a total act of kow-towing to Beijing. This is the problem -- Tsang is not elected by the people."

Tsang said his decision was "purely personal".

"In view of the unique nature of this by-election and after careful consideration, I have decided not to vote," he said in a statement.

"All members of my political team share this view and, of their own accord, have also decided not to vote."

In response, "Long Hair" Leung Kwok-hung, one of the five who resigned his seat, protested outside Tsang's residence on Sunday, calling on the city's leader to cast his ballot.

The radical political activist is famous for wearing Che Guevara T-shirts and throwing bananas at government officials during meetings.

Critics said the poll was unlikely to resolve a deadlock between the government and democrats over the pace of political reform, while surveys indicated turnout was only expected to be around 20 percent.

As of 0745 GMT, about 8.5 percent of Hong Kong's 3.7 million registered voters had cast a ballot, according to government statistics, with polling stations due to close at 1430 GMT.

The government introduced a reform proposal in April to increase the size of the election bodies for chief executive and the legislature in 2012. But opposition parties said they would not accept the proposal.

"It is very clear this government is not accountable to the people of Hong Kong," Tanya Chan, another of the five candidates, told AFP on Sunday.

"We hope the government will give a clear road map (on political reform)."

http://news.yahoo.com/s/afp/20100516/wl_asia_afp/hongkongpoliticsdemocracyelection_20100516094709
Title: Re: China
Post by: G M on May 19, 2010, 06:26:17 PM
http://www.cbsnews.com/stories/2010/05/19/world/main6498069.shtml

If this demonstrates a shift from isolated loners attacking children to groups of "have nots" against the "haves", then this could be a "Archduke Ferdinand" moment that really will shake the world.
Title: The Barbarian Wrangler Speaks
Post by: Body-by-Guinness on June 08, 2010, 08:29:32 AM
In Chinese admiral's outburst, a lingering distrust of U.S.
By John Pomfret
Washington Post Staff Writer
Tuesday, June 8, 2010; A10

BEIJING

On May 24 in a vast meeting room inside the grounds of the state guesthouse at Diaoyutai in Beijing, Rear Adm. Guan Youfei of the People's Liberation Army rose to speak.

Known among U.S. officials as a senior "barbarian handler," which means that his job is to deal with foreigners, not lead troops, Guan faced about 65 American officials, part of the biggest delegation the U.S. government has ever sent to China.

Everything, Guan said, that is going right in U.S. relations with China is because of China. Everything, he continued, that is going wrong is the fault of the United States. Guan accused the United States of being a "hegemon" and of plotting to encircle China with strategic alliances. The official saved the bulk of his bile for U.S. arms sales to China's nemesis, Taiwan -- Guan said these prove that the United States views China as an enemy.

U.S. officials have since depicted Guan's three-minute jeremiad as an anomaly. A senior U.S. official traveling on Secretary of State Hillary Rodham Clinton's plane back to the United States dismissed it, saying it was "out of step" with the rest of the two-day Strategic and Economic Dialogue. And last week in Singapore, Defense Secretary Robert M. Gates sought to portray not just Guan, but the whole of the People's Liberation Army, as an outlier intent on blocking better ties with Washington while the rest of China's government moves ahead.

But interviews in China with a wide range of experts, Chinese officials and military officers indicate that Guan's rant -- for all its discomfiting bluster -- actually represents the mainstream views of the Chinese Communist Party, and that perhaps the real outliers might be those in China's government who want to side with the United States.

Guan's speech underscored that 31 years after the United States and China normalized relations, there remains a deep distrust in Beijing. That the United States is trying to keep China down is a central part of the party's catechism and a foundation of its claims to legitimacy.

More broadly, many Chinese security experts and officials view the Obama administration's policy of encouraging Chinese participation in solving the world's problems -- including climate change, the global financial crisis and the security challenges in Iran and North Korea -- not as attempts to elevate China into the ranks of global leadership but rather as a scheme to enmesh it in a paralyzing web of commitments.

"Admiral Guan was representing what all of us think about the United States in our hearts," a senior Chinese official, who deals with the United States regularly, said on the condition of anonymity because he was not authorized to speak with a reporter. "It may not have been politically correct, but it wasn't an accident."

"It's silly to talk about factions when it comes to relations with the United States," said a general in the PLA who also spoke on the condition of anonymity. "The army follows the party. Do you really think that Guan did this unilaterally?"

China's fear of the United States was very much on display this past weekend during the Shangri-La Dialogue, where Gates and his Chinese counterparts clashed repeatedly throughout the program.

Gates said it was unnecessary for the PLA to hold the military relationship hostage because U.S. arms sales to Taiwan are, "quite frankly, old news." The United States has provided military assistance to Taiwan since 1949, when the Nationalist government of China fled to the island after the Communist victory on the mainland; this assistance did not stop when Washington normalized relations with Beijing in 1979.

"You, the Americans, are taking China as the enemy," countered Maj. Gen. Zhu Chenghu. Zhu rose to prominence in China in 2005 after he warned that if the United States came to Taiwan's defense in a war with China, Beijing would abandon its "no first use" doctrine on nuclear weapons and attack the United States.

In January, Washington announced a $6.4 billion arms package for Taiwan, prompting China to downgrade its military ties with the United States. China's stance on the issue is part of a concerted campaign to change a foundation of U.S. policy in the region -- its security relationship with Taiwan. At the very least, Chinese officials said, they want the Obama administration to reiterate a commitment it made in a joint communique with China in 1982 to decrease arms sales to Taiwan.

The U.S. framing of Guan's speech and the entire PLA as being out of step with the times is significant, analysts said, because the Obama administration could fall into a trap of expecting more from China than it can deliver. On the plane back to the United States, for example, U.S. officials predicted that despite Guan's outburst, China would welcome Gates and that it would also begin to side with South Korea against North Korea following the release of a report in Seoul implicating the regime of Kim Jong Il in the deadly sinking of a South Korean warship on March 26. China did neither, and interviews with PLA officers indicate that the military is highly suspicious of the South Korean report.

U.S. officials have also expressed the hope that China would work harder to press Iran, for example, to engage in talks on its nuclear weapons program. The United States also wants China's cooperation on slapping new sanctions on Tehran. China has shown more flexibility on this issue, but it is still unclear whether it will ultimately support sanctions.

Chinese analysts say the Obama administration ignores what China calls its "core national interests" -- especially U.S. weapons sales to Taiwan -- at its peril.

"For years, China has opposed arms sales to Taiwan among other things, but we were never strong enough to do anything about it," said Cui Liru, the president of the China Institutes of Contemporary International Relations, a think tank run by the Ministry of State Security. "But our national strength has grown. And it is time that the United States pay attention."

"This is not just a talking point that can be dismissed by your government," he continued. "It is something that must be dealt with or it will seriously damage ties."

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/07/AR2010060704762_2.html?hpid=topnews&sid=ST2010060705111
Title: Stratfor: Considering a failed transition for China
Post by: Crafty_Dog on June 10, 2010, 05:02:10 AM
Considering a Failed Transition for China
SOME TWO THOUSAND WORKERS CLASHED WITH POLICE in China on Tuesday during a staged walkout at a factory near Shanghai in Kunshan City, Jiangsu province. According to reports from Hong Kong, about 50 people were injured in the clash. It occurred amid a recent spate of labor incidents, including a series of worker suicides at the Foxconn electronics factory and strikes at Honda factories and several other factories in Guangdong province.

Recent labor problems have resulted in companies offering wage increases to appease workers. Foxconn has raised wages several times, most recently claiming to offer workers a 70 percent raise amid a public firestorm over the unsettling suicides at its plant that drew negative attention to major Western brands like Apple and Dell, who rely on Foxconn for parts. Honda raised wages only to see strikes emerge at one of its subsidiary’s factories. Elsewhere, failed negotiations over wages or unfulfilled promises of wage hikes have triggered walkouts. Most of the targeted companies have been foreign, mainly Taiwanese and Japanese, with one South Korea-affiliated factory. American company KFC agreed quietly during a round of negotiations to pay more to employees in China.

China is in the midst of an internal struggle to manage the rapid transformation of its economy and society. Few, when they look, can doubt that the struggle is one of consequence. The problem is that not many are looking. The recent labor issues raise serious questions about where China is going, and whether it will get there. The answers to these questions have a definite bearing on the global economy.

Beijing knows its lease has run out on rapid export-driven growth spurred by strong global demand. Across the world, stimulus programs are fading, and the debt hangover is setting in. Europe’s economies have become bogged down in unemployment, a weakening currency and painful attempts by many governments to correct their books. The inevitable result of this is less promise for the future consumption of Chinese goods. The United States’ prospects for growth are far better, but Americans’ consumer patterns have mellowed out, and Washington has fiscal problems of its own and is growing more mercantilist and more protectionist in the face of prolonged unemployment. None of these scenarios bode well for China’s manufacturing sector even if it had not spent almost 30 years experiencing unbridled expansion. The reality is that in the near term China will face lower external demand and slower growth rates, and not merely as a theoretical eventuality that can be noted and then blithely ignored.

The only hope for Beijing is to expedite the process of building its consumer base at home to generate new demand to keep Chinese workers busy and factories humming as foreign demand shrinks. One way to start restructuring a country as massive and diverse as China is to increase wages and household incomes, as Beijing has done by having local governments raise their required minimum wages. The more cash people have to spend and invest and boost the economy, the less likely they will be to take to the streets. Simple enough.

“Beijing knows its lease has run out on rapid export-driven growth spurred by strong global demand.”
Except that higher wages directly contravene the factor that made China an economic powerhouse in the first place: its massive pool of cheap labor. China’s manufacturers have already reached the point of saturating foreign markets and can no longer substantially increase their profits by increasing the bulk of production. In response they have pared down their costs, competing with each other to see who can run on thinner margins. This process too has nearly reached its end, with further margin-cutting starting to look fatal. If labor costs rise too high, a number of these companies will be forced to shed workers or shut down, and foreign investors may look elsewhere for cheap labor.

Nevertheless, this is the transition that China knows it must make. The survivors will be leaner and meaner and, ideally, the entire manufacturing sector will become more sophisticated and innovative. At the same time, new growth in other sectors will absorb the labor. The state will be there to catch those who fall through the cracks, economic restructuring will progress and China will shift away from export dependency and maintain growth at lower yet more sustainable rates.

Yet China’s ruling party fears it cannot handle the transition successfully, which explains its anxious attempts to manage the process as carefully and as gradually as possible. This entails using everything in its power to alleviate or suppress internal pressures and limit external interference and disturbances. The survival of the regime, not to mention the unity of the country, is at stake.

Needless to say, the rest of the world also fears a failed transition for China. China’s economy is currently the third largest in the world and much more deeply embedded into the global system than before, with a vast network of nations dependent on it in some way. While China could continue for a considerable period of time using fiscal spending and government direction to maintain its momentum and prop itself up (as it has done through the recent global crisis), a serious slowdown would have extremely negative consequences globally.

Reduced demand would send commodity prices falling and knock commodities producers off their feet in the Middle East, Africa, Latin America, Central and Southeast Asia and Australia. Supply chains linked into China’s manufacturing and assembly lines would collapse or be severely disrupted, harming China’s suppliers and leaving customers — from neighboring Japan and Korea to the United States and Europe — with shortages of goods integral to their own economies. Countries heavily invested in China would scramble to save what assets they could, and global financial markets would be in turmoil (not least because of American-Chinese financial interdependence). Opportunities would emerge for economic rivals to take advantage, developing countries would seek to fill the economic void and developed countries would try to take advantage of their various resources. China’s neighbors and the United States would see opportunities to strengthen their strategic position in China’s periphery.

In other words, trying to imagine what a failed transition would look like for the Chinese economy evokes memories of past failed attempts at social and economic transformation in China, all of which were catastrophic. The difference this time would be that the ramifications would extend further. The possibility alone, however far it may be from materializing in the near term (and STRATFOR suspects it is not as far off as conventional wisdom holds), has been enough to inject even more fear and uncertainty into the world economic system as China initiates new efforts to cool down its surging economy and reshape it for the future.
Title: exchange rate
Post by: Crafty_Dog on June 26, 2010, 12:09:12 AM
 

CHINA'S CURRENCY MOVES AND U.S. EXPECTATIONS

U.S. President Barack Obama spoke at length about U.S.-China relations on Thursday,
expressing approval of China's recent announcement that it would end its currency's
two-year de facto peg to the U.S. dollar and allow more flexibility in its exchange
rate going forward. Obama will meet with Chinese President Hu Jintao on the
sidelines of the G-20 summit, and spoke optimistically and conscientiously in
preparation for the talks. He said essentially that he approved of China's gesture
but now would like to see substantial action to support it.

The yuan's fixed rate has been a recurring source of tensions and threats, and the
prolonged unemployment problems following the recession have made U.S. leaders less
willing to tolerate China's taking exception to a range of international trade
norms. China's recent change to the policy was therefore welcome. But so far it is
merely symbolic, rising by barely two-hundredths of a yuan since a week ago. The
purpose of the tiny change was to give a sign, ahead of the G-20 summit in Canada,
that China is responsive to international demands for it to stop pushing the yuan
down to boost its manufacturers at the expense of others and begin playing a bigger
role in rebalancing the global economy. The other, more important purpose was to
reassure the United States.

In recent months, a long list of senators and representatives, as well as the
Treasury and Commerce departments, have brandished their weapons against China,
warning of the consequences of maintaining a currency that is undervalued by
anywhere from 20-40 percent. In the past few weeks the brandishing has gotten more
menacing. The chairmen of both the powerful Senate Finance Committee and the House
Ways and Means Committee have emphasized that if China does not act around the time
of the G-20 summit, and if the administration does not respond to this inaction,
then they will bring to a vote bills that would force the administration's hand.

From Beijing's point of view, there are good reasons to loosen the currency regime.
Allowing the yuan to rise would help in the process of transforming China's economy
into one that is of and for the consumer rather than one that is of and for the
producer. Chinese households and domestic-oriented businesses would see their buying
power enhanced, while exporters would lose some of their privileges. Investors would
respond to these trends and China would begin to genuinely shift away from
overdependence on exports as a means of growth. However, given the oft-observed
revolutionary effects of consumerism, Beijing is understandably insistent that the
process must be both gradual and carefully controlled. The Communist Party of
China's definition of a gradual pace of reform would elsewhere be interpreted as
glacial.

"Given the oft-observed revolutionary effects of consumerism, Beijing is
understandably insistent that the process must be both gradual and carefully
controlled."

 

For the United States, however, such timing is not fast enough. Midterm elections
are approaching in November and incumbents are in danger. While this is especially
important for congressmen whose states feel they have suffered the worst from cheap
Chinese imports, it is also important for Obama, whose domestic and foreign policy
woes are growing, and who could benefit from looking tough in dealing with China.

But the disagreement runs even deeper. As much as Obama may wish to avoid a
confrontation with China, he cannot afford to veto a bill against China once it sits
on his desk. The yuan is clearly artificially undervalued, and whatever the effect
on the U.S. economy, this is not beneficial. Not to mention the obvious question of
why China's currency is not freely traded like that of other countries, especially
given China's rapid growth, enormous economic size and the recovery of its exports
and trade surpluses.

Obama -- echoing the top lawmakers -- stressed the need to wait and observe the pace
and magnitude by which the yuan will rise in the coming weeks. Presumably, if China
is perceived to have made substantial improvement, the United States will call off
the dogs. Otherwise, the United States will begin meting out punishment for China's
currency "misalignment." The danger lies in where -- and whether -- U.S.
expectations intersect with China's capabilities given its fragile domestic
conditions. In the short term, Washington might be willing to be convinced to give
Beijing more leeway to reform at the pace it thinks it can handle. After all, a
deeper rift with China would not be beneficial for the United States given its other
economic and military preoccupations. (Though it would not be intolerable.) The
upcoming G-20 summit and Beijing's actions in the aftermath of those meetings will
determine whether such a rift can be avoided. Even so, any compromise will be
temporary, which spells trouble for U.S.-Chinese relations in the not-so-distant
future.

Copyright 2010 Stratfor.

Title: China's Political Awakening?
Post by: DougMacG on July 26, 2010, 11:37:01 AM
Very interesting coverage and realistic analysis, IMO.

http://the-diplomat.com/2010/07/14/china%E2%80%99s-political-awakening/

China’s Political Awakening?
July 14, 2010

The current labour unrest isn’t as apolitical as it looks. But don’t expect an early change in China’s autocratic leadership.

By Minxin Pei

The ongoing labour unrest in China is seen by many as a labour market response to uncompetitive wages offered by foreign companies. And, to a large extent, this is true. Changing demographics are reducing the supply of ultra-cheap young labourers from the countryside to coastal export-processing zones, giving labour more bargaining power.

But explaining China’s newly assertive workers purely on economic grounds misses the larger—and more interesting—political context. For labour activism is only one of the many signs of a broader political re-awakening in Chinese civil society.

For years, Western observers have been disheartened by the lack of political change in China. Modernization theory predicts that rapid economic progress should help liberalize the political system, but this hasn’t occurred in China since 1989. Until now.

In addition to migrant workers who have risked their jobs and personal safety in joining the strikes, China has seen other forms of civic activism and political assertiveness at the grassroots level.

What’s interesting about this new political reawakening is that on the surface it doesn’t look all that political. Instead of calling for democracy and freedom, participants in these activities focus on issues directly related to their economic interests, property rights and social justice. Examples include fighting off local governments’ attempts to build polluting factories, seize farmers’ land without compensation and evict urban residents from their homes. Criticism of government policy and performance in delivering public services and protecting social justice are routine in Chinese publications and on-line venues. And, of course, the ostensibly apolitical nature of such civic activism makes it much harder for the Communist Party to suppress it with brutal force.

Several forces have contributed to the reawakening. Clearly, the information revolution—a direct result of economic modernization—has helped change values and reduced the costs of organizing collective action. It has also magnified the political impact of such moves (even inspiring copycat action), while the rapidity with which the latest labour unrest has spread would have been inconceivable without the assistance of the Internet and cell phones.

Rising physical mobility of the population is another factor—as ordinary Chinese citizens have more opportunities to compare how conditions differ among China’s diverse localities, they acquire a greater awareness of the political and social injustice of their own surroundings and become less tolerant of such injustices.

In an important sense, the Communist Party’s own populist rhetoric has fuelled the expectations of Chinese society and, ironically, de-legitimized many of Beijing’s post-1989 policies that contributed to China’s rapid economic growth, such as courting foreign businesses, reducing social spending to boost investment and forcing tens of millions of ordinary Chinese to make enormous personal sacrifices (accepting low wages and losing their land and apartments for the sake of rapid economic growth). Now the Chinese government faces a dilemma: it has raised the people’s expectations, but meeting those expectations would be economically costly (more redistribution and social welfare) and politically risky (greater popular political participation).

The delayed political awakening of China’s civil society will have profound consequences. Economically, it will make it much harder for the government to continue to pursue its post-Tiananmen strategy of promoting economic growth at all cost. Politically, it may lead to greater disunity within the elites since some of them may be tempted to exploit rising populism for personal political advantage.

For a one-party regime for which elite unity is critical, any deep schisms within its top leadership could trigger a chain of de-stabilizing events. In addition, if the Chinese authorities fail to end the current labour unrest in foreign-invested firms, disgruntlement will likely spread to workers in other sectors (most likely in construction and mining, where working conditions are dangerous and pay extremely low).

Still, while the political awakening comes as a pleasant confirmation of the theory that economic progress will bring about political change, it can’t be assumed this emerging phenomenon will fundamentally change China’s autocratic political order. As a result of the post-Tiananmen repression, China’s civil society lacks independent centres of public morality, organizational networks and effective leadership. Most activities that challenge government authority are uncoordinated, disorganized and short-lived.

But if the Party thinks that it can continue to rule China in the same old way, it would be mistaken. If anything, the on-going labour unrest and the seismic shift in values in Chinese society show that the Party is governing a different country, where the old rules no longer apply.

Minxin Pei is an Adjunct Senior Associate at the Carnegie Endowment for International Peace and a Professor of Government at Claremont McKenna College
Title: Re: China
Post by: prentice crawford on August 06, 2010, 03:28:28 AM
Woof,
 Now why in the world should we have all those bad old nuclear weapons on hand? :-P Obama is putting us at risk everytime he gives one of his "We are so sorry for being more powerful than everybody else.", speeches.

http://news.yahoo.com/s/ap/20100805/ap_on_re_as/as_china_us_carrier_killer

                      P.C.
Title: China Climbing The Charts
Post by: prentice crawford on August 16, 2010, 03:37:06 AM
Woof,
 Pop the cork! www.msnbc.msn.com/id/38717767/ns/business-the-new_york-times (http://www.msnbc.msn.com/id/38717767/ns/business-the-new_york-times)

 Obama should be proud that his policies are going according to plan and China should send an envoy over to give him a big sloppy kiss. :-P
                                P.C.
Title: Re: China
Post by: prentice crawford on August 16, 2010, 08:36:02 PM
  WHY CHINA IS WINNING THE ECONOMIC WAR by Sy Harding, Forbes

 During the cold war, a term used to describe the tension between communist and capitalist countries that lasted from 1947 to 1991, one of the fears was a military conflict between Russia or China and the U.S.

 It didn't happen. The potential of a military war instead morphed into an economic war.

 The U.S. was winning hands down for a long time, but not so much anymore. It used to be that the U.S. was number one in pretty much everything; education, technology, standard of living, economic and military strength, admired world leadership. It was leading the rest of the world into the future with the demonstrative power of democracy and free markets, new technological breakthroughs in automation, computers, communications, energy, medicine, space travel, to name a few.

 In recent years, a number of countries have surpassed the U.S. in specific areas, including consumer incomes, standard of living, and health care. The true economic powerhouse, however, has been China. Some statistics, and the speed with which they have changed, have been startling.

 Over the last ten years China's economy has surged past those of Canada, Spain, Brazil, Italy, France, and Germany, and is expected to pass Japan this year, to become the second largest economy in the world, behind the U.S.

 Whether it's manufacturing efficiency, high-speed rail-line technology, nuclear power plant construction, clean air energy technology, education, China is making impressive global inroads, even in areas where the U.S. has significant dominance. Much of it has to do with China's massive population, about which the U.S. can do nothing about.

 For instance, while U.S. Internet companies dominate global headlines, China now has the world's largest internet market as measured by the number of users. Yet internet use has only penetrated 22 percent of the population versus 75% in the U.S. Meanwhile, U.S. Internet giants like Google, Yahoo, eBay, Amazon, Facebook and Expedia are experiencing problems trying to transport their dominance into the Chinese market. Part of it is obstacles placed in their way by China's government, in support of China's state-controlled corporations. The result is Chinese internet companies like Tencent, and Baidu, cannot help but become world leaders.

 Here's a statistic of more importance. U.S. universities will graduate 150,000 engineering students this year, while Chinese universities will graduate more than 500,000. I've had people tell me that's an unfair comparison since China's population is larger by approximately the same ratio. But that's not the issue. The issue is the degree to which China has moved higher education to the top of its priorities, and the fact that 500,000 new engineers a year will probably come up with more high-tech innovations than 150,000 can.

 China's great leap forward has been  going through the same phases the early U.S. experienced as it worked toward becoming the world's dominant economy.

 When we criticize China for the treatment of its underpaid and overworked labor force we sometimes forget that in the early years the U.S. also exploited its workers, even utilizing child labor in 14 hour days in garment, textile, and shoe factories, coal mines and crop fields, which gave the country its initial low-cost jump start economically.


 It appears China is beginning to exit that phase and enter the next, of treating its workers better. In the past year Chinese workers have been allowed to form unions and strike for higher wages and shorter hours at various auto and electronics plants.

 The west would probably like to think that is due to the pressure put on China to improve human rights. However, China has never shown any inclination to bow to pressure in any area. The fact is that the next phase of China's economic development must be, as it was in the U.S., to develop a strong domestic economy. To do so it needs to have a more prosperous population of consumers, rather than depending on low cost exports to other countries.

 Meanwhile, it can be said that China is eating America's lunch, never taking its eyes off the goal, while we squabble among ourselves, paying no attention.

 That's unfortunate. As Sam Houston said in the U.S. Senate in 1850, "A nation divided against itself cannot stand."

 Yet, for the last 15 years the U.S. has divided itself in increasingly bitter time and energy-consuming political arguments: the morals of Clinton, whether or not war should be waged to remove Saddam Hussein from power in Iraq, whether the country's current problems are due to the depth of the economic hole dug during the last administration, or ineptness of the current administration in pulling the economy out of the hole.

 Meanwhile, China has kept its eye on the goal. It not only is making economic strides, but on the financial side has become the world's largest creditor nation, even as the U.S. has become the world's largest debtor nation, with China holding much of its debt.

 The U.S. needs to interrupt its angry divisiveness and name-calling long enough to recognize the portent of what is going on. Unfortunately, in this particularly acrimonious mid-term election year, that is not going to happen.

 copyright 2010 Forbes  www.msnbc.msn.com/id/38726105/ns/business-forbescom (http://www.msnbc.msn.com/id/38726105/ns/business-forbescom)
 
                                               P.C.



 
Title: Re: China
Post by: lonelydog on August 17, 2010, 12:07:34 PM
Yes AND , , ,  IMHO a strong case can be made that China is a huge bubble.  Furthermore its unique demographic profile presents deep questions.
Title: Re: China
Post by: DougMacG on August 18, 2010, 09:37:46 PM
"a strong case can be made that China is a huge bubble.  Furthermore its unique demographic profile presents deep questions."

During the last expansion here, we had more GDP growth in part of a decade than they have in total GDP. China cut a corporate tax rate (Jan.2008) that was already below ours, right as our taxes were promised to get worse and right as our economy was starting to tank and needing the same type of real production stimulus.  Their economy is more dependent on ours than ours is on theirs, IMO.  If they outperform us going forward, the fault is all our own.  They have had phenomenal growth but as Crafty hints, there is plenty wrong in China.

A healthy Chinese economy and a growing world middle class is a healthy thing for the U.S. economy, assuming we also choose to engage and compete, except for the aspect and the extent to which they are military enemies of us.
Title: Re: China
Post by: prentice crawford on August 19, 2010, 12:48:11 AM

 We are just getting the wrong idea...

   http://news.yahoo.com/s/csm/20100818/wl_csm/320261 (http://news.yahoo.com/s/csm/20100818/wl_csm/320261)

                            P.C.
Title: Re: China
Post by: G M on August 27, 2010, 02:56:50 PM
http://www.ft.com/cms/s/0/182a2b70-b130-11df-b899-00144feabdc0.html

Thoughts?
Title: Re: China
Post by: Crafty_Dog on August 27, 2010, 03:20:47 PM
Please save me the pain in the butt of registering for a free 30 days and receiving a lifetime of pestering spam emails and post the article here?
Title: Re: China
Post by: G M on August 27, 2010, 03:52:04 PM
Banks back switch to renminbi for trade

By Robert Cookson in Hong Kong

Published: August 26 2010 17:55 | Last updated: August 26 2010 17:55

A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.
EDITOR’S CHOICE
Editorial Comment: Renminbi goes global - Aug-26
David Pilling: Long march to convertibility - Aug-25
Opinion: Great dangers of great powers - Aug-20
Lex: McDonald’s renminbi bonds - Aug-20
Beijing looks to broaden renminbi use - Aug-17
Opinion: Watch China’s coasts, not its currency - Aug-10

“We’re now capable of doing renminbi settlement in many parts of the world,” said Chris Lewis, HSBC’s head of trade for greater China. “All the other major international banks are frantically trying to do the same thing.”

HSBC and StanChart are among a slew of global banks – including Citigroup and JPMorgan – holding roadshows across Asia, Europe and the US to promote the renminbi to companies.

The move aligns the banks favourably with Beijing’s policy priorities and positions them to profit from what is expected to be a rapidly growing line of business in the future.

The phenomenon will accelerate Beijing’s drive to transform the renminbi from a domestic currency into a global medium of exchange like the dollar and euro.

Chinese central bank officials accompanied StanChart bankers on a roadshow to Korea and Japan in June. The bank held similar events in London, Frankfurt and Paris.

Lisa Robins, JPMorgan’s head of treasury and securities services for China, said there had been a “spike in interest” from international clients.

An increasing number of Chinese companies have been asking foreign trading partners to accept renminbi as payment, said Carmen Ling, Hong Kong head of global transaction services at Citi.

BBVA, Spain’s second-biggest bank, is also drawing up plans for a global marketing campaign that will focus on Latin American companies that export to China.

Banks started establishing renminbi trade settlement operations in mid-2009, when Beijing introduced a pilot scheme allowing companies to use the renminbi for trade outside China.

The scramble has intensified in recent months as Beijing has substantially expanded the scheme – from a handful of Asian countries to the whole world – and introduced other liberalisations to its currency regime.

Cross-border trade in renminbi totalled Rmb70.6bn ($10bn) in the first half of the year – about 20 times the Rmb3.6bn recorded in the second half of 2009.

But those figures remain tiny compared to the $2,800bn worth of goods and services that were traded across China’s borders last year, most of which was settled in dollars or euros.

With renminbi trade settlement volumes expected to increase rapidly, banks are under pressure to establish a foothold in the nascent market and demonstrate to Chinese officials that they are committed to the scheme.

China has taken several steps in recent months to boost the international use of its currency and to establish Hong Kong, the special administrative region, as the global centre for offshore renminbi business.

McDonald’s, the US burger chain and icon of globalisation, took advantage of the new rules this month when it became the first foreign multinational to issue renminbi-denominated bonds in Hong Kong.
Title: Re: China
Post by: G M on August 27, 2010, 06:08:58 PM
FWIW, I quote our esteemed vice president:

"This is a big fcuking deal".

I think history will show that this was an important benchmark. China is moving forward as we decline.
Title: Re: China
Post by: DougMacG on August 27, 2010, 11:31:01 PM
I have read that this is a good development and long overdue.  For one thing the Americans have been complaining for quite some time that the fixed exchange rate was artificially low.  If there is a market for their currency and a floating exchange rate, perhaps it will be right-sized.

"China is moving forward as we decline." 

At this moment, yes/maybe. Given that famous traffic jam, I would say not very fast and not without bumps in the road.  They are doing a couple of things right.  Underlying that you will also find crony capitalism, mis-allocated resources, bad loans, overvalued assets, an unprecedented demographic scheme, inability to take on immigrants and a structural inability to make political change.

If they are moving past us they will need their own currency.  But why did they not do it sooner?  Certainly they were not trading in dollars as a favor to us.  The dollar gave them something third world countries don't have - a stable currency.  If the pendulum of forward progress swings backward a couple of times, the currency could get pounded.  A floating and marketable currency will expose weakness.  I hope they don't have any.  :-)

"“We’re now capable of doing renminbi settlement in many parts of the world,”"

Maybe they can and maybe you can't.  But we don't have any yuan and we will be buying products from China in large quantities overnight, tomorrow morning and the next day.  Those transactions will happen in dollars.  If we must buy Yuan / Renminbi first, who do we buy them from?  The Chinese who print it.  What do we buy them with?  Dollars.  It's what we have.  Then they have dollars to spend elsewhere in the world, like on oil/energy. Or they can invest it back in our economy, our T-bills or dollar based investments - same as they do now.  They don't buy products from us for the most part so the trade / investment equation has to balance out somewhere.  Looks to me like change won't be easy for them.

We have had some heated exchanges here over monetary policy.  Second guessing the Fed from the armchair is easy and costs nothing.  Managing your own real currency in a major lopsided economy is not.  If I were the Fed advising the new currency board of the PRC my advice would be - don't try this at home.
Title: Re: China
Post by: Crafty_Dog on August 28, 2010, 01:05:42 AM
We currently are running about the same size deficit as a % of GDP as Greece.  The only difference is that we get to pay it with dollars we print.   When folks stop taking our dollars we will be in the same shape as Greece.  Folks have been taking our dollars for lack of alternative.  Now they begin to have one.  Should the trend continue, and we can no longer finance our deficits with the printing press, interest rates will shoot up-- quite possibly quite quickly as everyone heads for the exits at the same time. 

Working from memory IIRC at present interest payments currently run about $250B a year- a rather hefty sum considering how low interest rates are at present.  Even a moderate rise in interest rates could easily take this to over one Trillion dollars. 
Title: Re: China
Post by: JDN on August 28, 2010, 08:15:14 AM
We currently are running about the same size deficit as a % of GDP as Greece.

While I do think our deficit is way too large and growing, I couldn't find any source that verified that our current
deficit was "the same size deficit as a % of GDP as Greece."  Source?
Title: Re: China
Post by: G M on August 28, 2010, 08:39:39 AM
http://www.cnsnews.com/news/article/67183

Title: Re: China
Post by: JDN on August 28, 2010, 09:03:57 AM
"United States is in danger of being in the same dire situation as Greece – national bankruptcy -- in seven to 10 years unless the federal government radically curtails spending."

I understand, however "projecting" if no changes are make that in "seven to 10 years" from now we will be in the dame dire situation as Greece is a lot different
than Crafty saying "we are "currently" are running about the same size deficit as a % of GDP as Greece"

I have little faith in 7-10 year economic projections.
Title: Re: China
Post by: G M on August 28, 2010, 09:08:32 AM
But for Reidl, who recently issued his own report on federal spending, seven to 10 years may be too optimistic.
 
“It’s very tough to predict when a financial crisis will hit, because much of it depends on bond market psychology,” Reidl said. “As soon as the bond market decides the U.S. may not be able to fully service its debts, they will respond with a flight from our currency. When the bond market makes that decision is really anybody’s guess. It could be two to three years from now, it could be 10 years from now.”

**It could be even sooner.**
Title: Re: China
Post by: Crafty_Dog on August 28, 2010, 09:09:52 AM
Which is why you should read the whole article:

"When Greece started to admit its debt problems last November, the government estimated its deficit last year was 12.7 percent of its GDP – a figure that Eurostat, the European Commission’s official statistics agency, said was too low and which it revised to upward 13.6 percent.  Meanwhile, the U.S. deficit is on track to become 10.3 percent of GDP in 2010 under President Obama’s budget.  
, , , Greece’s debt hovered above 110 percent of the GDP in November. Meanwhile, the estimated U.S. national debt was 52.9 percent of GDP in 2009 -- a significant jump from the 39.7 percent in the previous year, according to data from the CIA World Factbook."

Lets see 52.9 minus 39.7 equals 13.2.  Yes?   13.2 is greater than 12.7.  Yes?
Title: Re: China
Post by: JDN on August 28, 2010, 09:34:45 AM
Sorry, but I am confused.

"Greece's deficit is 13.6
US deficit is on track to become 10.3"

Doesn't that mean our current deficit as a percentage is 25% less than Greece's?

or

"Greece's debt hovered above 110% in November
US debt was 52.9% in 2009."

So our debt as a percentage is less than half of Greece's right?


52.9 - 39.7 does equal 13.2%, but this is the amount, as a percentage,
that our debt has increased from last year.  Not good.  IF this trend continues we are in
deep shit, but "currently" we are much better off than Greece.

Title: Re: China
Post by: G M on August 28, 2010, 09:47:25 AM
http://www.dailyfinance.com/story/greenspan-warns-us-budget-deficit-greece/19521722/

Sword of Damocles.
Title: Re: China
Post by: Crafty_Dog on August 28, 2010, 10:06:00 AM
JDN: Sorry, but I am confused.

Marc:  Agreed. :lol:

JDN: "Greece's deficit is 13.6
US deficit is on track to become 10.3"
Doesn't that mean our current deficit as a percentage is 25% less than Greece's?

Marc:  I suppose I could quibble that one is 2009 and one is projected 2010 and that as best as I can tell both my numbers were for 2009, , ,

or

JDN: "Greece's debt hovered above 110% in November
US debt was 52.9% in 2009."

So our debt as a percentage is less than half of Greece's right?

Marc:  Very good and , , , irrelevant. This is not the point in question.  The point in question is the current magnitude of deficit spending.


52.9 - 39.7 does equal 13.2%, but this is the amount, as a percentage,
that our debt has increased from last year.  Not good.  IF this trend continues we are in
deep shit, but "currently" we are much better off than Greece.


Marc:  Lets refresh our memory.  A few hours ago, you questioned thusly:

" I couldn't find any source that verified that our current deficit was "the same size deficit as a % of GDP as Greece."  

GM posted an article which contained information that included data which precisely answered your question.  You responded to other data in the article as if it were the data being offered in response to your question.  I then broke down the relevant data for you.  Apparently I have not yet succeeded in explaining it in terms you understand.

Allow me to try again.

The point of the 13.2% number is precisely that it IS 2009's deficit and that this is greater than Greece's 2009 deficit and that my original assertion, for which you sought data, is thus supported.   Yes?  Anyway, is all of this really the point?  The larger point is that we are running in the same neighborhood as Greece.   As GM points out in his post, Greenspan is catching up with our analysis  :lol:
Title: Re: China
Post by: JDN on August 28, 2010, 10:20:16 AM
Sorry, still confused....   :-)

13.2% is not our 2009 deficit; it is merely the increase percentage from 2008.  Admittedly a horrid trend,
but we are not "currently" as bad a Greece.  Look at the numbers.

But I do agree, if something is not done or as you pointed out, if interest rates shoot up, times could/will get much worse.

But let's move on...  I think we agree on the overall gloomy picture.
Title: Re: China
Post by: DougMacG on August 28, 2010, 10:48:13 AM
JDN: "I have little faith in 7-10 year economic projections."

True, they are based on some rosy scenario numbers such as that health care is net-free and that the economy will grow robustly while we continue to raise taxes during recession or stagnation.  Without policy corrections, these forecasts will be WAY off the mark and reality will be far worse IMHO.

When Greece imploded, some thought it would bring down the Euro, the EU, the world financial system etc.  It did not all come true but when the U.S. fails, only that one guy in the Amazon will be unaffected.

JDN, the original point was that we are loaded in debt and loading up more with no end in sight.  Current (deemed but not passed) budget is roughly $4T revenues, $2.5T revenues resulting in $1.5T in new debt or monetized deficit.  Totally irresponsible and was enabled but not caused by China.  Crafty is right that whatever that true debt burden is now we have not felt the main impact yet with interest rates artificially held close to zero.  When interest rates skyrocket beyond our control, we are screwed and so are our creditors.

Crafty's wrote:  "...we get to pay it (international debt) with dollars we print."

 - What that means to me is that unlike third world countries, we (unfortunately) can inflate our way part way out of that burden, creating other/worse burdens.

"When folks stop taking our dollars we will be in the same shape as Greece.  Folks have been taking our dollars for lack of alternative.  Now they begin to have one.  Should the trend continue, and we can no longer finance our deficits with the printing press, interest rates will shoot up-- quite possibly quite quickly as everyone heads for the exits at the same time."

 - China's economy is built largely on export sales and its trade imbalance with the US (and elsewhere).  If they sell to Americans who have only dollars while not buying our products they will have excess dollars.  World trade if you include the investment and financial side offsetting the imbalanced flow of goods and services is a closed system.  I don't see how they quit buying dollar based investments without first correcting the trade imbalance.  If they sell off their dollars or dollar based investments, then someone else is holding them. 

If the currency change is successful from the Chinese point of view, I think it would force both countries to behave more responsibly. (ex: Greek lawmakers approved sweeping pension reforms July 10 2010  http://www.reuters.com/article/idUSTRE6674K320100708)  China needs to allow domestic consumption and personal wealth to start catching up with its production side and America needs to stop punishing our own manufacturers with the myriad of increasing rules, mandates, prohibitions, taxes, and start moving our federal budget back toward balance.

More likely this currency experiment will fail IMO for the same reasons that they were unable to do it previously.

The good news is that deficits and GDP are inversely related, not proportional.  Most of current spending is not going to go away.  The boldest proposal out there only rolls it back to 2008 levels.  We can only grow revenues and thus shrink deficits by growing GDP so pro-growth policies if we could find some would improve both measures simultaneously.   If we grow the private economy, deficits will shrink IF we find sane people to watch over public spending while we do this. And if we continue to steal the resources of our economy for the public sector, the GDP will not grow. The burden of the accumulated debt shrinks during times of high growth as a percentage of the total economy, but again only if public spending is controlled and contained.

I remember one of the pundits lamenting last year that China was the last check or balance left on our irresponsibility once Peloi-Reid-Obama gained their 60th vote in the senate.  This news seems to illustrate that.
Title: Re: China
Post by: Crafty_Dog on August 28, 2010, 01:48:54 PM
IMHO an important strand of China's strategy is to use those dollars to buy assets, raw materials, etc world-wide.
Title: Re: China
Post by: G M on August 28, 2010, 05:34:23 PM
Yup, especially oil.

 China: To Invest $1 Billion In Iranian Petrochemical Projects
August 28, 2010

The National Iranian Petrochemical Company and a Chinese consortium are completing talks on an agreement under which China would funnel some $1 billion into petrochemical projects in Iran, Mehr News Agency reported Aug. 28. The construction of the petrochemical facilities requires a total of $43 billion in investment funds; contracts have already been signed to implement 28 of those projects.
Title: Re: China
Post by: DougMacG on August 28, 2010, 07:05:48 PM
"an important strand of China's strategy is to use those dollars to buy assets, raw materials, etc world-wide."

Yes.  So the 2 largest energy importers buy oil in dollars hence oil is sold in dollars, oil suppliers take in dollars, buy or invest back into what they need, all over the world - in dollars.  I'm not able to see how that cycle breaks in favor of the Chinese currency without a change in underlying fundamentals.
Title: Re: China
Post by: Crafty_Dog on August 28, 2010, 10:34:06 PM
" I'm not able to see how that cycle breaks in favor of the Chinese currency without a change in underlying fundamentals."

Flesh this out please?
Title: China trade and currency
Post by: DougMacG on August 29, 2010, 02:20:57 PM
[Flesh this out please]

Some underlying fundamentals in no particular order:

The US imports from China: $300-330 billion
China imports form US: $70 billion, less than 1/4th.
 = China is importing $230+ dollars.  Must spend or invest these US dollars somewhere.

(EU goods exports to China 2009: €81.7 billion
 EU goods imports from China 2009: €214.7 billion - similar situation)

We also have a trade deficit with Europe, peaked at about $140-150 billion/yr. which floods dollars, not Euros into the global market.

The total US trade deficit peaked at about $700-750 in the healthy economy of 2005-2008. (That number is down in this recession) We are running a trade deficit with the rest of the world outside of China and Europe of roughly $250 billion/yr. That is net of what they spend with us so they must buy elsewhere using dollars or invest/lend back to the US in dollars.

The US imports 66% of its oil, buys primarily in US$, $400 billion/yr,

The US restricts domestic oil production.  Those restrictions cause much of the import requirement which causes dollars to leave the US.

China for the most part does not need US manufactured goods (and steals our technology anyway).

China consumers use perhaps a few hundred billion dollars/yr worth of US software, music, movies, patent infringements, etc. that they don't pay for (which would otherwise create some balance in trade).

The US zones, restricts, regulates, taxes, creates work rules, has pending energy use legislation, health care mandates, etc. that make US goods largely non-competitive in an economically freer country like China (it hurts to say that).  US auto manufacturing pays more for healthcare than steel.

China imports oil at $150-200 billion /yr.

US budget deficit is currently at 1500-1600 billion.

Of our public debt, 25% is owned by foreign governments, 22% of that is owned by China.  Those percentages will need to be updated after we see who is buying all our new debt.  At those percentages that would be $88 Billion per year bought by the China.  In other words, a part of their trade surplus comes back in there and a part of those dollars go into the global economy via their oil suppliers.
-------------------

These imbalances combine to make bidirectional and circular flows of funds that find a balance.  Each piece of the imbalance above either enables or causes something else to occur or exist, depending on how you look at it.  Floating or changing exchange rates also play a role in finding balance, as we see between the dollar and the Euro, but did not have with China.
----------------------------
Changing fundamentals:  

If China had a middle class demanding and purchasing goods from around the world up to near the amount of Chinese exports - it would not find itself holding dollars and using them for other purchases like oil and buying T-bills.

If the US produced all of its own oil that it could - fewer dollars would flood the world markets.

If the US moved toward rough balance in its federal budget - we would need fewer dollars to come back in to lend us our public debts.

If China enforced US/World copyright/patent/trademark laws - we would have some chance at approaching trade parity.  

If the US committed itself to being a competitive place to locate, manufacture, produce and export from instead of a place actively looking for ways to hinder production and punish profits - US goods would be more competitive, we would export more, employ more people in manufacturing and send fewer net dollars out.

As economies elsewhere develop, prosper, grow a middle class and their own industries, and develop legal systems to enforce global patents copyrights etc., they become viable markets for US export sales for technologies, intellectual property products, services, etc.  China has economic growth but does not seem to grow its middle class or bring its legal/political system up intot he 19th century or beyond.
-----

Very true that we certainly don't want to be borrowing our excesses in foreign currency but also true that we shouldn't want to be borrowing our excesses from anyone.

If you leave these fundamentals in place, the current cycle is hard to break.  China needs to sell to America to get a significant part of its money and growth and that money is in dollars. Then China needs to spend or invest those dollars somewhere.  They can require foreign sales in Yuan (Renminbi) but the customer cannot pay with them if they don't have them and unless they are an oil exporter, China is not buying their products with any proportionality.

If you break any or all of these cycles and co-dependencies, you could break the global reliance on the US$.  But if that happens, such as China buying more from the US, putting the US budget more in balance, seeing foreign trade between other countries made in currencies other than US dollars, if developing markets increase purchasing power, or if US manufacturers gain competitiveness and increase exports - I fail to see how any of those developments would be harmful to us.
----------------
Sources:
http://www.uschina.org/statistics/tradetable.html
http://www.census.gov/foreign-trade/statistics/historical/gands.txt
http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/china/
http://www.eia.doe.gov/cabs/China/Oil.html
http://en.wikipedia.org/wiki/United_States_public_debt
http://coham.osu.edu/
http://www.census.gov/foreign-trade/balance/c0012.html
Title: Interesting coincidence
Post by: Crafty_Dog on August 30, 2010, 09:49:28 AM
China: Rumors of the Central Bank Chief's Defection
August 30, 2010 | 1406 GMT

LIU JIN/AFP/Getty Images
People’s Bank of China Gov. Zhou XiaochuanRumors have circulated in China that People’s Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within the PBC, including Zhou. Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou’s defection have spread around China intensively, and Zhou’s name has been blocked from Internet search engines in China.

STRATFOR has received no confirmation of the rumor, and reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment. However, the release of this rumor and its dispersion throughout the public is significant, particularly as the Communist Party of China (CPC) is preparing for a leadership transition in 2012.

Chinese state-run media and official government websites have run several high-profile reports about Zhou, which should be seen as a move to refute the rumors. The PBC website published two articles on its homepage reporting on Zhou’s meeting with visiting Japanese Financial Services Minister Shozaburo Jimi during the third China-Japan high-level economic dialogue as well as a meeting with an Italian delegation. Xinhua news agency reported that Zhou told the PBC Party Committee Enlargement Meeting on Aug. 30 it should “continue to implement justice, and strengthen legislative work in the financial system.” Prior to this news, Zhou appeared at the 2nd annual conference of the heads of the Chinese, Japanese and Korean central banks held on Aug. 3, and his most recent public appearance was Aug. 10 for China’s Financial System Anti-corruption Construction Exhibition.

Zhou is known to have lofty political ambitions and is believed to be a close ally to former Chinese President Jiang Zemin, as well as a core figure for Jiang’s “Shanghai Gang.” There has been no shortage of rumors about Zhou’s possible dismissal in the past five years, as he is believed to be associated with several high-level financial scandals. For example, Zhou was rumored to be under “shuanggui,” a form of house arrest administered by the CPC, during the massive crackdown of Shanghai Party Secretary Chen Liangyu in 2006, which was perceived in the country as a crackdown of the Shanghai Gang and part of Hu’s effort to consolidate power ahead of the 2007 power transition. There was also a rumor that he might have been detained following the investigation and arrest of Wang Yi, the vice governor of the China Development Bank, along with several other officials in the financial circle. Currently, several financial scandals are still under investigation, and it is likely that Zhou, as PBC governor and one of the most powerful economic players in the country, could be associated with some cases. Therefore, whether or not the rumor is true at this time, the leaking of this news is very likely to be associated with a power struggle within the Communist Party’s economic hierarchy.

Title: China Bubble readying to burst?
Post by: Crafty_Dog on September 13, 2010, 09:10:39 PM
http://www.beijingtoday.com.cn/tag/vacancy-rate

Pop go the weasels , , ,
Title: Re: China
Post by: prentice crawford on September 13, 2010, 10:45:23 PM
Woof,
 And it is to be seen if their bubble, like our bubble, brings about another worldwide meltdown of the financial markets.
                                     P.C.
Title: Re: China
Post by: Crafty_Dog on September 14, 2010, 01:08:27 AM
EXACTLY SO :-o :-o :-o

By the way, did I hear correctly today that China is sending a rocket/satellite/manned landing to the moon in 2010?

Title: Stratfor: Succession
Post by: Crafty_Dog on September 14, 2010, 10:54:03 AM
second post of the day:
=========

In 2012, the Communist Party of China’s (CPC) leaders will retire and a new generation — the so-called fifth generation — will take the helm. The transition will affect the CPC’s most powerful decision-making organs, determining the makeup of the 18th CPC Central Committee, the Political Bureau (Politburo) of the Central Committee, and most important, the nine-member Politburo Standing Committee that is the core of political power in China.

While there is considerable uncertainty over the handoff, given China’s lack of clear, institutionalized procedures for succession and the immense challenges facing the regime, there is little reason to anticipate a succession crisis. But the sweeping personnel change comes at a critical juncture in China’s modern history, with the economic model that has enabled decades of rapid growth having become unsustainable, social unrest rising, and international resistance to China’s policies increasing. At the same time, the characteristics of the fifth generation leaders suggest a cautious and balanced civilian leadership paired with an increasingly influential and nationalist military. This will lead to frictions over policy even as both groups remain firmly committed to perpetuating the regime.

The Chinese leadership that emerges from 2012 will likely be unwilling or unable to decisively carry out deep structural reforms, obsessively focused on maintaining internal stability, and more aggressive in pursuing the core strategic interests it sees as essential to this stability.

Just as China’s civilian leadership will change, China’s military will see a sweeping change in leadership in 2012. The military’s influence over China’s politics and policies has grown over the past decade, as the country has striven to professionalize and modernize its forces and expand its capabilities in response to deepening international involvement and challenges to its internal stability. The fifth generation military leaders are the first to have come out of the military modernization process, and to have had their careers shaped by the priorities of a China that has become a global economic power. They will take office at a time when the military’s budget, stature and influence over politics is growing, and when it has come to see its role as extending beyond that of a guarantor of national security to becoming a guide for the country as it moves forward and up the ranks of international power.


Civilian Leadership

Power transitions in the People’s Republic of China have always been fraught with uncertainty because the state does not have clear and fixed institutional procedures for the transfer of power between leaders and generations. The state’s founding leader, Mao Zedong, did not establish a formal process before he died, giving rise to a power struggle. Mao’s eventual successor, Deng Xiaoping, was also a strong leader whose personal power could override rules and institutions. But Deng’s retirement also failed to set a firm succession precedent. He saw two of his chosen successors lose out amid factional struggles, and Deng maintained extensive influence well after formally retiring and passing power to Jiang Zemin and naming Jiang’s successor, current President Hu Jintao.

Even though China does not have any fixed rules on power transfers, a series of precedents and informal rules have been observed. Recent years have seen a move toward the solidification of these rules. Deng set a pattern in motion that smoothed the 2002 presidential transition from Jiang to Hu despite behind-the-scenes factional tensions. As mentioned, Deng had also appointed Hu to be Jiang’s successor. This lent Hu some of Deng’s great authority, thus establishing an air of inevitability and deterring potential power grabs. This leap-frog pattern was reinforced when Jiang put Vice President Xi Jinping in line to succeed Hu in 2012. The coming transfer will test whether the trend toward stable power transitions can hold.


Characteristics of the Fifth Generation

While all countries experience leadership changes that can be described as generational in one sense or another, modern Chinese history has been so eventful as to have created generations that, as a group, share distinct characteristics and are markedly different from their forebearers in their historical, educational and career experiences. Deng created the concept of the “generational” framework by dubbing himself the core second-generation leader after Mao, and events and patterns in leadership promotion and retirement reinforced the framework. The most defining factor of a Chinese leadership generation is its historical background. The first generation defined itself by the formation of the Communist Party and the Long March of exile in the 1930s, the second generation in the war against the Japanese (World War II), and the third during civil war and the founding of the state in 1949. The fourth generation came of age during the Great Leap Forward in the late 1950s, Mao’s first attempt to transform the entire Chinese economy.

The fifth generation is the first group of leaders that cannot — or can only barely — remember a time before the foundation of the People’s Republic. These leaders’ formative experiences were shaped during the Cultural Revolution (1967-77), a period of deep social and political upheaval in which the Mao government empowered hard-liners to purge their political opponents in the bureaucracy and Communist Party. Schools and universities were closed in 1966 and youths were sent down to rural areas to do manual labor, including many fifth-generation leaders such as likely future President Xi Jinping. Some young people were able to return to college after 1970, where they could only study Marxism-Leninism and CPC ideology, while others sought formal education when schools were reopened after the Cultural Revolution. Very few trained abroad, so they did not become attuned to foreign attitudes and perceptions in their formative days (whereas the previous generation had sent some young leaders to study in the Soviet Union). Characteristically, given the fuller educational opportunities that arose in the late 1970s, the upcoming leaders have backgrounds in a wide range of studies. Many were trained as lawyers, economists and social scientists, as opposed to the engineers and natural scientists who have dominated the previous generations of leadership.


TEH ENG KOON/AFP/Getty Images
Politburo Standing Committee member Xi Jinping at the National People’s Congress meeting in MarchIn 2012, only Vice President Xi Jinping and Vice Premier Li Keqiang will remain on the Politburo Standing Committee, the core decision-making body in China. Seven new members will join, assuming the number of total members remains at nine, which has been the case since 2002. All seven will hail from the broader Politburo and were born after October 1944, in accordance with an unwritten rule established under Deng requiring Chinese leaders to retire at age 70 (it was lowered to 68 in 1997). The retiring leaders will make every effort to strike a deal preventing the balance of power within the Politburo and the Politburo Standing Committee from tipping against them and their faction.

At present, China’s leaders divide roughly into two factions broadly defined as the populists and the elitists.

The populists are associated with Hu Jintao and the China Communist Youth League (CCYL) and are more accurately referred to as the “league faction” (in Chinese, the “tuanpai”). In the 1980s Hu led the league, which comprises his political base. The CCYL is a massive organization that prepares future members of the CPC. It is structured with a central leadership and provincial and local branches based in the country’s schools, workplaces, and social organizations. In keeping with the CCYL’s rigid hierarchy and doctrinal training, the policies of Hu’s “CCYL clique” focus on centralizing and consolidating power, maintaining social stability, and seeking to redistribute wealth to alleviate income disparities, regional differences, and social ills. The clique has grown increasingly powerful under Hu’s patronage. He has promoted people from CCYL backgrounds, some of whom he worked with during his term as a high-level leader in the group in the early 1980s, and has increased the number of CCYL-affiliated leaders in China’s provincial governments. Several top candidates for the Politburo Standing Committee in 2012 are part of this group, including Li Keqiang and Li Yuanchao, followed by Liu Yandong, Zhang Baoshun, Yuan Chunqing, Liu Qibao and Wang Yang.

The elitists are leaders associated with former President Jiang Zemin and his Shanghai clique. Their policies aim to maintain China’s rapid economic growth, with the coastal provinces unabashedly leading the way. They also promote economic restructuring to improve China’s international competitiveness and reduce inefficiencies, even at the risk of painful changes for some regions or sectors of society. The infamous “princelings” — or the sons, grandsons and relatives of the CPC’s founding fathers and previous leaders who have risen up the ranks of China’s system through these familial connections — are often associated with the elitists. The princelings are criticized for benefiting from nepotism, and some have suffered from low support in internal party elections. Still, they have name recognition from their proud Communist family histories, the finest educations and career experiences and access to personal networks set up by their fathers. The Shanghai clique and princelings are joined by economic reformists of various stripes who come from different backgrounds, mostly in the state apparatus such as the central or provincial bureaucracy and ministries, who often are technocrats and specialists. Prominent members of this faction eligible for the 2012 Politburo Standing Committee include Wang Qishan, Zhang Dejiang, Bo Xilai, Yu Zhengsheng and Zhang Gaoli.

The struggle between the populist and elitist factions is a subset of the deeper struggle in Chinese history between centralist and regionalist impulses. Because of China’s vast and diverse geography, China historically has required a strong central government, usually located on the North China Plain, to maintain political unity. But this cyclical unity tends to break down over time as different regions pursue their own interests and form relationships with the outside world that become more vital to them than unity with the rest of China. The tension between centralist and regionalist tendencies has given rise to the ancient struggle between the north (Beijing) and the south (Shanghai), the difficulties that successive Chinese regimes have had in subordinating the far south (i.e. Guangdong and the Pearl River Delta), and modern Beijing’s anxiety over the perceived threat of separatism from Taiwan, Xinjiang and Tibet. In this context, the struggle between the two dominant political factions appears as the 21st century political manifestation of the irresolvable struggle between the political center in Beijing and the other regions, whose economic vibrancy leads them to pursue their own ends. While Hu Jintao and his allies emphasize central control and redistributing regional wealth to create a more unified China, the followers of Jiang tend to emphasize the need to let China’s most competitive regions grow and prosper, often in cooperation with international partners, without being restrained by the center or weighed down by the less dynamic regions.


Factional Balance

The politicians almost certain to join the Politburo Standing Committee in 2012 appear to represent a balance between factional tendencies. The top two, Xi Jinping and Li Keqiang, are the youngest members of the current Politburo Standing Committee and are all but certain to become president and premier, respectively. Xi is a princeling — son of Xi Zhongxun, an early Communist revolutionary and deputy prime minister — and his leadership in Fujian, Zhejiang and Shanghai exemplifies the ability of coastal manufacturing provinces to enhance an official’s career. But Xi is also popular with the public, widely admired for his hardships as a rural worker during the Cultural Revolution. He is the best example of bridging both major factions — promoting economic reforms but seen as having the people’s best interests at heart. Li was trained as an economist under a prestigious teacher at Beijing University, received a law degree, and is a former top secretary of the CCYL and stalwart of Hu’s faction. Economics is his specialty, not in itself but as a means to social harmony. For example, he is famous for promoting further revitalization of northeastern China’s industrial rust belt of factories that have fallen into disrepair. Li also has held leadership positions in provinces like Henan, an agricultural province, and Liaoning, a heavy-industrial province, affording him a view of starkly different aspects of the national economy.

After Xi and Li, the most likely contenders for seats on the Politburo Standing Committee are Li Yuanchao, director of the CPC’s powerful organization department (CCYL clique), Wang Yang (CCYL), member of the CPC’s Politburo, Liu Yunshan (CCYL), director of the CPC’s propaganda department, and Vice Premier Wang Qishan (princeling/Jiang’s Shanghai clique). The next most likely candidates include Vice Premier Zhang Dejiang (Jiang’s Shanghai clique), Chongqing Party Secretary Bo Xilai (princeling), Tianjin Party Secretary Zhang Gaoli (Jiang’s Shanghai clique) and CPC General Office Director Ling Jihua (secretary to Hu Jintao, CCYL clique). It is impossible to predict exactly who will be appointed to the Politburo Standing Committee. The lineup is the result of intense negotiation between the current committee members, with the retiring members (everyone except Xi Jinping and Li Keqiang) wielding the most influence. Currently, of the nine Politburo Standing Committee members, as many as six are Jiang Zemin proteges, and they will push for their followers to prevent Hu from taking control of the committee.





(click here to enlarge image)
It accordingly seems possible that the 2012 Politburo Standing Committee balance will lean slightly in favor of Jiang’s Shanghai clique and the princelings, given that Xi Jinping will hold the top seat, but that by numbers the factions will be evenly balanced. Like his predecessors, Xi will have to spend his early years as president attempting to consolidate power so he can put his followers in positions of influence and begin to shape the succeeding generation of leaders for the benefit of himself and his circle. An even balance, if it is reached, may not persist through the entire 10 years of the Xi and Li administration: the CCYL clique looks extremely well-situated for the 2017 reshuffle, at which point many of Jiang’s proteges will be too old to sit on the Politburo Standing Committee while a number of rising stars in the CCYL currently serving as provincial chiefs will be well-placed for promotion.

There is a remote possibility that the number of seats on the Politburo Standing Committee could be cut from nine to seven, the number of posts before 2002. This would likely result in a stricter enforcement of age limits in determining which leaders to promote, perhaps setting the cutoff age at 66 or 67 (instead of 68). Stricter age criteria could eliminate three contenders from Jiang’s Shanghai clique (Zhang Gaoli, Zhang Dejiang, and Shanghai Party Secretary Yu Zhengsheng) and one from Hu’s clique (Politburo member Liu Yandong). This would leave Bo Xilai (a highly popular princeling with unorthodox policies, but like Xi Jinping known to straddle the factional divide) and CPC General Office Director Ling Jihua (secretary to Hu Jintao, CCYL clique) as the most likely final additions to the Politburo Standing Committee. The overall balance in this scenario of slightly younger age requirements would then lean in favor of Hu’s clique.

Title: Succession-2
Post by: Crafty_Dog on September 14, 2010, 10:55:15 AM
Collective Rule

The factions are not so antagonistic that an intense power struggle is likely to rip them apart. Instead, they can be expected to exercise power by forging compromises. Leaders are chosen by their superiors through a process of careful negotiation to prevent an imbalance of one faction over another that could lead to purges or counterpurges. That balance looks as if it will roughly be maintained in the configuration of leaders in 2012. In terms of policymaking, powerful leaders will continue to debate deep policy disagreements behind closed doors. Through a process of intense negotiation, they will try to arrive at a party line and maintain it uniformly in public. Stark disagreements and fierce debates will echo through the statements of minor officials and academics, and in public discussions, newspaper editorials, and other venues, however. In extreme situations, these policy battles could lead to the ousting of officials who end up on the wrong side. But the highest party leaders will not contradict each other openly on matters of great significance unless a dire breakdown has occurred, as happened with fallen Shanghai Party Secretary Chen Liangyu.

That the fifth generation leadership appears in agreement on the state’s broadest economic and political goals, even if they differ on the means of achieving those goals, will be conducive to maintaining the factional balance. First, there is general agreement on the need to continue with China’s internationally oriented economic and structural reforms. These leaders spent the prime of their lives in the midst of China’s rapid economic transformation from a poor and isolated pariah state into an international industrial and commercial giant, and were the first to experience the benefits of this transformation. They also know that the CPC’s legitimacy has come to rest, in great part, on its ability to deliver greater economic opportunity and prosperity to the country — and that the greatest risk to the regime would likely come in the form of a shrinking or dislocated economy that causes massive unemployment. Therefore, for the most part they remain dedicated to continuing with market-oriented reform. They will do so gradually and carefully, however, and will not seek to intensify reformist efforts to the point of dramatically increasing the risk of social disruption. Needless to say, while the elitists can be energetic in their pursuit of economic liberalization, the populists tend to be more suspicious and more willing to re-centralize controls to avoid undesirable political side effects, even at the expense of long-term risks to the economy.

More fundamentally, all fifth generation leaders are committed to maintaining CPC rule. The chaos of the Cultural Revolution impressed upon the fifth generation a sense of the extreme dangers of China’s having allowed an autocratic ruler to dominate the decision-making process and intra-party struggle to run rampant. Subsequent events have reinforced the fear of internal divisions: the protest and military crackdown at Tiananmen Square in 1989, the threat of alternative movements exemplified by the Falun Gong protest in 1999, the general rise in social unrest throughout the economic boom of the 1990s and 2000s. More recent challenges have reinforced this, such as natural disasters like the Sichuan earthquake in 2008, ethnic violence and riots in Tibet in 2008 and Xinjiang in 2009, and the pressures of economic volatility since the global economic crisis of 2008. These events have underscored the need to maintain unity and stability in the Party ranks and in Chinese society, by force when necessary. So while the fifth generation is likely to agree on the need to continue with economic reform and perhaps even limited political reform, it will do so only insofar as it can without destabilizing socio-political order. It will delay, soften, undermine, or reverse reform to ensure stability. Once again, the difference between the factions lies in judging how best to preserve and bolster the regime.


Regionalism

Beyond the apparent balance of forces in the central party and government organs, there remains the tug-of-war between the central government in Beijing and the 33 provincial governments (not to mention Taiwan) — a reflection of the timeless struggle in China between center and periphery. If China is to be struck by deep destabilization under the watch of the fifth generation leaders (which is by no means impossible, especially given the economic troubles facing them), the odds are this would occur along regional lines. Stark differences have emerged, as China’s coastal manufacturing provinces have surged ahead while provinces in the interior, west and northeast have lagged. The CPC’s solution to this problem generally has been to redistribute wealth from the booming coast to the interior in hopes that subsidizing the less developed regions eventually will nurture economic development. In some instances, such as in Shaanxi or Sichuan provinces, urbanization and development have indeed accelerated in recent years. But overall, the interior remains weak and dependent on subsidies from Beijing.

The problem for China’s leadership is that the coastal provinces’ export-led model of growth that has worked well over the past three decades has begun to peak, and China’s annual double-digit growth rates are expected to slow due to weakening external demand, rising labor and material costs and other factors. The result will be louder demands from poor provinces and tighter fists in rich provinces — exposing and deepening competition, and in some cases leading to animosity between the regions.

More so than any previous generation, the fifth generation has extensive cross-regional career experience. This is because climbing to the top of Party and government has increasingly required that many of these leaders first serve in central organizations in Beijing and then do a stint (or more) as governor or Party secretary of one of the provinces (the more far-flung, the better), before returning to a higher central Party or government position in Beijing. Hu Jintao followed such a path, as have many of the aforementioned candidates for the Politburo Standing Committee. Moreover, it has become increasingly common to put officials in charge of a region other than the one from which they originally hailed to reduce regionalism and regional biases. This practice has precedent in China’s imperial history, when it was used to prevent the rise of mini-fiefdoms and the devolution of power. More of the likely members of the 2012 Politburo Standing Committee than ever before have experience as provincial chiefs. This means that when these leaders take over top national positions, they theoretically will have a better grasp of the realities facing the provinces they rule, and will be less likely to be beholden to a single regional constituency or support base. This could somewhat mitigate the central government’s difficulty in dealing with profound divergences of interest between the central and provincial governments.

But regional differences are grounded in fundamental, geographical and ethnic realities, and have become increasingly aggravated by the disproportionate benefits of China’s economic success. Temporary changes of position across the country have not prevented China’s leaders from forming lasting bonds with certain provinces to the neglect of others; and many politicians still have experience exclusively with the regional level of government, and none with the central. The patron-client system, by which Chinese officials give their loyalty to superiors in exchange for political perks or monetary rewards, remains ineradicable. Massive personal networks extend across party and government bureaus, from the center to the regions. Few central leaders remain impervious to the pull of these regional networks, and none can remain in power long if his or her regional power base or bases have been cut. The tension between the center and provinces will remain one of the greatest sources of stress on the central leadership as it negotiates national policy.

As with any novice political leadership, the fifth generation leaders will take office with little experience of what it means to be fully in charge of a nation. Provincial leadership experience has provided good preparation, but the individual members have yet to show signs of particularly strong national leadership capabilities. The public sees only a few of the upcoming members of the Politburo Standing Committee as successfully having taken charge during events of major importance (for instance, Xi Jinping’s response to Tropical Storm Bilis, Wang Qishan’s handling of the SARS epidemic and the Beijing Olympics); only one has military experience (Xi, and it is slight); and only a few of the others have shown independence or forcefulness in their leadership style (namely Wang Qishan and Bo Xilai). Because current Politburo Standing Committee members or previous leaders (like former President Jiang Zemin) will choose the future committee members after painstaking negotiations, this might preserve the balance of power between the cliques. It might also result in a “compromise” leadership — effectively one that would strive for a middle-of-the-road approach, even at the cost of achieving mediocre results. A collective leadership of these members, precariously balanced, runs the risk of falling into divisions when resolute and sustained effort is necessary, as is likely given the economic, social and foreign policy challenges that it will likely face during its tenure.

This by no means is to say the fifth generation is destined to be weak. Chinese leaders have a time-tested strategy of remaining reserved for as long as possible and not revealing their full strength until necessary. And China’s centralist political system generally entails quick implementation once the top leadership has made up its mind on a policy. Still, judging by available criteria, the fifth generation leaders are likely to be reactive, like the current administration. Where they are proactive, it will be on decisions pertaining to domestic security and social stability.


Military Leadership


The Rise of the People’s Liberation Army


PHILIPPE LOPEZ/AFP/Getty Images
Chinese soldiers at the World Expo 2010 in ShanghaiAfter Deng’s economic reforms, the Chinese military began to use its influence to get into industry and business. Over time, this evolved into a major role for the military on the local and provincial level. Military commands supplemented their government budget allocations with the proceeds from their business empires. Ultimately, the central government and Party leadership became concerned that the situation could degenerate into regional warlordism of the sort that has prevailed at various times in Chinese history — with military-political-business alliances developing more loyalty to their interests and foreign partners than to Beijing. Thus when Jiang launched full-scale reforms of the military in the 1990s, he called for restructuring and modernization (including cutting China’s bloated ground forces and boosting the other branches of service) and simultaneously ordered the military to stop dabbling in business. Though the commanders only begrudgingly complied at first, the military-controlled businesses eventually were liquidated and their assets sold (either at a bargain price to family members and cronies or at an inflated price to local governments). To replace this loss of revenue and redesign the military, the central government began increasing budgetary allocations focusing on acquiring new equipment, higher technology, and training and organization to promote professionalism. The modernization drive eventually gave the military a new sense of purpose and power and brought a greater role to the PLA Navy (PLAN), the PLA Air Force (PLAAF), and the Second Artillery Corps (the strategic missile corps).

The military’s influence appears highly likely to continue rising in the coming years for the following reasons:

Maintaining internal stability in China has resulted in several high-profile cases in which the armed forces played a critical role. Natural disasters such as massive flooding (1998, 2010) and earthquakes (especially in Sichuan in 2008) have required the military to provide relief and assistance, giving rise to more attention on military planning and thereby improving the military’s propaganda efforts and public image and prestige. Because China is prone to natural disasters and its environmental difficulties have worsened as its massive population and economy have put greater pressure on the landscape, the military is expected to continue playing a greater role in disaster relief, including by offering to help abroad. At the same time, the rising frequency of social unrest, including riots and ethnic violence in regions like Xinjiang and Tibet, has led to military involvement in such matters. As the trend of rising social unrest looks to continue in the coming years, so the military will be called upon to restore order, especially through the elite People’s Armed Police, which falls under the joint control of the Central Military Commission and State Council.
As China’s economy has become the second largest in the world, its international dependencies have increased. China depends on stable and secure supply lines to maintain imports of energy, raw materials, and components and exports of components and finished goods. Most of these commodities and merchandise are traded over sea, often through choke-points such as the straits of Hormuz and Malacca, making them vulnerable to interference from piracy, terrorism, conflicts between foreign states, or interdiction by navies hostile to China (i.e., the United States, India or Japan). Therefore it needs the PLAN to expand its capabilities and reach so as to secure these vital supplies — otherwise the economy would be exposed to potential shocks that could translate into social and political disturbances. This policy has also led the PLA to take a more active role in U.N. peacekeeping efforts and other international operations, expand integrated training and ties with foreign militaries, and build a hospital ship to begin military-led diplomacy.
Competition with foreign states is intensifying as China has become more powerful economically and internationally conspicuous. In addition to building capabilities to assert its sovereignty over Taiwan, China has become more aggressive in defending its sovereignty and territorial claims in its neighboring seas — especially in the South China Sea, which Beijing elevated in 2010 to a “core” national interest (along with sovereignty over Taiwan and Tibet) and also in the East China Sea. This assertiveness has led to rising tension with neighbors that have competing claims on potentially resource-rich territory in the seas, including Vietnam, the Philippines, Indonesia, Malaysia, Brunei and Japan. Moreover, Beijing’s newfound assertiveness has collided with U.S. moves to bulk up its alliances and partnerships in the region, which Beijing sees as a strategy aimed at constraining China’s rise.
China’s military modernization remains a primary national policy focus. Military modernization includes acquiring and developing advanced weaponry, improving information technology and communications, heightening capabilities on sea and in the air, and developing capabilities in new theaters such as cyberwarfare and outer space. It also entails improving Chinese forces’ mobility, rapid reaction, special operations forces and ability to conduct combined operations between different military services.
The PLA has become more vocal, making statements and issuing editorials in forums like the PLA Daily and, for the most part, receiving positive public responses. In many cases, military officers have voiced a nationalistic point of view shared by large portions of the public (though one prominent military officer, Liu Yazhou, a princeling and commissar at National Defense University, has used his standing to call for China to pursue Western-style democratic political reforms). Military officials can strike a more nationalist pose where politicians would have trouble due to consideration for foreign relations and the concern that nationalism is becoming an insuppressible force of its own.
Of course, a more influential military does not mean one that believes it is all-powerful. China will still try to avoid direct confrontation with the United States and its allies and maintain relations internationally given its national economic strategy and the fact that its military has not yet attained the same degree of sophistication and capability as its chief competitors. But the military’s growing influence is likely to encourage a more assertive China, especially in the face of heightened internal and external threats.

Title: Succession-3
Post by: Crafty_Dog on September 14, 2010, 10:56:34 AM
The Central Military Commission

The Central Military Commission (CMC) is the state’s most powerful military body, comprising the top ten military chiefs, and chaired by the country’s civilian leader. This means the CMC has unfettered access to the top Chinese leader, and can influence him through a more direct channel than through its small representation on the Politburo Standing Committee. Thus the CMC is not only the core decision-making body of the Chinese military, it is also the chief conduit through which the military can influence the civilian leadership.





(click here to enlarge image)
Promotions for China’s top military leaders are based on the officer’s age, his current official position — for instance, whether he sits on the CMC or in the CPC Central Committee — and his personal connections. Officers born after 1944 will be too old for promotion since they will be 68 in 2012, past the de facto cutoff age after which an officer is no longer eligible for promotion to the CMC. Those officers meeting the age requirement and holding positions on the CMC, the CPC Central Committee, or a command position in one of China’s military services or its seven regional military commands (or the parallel posts for political commissars) may be eligible for promotion.

China’s paramount leader serves simultaneously as the president of the state, the general-secretary of the Party, and the chairman of the military commission, as Hu does. The top leader does not always hold all three positions, however: Jiang held onto his chair on the CMC for two years after his term as president ended in 2002. Since Hu did not become CMC chairman until 2004, it is not unlikely that he will maintain his chair until 2014, two years after he gives up his presidency and leadership of the party. But this is a reasonable assumption, not a settled fact, and some doubt Hu’s strength in resolving such questions in his favor.

Interestingly, Hu has not yet appointed Vice President Xi Jinping to be his successor on the CMC, sparking rumors over the past year about whether Hu is reluctant to give Xi the vice chairmanship or whether Xi’s position could be at risk. But Hu will almost certainly dub Xi his successor as chairman of the CMC soon, probably in October. Given the possibility that Hu could retain his CMC chairmanship till 2014, Xi’s influence over the military could remain subordinate to Hu’s until then, raising uncertainties about how Hu and Xi will interact with each other and with the military during this time. Otherwise, Xi will be expected to take over the top military post along with the top Party and state posts in 2012.


Old and New Trends

Of the leading military figures, there are several observable trends. Regional favoritism in recruitment and promotion remains a powerful force, and regions that have had the greatest representation on the CMC in the past will retain their prominent place: Shandong, Hebei, Henan, Shaanxi and Liaoning provinces, respectively, appear likely to remain the top regions represented by the new leadership, according to research by Cheng Li, a prominent Chinese scholar. These provinces are core to the CPC’s support base. There is considerably less representation in the upper officer corps from Shanghai, Guangdong, Sichuan, or the western regions, all of which are known for regionalism and are more likely to stand at variance with Beijing. (This is not to say that other provinces, Sichuan for instance, do not produce a large number of soldiers.)

One group of leaders, the princelings, are likely to take a much greater role in the CMC in 2012 than in the current CMC, in great part because these are the children or relatives of Communist Party revolutionary heroes and elites and were born during the 1940s-50s. Examples include the current naval commander and CMC member Wu Shengli, political commissar of the Second Artillery Corps Zhang Haiyang, and two deputy chiefs of the general staff, Ma Xiaotian and Zhang Qinsheng. In politics, the princelings are not necessarily a coherent faction with agreed-upon policy leanings. Though princeling loyalties are reinforced by familial ties and inherited from fathers, grandfathers and other relatives, they share similar elite backgrounds, their careers have benefited from these privileges, and they are viewed and treated as a single group by everyone else. In the military, the princelings are more likely to form a unified group capable of a coherent viewpoint, since the military is more rigidly hierarchical and personal ties are based on staunch loyalty. The strong princeling presence could constitute an interest group within the military leadership capable of pressing more forcefully for its interests than it would otherwise be able to do.

A marked difference in the upcoming CMC is the rising role of the PLAN, PLAAF and Second Artillery Corps, as against the traditionally dominant army. This development was made possible by the enlargement of the CMC in 2004, elevating the commanders of each of these non-army services to the CMC, and it is expected to hold in 2012. The army will remain the most influential service across the entire fifth generation military leadership, with the navy, air force, and missile corps following close behind. But crucially, in the 2012 CMC the army’s representation could decline relative to the other branches of service, since of the three members of the current CMC eligible to stay only one comes from the army (General Armaments Department Director Chang Wangquan) and many of the next-highest candidates also hail from other services. After all, missile capabilities and sea and air power are increasingly important as China focuses on the ability to secure its international supply chains and prevent greater foreign powers (namely the United States) from approaching too closely areas of strategic concern. The greater standing of the PLAN, PLAAF, and Second Artillery Corps is already showing signs of solidifying, since officers from these services used not to be guaranteed representation on the CMC but now appear to have a permanent place.


MARK WILSON/Getty Images
Central Military Commission Vice Chairman Gen. Xu Caihou and a military delegation in WashingtonThere is also a slight possibility that the two individuals chosen to be the CMC vice chairmen could both come from a background in military operations. Typically the two vice chairmen — the most powerful military leaders — are divided between one officer centered on military operations and another centered on political affairs. This ensures a civilian check on military leadership, with the political commissar supervising the military in normal times, and the military commander having ultimate authority during times of war. However, given the candidates available for the position, the precedent could be broken and the positions filled with officers who both come from a military operational background. Such a configuration in the CMC could result in higher emphasis on the capability and effectiveness of military rather than political solutions to problems and a CMC prone to bridle under CPC orders. But having two military affairs specialists in the vice chairmen seats is a slim possibility, and personnel are available from political offices to fill one of the vice chairmanships, thus preserving the traditional balance and CPC guidance over military affairs.


Civilian Leadership Maintained

The rising current of military power in the Chinese system could manifest in any number of ways. Sources tell STRATFOR that military officers who retire sooner than civilian leaders may start to take up civilian positions in the ministries or elsewhere in the state bureaucracy. Nevertheless, the overall arc of recent Chinese history has reinforced the model of civilian leadership over the military. The Communist Party retains control of the CMC, the central and provincial bureaucracies, the state-owned corporations and banks, mass organizations, and most of the media. Moreover, there does not appear to be a single military strongman who could lead a significant challenge to civilian leadership. So while the military’s sway is undoubtedly rising, and the upcoming civilian leadership could get caught in stalemate over policy, the military is not in a position to seize power. Rather, it is maneuvering to gain more influence within the system, adding another element of intrigue to the already tense bargaining structure that defines elite politics in China. But despite possible military-civilian frictions, the PLA will seek to preserve the regime, and to manage or suppress internal or external forces that could jeopardize that goal.



Read more: Looking to 2012: China's Next Generation of Leaders | STRATFOR
Title: Re: China
Post by: G M on September 14, 2010, 11:11:33 AM
http://articles.moneycentral.msn.com/Investing/JubaksJournal/bubble-bubble-chinas-trouble.aspx

Up to this point, the scenario sounds incredibly similar to the run-up to the housing bust in the United States. But there are crucial differences. Let me describe a few.
No. 1: Chinese buyers aren't nearly as leveraged as US buyers were
Down payments in China were a high 30%; in the U.S., at the height of the frenzy, lenders were bundling two mortgages together so that a buyer could borrow the required (and much smaller) down payment as well. Homebuyers effectively were putting nothing down.

And Chinese homebuyers started off with a much larger base of savings. In 2009, the Chinese savings rate was about 40%. In the years just before the end of the U.S. boom, Americans' savings rate had actually turned negative.

As a result of those differences, I don't think a real-estate bust in China would set off the huge contraction of family balance sheets and consequent steep drop in consumer spending that have resulted from the bust in the United States.
Title: Booming China Lures Key Professors
Post by: G M on September 23, 2010, 03:27:57 PM
http://www.aolnews.com/world/article/booming-china-lures-science-and-technology-professors-home-from-us/19634851

China has waited patiently for decades for some of its brightest and most accomplished scientists to return. Until recently, it could not offer high-quality research facilities, adequate funding or an attractive research environment.

But in the past few years, the government has invested heavily in infrastructure, constructing campuses and science parks to accommodate what it hopes will be a boom in homegrown technological advances, particularly in such fields as nanotechnology, computer science and pharmaceuticals. The government's goal is to turn new discoveries into products as quickly as possible.

Richard Appelbaum, a professor of sociology and global studies at UC Santa Barbara, said he recently visited a vast new research facility outside Shanghai.

"This is a science park the size of a city," he recounted. "It's all brand-spanking-new buildings that have been put up by the government of Suzhou. They are occupied by all these startup companies, working in biology and at the interface of nano and biology. It's all very impressive, at least to an outsider."

With the "Thousand Talents" program, China is not only luring "sea turtles," but also showing new flexibility by negotiating part-time deals with "sea gulls," who split their time between universities in China and the U.S.

One "sea gull" is UC San Francisco professor Chao Tang, who also is founder and director of the Center for Theoretical Biology at Peking University, where he teaches part of the year.

A leader in the field of quantitative biology, Tang said holding positions at the two universities gives him the best of both worlds: He can stay connected with experts in his field in the U.S. while still being part of the transformation of science in China.
Title: GM continues to make me money
Post by: Crafty_Dog on September 23, 2010, 07:23:44 PM
As predicted by GM:

China Blocks Export of Crucial Minerals to Japan as Dispute Escalates

Sharply raising the stakes in a dispute over Japan’s
detention of a Chinese fishing trawler captain, the Chinese
government has placed a trade embargo on all exports to Japan
of a crucial category of minerals used in products like
hybrid cars, wind turbines and guided missiles.

Chinese customs officials are halting all shipments to Japan
of so-called rare earth elements, industry experts said on
Thursday morning.

Read More:
http://www.nytimes.com/2010/09/23/business/global/23rare.html?emc=na

==========

GM is the one who got me looking into the Rare Earth Metals hypothesis (e.g. the Dines Newsletter) and I have positions in PALL (up roughly 20%, TIE up roughly 70%, MCP up roughly 65% in only a few weeks, and REE up 12% in three days.  Today's news probably caused the strong pops in REE and MCP and these pops will ratchet back as the situation with the Japanese presumably clarifies, but nonetheless the thesis that China will use its powerful leverage with these indispensable minerals seems now to be proven.
Title: Re: China
Post by: G M on September 23, 2010, 07:31:04 PM
Prediction: China will do a bit of a gut check with us soon (again) just to gauge our response. It may be financial, it may be military. It won't (probably) escalate, but they will bump us.
Title: Re: China
Post by: Crafty_Dog on September 23, 2010, 07:57:42 PM
China says 4 Japanese filmed military targets
ALEXA OLESEN
From Associated Press
September 23, 2010 9:32 PM EDT

BEIJING (AP) — China is investigating four Japanese suspected of illegally filming military targets and entering a military zone without authorization, state media reported amid a tense diplomatic spat between Beijing and Tokyo over a fishing boat collision near disputed islands.

China's state-run Xinhua News Agency cited state security authorities in the northern city of Shijiazhuang as saying they had "taken measures" against the four Japanese "after receiving a report about their illegal activities." There was no elaboration.

The authorities accuse the Japanese of entering a military zone without authorization in Hebei province, the capital of which is Shijiazhuang.

The brief report late Thursday night did not say whether the four Japanese are in detention.

The four men are believed to be employees of Fujita Corp., a Tokyo-based construction and urban redevelopment company.

"We are pretty certain they are our employees," said Fujita spokesman Yoshiaki Onodera. "But we have not spoken with them, so we don't know how they came to be questioned."

Onodera said he could not confirm Japanese media reports saying that the men were preparing a bid on a project to dispose of abandoned chemical weapons from World War II.

The Japanese Foreign Ministry confirmed that it had received word from the Chinese government Thursday night about the incident. It did not have further details, including whether the men had been arrested or merely questioned.

The news could further sour relations that have deteriorated badly since earlier this month when Japan arrested a Chinese captain whose fishing boat collided with Japanese coast guard vessels near a string of islands in the East China Sea. Called Diaoyu or Diaoyutai in Chinese and Senkaku in Japanese, the islands are controlled by Japan, but are also claimed by China. They are surrounded by rich fishing grounds and are regularly occupied by nationalists from both sides.

Japan extended the detention of the Chinese captain Sunday, and Beijing reacted quickly, suspending high-level contacts with Tokyo and ruling out a meeting between Premier Wen Jiabao and Japanese Prime Minister Naoto Kan during U.N. meetings in New York this week.

On Tuesday, Wen threatened "further action" against Japan if it did not release the Chinese captain immediately.

Meanwhile, the United States on Thursday urged the two powers to quickly resolve the dispute and a military official said that Washington was committed to strongly supporting Japan, one of America's closest allies in the Pacific.

At a Pentagon news conference, Chairman of the Joint Chiefs of Staff Adm. Mike Mullen said the U.S. was tracking the situation closely and hoped that diplomatic efforts would ease tensions soon.

"And obviously we're very, very strongly in support of ... our ally in that region, Japan," Mullen told reporters.

Defense Secretary Robert Gates added "and we would fulfill our alliance responsibilities," without offering more specifics.

But besides hoping that tensions ease between China and Japan, Mullen said "we haven't seen anything that would, I guess, raise the alarm levels higher than that."

The dispute faces a test on Sept. 29, the deadline by which Japanese prosecutors must decide whether to charge the Chinese captain. Fourteen crew members and the boat have been returned.
Title: Re: China
Post by: G M on September 23, 2010, 08:22:19 PM
http://www.atimes.com/atimes/China/LI16Ad02.html

"It will be the last straw for Beijing if Japan insists on trying the Chinese captain for his fishing operation off the Diaoyu Islands, in the East China Sea," said the Global Times. "Although Japanese leaders hope the fishing boat issue will be seen as a stand-alone incident and will not hurt the two countries' normal relations, it is impossible for China's protest to remain verbal only."

After making it clear that "Japan's handling of the case is seen as a direct challenge of China's sovereignty over the contended islands", the Global Times issued this stern warning:

    Suspension of the East China Sea gas field talks, scheduled for mid-September, is the first move of China's counter strike. Given the decades of relationship building after WWII, China will probably not resort to force over this incident. But, if the protests from the Chinese government and public don't bring the Japanese back from the brink of a relations breakdown, Beijing has to consider stronger retaliatory measures.

Other obvious moves include the suspension of a high-level visit to Japan by a senior Chinese government official, and a series of awkward maneuvers southwest of Okinawa between Chinese maritime patrol ships and Japanese survey vessels which suggested that more confrontations could soon occur.

Chinese Foreign Ministry spokeswoman Jiang Yu said the Japanese actions as a whole in this instance violated the law of nations and were "ridiculous, illegal and invalid".

"Japan will reap as it has sown, if it continues to act recklessly," Jiang warned.

Is this more than an untimely error on the part of a Chinese fishing boat captain? After all, any attempt by China to fabricate an incident at sea involving a Chinese commercial or fishing vessel would not come as a surprise. While the focus previously has been primarily on the South China Sea, it is possible that China may also be preparing to make more aggressive moves in the East China Sea. [2]
Title: We won't win this one
Post by: G M on September 23, 2010, 08:45:47 PM
http://www.economist.com/node/17093539?story_id=17093539&fsrc=rss



CHINESE officials like to lecture their American counterparts that, when it comes to loosening their tightly controlled currency, pressure is counterproductive. Tim Geithner, the treasury secretary, has resisted direct confrontation with China over the yuan’s value. Like his predecessors, he worries that overt pressure would undermine advocates of reform inside China, principally the People’s Bank of China, and erode co-operation on other issues such as Iran and North Korea.

When China said in June that the yuan would be allowed more flexibility, it looked like a victory for Mr Geithner. But as weeks elapsed and the yuan stayed put, the critics began to resurface. “We’re all coming to the conclusion that they don’t believe we’re serious,” Jack Reed, a Democratic senator, told Mr Geithner on September 16th. “And as a result, they will listen to you politely but they will not take any effective action.”

The administration increasingly appears to agree. On September 15th it brought two actions against China at the World Trade Organisation (WTO): one contesting Chinese duties on American exports of a special type of steel used in power generation, and another over discrimination against foreign providers of payment-card transactions.
Title: Re: China
Post by: G M on September 24, 2010, 11:17:15 AM
Look for things to flare up w/ the NorKs. That's one of China's favorite pressure points to use on US/Japan/SKorea.
Title: China-Pakistan reactor deal to open fresh US rift
Post by: G M on September 24, 2010, 11:35:15 AM
**Or Pakistan....**

http://www.ft.com/cms/s/0/83db2ac8-c72d-11df-aeb1-00144feab49a.html

At a time when Washington and Beijing are already sparring about exchange rates, North Korea and territorial disputes in the South China Sea, the nuclear deal could spark a fresh diplomatic argument. The Obama administration has already come out against the sale of the two reactors and has made nuclear proliferation one of its signature foreign policy issues.

“This sets up a potential conflict between China and the US,” said Mark Hibbs, an expert on nuclear ­politics at the Carnegie Endowment.

“A resolution will require a diplomatic discussion between the US and China about the future of the nuclear trade.”
Title: More on Rare Earth Minerals
Post by: Crafty_Dog on September 24, 2010, 12:58:31 PM
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/23/AR2010092300756.html

China increasing economic leverage by limiting 'rare earths' exports

, , ,that it will hold a Chinese fishing boat captain for another

 
By John Pomfret
Washington Post Staff Writer
Thursday, September 23, 2010; 10:36 PM

China's recent move to limit exports of minerals critical in the manufacture of a vast array of products such as missiles, car batteries, cellphones, lasers and computers is stoking alarm that its domination of the industry could give it enhanced leverage over the United States.


On Thursday, some traders of "rare earths," 17 minerals that are used in small portions in almost every advanced industrial product, reported that China, which controls 97 percent of the industry, had halted the export of anything that contained traces of the minerals to Japan. The Chinese government denied the allegation.

The purported export ban was linked to a dispute between the two countries over an island chain called the Senakus in Japanese and Diaoyu islands in Chinese. Japan has detained the captain of a Chinese fishing vessel over a collision at sea with a Japanese coast guard ship. On Thursday, Chinese Premier Wen Jiabao demanded that Japan release the boat captain immediately. China also announced that it had arrested four Japanese near a Chinese military installation.

Analysts and manufacturers said regardless of whether China has indeed blocked these exports to Japan, the incident underscored China's increasing economic leverage and its seeming willingness to try to translate that into political power.

This summer, China's Commerce Ministry said that total exports of rare earths would be capped at about 30,300 metric tons - a 40 percent drop compared with last year. Most of that tonnage has already been shipped.

"The most important issue here is that China is able to wield power like this," said Ed Richardson, the vice president of Thomas & Skinner, a magnet maker in Indianapolis. "Just the reports that they might have done something like this has sent a chill through the industry. Here you have an incident over a fishing boat and this topic comes up. It's startling."

Only in the past year has the issue begun to receive significant attention in Washington. In April, the Government Accountability Office reported that it could take as long as 15 years to rebuild the U.S. rare earth industry. The GAO report also found components in U.S. defense systems that use Chinese sources for rare earth materials. And it determined that the Defense Department had "not yet identified national security risks or taken departmentwide action to address rare earth material dependency." The Defense Department, however, is studying this issue, and a report is slated to be delivered this month.

On Thursday, the House Committee on Science and Technology approved legislation that would provide funds for research and development of rare earths technologies as a first legislative step to break China's monopoly.

"Rare earth materials are essential for our country's technological competitiveness and our national security, yet China is cornering the market and we are falling behind," said Rep. Kathy Dahlkemper (D-Pa.), who wrote the legislation.

For years, China has worked to dominate the rare earths industry. Starting in the late 1980s and early 1990s, China flooded the world with cheap rare earths. It sold neodymium and samarium, which form the basis of extraordinarily powerful magnets needed for precision-guided missile systems and the batteries used in hybrid or electric vehicles. It mined europium, which forms the basis of the high-efficiency lighting industry; lanthanum, without which it would be difficult to refine gas; and cerium, which is used to polish the glass on computer screens and cellphones.

China's prices were so low that it led the once-biggest mine in the world - Mountain Pass in California - to shut its operations in 2002 after allegations of environmental violations at the facility.

"In the Western world, people were happy to give the Chinese this job," said Jaakko Kooroshy, an analyst at The Hague Centre for Strategic Studies. "Mining rare earths is a dirty business. It is environmentally really dangerous. There's radioactivity involved."



From mining, China moved up to refining and advanced metallurgy. They drove rare earths refiners out of the market. They obtained patents for downstream work. They bought magnet makers around the world. They offered to massively overpay for three Japanese firms that dominate the production of magnets for computer hard drives. They made a run at Richardson's firm as well.


"We're an employee-owned operation," Richardson said, "so if they'd bought us up and shipped us to China . . . well, let's just say it wouldn't have sat well with the employees here."

Today, China dominates not just the mining but also the refining of rare earths, and the profits are enormous. Prices of several minerals have jumped 200 percent in the months since China announced it was limiting exports.

Western countries and firms have been slow to respond to the challenge that China posed to key industries from defense to energy to information technology, said Jon Hykawy, an analyst at Byron Capital.

In the 1990s, as China sold cheap rare earths around the world, the United States, which used to stockpile rare earths for its defense industry, sold off its stocks and watched as its industry dismantled what was once a complete supply chain. Europe never maintained a strategic stash. Only Japan understood the challenge and several years ago began setting aside significant quantities of the minerals.

"We never really acknowledged that the Chinese were in a race to dominate this industry even though they publicly stated it," Hykawy said.

China is already being sued at the World Trade Organization by the United States, the European Union and Mexico for export restrictions on raw materials, including some rare earth minerals. The U.S. trade representative is also considering filing a separate case purely on rare earths, U.S. officials said. And in industry, Molycorp Metals is working to reopen the California mine.

In June, the European Union issued its own report on rare earths that predicted that the minerals would become increasingly rare. While the United States has focused on China's increasing leverage over its national defense, the EU report reflected worries that China would control the core of green technology in the future.

"This is the first time that the Chinese openly used rare earths as a geopolitical bargaining chip," said Kooroshy in a telephone interview from The Hague. "They have built up a monopoly until now, but they have been very civil about it. They say things like, 'You don't need to be afraid. We're a reliable supplier.' But now the message is clear. It's: 'Look, guys, we're your most important economic partner, and we want you to change the way you deal with us.'"
Title: NYT/POTH Japan buckles (due to REM?)
Post by: Crafty_Dog on September 25, 2010, 01:35:29 AM
TOKYO — A diplomatic showdown between Japan and China  that began two weeks ago with the arrest of the captain of a Chinese trawler near disputed islands ended Friday when Tokyo accepted Beijing’s demands for his immediate release, a concession that appeared to mark a humiliating retreat in a Pacific test of wills.


Japan freed the captain, Zhan Qixiong, 41, who left Saturday on a chartered flight sent by the Chinese government to take him home. Mr. Zhan had been held by the Japanese authorities since his boat collided with Japanese patrol vessels on Sept. 7 near uninhabited islands in the East China Sea, and Japan had insisted that he would be prosecuted.

His release handed a significant victory to Chinese leaders, who have ratcheted up the pressure on Japan with verbal threats and economic sanctions.

“It certainly appears that Japan gave in,” said Hiroshi Nakanishi, a professor of international relations at Kyoto University. “This is going to raise questions about why Japan pushed the issue in the first place, if it couldn’t follow through with meeting China’s challenges.”

The climb down was the latest indicator of the shifting balance of power in Asia. China this year surpassed Japan as the world’s second largest economy and had already become Japan’s biggest export market. Japan, mired in extended political uncertainty and economic malaise, has had a succession of weak prime ministers who have struggled to assert its interests in a region focused mainly on a resurgent China.

China on Saturday restated its claims to the disputed islands and in a statement demanded an apology and compensation. “Such an act seriously infringed upon China’s territorial sovereignty and violated the human rights of Chinese citizens,” the statement said.

At the outset, Japan had made an uncharacteristic display of political backbone by detaining the captain, when in the past it had simply chased away Chinese vessels that approached too close to the islands, which are claimed by both countries but administered by Japan. Apparently angered by a rising number of incursions by Chinese fishing boats in recent years, Tokyo initially appeared determined to demonstrate to Beijing its control of the islands, analysts and diplomats said.

Instead, the move unleashed a furious diplomatic assault from China. Beijing cut off ministerial-level talks on issues like joint energy development, and curtailed visits to Japan by Chinese tourists. The fact that the detention took place on Sept. 8, the anniversary of Japan’s 1931 invasion of northeast China, spurred scattered street protests and calls by nationalistic Chinese bloggers to take a firm stand against Tokyo.

In recent days, China stepped up its intimidation. Chinese customs officials appeared to block crucial exports to Japan of rare earths, which are metals vital to Japan’s auto and electronics industries. Then on Thursday, four Japanese construction company employees were detained in the Chinese province of Hebei.

In the end, diplomats and analysts said Japan was forced to recognize that taking the next step of charging the captain and putting him on trial would result in a serious deterioration of ties with China, Japan’s biggest trading partner.

“At this point, Japan had only one choice,” said a Western diplomat in Beijing, who spoke on the usual diplomatic condition of anonymity. “It had to charge the captain, or it would have to climb down.”

It chose the latter. On Friday, prosecutors on the island of Ishigaki, where the captain was held, cited diplomatic considerations in their decision to let him go, and suspended their investigation into charges of obstructing officials on duty.

“Considering the effect on the people of our nation and on China-Japan relations, we decided that it was not appropriate to continue the investigation,” the prosecutors said in a statement.

Until Japan’s sudden reversal on Friday, the tussle had grown to dominate both nations’ diplomatic agendas, including during the United Nations development summit meeting this week in New York.

Prime Minister Wen Jiabao of China had refused to meet on the sidelines of the meeting with Japan’s prime minister, Naoto Kan, and instead threatened additional actions if Japan did not release the captain.

(Page 2 of 2)

The Japanese used the summit meeting to seek American support for its position. They seemed to get it when Secretary of State Hillary Rodham Clinton told Japan’s new foreign minister, Seiji Maehara, that America’s treaty obligations to defend Japan from foreign attack would include any moves against the islands where the Chinese captain had been arrested.
Related

   
The islands, known as Senkaku in Japanese or Diaoyu in Chinese, are also claimed by Taiwan.

The fact that Japan seemed to back down after escalating the situation brought an outpouring of criticism of Mr. Kan, who was re-elected prime minister just two weeks ago. On Friday, members of his own governing Democratic Party joined opposition lawmakers in condemning the decision to release the captain.

“I’m flabbergasted that this was resolved with such a clear diplomatic defeat for Japan,” said Yoshimi Watanabe, leader of the opposition Your Party.

The setback appears likely to raise new concerns about the leadership of the Democrats, who took power in a landslide election victory last year with promises to improve ties within Asia and reduce Japan’s dependence on the United States.

However, the standoff underscored how sentiment in Japan had hardened against China, even in recent months. Ever more frequent movements by Chinese warships into Japanese waters have stirred fears here that fast-growing China will become more aggressive in pushing its territorial claims.

However, there were also growing calls in Japan for a quick resolution to the standoff, particularly by the business community, which has become increasingly reliant on China for trade and investment. On Friday, the president of the Tokyo Stock Exchange, Atsushi Saito, told reporters he welcomed the release.

“As a Japanese, I have mixed feelings about appearing so weak-kneed,” Mr. Saito said, “but realistically speaking, we had to put this problem behind us.”

In China, the captain’s release appeared to be a victory for the leadership, and particularly the prime minister, Mr. Wen. The Communist Party is keen to show itself as defending China’s territorial claims, which enjoy strong emotional support from the Chinese people. China also views itself as geopolitically hemmed in by Japan and other cold war-era American allies as it tries to take its place as a regional power.

Chinese analysts agreed that Japan had appeared to fold, but said Tokyo had no choice if it wanted to avoid a continued escalation with China.

“This was a move that Japan had to make or China would have taken further steps,” said Wang Xiangsui, a foreign policy analyst at the Beijing University of Aeronautics and Astronautics. “Now the two sides can discuss this more calmly.”

Mr. Zhan, the trawler captain, arrived in the Chinese coastal city of Fuzhou at 4 a.m. local time, according to the official Xinhua news agency. He was met at the airport by senior officials from the Foreign Ministry and the Agriculture Ministry, which had chartered a plane to pick him up after his release in Japan.

When the door of the plane opened, Mr. Zhan was carrying flowers and immediately was greeted with hugs by relatives waiting for him, Xinhua reported.

“Being able to return safely this time, I thank the party and government for their care,” Mr. Zhan said. “I also thank the Chinese people for their concern.”




Title: Re: China
Post by: G M on September 25, 2010, 06:44:01 AM
My money says Japan folded after the US told them that we don't have their back. This win by China will encourage more aggressive moves by them. Japan has a serious loss of face and has to re-examine it's entire national security structure as a result of this.
Title: Re: China
Post by: G M on September 25, 2010, 07:07:45 AM
http://www.businessinsider.com/states-us-china-exports-2010-9

The relentless pressure on both countries to expand their exports is threatening to create a trade war between the US and China.

Congressmen, feeling the populist pressure from voters back home, have approved a new bill that would place import duties on Chinese goods, if they don't revalue the yuan. The bill has yet to be passed by the House or Senate.

But if the U.S. government enters into a tit-for-tat trade war with China, it's likely the Chinese will respond. And that could hammer U.S. companies that export to China.

We've evaluated the states, using data from the U.S. China Business Council, that export the most to China, and companies that might get crushed in each if a trade war commences.


Read more: http://www.businessinsider.com/states-us-china-exports-2010-9#ixzz10YAwZu3r
Title: Re: China
Post by: JDN on September 25, 2010, 07:50:35 AM
My money says Japan folded after the US told them that we don't have their back. This win by China will encourage more aggressive moves by them. Japan has a serious loss of face and has to re-examine it's entire national security structure as a result of this.

I don't think the issue is whether we have their back or that they will re-examine their entire national security structure.  No one is going to war over these islands.

Rather it's all about the money.  China is a huge market for Japanese companies which need to export to survive.  Japan decided better to lose face than
risk economic retaliation.  China has leverage; Japan does not.  Plus Japan handled the situation poorly.

However as you point out in your most recent post, the same could happen to us.
Title: Re: China
Post by: G M on September 25, 2010, 08:44:58 AM
http://mdn.mainichi.jp/mdnnews/news/20100925p2a00m0na007000c.html

The captain's release came as a surprise to some Japan Coast Guard officials and sparked criticism that it could result in confusion over the handling of similar incidents in the future. At the same time, a Coast Guard official commented: "It must have been tough for public prosecutors to have to make an unnatural decision like that."

On Sept. 7, when the initial decision to arrest the skipper was made, two unofficial meetings were held by the Japan Coast Guard and related government bodies including the Ministry of Foreign Affairs and the Ministry of Justice. But on Sept. 24, when prosecutors decided to release the skipper, no meetings were staged and it was not until after 2 p.m. that the Japan Coast Guard was notified of the decision. Watching television broadcasts announcing the move, Coast Guard members were angered, with one commenting that Japan had "bowed to pressure." Another disappointed member added: "It made me want to resign from the civil service."

"The case for obstruction of official duties was formed under the direction of public prosecutors. This has set a bad precedent," one official Coast Guard official commenting on the release said. The official became calmer when hearing about public prosecutors taking Japan-China relations into consideration, and said, "The Japan Coast Guard investigation has been proven appropriate. I guess public prosecutors decided to take the responsibility by making a point of referring to Japan-China relations." Still, the official described the release as "a regrettable outcome."

Following the move to release the Chinese captain, the Japan Coast Guard received a flood of telephone complaints from people asking why the skipper had been released without punishment. By 7 p.m. on Sept. 24, some 60 calls had been fielded. One caller reportedly stated, "I've never complained to a public office before, but I can't let things go this time." However, when officials explained that the issue was in the hands of public prosecutors, many callers were reportedly understanding, and instead started praising the Coast Guard, saying they wanted it to continue to clamp down on offenders.

When questioned in a news conference shortly after 5 p.m. on Sept. 24 whether the issue had been dealt with "solemnly in accordance with laws," Land, Infrastructure, Transport and Tourism Minister Sumio Mabuchi stated he had "no particular thoughts" about the decision to release the captain.
Title: Re: China
Post by: G M on September 25, 2010, 08:55:35 AM
http://blogs.forbes.com/gordonchang/2010/09/24/chinas-new-economic-warfare/

The Japanese are in fact the world’s largest consumers of rare-earth minerals.  But they have been stockpiling the minerals—and working on technologies to recycle them—to protect against supply disruptions.  Toyota, which depends on these minerals in the batteries for its hybrids, reportedly possesses a one-year supply.

The United States, however, has not been so careful, letting the Chinese using predatory pricing to make American mines uncompetitive.  As a result, there is almost no domestic production of rare earths in the United States.  So Beijing’s cut off of the minerals to Japan highlights America’s critical vulnerability.  Due to this almost-complete dependence on foreign sources, Molycorp is now looking to reopen its Mountain Pass mine in California and there is growing pressure on Congress to authorize the much-needed stockpiling of strategic minerals.

Yet there is a far more important lesson to be learned here.  The West had assumed that China could be integrated into the global system of commerce and, once so enmeshed, it would become benign.  Yet nine years after the accession to the World Trade Organization, Beijing appears not to have been constrained by its participation in global trade.

During this period, China has become economically powerful, and now, it is using that power to achieve geopolitical goals—in this case to demand from Japan territory over which it has exceedingly weak legal claims.  So whatever we may think about free trade or open borders, we have to remember that every economic advantage we extend to China gives its leaders one more tool to advance their geopolitical goals.

“Taking into account the impact on our citizens and Japan-China relations, our judgment was that it would have been excessive to prolong the investigation and his detention,” said Toru Suzuki, deputy public prosecutor at a press conference today.  Until now, Japanese authorities had insisted that the prosecutor would make a decision based only on the facts of Captain Zhan Qixiong’s conduct.

Beijing has—once again—learned intimidation works.  Who will be its next target?
Title: Re: China
Post by: G M on September 25, 2010, 09:07:21 AM
http://blogs.wsj.com/chinarealtime/2010/09/24/did-japan-cave-to-china-too-soon/

Japan has been deemed overwhelmingly the loser in the strange game of chicken that’s been escalating between Beijing and Tokyo over the past week — at least judging from a sampling of the immediate vitriolic reaction toward Tokyo in the virtual world.

In the seconds after Japan announced it would release the Chinese ship captain who has been in Japanese custody, Tokyo’s decision was lambasted as weak and the ruling Democratic Party of Japan as unable to govern.

“This nation really does not have foreign policy and has no ability…it’s a shame that [Japan] easily gave up their last cards. They [Chinese] are shaking us up badly,” moaned one person on Twitter. Another said more simply: “How do you say ‘cave’ in Chinese?” Yet another tweeted: “Due to the DPJ, democracy and the notion of a nation’s sovereignty are about to be lost. I’m amazed to see their inability to govern. They’re worse than the LDP which was in power before.”

Ever gentlemanly, an official from the Osaka prosecutors’ office said at a hastily called press conference Friday afternoon: “We decided it was inappropriate to continue the investigation while keeping the suspect in custody any further, considering the future of the Japan-China relationship,”

The government’s decision may be good for tourism and business ties between the two countries, but the jury’s still out on how it might knock the DPJ’s popularity rankings — and Prime Minister Naoto Kan’s.
Title: Re: China
Post by: G M on September 25, 2010, 09:20:23 AM
http://www.panorientnews.com/en/news.php?k=442

Beginning with the Japanese scene, this event is guaranteed to fuel the rage of the right, which will become even more intense in denouncing the "treason" of the DPJ.

Moreover, these angry sentiments are unlikely to be confined to the usual suspects, because many ordinary Japanese too will be left with a sour taste in their mouths over the government's handling of this matter. Many will feel that releasing the captain and citing the future of "Japan-China relations" smacks of pathetic weakness.

It certainly doesn't help that Prime Minister Naoto Kan and Foreign Minister Seiji Maehara have been overseas at this critical juncture, and so are unavailable to provide leadership or any convincing public explanations.

It would not be surprising if the next public opinion polls show a significant drop in support for the cabinet.

In fairness, the DPJ inherited a political posture from their predecessors which argued that "no territorial issues exist" in regard to the Senkaku Islands. With this as their starting point, Tokyo was poorly prepared to respond to Chinese (and Taiwanese) demands.
Title: China/Japan/US timeline
Post by: G M on September 25, 2010, 10:00:25 AM
http://articles.cnn.com/2010-09-24/politics/us.china.japan_1_diaoyu-senkaku-east-china-sea?_s=PM:POLITICS

While the United States hasn't taken an official position on the claims to the islands, they are considered part of Japan based on U.S.-Japan security treaties.

Defense Secretary Robert Gates told reporters Thursday the United States "would fulfill our alliance responsibility" if the conflict escalated.

Though analysts don't think the current tension will escalate and draw in the U.S. military treaty obligations, the agreements add murkiness to an already muddy territorial dispute.

It also puts the United States in the uncomfortable position of trying to stand by its closest ally in the region, Japan, while not irritating China, a growing power that the U.S. needs for a variety of political and economic issues.

"We're watching that tension very, very carefully," Navy Adm. Mike Mullen, chairman of the Joint Chiefs of Staff told reporters at the Pentagon ."Obviously we're very, very strongly in support of our ally in that region, Japan.

Both China and Japan have raised the issue with Secretary of State Hillary Clinton during meetings on the sidelines of the United Nations General Assembly. On Thursday, during talks with Japanese Foreign Minister Seiji Maehara, Clinton urged Japan to resolve the dispute through dialogue, State Department Spokesman P.J. Crowley said.

**So, on Thursday SecDef Gates and Adm. Mullen articulate to the global media the US defense treaty with Japan. Obama then meets with Japan's Prime Minister Kan in NYC on the China/Japan standoff. http://search.japantimes.co.jp/cgi-bin/nn20100925a4.html

   

**Suddenly, Japan reverses course and the local Japanese prosecutors drop the charges on orders from Tokyo**
. http://mdn.mainichi.jp/mdnnews/news/20100925p2a00m0na006000c.html

Decision to release Chinese boat captain made in Tokyo: sources

The decision to release the captain of a Chinese fishing boat involved in a collision with Japan Coast Guard patrols boats was a political decision made by the Japanese government and not by the Naha District Public Prosecutors Office, as it has been publicly announced, according sources close to Prime Minister Naoto Kan.
Title: Re: China
Post by: Crafty_Dog on September 25, 2010, 12:00:56 PM
Excellent work here GM. 

In support of GM's analysis "My money says Japan folded after the US told them that we don't have their back"  while flying back to LA from Dulles/DC airport today this morning's Pravda on the Potomac (a.k.a. the WaPo) quoted some Under Secretary of State saying that Japan had done the right thing, that is was the sort of thing that "mature" nations did or something like that. 
Title: Remarks to the Press from UNGA
Post by: G M on September 25, 2010, 01:30:43 PM
http://www.state.gov/p/af/rls/spbr/2010/147922.htm

Remarks to the Press from UNGA

Johnnie Carson
   Assistant Secretary, Bureau of African Affairs
Philip J. Crowley
   Assistant Secretary, Bureau of Public Affairs
New York City
September 24, 2010

QUESTION: P.J., EAP in Washington is telling us to ask you for any statement on the release of the Chinese captain by the Japanese. They keep deferring us back up here to you. They say, “P.J. will have something to say on it.”

MR. CROWLEY: Well, as we had stated yesterday, we were concerned that this was an issue that had the potential to escalate. I think Jeff Bader yesterday talked about the strong nationalist fervor that had been generated both on the Chinese side and the Japanese side, so we are gratified that the situation has been resolved. It was something that the Japanese Government assured us that would be done within accordance of their legal process and international law. This was a Japanese decision to make, and we’re just hopeful that with the release of the ship captain, tensions will recede and the countries in the region will get back to normal business.

QUESTION: Thank you.

QUESTION: Just one Japanese question. Is this – I mean, maybe that Prime Minister Kan’s – his new cabinet is criticized by the other side, opposite side of the party – I mean the – this compromise means that Japan lost diplomatic – diplomatically with the Chinese – I mean this kind of chicken game, people (inaudible) chicken game. Don’t you think that this kind of criticizing (inaudible)?

MR. CROWLEY: I mean, as we – we think this is a proper outcome. And we had discussed this with the Japanese. It came up, as we said, in the meeting that the Secretary had with Foreign Minister Maehara yesterday. We had some low-level – lower-level conversations with the Chinese as well, and we sensed that there was a desire on both sides to resolve this soon. We think this is the right decision. It’s how mature states resolve these things through diplomacy . And we think this is in the interest of the two countries and the interest of the region. Obviously, there are some underlying issues that have been triggered by this episode. The United States continues to support freedom of navigation in the region, and we will continue to emphasize that. Obviously, we have an important meeting that’ll be going on today involving the ASEAN countries and you’ll be seeing a communiqué that comes out of that meeting.

QUESTION: Regarding to the Clinton and Maehara discussion, was there any indication from the Japanese side of this possibility to release him?

MR. CROWLEY: This is a decision for – that Japan has made, and I’ll defer to the Japanese Government to explain its reasoning. But obviously, we believe that this will significantly reduce the existing tension. We think it was a proper decision for Japan to make.
Title: Re: China
Post by: Crafty_Dog on September 25, 2010, 04:46:56 PM
GM-- awesome google fu my man, that's what I was thinking of.
Title: Re: China
Post by: G M on September 25, 2010, 04:53:16 PM
Anyone here still think Obama didn't tell Japan that the US wouldn't back them? Anyone here think China won't continue to press their claim on the islands?
Title: An imbalance that will shake the world
Post by: G M on September 25, 2010, 05:19:09 PM
http://news.sky.com/skynews/Home/World-News/China-30-Years-Since-The-Introduction-Of-One-Child-Policy-Millions-Of-Girls-Have-Disappeared/Article/201009415741661?f=rss

The town of Wuxue in southern China looks normal enough. Pedicabs ply its narrow streets; hawkers sell steaming bowls of rice noodles to passers-by.

But in Wuxue's primary school something is amiss.

In one classroom of white-washed walls and wooden desks a group of seven-year-olds learn to pipe on the bamboo Chinese flute. Of 40 students just nine are girls.

Next door, another class practice their calligraphy, copying down hieroglyphs in neat rows. Once again, most of the children grappling with their pencils are boys.

The little girls of Wuxue are not being denied an education. Rather, they simply don't exist. According to official statistics, for every 100 girls there are 197 boys.

It is the worst example of gender imbalance in China, but a similar pattern exists across the country. The cause is an unintended result of the one-child policy: sex selective abortions.
Title: Captain's Release Sparks Furor in Japan
Post by: G M on September 26, 2010, 05:47:21 AM
http://online.wsj.com/article/SB10001424052748704082104575515093333231112.html?mod=googlenews_wsj#

The sudden Friday release also touched off an unusually intense political firestorm in Japan, with the media and opposition politicians hammering Prime Minister Naoto Kan's government for handling the incident in a way that seemed to portray Japan as weak and succumbing to pressure from China.

The Chinese government demanded on Saturday that Japan apologize for the incident, suggesting that China's steady intensifying actions against Japan over the past two-and-a-half weeks—from curbing diplomatic exchanges to scaling back commercial activity—may not abate. "China of course has the right to demand Japan apologize and make compensation,'' Foreign Ministry spokeswoman Jiang Yu said in a Chinese-language statement.

Japan's foreign ministry issued its own sternly worded statement rejecting the plea. "The demand by the Chinese side for apology and compensation is completely groundless and is utterly unacceptable for Japan," that statement said.

*snip*



Japanese government officials, including Mr. Kan, denied any political influence on the prosecutors' decision, but local media said there was no doubt that the issue was settled in a political decision with national-government input.

"To begin with, prosecutors are not authorized to determine what kind of 'future Japan-China ties' is desirable," the Nikkei Shimbun, Japan's leading business daily, said. The Mainichi Shimbun shared this view in its editorial, saying it was "odd" for the prosecutors to refer to "diplomatic considerations" in releasing the captain and that it contradicted the government stance that the issue would be handled in accordance with the law.

Meanwhile, the Asahi Shimbun said, "It must be a high-level political judgment by the Kan administration." The paper's editorial also said, "In the first place, did the Kan government forecast the possible reaction of China and how to conclude the issue when it decided to arrest the captain?"

"It cannot be helped if the weakness of the DPJ's diplomacy is pointed out," it said. "It should reflect on it seriously as a bitter lesson."

The Japanese papers' criticism was echoed by opposition-party members on NHK, the public broadcaster. "What message did Tokyo send to other Asian nations which have territorial disputes [with China]?" said Nobuteru Ishihara, secretary-general of the Liberal Democratic Party, the largest opposition bloc. He added that the decision would also confuse Japan's coastguards who are out in the sea on duty. "What should they do if China again illegally enters our territorial waters?"

Title: China pretty happy about it's control of rare-earth
Post by: G M on September 26, 2010, 05:57:57 AM
http://news.xinhuanet.com/english2010/china/2010-09/26/c_13530321.htm

BEIJING, Sept. 26 (Xinhua) -- China's regulation of its rare-earth minerals industry protects the environment, prevents over exploitation of the its resource, and promotes the development of new energy industries across the globe, experts say.

Rare earths have become increasingly important in the manufacture of new energy products like electric-car batteries, wind turbines and other sophisticated products including flat-screen monitors, missiles and aerospace alloys.

The exhaustion of China's rare earths would be a major blow to the world's green energy industry, so China must regulate to curb excessive and disorderly mining of the non-renewable resource, the latest edition of the Xinhua News Agency's finance magazine - Economy & Nation Weekly - quoted Lin Donglu, secretary general of the Chinese Society of Rare Earths, as saying Sunday.

China's regulation of its rare earth industry includes reducing export quotas, cracking down on illegal mining and smuggling, no further issuing of mining licenses and the imposing of production caps.

The time is right to form an international competition mechanism for the rare earth industry to ensure sustainable development of new energy technologies, Lin said, noting that China's rare earth reserves accounted for one third of the world's total in 2009.

However, China's rare earths output hit 120,000 tonnes last year, 97 percent of the world's total, according to a report by Marc Humphries, an energy policy analyst at the United States Congressional Research Service.
Title: While U.S. is distracted, China develops sea power
Post by: G M on September 26, 2010, 06:47:20 AM
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/24/AR2010092404767.html

Whereas an island nation such as Britain goes to sea as a matter of course, a continental nation with long and contentious land borders, such as China, goes to sea as a luxury. The last time China went to sea in the manner that it is doing was in the early 15th century, when the Ming Dynasty explorer Zheng He sailed his fleets as far as the Horn of Africa. His journeys around the southern Eurasian rim ended when the Ming emperors became distracted by their land campaigns against the Mongols to the north. Despite occasional unrest among the Muslim Uighur Turks in western China, history is not likely to repeat itself. If anything, the forces of Chinese demography and corporate control are extending Chinese power beyond the country's dry-land frontiers -- into Russia, Mongolia and Central Asia.

China has the world's second-largest naval service, after only the United States. Rather than purchase warships across the board, it is developing niche capacities in sub-surface warfare and missile technology designed to hit moving targets at sea. At some point, the U.S. Navy is likely to be denied unimpeded access to the waters off East Asia. China's 66 submarines constitute roughly twice as many warships as the entire British Royal Navy. If China expands its submarine fleet to 78 by 2020 as planned, it would be on par with the U.S. Navy's undersea fleet in quantity, if not in quality. If our economy remains wobbly while China's continues to rise -- China's defense budget is growing nearly 10 percent annually -- this will have repercussions for each nation's sea power. And with 90 percent of commercial goods worldwide still transported by ship, sea control is critical.
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The geographical heart of America's hard-power competition with China will be the South China Sea, through which passes a third of all commercial maritime traffic worldwide and half of the hydrocarbons destined for Japan, the Korean Peninsula and northeastern China. That sea grants Beijing access to the Indian Ocean via the Strait of Malacca, and thus to the entire arc of Islam, from East Africa to Southeast Asia. The United States and others consider the South China Sea an international waterway; China considers it a "core interest." Much like when the Panama Canal was being dug, and the United States sought domination of the Caribbean to be the preeminent power in the Western Hemisphere, China seeks domination of the South China Sea to be the dominant power in much of the Eastern Hemisphere.

We underestimate the importance of what is occurring between China and Taiwan, at the northern end of the South China Sea. With 270 flights per week between the countries, and hundreds of missiles on the mainland targeting the island, China is quietly incorporating Taiwan into its dominion. Once it becomes clear, a few years or a decade hence, that the United States cannot credibly defend Taiwan, China will be able to redirect its naval energies beyond the first island chain in the Pacific (from Japan south to Australia) to the second island chain (Guam and the Northern Mariana Islands) and in the opposite direction, to the Indian Ocean.

Title: Re: China
Post by: Crafty_Dog on September 26, 2010, 07:09:38 AM
Stratfor's George Friedman's book "The Next 100 Years" (which the author of this article may have read  :wink: ) really impressed me with the importance of naval power.  This article's analysis makes a lot of sense to me.
Title: Re: China
Post by: G M on September 26, 2010, 07:20:00 AM
Robert D. Kaplan is a smart guy. I like a lot of what he has to say on geopolitics.
Title: Re: China
Post by: JDN on September 26, 2010, 07:28:27 AM
Anyone here still think Obama didn't tell Japan that the US wouldn't back them? Anyone here think China won't continue to press their claim on the islands?

"Wouldn't back them" means what? 
On this issue?  As the State Department Official said, "I mean, as we – we think this is a proper outcome."

So?  I too think this was the proper outcome; Japan handled it poorly.
Why do we want to enter into this matter?  Or approve or back one party in an economic war over an island in dispute.
China had already begun to escalate. 

Further, Japan didn't capitulate because we agreed or didn't agree with them or told them we "wouldn't back them".
The issue is economics.  At this time, Japan needs China and it's market a lot more than China needs Japan.  Large Keiretsu, the trading
companies, and the Japan Business Association needs China.  Therefore so does Japan.   Mix this with the history
and you have problems. 

Sure China will continue to press their claim on the islands.  Taiwan too
is pressing a claim.  Russia and Japan are also disputing some islands. It happens.
Title: Re: China
Post by: G M on September 26, 2010, 08:51:38 AM

"Wouldn't back them" means what?

**That despite our treaty obligations, we would not provide military support to Japan in a conflict with China over the disputed islands.**


So?  I too think this was the proper outcome; Japan handled it poorly.

**Really? You think that the islands that have been recognized as belonging to Japan by us since WWII should be conquered by China because China is willing to assert their ownership?Should Japan police the lands in it's jurisdiction and arrest violators of it's laws or not?**
Title: China Hold on Metals Worries Washington
Post by: G M on September 26, 2010, 09:03:35 AM
http://online.wsj.com/article/SB10001424052748704062804575510112116972510.html

In the newest issue of Joint Force Quarterly, a professional military journal published by National Defense University, Navy Reserve Lt. Cdr. Cindy Hurst, a research analyst in the Foreign Military Studies Office at Fort Leavenworth, Kan., wrote that "China appears to be holding an unlikely trump card" through its dominance in the rare-earth element industry.

"The country's grasp on the rare-earth element industry could one day give China a strong technological advantage and increase its military superiority," she wrote.

The Department of Defense is completing a study to identify the potential national security risks of rare-earth material dependency. Pentagon spokeswoman Cheryl Irwin said a full report drawing on input from a number of government agencies will be released next month.

"It is a highly charged topic," she said, adding the Pentagon is seeking to separate "fact from fiction to ensure we continue to protect the interests of both the warfighter and the taxpayer."

In parallel, U.S. lawmakers have begun probing the national-security implications of rare-earth supplies. The House Committee on Science and Technology's investigations panel held a hearing this year on the issue, and on Thursday, the committee began marking up a bill that would encourage the U.S. government to hedge against rare-earth shortages by collecting more data on potential supply and identifying alternative materials.

Rep. Bart Gordon (D., Tenn.), chairman of the committee, said he was concerned about the United States being "held hostage" when it came to access to raw materials for new technology.

Molycorp, Inc., the owner of a mine in Mountain Pass, Calif., that holds the largest, richest rare-earth deposit outside China, is currently looking to restart and expand production. Jim Sims, a spokesman for Molycorp, said the company was planning by mid-2012 to create a complete U.S.-based supply chain for some kinds of rare-earth magnets.
Title: China has an accurate view of Obama
Post by: G M on September 26, 2010, 09:35:01 AM
http://www.timesonline.co.uk/tol/news/world/asia/article7017951.ece

An independent survey of Chinese-language media for The Sunday Times has found army and navy officers predicting a military showdown and political leaders calling for China to sell more arms to America’s foes. The trigger for their fury was Obama’s decision to sell $6.4 billion (£4 billion) worth of weapons to Taiwan, the thriving democratic island that has ruled itself since 1949.

“We should retaliate with an eye for an eye and sell arms to Iran, North Korea, Syria, Cuba and Venezuela,” declared Liu Menxiong, a member of the Chinese people’s political consultative conference.

He added: “We have nothing to be afraid of. The North Koreans have stood up to America and has anything happened to them? No. Iran stands up to America and does disaster befall it? No.”

Officially, China has reacted by threatening sanctions against American companies selling arms to Taiwan and cancelling military visits.

But Chinese analysts think the leadership, riding a wave of patriotism as the year of the tiger dawns, may go further.

“This time China must punish the US,” said Major-General Yang Yi, a naval officer. “We must make them hurt.” A major-general in the People’s Liberation Army (PLA), Luo Yuan, told a television audience that more missiles would be deployed against Taiwan. And a PLA strategist, Colonel Meng Xianging, said China would “qualitatively upgrade” its military over the next 10 years to force a showdown “when we’re strong enough for a hand-to-hand fight with the US”.

Chinese indignation was compounded when the White House said Obama would meet the Dalai Lama, the exiled spiritual leader of Tibet, in the next few weeks.

“When someone spits on you, you have to get back,” said Huang Xiangyang, a commentator in the China Daily newspaper, usually seen as a showcase for moderate opinion.

An internal publication at the elite Qinghua University last week predicted the strains would get worse because “core interests” were at risk. It said battles over exports, technology transfer, copyright piracy and the value of China’s currency, the yuan, would be fierce.

As a crescendo of strident nationalistic rhetoric swirls through the Chinese media and blogosphere, American officials seem baffled by what has gone wrong and how fast it has happened.

During Obama’s visit, the US ambassador to China, Jon Huntsman, claimed relations were “really at an all-time high in terms of the bilateral atmosphere ... a cruising altitude that is higher than any other time in recent memory”, according to an official transcript.

The ambassador must have been the only person at his embassy to think so, said a diplomat close to the talks.

“The truth was that the atmosphere was cold and intransigent when the president went to Beijing yet his China team went on pretending that everything was fine,” the diplomat said.

In reality, Chinese officials argued over every item of protocol, rigged a town hall meeting with a pre-selected audience, censored the only interview Obama gave to a Chinese newspaper and forbade the Americans to use their own helicopters to fly him to the Great Wall.

President Hu Jintao refused to give an inch on Obama’s plea to raise the value of the Chinese currency, while his vague promises of co-operation on climate change led the Americans to blunder into a fiasco at the Copenhagen summit three weeks later.

Diplomats say they have been told that there was “frigid” personal chemistry between Obama and the Chinese president, with none of the superficial friendship struck up by previous leaders of the two nations.

Yet after their meeting Obama’s China adviser, Jeff Bader, said: “It’s been highly successful in setting out and accomplishing the objectives we set ourselves.”

Then came Copenhagen, where Obama virtually had to force his way with his bodyguards into a conference room where the urbane Chinese premier, Wen Jiabao, was trying to strike a deal behind his back.

The Americans were also livid at what they saw as deliberate Chinese attempts to humiliate the president by sending lower-level officials to deal with him.

“They thought Obama was weak and they were testing him,” said a European diplomat based in China.
Title: Re: China
Post by: G M on September 26, 2010, 12:40:42 PM
Prediction: China will do a bit of a gut check with us soon (again) just to gauge our response. It may be financial, it may be military. It won't (probably) escalate, but they will bump us.

China slaps anti-dumping duties on US chicken imports


Agence France-Presse
First Posted 17:01:00 09/26/2010

BEIJING – China will levy anti-dumping duties of up to 105 percent on imports of US chicken products, the government said Sunday, in a move likely to ratchet up trade tensions between the two nations.

"The US chicken industry has dumped broiler products into the Chinese market and caused substantial damage to the domestic industry," the commerce ministry said in a statement on its website.

The duties take effect on Monday, it said.

China will slap anti-dumping levies of over 50 percent on up to 35 US chicken broiler exporters including Tyson Foods Inc, Keystone Foods LLC, Pilgrim's Pride Corporation and Sanderson Farms Inc, the statement said.

Levies of over 105 percent will be placed on imported chicken broilers, a type of chicken raised specifically for meat production, from all other US producers, it said.

The measures will apply for five years and follow up preliminary tariffs on the same products issued by the ministry in February.
Title: Re: China
Post by: JDN on September 27, 2010, 08:38:32 AM
Prediction: China will do a bit of a gut check with us soon (again) just to gauge our response. It may be financial, it may be military. It won't (probably) escalate, but they will bump us.

China slaps anti-dumping duties on US chicken imports

Agence France-Presse
First Posted 17:01:00 09/26/2010

Old news; this was announced in February.

China responded to the US anti dumping duties....  Tit for tat; that seems to be the norm...

"Since this January, the US has decided to impose anti-dumping duties of as much as 289 and 175 percent respectively on imports of wire decking products and electric blankets, and the nation also announced recently it would launch an anti-dumping and anti-subsidy investigation into imports of drill pipe used for oil wells from China."

http://www.chinadaily.com.cn/business/2010-02/06/content_9438260.htm

Regarding the islands there is a legitimate dispute; it has been going on for years.  It's a lot closer to Taiwan than Japan.
I'm not sure who is right or wrong.  I just don't want the matter to escalate into anything serious affecting America.
http://www1.american.edu/TED/ice/DIAOYU.HTM

Regarding using our military support, I truly hope we would not! 
**That despite our treaty obligations, we would not provide military support to Japan in a conflict with China over the disputed islands.**

Maybe we should rattle the sabers?  Send our fleet to encircle the island?  I'm sure the average American would support millions/billions of dollars lost, possible lives lost, at minimum an economic war, just to "defend" a disputed island on behalf of Japan but claimed by Japan, China, and Taiwan.   :?

That being said, while most people fear Islam and the camel riders, I don't lose any sleep.  Not to denigrate the threat; it is very real, but I believe one day
China will pose a much greater and direct threat to America on multiple levels.  I'm old enough to remember hiding under my desk  :-)  for fear of the Russian attack.  I hope that will not happen again with China.




Title: Re: China
Post by: G M on September 27, 2010, 09:37:19 AM
 
**That despite our treaty obligations, we would not provide military support to Japan in a conflict with China over the disputed islands.**

Maybe we should rattle the sabers?  Send our fleet to encircle the island?  I'm sure the average American would support millions/billions of dollars lost, possible lives lost, at minimum an economic war, just to "defend" a disputed island on behalf of Japan but claimed by Japan, China, and Taiwan.   :?


China sees Obama as weak, and thus the US as weak. Should we continue to allow this perception? That stability in asia post-WWII has been based on American power in the pacific. Japan's de-militarization is based on our promise of them being under our defense umbrella. Do you think Japan rebuilding it's military will be better or worse for asia, the rest of the world and us, or not? If Japan finds it's on it's own, what of Taiwan? What of the rest of the asia-pacific nations? What of America's allies globally? What's the message? America will defend it's allies unless it gets expensive or there is the possibility of casualties. Right?
Title: Re: China
Post by: JDN on September 27, 2010, 09:58:06 AM
I understand your point, but I do think we need to pick our fights.  IF Japan (mainland)
was threatened I think we should offer unlimited support; whatever it takes.  Money or lives.

A disputed island off the coast of Taiwan claimed by China and Taiwan does not qualify.  Nor would a similar territorial dispute/example
for any of our allies justify American lives.

As for Japan rebuilding it's military, I don't know.  An interesting question.  However,
in my opinion, if I was Japan I would reconsider their Constitution and I would begin
rebuilding their military.  Will that be better or worse for Asia?  Us?  Again, I don't know. 
But as you have indirectly pointed out, if your big brother leaves home or seems busy, you better learn
to defend yourself from the local bullies.  Or one day you might get hurt.
Title: Re: China
Post by: G M on September 27, 2010, 10:06:29 AM
Do you understand the impact of a re-militarized Japan on the rest of asia? The end of Pax-Americana would be profoundly destabilizing to the region.
Title: Re: China
Post by: JDN on September 27, 2010, 10:13:48 AM
Yes, again I understand your point.  Memories of blood and conflict and oppression is long in Asia.

Yet, China seems to be like the new bully in town.  And is growing.  It might be nice to have friends
on the local scene able to defend themselves.
Title: Re: China
Post by: G M on September 27, 2010, 10:40:06 AM
The Japanese Self-Defense Force has quietly upgraded and improved it's military capacity for decades, but this has not spooked the other asian nations as US dominance and article 9 of the Japanese constitution remain in effect. A Japan that turns away from it's pacifist facade would send shockwaves through the region and actually empower Beijing's aggressiveness.
Title: Re: China
Post by: G M on September 27, 2010, 10:51:46 AM
http://www.reuters.com/article/idUSTRE6731EJ20100804

Southeast Asian states, including the Philippines, have become worried by China's increasingly aggressive stance on the complex set of disputes in the South China Sea.

"We expect them to be responsible on what they do as we are. And I believe if we act in that way, there should be no issues," Captain Rudy Lupton, commander of the USS Blue Ridge, the command and control ship of the U.S. Navy's 7th Fleet based in Japan.

Last week, Chinese naval forces carried out drills in the disputed southern waters amid tension with Washington over security in the Korean peninsula and South China Sea.

Last year, there was a collision between sonar equipment being towed by a U.S. Navy warship and a Chinese submarine near Philippine waters.

**snip**

China's growing might military might and rising defense spending have set alarm bells ringing around the region, particularly in Japan and Taiwan. It has repeatedly said its claims on the southern waters and island are indisputable.
Title: Re: China
Post by: JDN on September 27, 2010, 11:03:23 AM
The Japanese Self-Defense Force has quietly upgraded and improved it's military capacity for decades, but this has not spooked the other asian nations as US dominance and article 9 of the Japanese constitution remain in effect. A Japan that turns away from it's pacifist facade would send shockwaves through the region and actually empower Beijing's aggressiveness.

Yes, but so too is China upgrading and improving their military capacity as you have previously pointed out.
With offensive weapons.  I think this is what is spooking the other asian nations.  Not so much the possibility of Japan rearming. 

Title: Re: China
Post by: G M on September 27, 2010, 11:30:19 AM
As pointed out by various posters, China suffers from serious internal issues that threaten the power structure in Beijing. The chinese people do not believe in communism, they've seen it's failure firsthand. The communist party, in fact does not believe in communism either (Too bad our president and his cabinet do, but that's another thread). Slogans about a "worker's paradise" get nothing but scorn from the chinese masses. Beijing now uses the tragic chinese history of suffering at the hands of other nations to fuel a sense of grievance and nationalism. Japan, in paticular is a focus of this, especially given the real horrors inflicted on China by Japan not very long ago. Of course, the masses of dead chinese as the result of Mao have been sent to the memory hole.

Beijing is forced to run as fast as it can just to stay in place providing a degree of improved standard of living and economic mobility to a still growing population. A Japan that distances it's self from the US and re-militarizes would be very beneficial for Beijing in empowering it's hawks and refocusing domestic discontent on the still very hated japanese.

Every time Beijing toes over the line and feels like it won, the more it builds to taking the next step until we end up in a real confrontation.

You put out fires when they are small, you don't sit back and wait until the fire has gotten out of control because a small fire isn't worth the time and energy.
Title: Well, who could have seen this coming?
Post by: G M on September 27, 2010, 11:50:03 AM
http://www.nhk.or.jp/daily/english/27_33.html

2 Chinese patrol boats spotted off Senkaku

Japan's top cabinet spokesman has confirmed the presence of 2 Chinese fisheries patrol boats in waters near the Senkaku Islands since last Friday. He says Japan is demanding that the Chinese vessels leave the area.

Chief Cabinet Secretary Yoshito Sengoku told reporters that 2 Chinese surveillance ships against illegal fishing have been spotted near Japan's territorial waters in the East China Sea.
Title: Re: China
Post by: Body-by-Guinness on September 27, 2010, 11:54:48 AM
Ruh roh. Extra innings, I expect.
Title: Re: China
Post by: G M on September 27, 2010, 12:03:31 PM
http://www.yomiuri.co.jp/dy/national/T100927004334.htm

China to up patrols near Senkaku isles

Satoshi Saeki / Yomiuri Shimbun Correspondent

BEIJING--The Chinese government has decided to regularly deploy its fisheries patrol boats near the Senkaku Islands in an apparent reaction to the arrest of a Chinese fishing boat captain near the Japanese islets early this month, it was learned Monday.

It was anticipated that the administration of President Hu Jintao would intensify such patrols as a retaliatory measure against the arrest and detention of the captain.

The Chinese Agriculture Ministry said in a Sept. 20 publication for the fisheries industry that the government hereafter would need to increase and make permanent the activities of its patrol boats near the islands in the East China Sea, Hong Kong's Ming Pao Daily News reported Monday. The official in charge emphasized in the ministry's fisheries news that the action was designed to protect the safety of the country's fishermen and their assets.

According to sources, fisheries patrol ships No. 201 and No. 204 are currently in operation around the Senkaku Islands, territorial rights over which are claimed by both China and Taiwan.

The Agriculture Ministry operates the fisheries patrol ships, some of which are decommissioned navy ships. Two patrol ships began regular patrols in the South China Sea in April "to protect" the country's fishing boats and control the "illegal operation" of foreign fishing vessels.

Meanwhile in Tokyo, the Japanese government has decided to demand that the Chinese government pay for the damage caused to two Japan Coast Guard vessels by the Chinese fishing boat, Chief Cabinet Secretary Yoshito Sengoku said Monday.

"This is an important issue for the government, separate from the issue over whether such a demand is made shortly or sometime after the two countries' relations 'have cooled down,'" the top government spokesman said.

He thus did not make it clear when Japan will make such a demand.

The collisions, which took place on Sept. 7 in the Japanese territorial waters, have led to one of the worst diplomatic rows in years between Japan and China. There are no signs of an easing of tensions, despite the release of the captain in what was effectively a concession by Japanese authorities.

After the arrest of the captain, China intensified pressure on Japan, through such means as restricting exports of rare earth minerals and suspending ministerial-level talks.

In New York last week, Chinese Premier Wen Jiabao said, "If Japan clings to its mistake, China will take 'further action' and the Japanese side shall bear all the consequences that arise."
(Sep. 28, 2010)
Title: Re: China
Post by: G M on September 27, 2010, 12:20:28 PM
So JDN,

What's the "mature" way to handle this new development?

Title: Re: China
Post by: G M on September 27, 2010, 01:09:49 PM
http://www.google.com/hostednews/ap/article/ALeqM5jZwfAf5KJIxgndClonD3cKmh0PzwD9IG85NO0

BEIJING — China has stepped up customs inspections of goods shipped to and from Japan, slowing trade, logistics companies said Monday, amid a spat over the detention of a Chinese fishing boat captain near disputed islands.

Customs officers who usually look at 2 percent to 10 percent of goods in shipments began checking up to 95 percent this weekend, said employees of cargo companies in Shanghai and Shenzhen, a major port near Hong Kong. Customs officials gave no explanation for the change, they said.

"Normally it takes one or two days but now it's going to be about a week," said Mary Deng, an administrator for Shenzhen Hyun Young International Transportation Co. The company handles shipments of Chinese-made furniture, clothing and other goods to Japan.

A customs agency spokesman denied that goods to and from Japan were targeted for increased inspections.

"China's customs agency monitors and inspects inbound and outbound products according to law," said the spokesman, who would give only his surname, Tao. "We have not increased the rate of inspections on Japan-related products."

**If you know China, you know this is their classic "fcuk you", done while shrugging their shoulders and smiling apologetically.**


Anti-Japan protesters hold war flags of the Japanese Imperial Army with "Japan get out" written on them during a demonstration near the Japanese Consulate in Hong Kong Sunday, Sept. 26, 2010. China has reiterated its demand for an apology from Japan over the detention of a Chinese fishing boat captain whose arrest plunged relations between the Asian neighbors to their lowest level in years.

**Cue the astroturfed protesters.**

Anti-Japan protesters hold war flags of the Japanese Imperial Army with "Japan get out" written on them during a demonstration near the Japanese Consulate in Hong Kong Sunday, Sept. 26, 2010. China has reiterated its demand for an apology from Japan over the detention of a Chinese fishing boat captain whose arrest plunged relations between the Asian neighbors to their lowest level in years.
Title: Shockwaves
Post by: G M on September 27, 2010, 01:22:22 PM
http://www.koreatimes.co.kr/www/news/biz/2010/09/123_73580.html

Korea more vulnerable to China threats than Japan

By Kim Tae-gyu

China’s recent diplomatic victory over Japan makes Korean bureaucrats and corporations sweat since the former’s lethal weapon of rare metals against the latter is expected to work on Korea as efficiently as on Japan.

Late last week Tokyo released the detained captain of a Chinese fishing trawler, who was detained by the Japanese coast guard early this month while operating in the waters around a group of uninhabited rocky outcroppings in the East China Sea.

Although Japan has shown a very stern attitude on issues involving disputed territory, the country easily surrendered this time around as China reportedly halted shipment of rare earth elements although Beijing denies such maneuver.

“What if China adopts the strategy of stopping shipment of the materials to Korea amid bilateral political or economic disputes? We would be at a loss on how to deal with it,” said a Seoul analyst who asked not to be named.

Rare-earth elements refer to a collection of 17 chemical elements in the periodic table. They are indispensable in producing high-tech products or eco-friendly technologies such as electric cars, wind turbines and liquid crystal displays (LCDs).

Korea, home to the world’s top LCD manufacturers, does not produce them at all and depends wholly on imports to procure them. Last year, all of its 2,600 tons of demand were met by shipments from China.

The state-run Korea Resources Corporation (KRC) has set up a target of maintaining its reserves for the rare-earth metals at more than 1,150 tons by 2016 but its present storage remains at a mere 3 tons.

In this climate, Korea seems to have no choice but to rely on China, around 95 percent of which produces all supplies. The communist state even imposed a global export quota on them.

Industry watchers point out that Asia’s fourth-largest economy needs to generate a long-term plan of grappling with the aforementioned problems.

“Many Koreans tend to presume that they would need us just as much as we need them. However, the reality check shows a different result as amply demonstrated by the past disputes,” the analyst said.

“Have a look at the garlic case a decade ago. We were already not in the position to commission a tit-for-tat strategy against China and now there are the rare-earth elements. We need to do something to level the playing field but the hitch is that nobody seemingly knows how to do so.”

Midway through 2000, the former Kim Dae-jung administration jacked up tariffs on Chinese garlic from 30 percent to as high as 315 percent by 2003 in order to protect Korean farmers from cheap Chinese imports.

A week later, the Chinese government countered the move by banning imports of Korean handsets. Seoul immediately backed off by cutting the tariffs after quick negotiations.

Korea’s dependency on China has shot up since then as the latter became the No. 1 trading partner of the former during the first decade of the new millennium, nudging past the United States.
Title: Re: China
Post by: JDN on September 27, 2010, 02:53:09 PM
Definitely "overtime".   :-)

I'm still not sure we should rattle the sabers if only economic tit for tats is the results.  Or even enter into the fray.
Japan and China are both big boys.

However, IF China threatens military action against Japan then America should make it very clear that we will
be there to defend Japan whatever it takes.  At this time, I cannot see it going anywhere close to that far.

Stayed tuned.  I doubt if this game is over.  Each country has it's own rabid nationalists to deal with.  And it's own business interests.
Title: Re: China
Post by: G M on September 27, 2010, 02:58:18 PM
http://www.yomiuri.co.jp/dy/national/T100926002139.htm

Captain's release doesn't bring expected result / Tense exchanges between Japan, China continue; intrusions into waters near Senkaku likely to increase

Hideo Kamata and Toshimitsu Miyai / Yomiuri Shimbun Staff Writers

Prime Minister Naoto Kan's administration believed that releasing the Chinese fishing boat captain would end this country's confrontation with China, but that expectation proved to be wrong as Beijing instead escalated its hostile actions.

The Chinese government has demanded an apology and compensation for the arrest of the captain, whose boat collided Sept. 7 with Japan Coast Guard patrol vessels in Japanese territorial waters off the Senkaku Islands in Okinawa Prefecture.

After the Japanese government refused the demands, the Chinese government immediately released a counterstatement. The tense back-and-forth between Japan and China continues.

Internal Affairs and Communications Minister Yoshihiro Katayama said Saturday, "The Japanese side responded a little more maturely [than China]."

Katayama praised the decision to release the captain, who was arrested on suspicion of obstruction of the JCG's official duties. "It's not good for [Japan and China] to be locked in a dispute," he said.

However, the Japanese government was deeply shocked by China's unexpected demand for an apology and compensation.

"The Senkaku Islands are part of Japan's territory," a government source said. "What do they mean demanding an apology even though the arrest was in line with Japanese law?"

His remark reflects the optimistic view that spread through the Prime Minister's Office on Friday, when it was decided to release the Chinese captain. Officials thought the release would immediately lead to an improvement in Japan-China relations.

China's subsequent hard-line stance, however, revealed that Kan's diplomatic outlook was naive.

Government officials have voiced serious concern about future developments. One said, "After winning the release of the captain, China may try to further shake Japan, instead of stopping its attacks."

Intrusions by Chinese fishing boats into Japan's territorial waters around the Senkaku Islands are expected to escalate. JCG officials and other involved parties are concerned they will be unable to effectively patrol the area even if Chinese boats fish there illegally.

There is no sign China will stop its apparent retaliation over the arrest of the captain. For example, China has made moves indicating it will unilaterally drill in natural gas fields in the East China Sea.

In the gas field Japan calls Shirakaba and China calls Chunxiao, the Japanese government recently confirmed that what appeared to be an excavating drill was brought to the Chinese facility and turbid water was newly spotted around the gas field.


At a meeting Friday of the Liberal Democratic Party's Foreign Affairs Division, a senior official from the Natural Resources and Energy Agency said, "We continue to believe that drilling has likely been conducted."

The Foreign Ministry also China likely has begun drilling and has repeatedly asked China through diplomatic channels whether it is true.

In addition, four Fujita Corp. employees who were detained by Chinese authorities in Hebei Province have not yet been released, although officials of the Japanese Embassy in Beijing finally were allowed to meet with them Saturday.

Officials in the government and the Democratic Party of Japan are concerned about China's next steps.

"Now that we've given up the captain, who was our bargaining chip, we're afraid China will do anything it wants toward Japan," a source close to the DPJ said.

Kan said in New York on Friday: "Japan and China are important neighbors who have responsibilities in the international community. Both sides need to make cool-headed efforts to deepen their strategic bilateral relations."

But it seems his message has not reached China.
(Sep. 27, 2010)
Title: China-Japan: Carbon-Based Confrontation
Post by: G M on September 27, 2010, 03:17:24 PM
http://blogs.forbes.com/jedbabbin/2010/09/27/china-japan-carbon-based-confrontation/

China’s claim to the “Diaoyu” islands is older – going back to the fifteenth century – and more urgent.  China’s economy and hell-for-leather military buildup makes it the fastest-growing consumer of carbon-based fuels.  Forget all the talk of China’s “green” economy: they are (at least) the world’s third-largest oil consumer, have for at least three years been opening coal-fueled power plants at the rate of about one every week, and one of the Chinese government’s principal goals is to expand their claims to oil and gas resources.  China was forced to shut down about 3% of their coal plants this year due to a coal shortage.  Energy demand continues to rise, unabated by environmental concerns.

China’s claim to the Senkaku/Diaoyu islands is serious, and not subject to compromise.  It is but one of several energy-based issues which could – and likely will – drive China to war.

My 2006 book, “Showdown: Why China Wants War with the US”  was unfortunately titled.  It should have been, “Why China Needs War with the US.” China must confront us in order to remove our protective barrier to its hegemony over its region.

China wants to avoid compromise because its aim in what it refers to as the “peripheral nations” is to assert hegemony: peacefully if possible, and through military confrontation if necessary.  With nations such as India, they can only bluff and bluster. With Japan and others, they can literally gain ground through intimidation if the U.S. remains supine.

China’s dispute with Japan meets two needs. If it can assert hegemony over the Senkakus, China can both expand its influence (and intimidate other regional nations) while gaining possession of badly-needed natural gas reserves. (The Senkakus, according to a report by GlobalSecurity.org  may have gas reserves sized at 1.6 trillion cubic feet and are expected to be a major source of production within ten years.)
Title: The new East Asia world order
Post by: G M on September 27, 2010, 03:41:34 PM
http://taipeitimes.com/News/editorials/archives/2010/09/27/2003483895

EDITORIAL : The new East Asia world order

Monday, Sep 27, 2010, Page 8
President Ma Ying-jeou (馬英九) was no doubt pleased last week when Chinese Premier Wen Jiabao (溫家寶) offered his reassurances concerning the missiles China has aimed at Taiwan. Ma has repeatedly called on Beijing to remove the missiles if the two sides of the Taiwan Strait are to begin political negotiations.

However, a closer look at Wen’s remarks indicate little to be pleased about. It was not a policy statement, but merely an indifferent response to questions from a Taiwanese reporter.

As Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen (蔡英文) said, “will one day be removed” was so vague that it is meaningless.

Not that being more specific would have helped. Had Wen provided a date and timetable, removing the weapons would still be little more than a gesture. Analysts repeatedly point out that if the missiles are moved, they can easily be replaced if negotiations do not produce the desired results. And if China gets what it wants: It can deploy the missiles elsewhere, which makes Taiwan’s problem everyone’s problem since China has no shortage of territorial disputes.

Indeed, an incident last week reminds us of just this. Japan’s unsuccessful attempt to prosecute a Chinese fishing boat captain for colliding with two Japanese Coast Guard vessels in disputed waters off the Diaoyutai Islands (釣魚台) is disturbing for many reasons.

First is Tokyo’s sheer ineptitude in the affair. Having detained the captain and announced plans to try him, officials abruptly reversed course when an enraged China threatened to block exports to Japan of materials essential to high-tech manufacturing. Apparently surprised by the fury of China’s response, Tokyo’s lack of resolve to pursue the case angered many Japanese, who described the decision as foolish and humiliating.

Another reason for alarm is the Chinese response, which, to give the Japanese some credit, was stronger than expected given that such incidents are hardly unusual. For Ma and others who seek to calm concerns about future relations across the Taiwan Strait, China’s treatment of Japan signals not just its growing power, but its aggression. For all the talk of soft power and denials of regional hegemony, China seems willing to use force to achieve its goals.

Most troubling about Japan’s humiliation, however, is that the force China used was not military. For those determined to see Taiwan obtain F-16s and other US military hardware for cross-strait defense, it is worth noting that Japan has plenty of military equipment, and thousands of US troops to operate it.

Another thing analysts have long said is that China’s military threat will ultimately be matched by its economic clout. As Japan’s largest trading partner, China wields immense power over its neighbors. Neither missiles nor any other form of conventional armament could begin to match the damage that could be caused to Japan’s already struggling economy were China to follow through on its threat.

The obvious effect in Taiwan of Japan’s Diaoyutais debacle will be to dampen enthusiasm for the Economic Cooperation Framework Agreement, which the Chinese Nationalist Party (KMT) administration has pushed so strongly. Closer cross-strait economic ties will certainly make Taiwan more vulnerable to Chinese coercion, and warnings of this danger must be harder for the government to dismiss.

Yet the ultimate lesson may be for the DPP. Say what she wants about Wen’s remark, but Tsai too must be wary. China is increasingly the dominant force in the region and it must be dealt with. High seas bravura will not do. If the DPP is to be a viable political alternative, it must develop positions that will make a cross-strait relationship possible.
Title: POTH-China Imposes a Steep Tariff on U.S. Poultry
Post by: G M on September 27, 2010, 04:01:12 PM
Published: September 26, 2010

HONG KONG — Days after it flexed its economic muscle in a diplomatic dispute with Japan, China  continued to display a more assertive international economic policy on Sunday as it imposed steep tariffs on poultry imports from the United States.

China’s commerce ministry announced on its Web site that it would impose import tariffs on American poultry of up to 105.4 percent. It said the tariffs reflected the result of its own antidumping investigation, which looked at whether the United States was harming China’s poultry industry by exporting chicken parts for less than it cost to produce them.

The commerce ministry started the investigation less than two days after President Obama imposed steep tariffs on Chinese tires a year ago. Chinese officials have denied that the inquiry was in retaliation, but poultry is one of the few categories in which the United States runs a trade surplus with China, making it an ideal target for Chinese trade actions.

The tariffs are another example of China’s willingness to use its economic leverage when it feels it is being challenged. An official at one of Japan’s top traders in rare earth minerals said on Monday that there appeared to be no resumption in shipments to Japan, a result of a still-simmering dispute over Japan’s arrest of a Chinese fishing boat captain. The official, who spoke on condition of anonymity, said traders were watching closely to see whether Chinese customs would start letting shipments through again. “China’s rising assertiveness on the international economic stage reflects its growing economic might and the self-confidence of its leadership, but is tempered by the realization that it faces many challenges in terms of its own development,” said Eswar S. Prasad, an economics professor at Cornell.

Carol J. Guthrie, a spokeswoman for the United States trade representative, said, “We are disappointed that duties are to be imposed and will be examining the determination for consistency with applicable rules.”

Quarrels over products as diverse as chickens and rare earth minerals might seem like minor spats. But they come against the backdrop of China’s vigorous defense of its currency policy, and its stepped-up activity in the World Trade Organization.
Title: Re: China
Post by: JDN on September 27, 2010, 04:19:50 PM
As I had mentioned before; tit for tat...
chickens and tires, x vs y

I think you will see more "examples of China’s willingness to use its economic leverage when it feels it is being challenged".

As a growing economic and military might, it is not unexpected. 

I'm curious, in your opinion what should we do?  Rattle the sabers?  Send the fleet?
Start a trade war?  An economic war?  Escalate? 

It won't be pretty...

Title: Re: China
Post by: G M on September 27, 2010, 04:28:38 PM
As I said before, we can't afford a trade war. I would send the 7th fleet to escort Japanese Coast Guard ships as they resume their patrols of their territorial waters. This would rock Beijing and the Sinohawks/PLA elements out of favor just as China's next generation of leadership sorts it's self out.

That can turn this win into a painful defeat for them that will moderate their aggressive behavior.

If this move were to turn this into a shooting war, now is better than later. Later, we will be weaker, later, they will be stronger.
Title: Re: China
Post by: JDN on September 27, 2010, 07:00:04 PM
"We can't afford a trade war" yet I bet, at least for this round that is how China will fight. Between trade, dollars and bonds held by China it won't be pleasant for America.  The word ugly comes to mind.  Of course they will respond. And then what do we do?  Send black ships into Hong Kong?

For the moment it seems more prudent to let Japan and China resolve their differences between themselves.
Title: Re: China
Post by: Crafty_Dog on September 27, 2010, 07:12:17 PM
Prudent?  Yeah that's what was said with Alsace-Lorraine, Sudentland (sp?) and Austria too.

Hell, maybe we could crank up the printing press and pay off all the bonds they hold.  Of course then no one would lend us money any more , , , which could be a good thing.  :lol:
Title: Re: China
Post by: G M on September 27, 2010, 07:34:45 PM
JDN,

You did note that the other asian nations are watching this closely and don't seem real happy with how things are looking, right? Without us, what exactly will Japan do?

Send black ships into Hong Kong?

No, as I said before, we move the 7th fleet, which just happens to be patrolling the western pacific right now, to escort the Japanese Coast Guard as it patrols it's legally recognized territory. Then we see what moves China does or does not make.
Title: Re: China
Post by: G M on September 27, 2010, 07:57:27 PM
Here are basic principles that apply across time and culture:

There is NEVER a power vacuum in human affairs. There are those on top, those on the bottom and those in motion in either direction.


In this case, China sees a weakened America with a weak, inexperienced leader who at the worst will send letters harshly condemning China's actions. Sadly, their perceptions are spot on. There is an old chinese saying that says "Kill the chicken to scare the monkey". Make a public display of your power, make an example of a chosen victim to get others to recognize that they could be next. Japan is the chicken today, and the rest of asia, us and the rest of the world are to get the message of who is dominant in eastern asia these days.

Those who neglect history are doomed to repeat it.

As Crafty already pointed out, remember another country with a chip on it's should for past grievances, a wave of nationalist fever in it's population and a growing military looking to expand it's territory? Remember those who thought appeasement would bring them "peace in our time"?
Title: Re: China
Post by: Crafty_Dog on September 27, 2010, 09:36:15 PM
As someone pointed out, the current trajectory seems to lead to us being run off of our alliance with Taiwan; perhaps in the aftermath of our , , , departure from Iraq and Afghanistan.   
Title: China blames US for dispute with Japan
Post by: G M on September 28, 2010, 08:18:04 AM
http://www.americanthinker.com/blog/2010/09/china_blames_us_for_dispute_wi.html

September 28, 2010
China blames US for dispute with Japan
William R. Hawkins
Though the Chinese fishing boat captain detained by Japan after ramming two coast guard boats returned home over the weekend, tensions remain high between Beijing and Tokyo. The underlying dispute over the islands called Diaoyu by China and Senkaku by Japan continues. Both countries claim ownership from ancient times, but Japan has made the stronger enforcement effort. China claims it will step up its patrols around the islands, so future clashes are likely. The islands are 240 nautical miles southwest of Okinawa. At stake is control of the surrounding East China Sea, its oil and mineral resources and trade routes.

The day after the Chinese captain was released, the Chinese Communist Party newspaper Global Times editorialized that "Coolness Towards Japan Should Remain." It stated

    Japan needs to be given a clear message that irresponsible policies have consequences. The Japanese public also needs to be clear that China should not be trifled with. China's 1.3 billion people have no intention of overwhelming the Japanese public in sentiment, but 100 million Japanese certainly should not try to overwhelm the Chinese people.

A Global Times "editor's choice" commentary by two Chinese scholars September 27 blamed the United States for the crisis because Washington gave a weak Tokyo the courage to confront Beijing. Liu Jiangyong, deputy director of the Institute of International Studies at Tsinghua University, wrote,

    The incident cannot be seen as an isolated dispute between Japan and China. The American shadow is obvious. It is the US military support that drives the hard-line stand of Japan against China.

    Even though the US transferred control [of the islands] to Japan [after World War II] , that doesn't mean the islands are the Japanese territory. So there is no legal foundation to support the [US-Japan Security] treaty's application to the Diaoyu Islands. It is the US that has made the Diaoyu disputes more complicated and caused it to become an obstacle to a healthy Sino-Japanese relationship

Ni Lexiong, a professor at the Shanghai University of Political Science and Law, went further in his argument,

    The background to the incident is that the US has been provoking China and taking advantage of conflicts between China and its neighbors to contain China recently.

    The Diaoyu Islands incident could be seen as a direct result of the recent series of Sino-US confrontations, from US-South Korea joint military drills to the US challenging China's core interests in South China Sea. Facing these provocations, China has to respond in defence, which inspires surrounding countries such as Vietnam, India and Japan to challenge China

    Logically Japan should intensify political and military cooperation with China; unfortunately, it turns to the US politically and militarily.

Direct talks between President Barack Obama and Chinese Premier Wen Jaibao at the United Nations last week fell flat. China seems confident that it can bully both the U.S. and Japan. Washington needs to demonstrate to Beijing very quickly that the balance of power has not shifted away from the democratic alliance in Asia if future confrontations are to be deterred.
Title: Re: China
Post by: Crafty_Dog on September 28, 2010, 12:34:06 PM
So, what is the legal background to our giving the islands to Japan?  How did we acquire dominion over them?
Title: Re: China
Post by: G M on September 28, 2010, 12:53:25 PM
WWII. We returned control of them to Japan in 1971.
Title: Re: China
Post by: JDN on September 28, 2010, 02:18:45 PM
GM is correct; in 1971 as part of Okinawa we returned the islands to Japan.  However a little history is important.  There are two sides to this story.

In 1874, Japan took Liu Chiu Islands (Okinawa) from China by force when Chinese Ching Dynasty was involved in several wars with other foreign countries. However, the Diaoyu Islands still remained under the administration of Taiwan, a part of China. After being defeated by Japan in the Sino-Japan War, China ceded Taiwan to Japan under the Shimonoseki Treaty. As a part of Taiwan, the Diaoyutai Islands belonged to Japan at that time.

Taiwan was returned to China at the end of World War II in 1945 based upon the 1943 agreement of the Cairo and Potsdam Declarations. The Japanese government accepted the terms that stated in these documents"...that all the territories Japan has stolen from the Chinese, such as Manchuria, Formosa, the Pescadores, shall be restored to the Republic of China.

In 1951 Article 2 of the Treaty of Peace with Japan signed by Japan and the Allied Powers (excluding both the ROC and the PRC) stated that, "Japan renounces all right, title and claim to Formosa and the Paracels". Article Four of the separate peace treaty signed between Japan and the ROC in 1952 declared that all agreements between Japan and China before 1941 were null and void. [2] As stated above, it is reasonable to take the mean that Diaoyu Islands should be returned to China because the Diaoyu Islands are one part of Taiwan. However, Japanese have maintained that the islands should not be included in these treaties. This issue remain quiet through the 1950s and 1960s probably because the these small uninhabited islands held little interests for the three countries.
Title: Re: China
Post by: Crafty_Dog on September 28, 2010, 06:05:50 PM
That is very interesting JDN, from what you say, China seems to have a plausible claim at least.  Should I want to cite a source, what source would that be?

Title: Weishe Works
Post by: Body-by-Guinness on September 28, 2010, 07:02:35 PM
Heritage's take:

East China Sea Flare-Up: Learning the Wrong Lessons in Beijing
Published on September 27, 2010 by Dean Cheng WEBMEMO #3027

Japanese prosecutors have reportedly decided to release the captain of the Chinese fishing boat whom they arrested after he apparently rammed two Japanese coast guard vessels in the waters around the Senkakus. The decision, a Japanese deputy public prosecutor said, was made “taking into account the impact on our citizens and Japan–China relations, [so] our judgment was that it would have been excessive to prolong the investigation and his detention.”[1]

The Japanese government’s comments make it even clearer that this decision was made due to the impact of the case on Sino–Japanese relations. Japanese Chief Cabinet Secretary Yoshito Sengoku stated explicitly, “It is a fact that there was the possibility that Japan–China relations might worsen or that there were signs of that happening.”[2]
While this decision may resolve the immediate issue of Captain Zhan Qixiong, it is likely to generate far more problems in the future.

Sending the Wrong Message
The situation first erupted on September 7, when Japanese coast guard vessels intercepted Zhan’s fishing boat in the waters around the disputed Senkaku/Diaoyutai islets. The captain tried to flee and apparently collided with two of the coast guard vessels (with little damage and no loss of life), for which he was arrested.

In the immediate aftermath of the incident, Beijing demanded that the Japanese government “immediately and unconditionally” release the captain. Such an aggressive response was unusual, given that the situation was far from critical. Of even greater concern, however, was the fact that Beijing escalated both the rhetoric and its responses over the following two weeks, to the point of Chinese Premier Wen Jiabao publicly snubbing Japanese Prime Minister Naoto Kan last week at the United Nations and China suspending the sale of rare earth minerals (essential for the production of electronics) to Japanese customers. For Tokyo to decide to release the Chinese captain in the face of such overreaction only teaches Beijing that its policies worked.

This is an extremely dangerous precedent not only for Japan but for the larger East Asia region and, ultimately, even for the United States.

It was Beijing, not Tokyo, that decided that this relatively minor incident should escalate. Some recent reports even suggest that the People’s Liberation Army (PLA) was responsible for the harder line pursued by the Chinese in this crisis.[3] Regardless of whether it was ultimately the military that pushed this position or simply hardliners writ large, they have now been handed a victory by Tokyo. Chinese demands for immediate and unconditional release have been met.

Weishe Works
More to the point, from Beijing’s perspective, the combination of diplomatic paroxysm and economic blackmail have led to a desired outcome. This would suggest the successful application of weishe.

While commonly translated as “deterrence,” the Chinese phrase weishe embodies not only dissuasion (commonly associated with the term deterrence) but also coercion. That is, whereas Western concepts of deterrence tend to focus on persuading a rival not to do something they would otherwise do, the Chinese concept of deterrence also includes persuading a rival to do something they would otherwise not do.

It would therefore be logical for the PRC to pursue a similar approach over future territorial disputes—use weishe to coerce neighbors into make concessions. And there are many such disputes looming if not already underway, including with Japan and most of Southeast Asia, as well as India. Consequently, the Japanese decision makes it more likely that there will be increasing confrontations all along China’s disputed periphery.

What will Japan do the next time a Chinese fishing boat is found around the Senkaku/Diaoyutai? Or if Chinese vessels challenge Japanese survey operations in disputed waters?
Worse, this incident is also likely to persuade Chinese officials that their current approach to crises is a successful one. A review of recent crises—such as the 2001 EP-3 incident and the 2007 shooting down of a Chinese satellite, as well as the case of Captain Zhan—reveals that Chinese responses are consistently delayed and fragmented—and initially nearly incoherent. Yet there are few downsides for the Chinese aside from a demarche or two.

A Dangerous Situation: The U.S.’s Two-Pronged Response
For the U.S., which is often allied or friends with parties that have territorial disputes with the PRC, this situation will become ever more dangerous. Chinese miscalculations (which are essentially being encouraged) will inevitably draw in the U.S. if the situation starts to spiral out of control. Washington needs to engage in a two-pronged approach.

First, the U.S. needs to make clear to its allies that their policy of preemptive concession and non-response to Chinese irascibility is ultimately self-defeating. Not only does it encourage the Chinese to be more belligerent and less conciliatory, but it is also more likely to escalate future crises. And Washington has no intention to help those who will not help themselves.
Simultaneously, the U.S., in its own policies, needs to be more coherent and coordinated. China resorting so promptly to the economic threat of curtailing rare earth exports, for example, should be a clear signal to American decision-makers that it is time to reexamine its decisions influencing domestic exploration and exploitation of said materials. Similarly, Chinese efforts to exclude the U.S. Navy from operating in the Yellow Sea and East China Sea should be met with a recommitment of the U.S. to uphold its treaty and legal obligations to allies and friends in the Pacific.

America: “Returning” to Asia
If the U.S. is going to argue that it is “returning” to Asia, it needs to make clear that, this time, it is here to stay. Such a commitment requires not only maintaining a strong military presence but deepening its diplomatic and trade ties to the region. The American presence has always been multifaceted, and its “return” should reflect all those aspects.

Dean Cheng is Research Fellow in Chinese Political and Security Affairs in the Asian Studies Center at The Heritage Foundation.

http://www.heritage.org/Research/Reports/2010/09/East-China-Sea-Flare-Up-Learning-the-Wrong-Lessons-in-Beijing
Title: Re: China
Post by: JDN on September 29, 2010, 08:37:48 AM
It seems tensions are easing. 


Japan Times   9.29.10
China's rare earth exports back on track
BEIJING (Kyodo) China has resumed procedures to export rare earth metals to Japan after the bilateral dispute over the Senkaku Islands reportedly halted shipments of the critical materials, trading house sources said Wednesday.
 
A Chinese mining company has restarted applications for exports and Chinese customs authorities have confirmed that cargo will be shipped once the procedures are completed, the sources said.

Separately, Chief Cabinet Secretary Yoshito Sengoku said that China may have started trying to repair ties with Japan, but more must be done to reduce the bilateral tension.

"Currently, we are not in a win-win relationship. It is probably obvious to everyone," the government's top spokesman said at a news conference. "However, I presume that (China) has started making efforts to bring the situation back to zero (from negative)."

He also said China has to do more before organizing high-level talks.

"I have been saying that the ball is already in China's court," he said. "If high-level talks are necessary, China must first return the ball" to convince the Japanese public that Beijing has changed its recent hardline attitude.

Sengoku also said the government has no concrete information on new developments regarding exports of rare earth metals and has asked China to provide a real picture of the situation.

China denied banning exports in retaliation for the arrest of a Chinese fishermen near the disputed isles, but various companies have reportedly said they were pressured to halt shipments.

Japanese traders, for example, said last week that shipments of rare earth metals, which are used to make hybrid cars, mobile phones and other high-tech products, had been stopped, although the Chinese Foreign Ministry said Saturday there had been no order to suspend shipments.

On Sept. 22, trading sources in Beijing said exports of the materials had grown "stagnant," and The New York Times reported that China had introduced a ban to pressure Japan to free the captain of the Chinese fishing vessel, who was detained following collisions with Japanese Coast Guard cutters Sept. 7 off the Senkaku Islands in the East China Sea.
Title: Re: China
Post by: G M on September 29, 2010, 06:58:11 PM
http://formerspook.blogspot.com/2010/09/todays-reading-assignment_26.html

Sunday, September 26, 2010
Today's Reading Assignment

..from Robert Kaplan, the national security correspondent for The Atlantic, and a fellow at the Center for a New American Security. Writing in today's Washington Post, he notes that China is using our "distraction" in the Middle East to become a great naval power. From his op-ed:

China has the world's second-largest naval service, after only the United States. Rather than purchase warships across the board, it is developing niche capacities in sub-surface warfare and missile technology designed to hit moving targets at sea. At some point, the U.S. Navy is likely to be denied unimpeded access to the waters off East Asia. China's 66 submarines constitute roughly twice as many warships as the entire British Royal Navy. If China expands its submarine fleet to 78 by 2020 as planned, it would be on par with the U.S. Navy's undersea fleet in quantity, if not in quality. If our economy remains wobbly while China's continues to rise -- China's defense budget is growing nearly 10 percent annually -- this will have repercussions for each nation's sea power. And with 90 percent of commercial goods worldwide still transported by ship, sea control is critical.

The geographical heart of America's hard-power competition with China will be the South China Sea, through which passes a third of all commercial maritime traffic worldwide and half of the hydrocarbons destined for Japan, the Korean Peninsula and northeastern China. That sea grants Beijing access to the Indian Ocean via the Strait of Malacca, and thus to the entire arc of Islam, from East Africa to Southeast Asia. The United States and others consider the South China Sea an international waterway; China considers it a "core interest." Much like when the Panama Canal was being dug, and the United States sought domination of the Caribbean to be the preeminent power in the Western Hemisphere, China seeks domination of the South China Sea to be the dominant power in much of the Eastern Hemisphere.

While Kaplan's central thesis is clearly correct, there are a few faults in his analysis. First, the "niche" capabilities he describes are useful for (potentially) limiting American naval forces in China's desired spheres of influence, but they do not add up to a true, global maritime power. To achieve that status, Beijing needs a blue water navy, built around carrier battle groups and other force-projection assets. True, China will have carriers by the end of this decade, but it will take even longer to develop the trained pilot cadre and ISR support needed to support their naval power thousands of miles from home.

However, Beijing's initial focus is the South China Sea and adjacent waters, stretching from Australia to Japan. In that region, China's growing naval power is already a menace, and the U.S. seems to have no credible response, beyond attempts at engagement. More disturbingly, the size of our Navy continues to shrink while more ships and subs join the Chinese fleet. That development alone gives Beijing a powerful incentive to pursue an aggressive maritime strategy, fueled by 10% annual increases in defense spending.

Not long ago, Defense Secretary Robert Gates argued that the U.S. could afford to retire some of its aircraft carriers, claiming that we were "over-matched" against potential adversaries. Obviously, that analysis is a bit short-sighted when it comes to China. Before he retires in a few months, someone might ask Dr. Gates about his over-matched theory regarding the PLAN and its expansion program.
Title: Re: China
Post by: G M on September 29, 2010, 08:33:01 PM
**Note: Bill Gertz is well known for having lots of sources within the pentagon and other national security entities.**

http://www.washingtontimes.com/news/2010/sep/29/inside-the-ring-920960594/?page=1

Inside the Ring

By Bill Gertz

-

The Washington Times

6:38 p.m., Wednesday, September 29, 2010


Japan-China standoff

Tensions between China and Japan continue to rise even though Japan on Saturday released a Chinese fishing boat captain who was held for ramming his vessel into two Japanese coast guard ships near the Senkaku Islands in the East China Sea.

China recently deployed two armed patrol boats to waters near what it calls the Diaoyu Islands, and a Chinese Foreign Ministry spokeswoman said on Tuesday that the "law-enforcement boats" were sent "to maintain fishing order and protect safety of life and property of Chinese fishermen."

"We hope Japan stop* tracking and disrupting Chinese fishery law-enforcement boats," spokeswoman Jiang Yu said.

Japan has made four diplomatic appeals to call off the patrols and has deployed six coast guard ships in the waters in the region.

The uninhabited islands are located south of Okinawa, which has administered the islands since the 1800s, not including the period when the U.S. military occupied Okinawa at the end of World War II.

China has demanded an apology from Japan for the detention of the fishing boat captain, and Tokyo has asked China to pay for repairs to the one coast guard ship that was damaged.

Beijing has claimed the incident that began Sept. 7 violates its sovereignty and asserted that Japan cannot enforce its laws near the Senkakus because the island chain belongs to China.

U.S. intelligence agencies have stepped up surveillance of the Senkakus and are closely monitoring the rising tensions over the dispute.


The strike group led by aircraft carrier USS George Washington is currently under way in waters close to the disputed islands and could move closer if shooting breaks out.
Title: Don't kowtow to the Chinese
Post by: G M on September 29, 2010, 09:08:37 PM
http://www.theaustralian.com.au/news/opinion/dont-kowtow-to-the-chinese/story-e6frg6zo-1225931985418

Don't kowtow to the Chinese

    * Greg Sheridan, Foreign editor
    * From: The Australian
    * September 30, 2010 12:00AM
   

THE international community needs to engage Beijing in a web of rules and customs.

IS this the year that China's leadership lets us all know that it is determined not to abide by routine international norms but will use raw power to take whatever it wants?

That is too strong a conclusion just yet, but it has certainly been a year of rugged behaviour from Beijing, behaviour that we should study closely.

Consider, first, the contrasting cases of Stern Hu and Zan Qixiong.

Hu, you'll recall, is the Australian former No 2 for giant miner Rio Tinto. In July last year he was arrested, initially on charges of espionage. Later he was convicted of bribery and corruption charges. At the start the Chinese government wouldn't communicate with the Australian government over the matter. Later it barely conformed to the minimum requirements of the consular agreement between the two nations.

Start of sidebar. Skip to end of sidebar.

End of sidebar. Return to start of sidebar.

We will never know if Hu was remotely guilty of anything. We do know that corruption is rife in China and Hu was the only foreign executive singled out by the Chinese authorities this way.

We also know the context. The Chinese were annoyed by the prices they were paying for Australian minerals and deeply furious that their bid for a big equity stake in Rio Tinto had failed.

Within Australia the reliable pro-China gang, centred on the Australian National University, but well represented in business as well, told us in effect to keep quiet and not protest against Hu's punishment. We were to protect the Chinese legal system, as though that were not among the most corrupt and politicised legal systems in the world.

Now consider Zan's case. Zan is a Chinese fishing boat captain. He was plying his trade in the Senkaku Islands in the East China Sea. Japan considers these islands to be part of Japan and exercises normal control over them. China also claims the islands, as it does much of the maritime domain of northeast and Southeast Asia.

Zan's boat was approached by the Japanese navy. Now, all over the world, what does an illegal fisherman do if approached by a national coastguard? Universally, the fisherman runs away.

But in Zan's case, according to the Japanese navy, he rammed the Japanese vessel. That is akin to piracy and is certainly equivalent to criminal damage.

Zan was taken into Japanese custody. He was not charged with being in Japanese waters illegally but with offences arising out of ramming the Japanese ship. Many analysts believe the fisherman's actions were directed by the Chinese government as a deliberate way of testing the Japanese.

The Chinese reaction could not have been more different from the Australian response to Hu. There were no significant voices within China urging that Japanese legal processes be allowed to unfold.

Instead, the Chinese reaction was brutal and effective. Beijing cancelled high-level meetings with Japanese officials, including with the Japanese Prime Minister. Groups of Chinese tourists were prevented from visiting Japan. Four Japanese in China were suddenly arrested in what looked like preposterous charges of photographing Chinese military establishments. A high-level torrent of abuse was directed at Japan from Chinese government and media sources.

It was alleged that China banned temporarily the export of rare earth metals -- vital in much hi-tech gadgetry -- to Japan, though this was later denied.

Eventually the Japanese gave in and let Zan go, at which point the Chinese demanded apologies and compensation. Outraged public opinion finally forced Tokyo to reject this.

The Zan episode needs to be seen in the context of three other episodes this year where the Chinese have flouted well-established international norms.

One was the sinking of South Korean naval ship the Cheonan by North Korea, with dozens killed.

No serious analyst in the world doubts that the North Koreans torpedoed the Cheonan. Yet the Chinese refused, at the UN or anywhere else, to acknowledge Pyongyang's responsibility for the attack. Beijing's continued political investment in the Stalinist regime remains strong.

The second incident arose from the Cheonan sinking. The US and South Korea planned to hold joint naval exercises involving a US aircraft carrier off the coast of South Korea in the Yellow Sea. The Chinese demanded that these be moved, claiming, absurdly, that there would be a danger of US ships colliding with Chinese ships.

The implication is that Beijing can decide where international ships can sail, even if they are in indisputably international waters. The Americans, not wanting to take the focus off North Korea, moved the exercises to the east side of the Korean peninsula, away from China. But the Americans also promised they would be back in the Yellow Sea later this year.

Finally, there is the South China Sea. Beijing claims sovereignty over virtually all of the South China Sea. Various Southeast Asian nations claim the parts close to them. I urge you to look at a map to see just how preposterous Beijing's claim is, how far the South China Sea is from China.

At an ASEAN meeting this year, China's Foreign Minister Yang Jiechi furiously told the ASEANs that they were small nations while China was a big nation, and they should do as theywere told.

All this doesn't prove that China will behave with consistent aggression in the years ahead, but it sure doesn't prove the opposite, either.

Three prudent responses are obvious. One is to engage China in multilateral institutions so it is enveloped in a web of rules and customs. Another is for nations to have a clear idea of their individual bottom lines, beyond which they will not retreat.

And the third is for everyone to attend to their armed forces, so that a stable balance of power and deterrence are maintained.

Then the risk of fateful Chinese miscalculation is diminished. Pre-emptive capitulation, as some are now counselling, would be the worst policy for everyone.
Title: POTB/LATimes: Children left behind
Post by: Crafty_Dog on September 30, 2010, 08:38:42 AM
Not looking to disrupt the flow here, but a moment for another in my random reminders that China has some very weak links in its chain.

http://www.latimes.com/news/nationworld/world/la-fg-china-left-behind-20100930,0,4655427.story

Title: We already know the answer to this one
Post by: G M on October 01, 2010, 08:03:55 PM
http://www.csmonitor.com/Commentary/the-monitors-view/2010/1001/Is-Obama-ready-for-a-stare-down-with-China

Obama’s national security strategy, however, is to primarily focus on rebuilding the US. Indeed, in September, when China protested about a planned military exercise in the Yellow Sea with a US aircraft carrier, the US backed down rather than risk Chinese anger. And Obama didn’t do much to persuade Beijing that its ally, North Korea, was guilty of sinking a South Korean naval ship last March, killing 46 sailors.

In July, Secretary of State Hillary Rodham Clinton did take a legal stand against China’s bold claims to a set of disputed islands in the South China Sea, saying the claims must be resolved with multilateral diplomacy. But the US hasn’t done much about that since then.

President Clinton was tested by China in 1996 after it lobbed missiles near Taiwan. He sent two aircraft carriers into the area in a show of defense for the island nation, which China claims as its own.

But these days China sees the US as weak. The American economy is stagnant. Many of the top Obama officials, such as Chief of Staff Rahm Emanuel and Defense Secretary Robert Gates, are leaving the administration. The president wants major cuts in the Pentagon. US forces began to leave Iraq this year, and Obama plans to start a US retreat from Afghanistan next year.

Since 2009, China has become more assertive in Asia. It recently told its neighbors that they are “small countries” while China is a “large country” – and that they should not expect an equal relationship.

This bluntness only raised fears of confrontation, especially as China expands it naval reach. Japan now wonders if it can count on the US in a crisis. It is considering a boost in its military spending. Over the past decade, Japan’s defense budget has declined about 5 percent – while China’s spending on its forces has soared
Title: China: Is Obama ready for a staredown?
Post by: DougMacG on October 01, 2010, 09:50:14 PM
One peaceful way to say he is ready for a staredown with China would be for this Nobel prize winning peace artist to sponsor the nation of Taiwan to join the United Nations and to quietly with no fanfare put our own membership and financial support for the organization on hold until it is accomplished. 

(The answer is no, I don't think he is ready.)
Title: Re: China
Post by: Crafty_Dog on October 01, 2010, 10:56:44 PM
Although I emotionally resonate to the idea, IIRC we have a signed treaty with China which recognizes that Taiwan ultimately is a part of China, or something like that.

I'm guessing our man GM has the precise facts at hand  :-D
Title: Re: China
Post by: G M on October 02, 2010, 04:46:44 AM
http://www.hks.harvard.edu/news-events/news/articles/ash-taiwan-anniv-apr09

How has the TRA affected Taiwan and China?

In the last 30 years, Taiwan has evolved culturally, commercially, intellectually, politically and economically from a one-party dictatorship under martial law to a very vibrant democracy with a truly active and engaged press. Yet, I think it has been psychologically difficult for Taiwan to be gradually shunted aside. Despite this, whether it is due to the U.S. presence or the TRA itself, there has been a huge shift in how the Taiwanese think about their country and their relationship to China. Some people are more comfortable with Taiwan’s progress of cultural awakening, while some of Taiwan’s older generation will never give up the dream of a unified China.

Of course with the dramatic economic growth in China, Taiwan is now in a weaker economic position than ever before. There are hundreds of thousands of Taiwanese businessmen living in China, and there is very active cross-strait investment mostly from Taiwan to the mainland.

From China’s perspective, I think the country would have preferred if the United States had viewed Taiwan as a Chinese domestic issue. While, realistically, China can treat Taiwan in whatever way it sees fit, the country must take the United States into consideration due to the provisions established in the TRA. Despite some saber rattling in 1996 and an overall escalation in military tensions then, I think China has found a more reasonable counterpart in the Ma Ying-jeou Nationalist government in Taiwan.

Can the TRA continue to play a role for the indefinite future? What challenges do you foresee to the TRA as it relates to globalization and the economy?

In our recent Taiwan Conference, Ambassador Stapleton Roy stated, “Don’t touch the TRA unless you really know what you are doing, and if you really know what you are doing, you wouldn’t touch it.” I agree with his statement and while there are some issues with the TRA, I think it can serve to support conversations on a lengthy list of cross-border challenges. From the environment and human rights to international relations and terrorism, these issues require more cooperation among the United States, China and Taiwan than ever before, and the TRA will not stand in the way of that.

At the same time, I think the TRA does require the United States to do a bit more internal soul searching to better clarify its interests in relation to Taiwan and China. I think preserving peace in the Western Pacific should remain core to U.S. interests, and all other pieces of these important diplomatic relationships can be worked out within the context of that overriding concern.
Title: Re: China
Post by: G M on October 02, 2010, 04:58:02 AM
http://www.law.cornell.edu/uscode/html/uscode22/usc_sup_01_22_10_48.html

CHAPTER 48—TAIWAN RELATIONS


    * § 3301. Congressional findings and declaration of policy
    * § 3302. Implementation of United States policy with regard to Taiwan
    * § 3303. Application to Taiwan of laws and international agreements
    * § 3304. Overseas Private Investment Corporation
    * § 3305. The American Institute in Taiwan
    * § 3306. Services to United States citizens on Taiwan
    * § 3307. Exemption from taxation
    * § 3308. Activities of United States Government agencies
    * § 3309. Taiwan instrumentality
    * § 3310. Employment of United States Government agency personnel
    * § 3310a. Commercial personnel at American Institute of Taiwan
    * § 3311. Reporting requirements
    * § 3312. Rules and regulations
    * § 3313. Congressional oversight
    * § 3314. Definitions
    * § 3315. Authorization of appropriations
    * § 3316. Severability

§ 3301. Congressional findings and declaration of policy

(a) Findings
The President having terminated governmental relations between the United States and the governing authorities on Taiwan recognized by the United States as the Republic of China prior to January 1, 1979, the Congress finds that the enactment of this chapter is necessary—
(1) to help maintain peace, security, and stability in the Western Pacific; and
(2) to promote the foreign policy of the United States by authorizing the continuation of commercial, cultural, and other relations between the people of the United States and the people on Taiwan.
(b) Policy
It is the policy of the United States—
(1) to preserve and promote extensive, close, and friendly commercial, cultural, and other relations between the people of the United States and the people on Taiwan, as well as the people on the China mainland and all other peoples of the Western Pacific area;
(2) to declare that peace and stability in the area are in the political, security, and economic interests of the United States, and are matters of international concern;
(3) to make clear that the United States decision to establish diplomatic relations with the People’s Republic of China rests upon the expectation that the future of Taiwan will be determined by peaceful means;
(4) to consider any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States;
(5) to provide Taiwan with arms of a defensive character; and
(6) to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan.
(c) Human rights
Nothing contained in this chapter shall contravene the interest of the United States in human rights, especially with respect to the human rights of all the approximately eighteen million inhabitants of Taiwan. The preservation and enhancement of the human rights of all the people on Taiwan are hereby reaffirmed as objectives of the United States.
Title: Re: China
Post by: G M on October 02, 2010, 05:15:55 AM
http://www.yomiuri.co.jp/dy/world/T101001006250.htm

'Smiling' China keeps bargaining chip / Recent actions have been conciliatory, but Beijing still holds 1 Japanese citizen

Seima Oki / Yomiuri Shimbun Correspondent

BEIJING--One Japanese citizen remains under lock and key in China, a diplomatic bargaining chip for the country, and in contrast to its release Thursday of three other Fujita Corp. employees and other recent conciliatory moves.

China's art of diplomacy, which stresses strategy, is quintessentially tough.

Some see the continued detention as a blatant retaliation against Tokyo. After the release of the three was reported, a Japanese source said, "When the collisions with the Chinese trawler happened near the Senkaku Islands, Japan held the captain [and released the crew]. China's trying to create a similar situation."

Chinese authorities said the three, who had been held on suspicion of trespassing in a military zone in Shijiazhuang, Hebei Province, were released after they wrote letters apologizing for their illegal actions. The country seems to be saying that if Japan accepts what it says, bilateral relations can begin to improve.


China's security bureau can detain suspects for up to six months. The decision to release the three on the 11th day of their detention and hold on to one is based on a delicate balance. While sending signals it wants to mend ties with Japan by releasing the three, China has kept firm hold of something it can use for leverage.

"China's gained a new bargaining chip ahead of the Asia-Europe Meeting in Belgium this month," a source familiar with Japan-China relations said. For China, accepting Prime Minister Naoto Kan's request to meet in Belgium and the release of the remaining Japanese citizen are cards it can play to win more concessions on issues concerning the Senkaku Islands.

With its recent actions, China has tried to show it has softened its hard-line stance over the incident involving the Chinese fishing boat. Immediately after Japanese authorities decided to extend the detention of the Chinese captain, China restricted exports of rare earths to Japan in an apparent retaliation. But by Tuesday, Beijing seemed to have partially lifted the restriction. Furthermore, demands by China's Foreign Ministry that Japan apologize and pay compensation over the Senkaku incident have decreased. The release of the three was in line with these conciliatory actions.

A diplomatic source said, "In the game of diplomacy, Beijing always tries to destroy its opponents' unity, to divide their power to create circumstances favorable to China."

In fact, politicians and the public in Japan are divided over whether the country should take a firm or conciliatory attitude toward China. Similarly, the Japan-U.S. alliance has been shaken under the Democratic Party of Japan-led government.


For China, the current situation in Japan is an easy one to shake up. The country's current "smile" is merely a show to prevent Japan from taking strong action and to encourage a conciliatory attitude. The softening of Beijing's position also aims to cool international opinion that China is a threat.

ASEM is an especially important event. The Chinese Communist Party seems to think Prime Minister Wen Jiabao should not face criticism at the meeting.

In Beijing, a source familiar with Japan-China relations said, "None of the exchange programs that the Chinese canceled have been revived. I wouldn't say China has softened its stance."

Indeed, China has not made any compromises about the core issue--its claim to the Senkaku Islands. While wearing a smile, Chinese fishery patrol ships have been stationed off the Senkaku Islands, and Beijing has moved steadily to settle and expand its claims in the East China Sea.

The Chinese Communist Party will open the fifth meeting of its 17th Central Committee on Oct. 15 to draw up the blueprint for the government after President Hu Jintao steps down in 2012. At such a time, the party wants to prioritize stability, and most diplomatic sources say Beijing will not make any compromises with Japan, as such actions could infuriate the Chinese public.
(Oct. 2, 2010)
Title: Re: China and Taiwan
Post by: DougMacG on October 02, 2010, 09:27:30 AM
Looks to me like the Taiwan Relations Act was an act of congress (signed by Jimmy Carter) rather than a treaty. Since I believe the UN is worthless, I am not saying start a war over this issue, but it is a card that any serious President should be ready to consider.  Especially when it always seems that China holds all the cards, like the game playing they do with NK and this latest spat with Japan.

The one-China concept is simply de facto false today.  Taiwan will never rule China, and Taiwan will never peacefully accept PRC rule.  They can reunite later after China is free like East and West Germany did, but right now they are 2 countries.  Taiwan is as worthy of international acceptance as any nation or territory I can think of.
Title: Re: China
Post by: G M on October 02, 2010, 09:46:57 AM
Doug,

Taiwan formally declaring independence would absolutely trigger a war with China. The Taiwanese don't want a formal declaration. Our best strategy is to move to contain Chinese expansionism, show we are firmly supporting our allies like Japan, S. Korea and Taiwan and build closer military relationships with India and other nations not willing to live under "pax sinica".
Title: Re: China
Post by: Crafty_Dog on October 02, 2010, 12:31:00 PM
Thank you GM.  Apparently the TRA was what I was thinking of, but what have the Chinese and we signed with each other?
Title: Re: China
Post by: G M on October 02, 2010, 12:41:30 PM
Joint Communique of the United States of America and the People's Republic of China

January 1, 1979

(The communique was released on December 15, 1978, in Washington and Beijing.)

   1. The United States of America and the People's Republic of China have agreed to recognize each other and to establish diplomatic relations as of January 1, 1979.
   2. The United States of America recognizes the Government of the People's Republic of China as the sole legal Government of China. Within this context, the people of the United States will maintain cultural, commercial, and other unofficial relations with the people of Taiwan.
   3. The United States of America and the People's Republic of China reaffirm the principles agreed on by the two sides in the Shanghai Communique and emphasize once again that:
   4. Both wish to reduce the danger of international military conflict.
   5. Neither should seek hegemony in the Asia-Pacific region or in any other region of the world and each is opposed to efforts by any other country or group of countries to establish such hegemony.
   6. Neither is prepared to negotiate on behalf of any third party or to enter into agreements or understandings with the other directed at other states.
   7. The Government of the United States of America acknowledges the Chinese position that there is but one China and Taiwan is part of China.
   8. Both believe that normalization of Sino-American relations is not only in the interest of the Chinese and American peoples but also contributes to the cause of peace in Asia and the world.

    The United States of America and the People's Republic of China will exchange Ambassadors and establish Embassies on March 1, 1979.
Title: Re: China
Post by: G M on October 02, 2010, 08:09:44 PM

   5. Neither should seek hegemony in the Asia-Pacific region or in any other region of the world and each is opposed to efforts by any other country or group of countries to establish such hegemony.

**The PRC often refers to the US as "The hegemon".**
Title: Re: China
Post by: G M on October 02, 2010, 08:12:49 PM
http://www.asahi.com/english/TKY201006200174.html

China seeks to neutralize Japan-U.S. security treaty

THE ASAHI SHIMBUN

2010/06/21

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photoA Chinese navy Kilo-class submarine cruises in waters near the Okinawa main island. (THE DEFENSE MINISTRY)

A rapid buildup of nuclear weapons by China and its apparent determination to restrict United States forces' access to the western Pacific is threatening to transform the balance of power in East Asia.

Tensions in the region were demonstrated at a meeting of the foreign ministers of Japan, China and and South Korea in Gyeongju in South Korea on May 15.

Though the main topic of the meeting was the sinking of the South Korean corvette Cheonan, a testy exchange between the foreign ministers of Japan and China showed strategic concerns simmering below the surface.

Japanese Foreign Minister Katsuya Okada told the Chinese representative, "Among the countries that possess nuclear weapons, only China is increasing its nuclear weapons."

This angered Chinese Foreign Minister Yang Jiechi. Without turning on his microphone, he said, "There is nothing to justify being told such a thing by Japan, which is protected by the U.S. nuclear umbrella." He then started to leave his seat.

Wednesday will mark the 50th anniversary of the beginning of the revised Japan-U.S. Security Treaty, but China's increasing military assertiveness is raising questions about the continuing efficacy of Japan's defense strategy.

China is estimated to have about 400 nuclear warheads, a fraction of the more than 5,000 warheads held by the United States. China has declared that it will not use its nuclear weapons for preemptive strikes.

"We continue to maintain the minimum-level nuclear capabilities that are required for the safety of our country," said Ma Zhaoxu, director-general of the Information Department of the Chinese Foreign Ministry.

But, despite the soothing words, China is quietly transforming its long range nuclear capabilities. New missiles include the Dong Feng 31A, an intercontinental ballistic missile with a range of 14,000 kilometers.

The shorter range Dong Feng 21C missile has Japan well within its range and a new type of anti-ship ballistic missile can pursue vessels at supersonic speeds.

China is also constructing underground bases for nuclear missiles in mountainous areas in Henan and Shanxi provinces, aimed at protecting them from preemptive strikes.

The missile development is a vital part of an emerging "anti-access" theme in Chinese military strategy aimed at preventing U.S. aircraft carriers from advancing into sea areas near China in the case of a stand-off between the two countries over Taiwan.

"If we place U.S. aircraft carriers and U.S. bases in Japan within the range of our missiles, the U.S. fleets will not be able to enter the western Pacific freely. As a result, we will make the Japan-U.S. Security Treaty ineffective," said a source close to China's military.

Submarines are another important pillar of the anti-access strategy. In recent years, China has developed state-of-the-art Song-class and Kilo-class submarines with quiet propulsion technologies that make them difficult to detect.

The new technology has allowed much more aggressive deployment. The Chinese military has told U.S. military officials that two Chinese submarines are permanently stationed in waters near the United States.

In October 2006, a Chinese Song-class submarine surfaced about eight kilometers from the U.S. aircraft carrier Kitty Hawk near Okinawa Prefecture.

The U.S. ship had been unaware of the Chinese submarine's presence and was within the range of the Chinese submarine's torpedoes.

The Chinese navy flexed its muscles again in April this year, when a fleet of 10 vessels, including two Kilo-class submarines, passed between the main Okinawa island and Miyakojima island.

A Chinese helicopter came within about 90 meters of a Japanese Maritime Self-Defense Force's escort warship during the incident.

The Chinese Defense Minister Liang Guanglie told a delegation of Japanese Self-Defense Forces' officers in Beijing on June 11 that the passage was part of a training exercise and was not a violation of international law.

"Though the Self-Defense Forces' reconnaissance planes frequently come to (air space over) the Yellow Sea (between China and the Korean Peninsula), the Chinese military forces are not obstructing them. We hope that the Japanese side do not watch us too closely either," Liang said.

However, a military source in Beijing said the maneuver had a more profound motivation: "The passage was made to demonstrate to Japan and the United States the improvement in China's anti-access capabilities in the East China Sea."

According to the Japanese Defense Ministry, Chinese destroyers have been detected near Miyakojima island and Okinotorishima island five times since 2008.

One of the Japanese officers present at the meeting with Liang said, "We felt that China has established superiority and that Chinese naval power is already greater than Japan's."

Chinese military officers say that China's military buildup is focused on Taiwan.

The primary target of its increasing strategic assertiveness is not Japan but the United States, which has been selling weapons to Taiwan. But China recognizes that accidental clashes with Japan in the East China Sea may be a side effect of the policy.

When Chinese Premier Wen Jiabao met with then Japanese Prime Minister Yukio Hatoyama in Japan in late May, he proposed re-establishing a hotline between the leaders. The hotline had not yet been set up and the Chinese side appeared to have gone cold on the idea.

At the same meeting, the two leaders agreed to improve other crisis management mechanisms to deal with confrontations at sea.

Meanwhile, the sinking of the South Korean corvette Cheonan in late March raised questions about Japanese and South Korean security cooperation. The Japanese government was slow in responding to the incident and did not ask to participate in the investigation into the causes of the incident.

The Cheonan's sinking, which the international investigation blamed on Pyongyang, was a stark reminder of the military power of North Korea. The reclusive country has up to 180,000 special military troops, weapons of mass-destruction, ballistic missiles, and submarine capabilities, all of which threaten both South Korea and Japan's security.

Japanese officials are pushing for greater cooperation with South Korea on security issues but the response from the South Korean side has often been unenthusiastic.

There is a strong resistance in South Korea to establishing a military alliance with Japan because of the friction resulting from Japan's occupation of the Korean Peninsula. There is also concern about China's opposition to such an alliance.

Nevertheless, there is an understanding among some in the South Korean military of the two country's common interests.

A South Korean officer said, "An (military) alliance (between South Korea and Japan) may be impossible. But both countries always need to maintain high-level friendly relations."
Title: Re: China
Post by: G M on October 02, 2010, 09:22:13 PM
http://www.srilankaguardian.org/2010/10/finding-achilles-heel-of-china.html

Finding the Achilles' heel of China
Posted by Sri Lanka Guardian B.Raman, China, worldview 8:33:00 AM

Visiting Chinese Premier Wen Jiabao addresses reporters during a news conference in Athens October 2, 2010. China offered on Saturday to buy Greek government bonds in a show of support for the country whose debt burden triggered a crisis for the euro zone and required an international bailout. (-Reuters Photo )
by B.Raman

(October 03, Chennai, Sri Lanka Guardian) The war of nerves and words between China and Japan over the ownership of the Senkaku Islands (the Chinese call it the Diayou Islands) in the East China Sea continues despite the Japanese release of the Captain of a Chinese fishing trawler whom they had arrested on September 8,2010, for criminal trespass into the Japanese territorial waters around the Japanese-administered islands.

2.The Chinese are yet to release one of the four Japanese employees of a construction company whom they had arrested apparently in retaliation for the Japanese arrest of the fishing trawler's Captain. The abrupt Japanese release of the Captain after having initially given evidence of its intention to prosecute him followed the Chinese arrest of the four Japanese employees.

3.Rightly or wrongly, this has given rise to a perception in Japan that its Prime Minister Naoto Kan has let himself be bullied by China. The whole incident as it has been handled by the Kan Government has been seen by sections of the media and public in Japan as a humiliation of Japan by China.As if this perceived humiliation is not enough, Bejing is insisting that before the relations between the two countries could be normalised, Japan should apologise for the "illegal" arrest of the Captain and for his "wrongful" detention.If Mr.Kan concedes this demand, it would amount to his admitting indirectly that the group of islands is Chinese and not Japanese territory.

4.There is disappointment in Japan over the failure of the Barack Obama Administration to come out strongly in support of Japan in this war of nerves with China. The US recognises the Senkaku as Japanese-administered since 1972, but has not recognised Japanese claims of sovereignty over the Islands. At the same time, there is no denial of the interpretation that the protective provisions of the US-Japan security treaty cover the Senkaku islands too.

5. The Japanese were hoping that the US would come out as strongly against Chinese machinations in respect of the East China Sea islands as Mrs.Hillary Clinton, the Secretary of State, did in respect of the South China Sea islands during her intervention at a meeting of the ASEAN Regional Forum (ARF) in Hanoi earlier this year. Surprisingly and inexplicably, the US has contented itself with statements merely calling for a peaceful resolution of the Sino-Japanese differences.

6. Attention has not been drawn by analysts to the blatant double standards in Chinese diplomacy as seen from its policy towards India on the Kashmir issue and its policy towards Japan on the Senkaku issue. The Chinese have been saying that the recent changes in favour of Pakistan in their stance on Kashmir is an individual issue which should not be allowed to have an impact on the over-all relations between India and China. But, they have refused to treat the arrest of the Chinese Captain by the Japanese as an individual issue which should not affect the over-all Sino-Japanese relations.

7. They have made the entire Sino-Japanese relations a hostage to this single issue. They have allegedly stopped the export of rare earth elements to Japan on which the Japanese high-tech industries are dependent. They have suspended high-level contacts between the two countries. Prime Minister Wen Jiabao declined to meet the Japanese Prime Minister when the two were in New York last week for the UN General Assembly session. Beijing has discouraged its tourists from visiting Japan. It has cancelled the visit of Japanese delegations to the Shanghai Expo.

8. The only factors that have acted as a check on the Chinese bullying of Japan are Beijing's uncertainty over the implications of the US-Japan security treaty in so far as the Senkaku group is concerned and fears that if Beijing continued to over-react it might provide fresh oxygen to Japanese militarists.


9. In a statement before the Japanese Parliament on October 1, Prime Minister Kan said: "The rise of China has been remarkable in recent years,but we are concerned about its strengthening defence capabilities without transparency and accelerating maritime activities spanning from the Indian Ocean to the East China Sea. The Senkaku islands are an integral part of our country, historically and under international law.Good relations with China - Japan's largest trading partner - are vital to both countries, but China must act as a responsible member of the international community. Japan needed to adopt more active foreign and defence policies to deal with uncertainty and instability that exist in areas surrounding our country."

10. His statement followed remarks by China's Foreign Ministry spokesman the previous day urging Japan to "stop making irresponsible remarks and safeguard the larger interests of bilateral relations with concrete actions". The spokesman, Jiang Yu, said: "We are willing to resolve our disputes through friendly negotiations but the Chinese Government's and people's will and resolve are unswerving on issues involving China's territorial integrity and sovereignty."

11. The regional "uncertainty and instability" consequent upon China's over-assertiveness in matters relating to territorial disputes should be of concern not only to Japan, but also to India, Vietnam and the Philippines. India's concerns over its long-pending border dispute with China and over the stepped-up Chinese support to Pakistan in the nuclear field and in the construction of road and rail infrastructure in Pakistan-occupied Gilgit-Baltistan are legitimate. So are the concerns of Vietnam and the Philippines regarding the Chinese intentions and capabilities in the South China Sea.

12. The perceptions and concerns of India, Japan, Vietnam and the Philippines relating to China should bring them together to discuss among themselves as to how to counter the over-assertiveness of China without creating a confrontational situation and without damaging the positive dimensions of their respective bilateral relations with China. Their discussions among themselves should cover the strong as well as the weak points of China--- the strong points against which they should protect themselves and the weak points which they could exploit.

13. An editorial carried by the Chinese Communist Party controlled "Global Times" on September 21 under the title "Finding the Achilles' Heel of Japan" (annexed below) said: "Provoking China comes with a heavy price tag. Finding Japan's soft spot will help end its hostile policies against China during its rise."

14. There is a need for India, Japan, Vietnam and the Philippines to find the soft spots of China. Pakistan could turn out to be one such soft spot. India knows Gilgit-Baltistan and the Chinese-controlled Xinjiang better than the Chinese. North Korea, where a new leadership is emerging, could be another. The Japanese know North Korea as well as the Chinese do. India, Japan, Vietnam and the Philippines should make overtures to the new, emerging leadership in North Korea and help it to free North Korea of its linkages with China and develop its prosperity. This is the time for India to seriously consider establishing contacts with the new North Korean leadership and invite Kim Jong-Un, the heir-apparent to Kim Jong-il, to India.

15. New Delhi's Look East policy as it has evolved till now has over-focussed on our relations with the ASEAN. The relations with the ASEAN countries continue to be important. It is time to give an East Asia dimension too to our Look East policy.

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com )
Title: Re: China
Post by: Crafty_Dog on October 02, 2010, 11:48:51 PM
Reading the Indian perspective is usually a worthy investment of time.  Interesting find GM.
Title: NorKs, China and Obama's weakness
Post by: G M on October 03, 2010, 05:08:17 AM
http://scotlandonsunday.scotsman.com/news-analysis/Gerald-Warner-We-mock-the.6562418.jp?articlepage=2

World Vision has calculated that in the 1990s the regime's Marxist agricultural policies killed two million North Koreans, with fresh graves being raided for flesh by starving people. Concentration camps have killed another 1.5 million. Women prisoners are tortured and sold as sex slaves; babies are either forcibly aborted or delivered and then smothered, or have their throats cut. These details will probably be familiar to you, because you will have seen them denounced on the many demonstrations against the regime organised by the professional protesters of the British left - will you not?

Any interpretation of the inner workings of the Pyongyang regime is necessarily largely speculative. The armed forces could field 5.8 million men if they invaded South Korea, bolstered by the largest stocks of chemical and biological weapons on the planet. In 2006 North Korea carried out a successful nuclear test and has continued to develop its nuclear capacity. In April 2009, much Western derision was directed against North Korea because of the supposed "failure" of its Taepodong-2 missile test. That mockery was misdirected: the missile's 2,000-mile flight was twice as long as any preceding effort and it impressed Pyongyang's ballistic missile customers in Iran, Syria and elsewhere.

The feebleness of Barack Obama's response both to that incident and the sinking of a South Korean naval vessel signalled the lack of Western political will to confront this aggressor regime. The West took refuge in the belief that China could rein in this errant Communist state. That is questionable. Mao's dictum that the relationship between China and North Korea was as close as "lips and teeth" no longer holds. China is wary of confronting Pyongyang, for fear of being publicly defied and losing face. The maverick regime continues to threaten South Korea, Japan, Singapore and US carrier groups in adjacent waters. Next month's G20 summit in Seoul could well provoke an act of aggression from Pyongyang, encouraged by proven Western impotence and eager to assert its reinvigoration by the newly secured succession of the third generation of what is now an undisguised hereditary monarchy.
Title: Re: China
Post by: DougMacG on October 03, 2010, 10:14:09 AM
"Taiwan formally declaring independence would absolutely trigger a war with China. The Taiwanese don't want a formal declaration."

GM, thank you.  My thought was purely hypothetical.  We have no leadership to stand up to China on anything.
Title: Re: China
Post by: G M on October 03, 2010, 11:32:07 AM
Nope. It's tragic that lots of future horrors will happen because too many people were stupid enough to vote Obama into office. I just hope Taiwan, Israel and the US can survive.
Title: POTH: Harsh tone a "
Post by: Crafty_Dog on October 12, 2010, 08:49:30 AM
BEIJING — Defense Secretary Robert M. Gates met his Chinese counterpart, Liang Guanglie, in Vietnam on Monday for the first time since the two militaries suspended talks with each other last winter, calling for the two countries to prevent “mistrust, miscalculations and mistakes.”

His message seemed directed mainly at officers like Lt. Cmdr. Tony Cao of the Chinese Navy.
Days before Mr. Gates arrived in Asia, Commander Cao was aboard a frigate in the Yellow Sea, conducting China’s first war games with the Australian Navy, exercises to which, he noted pointedly, the Americans were not invited.

Nor are they likely to be, he told Australian journalists in slightly bent English, until “the United States stops selling the weapons to Taiwan and stopping spying us with the air or the surface.”

The Pentagon is worried that its increasingly tense relationship with the Chinese military owes itself in part to the rising leaders of Commander Cao’s generation, who, much more than the country’s military elders, view the United States as the enemy. Older Chinese officers remember a time, before the Tiananmen Square protests in 1989 set relations back, when American and Chinese forces made common cause against the Soviet Union.

The younger officers have known only an anti-American ideology, which casts the United States as bent on thwarting China’s rise.

“All militaries need a straw man, a perceived enemy, for solidarity,” said Huang Jing, a scholar of China’s military and leadership at the National University of Singapore. “And as a young officer or soldier, you always take the strongest of straw men to maximize the effect. Chinese military men, from the soldiers and platoon captains all the way up to the army commanders, were always taught that America would be their enemy.”

The stakes have increased as China’s armed forces, once a fairly ragtag group, have become more capable and have taken on bigger tasks. The navy, the centerpiece of China’s military expansion, has added dozens of surface ships and submarines, and is widely reported to be building its first aircraft carrier. Last month’s Yellow Sea maneuvers with the Australian Navy are but the most recent in a series of Chinese military excursions to places as diverse as New Zealand, Britain and Spain.

China is also reported to be building an antiship ballistic missile base in southern China’s Guangdong Province, with missiles capable of reaching the Philippines and Vietnam. The base is regarded as an effort to enforce China’s territorial claims to vast areas of the South China Sea claimed by other nations, and to confront American aircraft carriers that now patrol the area unmolested.

Even improved Chinese forces do not have capacity or, analysts say, the intention, to fight a more able United States military. But their increasing range and ability, and the certainty that they will only become stronger, have prompted China to assert itself regionally and challenge American dominance in the Pacific.

That makes it crucial to help lower-level Chinese officers become more familiar with the Americans, experts say, before a chance encounter blossoms into a crisis.

“The P.L.A. combines an odd combination of deep admiration for the U.S. armed forces as a military, but equally harbors a deep suspicion of U.S. military deployments and intentions towards China,” David Shambaugh, a leading expert on the Chinese military at George Washington University, said in an e-mail exchange, referring to the People’s Liberation Army.

“Unfortunately, the two militaries are locked in a classic security dilemma, whereby each side’s supposedly defensive measures are taken as aggressive action by the other, triggering similar countermeasures in an inexorable cycle,” he wrote. “This is very dangerous, and unnecessary.”

From the Chinese military’s view, this year has offered ample evidence of American ill will.

The Chinese effectively suspended official military relations early this year after President Obama met with the Dalai Lama, the Tibetan religious leader, and approved a $6.7 billion arms sale to Taiwan, which China regards as its territory.

Since then, the Chinese military has bristled as the State Department has offered to mediate disputes between China and its neighbors over ownership of Pacific islands and valuable seabed mineral rights. And when the American Navy conducted war games with South Korea last month in the Yellow Sea, less than 400 miles from Beijing, younger Chinese officers detected an encroaching threat.

===========

Page 2 of 2)



The United States “is engaging in an increasingly tight encirclement of China and constantly challenging China’s core interests,” Rear Adm. Yang Yi, former head of strategic studies at the Chinese Army’s National Defense University, wrote in August in the People’s Liberation Army Daily, the military newspaper. “Washington will inevitably pay a costly price for its muddled decision.”


In truth, little in the American actions is new. Mr. Obama’s predecessors also hosted the Dalai Lama. American arms sales to Taiwan were mandated by Congress in 1979, and have occurred regularly since then. American warships regularly ply the waters off China’s coast and practice with South Korean ships.

But Chinese military leaders seem less inclined to tolerate such old practices now that they have the resources and the confidence to say no.

“Why do you sell arms to Taiwan? We don’t sell arms to Hawaii,” said Col. Liu Mingfu, a China National Defense University professor and author of “The China Dream,” a nationalistic call to succeed the United States as the world’s leading power.

That official military relations are resuming despite the sharp language from Chinese Army officials is most likely a function of international diplomacy. President Hu Jintao is scheduled to visit Washington soon, and American experts had predicted that China would resume military ties as part of an effort to smooth over rough spots before the state visit.

Some experts see increased contact as critical. A leading Chinese expert on international security, Zhu Feng of Peking University, says that the Chinese military’s hostility toward the United States is not new, just more open. And that, he says, is not only the result of China’s new assertiveness, but its military’s inexperience on the world stage.

“Chinese officers’ international exposure remains very limited,” Mr. Zhu said. “Over time, things will improve very, very significantly. Unfortunately, right now they are less skillful.”

Greater international exposure is precisely what American officials would like to see. Americans hope renewed cooperation will lead to more exchanges of young officers and joint exercises.

“It’s time for both militaries to reconsider their tactics and strategy to boost their friendship,” Mr. Zhu said. “The P.L.A. is increasing its exposure internationally. So what sort of new rule of law can we figure out to fit the P.L.A. to such new exposure? It’s a challenge not just for China, but also for the U.S.
Title: Re: China
Post by: G M on October 12, 2010, 09:04:03 AM
http://www.time.com/time/world/article/0,8599,2024090,00.html

On Sept. 29, the House of Representatives passed a bill with overwhelming support from both Democrats and Republicans. It would punish China for keeping its currency undervalued by slapping tariffs on Chinese goods. Everyone seems to agree that it's about time. But it isn't. The bill is at best pointless posturing and at worst dangerous demagoguery. It won't solve the problem it seeks to fix. More worrying, it is part of growing anti-Chinese sentiment in the U.S. that misses the real challenge of China's next phase of development. (See "Geithner: We Need to Toughen Up with China.")

There's no doubt that China keeps the renminbi, its currency, undervalued so it can help its manufacturers sell their toys, sweaters and electronics cheaply in foreign markets, especially the U.S. and Europe. But this is only one of a series of factors that have made China the key manufacturing base of the world. (The others include low wages, superb infrastructure, hospitality to business, compliant unions and a hard-working labor force.) A simple appreciation of the renminbi will not magically change all this. (See pictures of China's infrastructure boom.)

Chinese companies make many goods for less than 25% of what they would cost to manufacture in the U.S. Making those goods 20% more expensive (because it's reasonable to suppose that without government intervention, China's currency would increase in value against the dollar by about 20%) won't make American factories competitive. The most likely outcome is that it would help other low-wage economies like Vietnam, India and Bangladesh, which make many of the same goods as China. So Walmart would still stock goods at the lowest possible price, only more of them would come from Vietnam and Bangladesh. Moreover, these other countries, and many more in Asia, keep their currencies undervalued as well. As Helmut Reisen, head of research for the Development Center at the Organisation for Economic Co-operation and Development, wrote recently in an essay, "There are more than two currencies in the world."

We've seen this movie before. From July 2005 to July 2008, under pressure from the U.S. government, Beijing allowed its currency to rise against the dollar by 21%. Despite that hefty increase, China's exports to the U.S. continued to grow mightily. Of course, once the recession hit, China's exports slowed, but not as much as those of countries that had not let their currencies rise. So even with relatively pricier goods, China did better than other exporting nations. (See pictures of the making of modern China.)

Look elsewhere in the past and you come to the same conclusion. In 1985 the U.S. browbeat Japan at the Plaza Accord meetings into letting the yen rise. But the subsequent 50% increase did little to make American goods more competitive. Yale University's Stephen Roach points out that since 2002, the U.S. dollar has fallen in value by 23% against all our trading partners, and yet American exports are not booming. The U.S. imports more than it exports from 90 countries around the world. Is this because of currency manipulation by those countries, or is it more likely a result of fundamental choices we have made as a country to favor consumption over investment and manufacturing? (Comment on this story.)

Coming: The New China
The real challenge we face from China is not that it will keep flooding us with cheap goods. It's actually the opposite: China is moving up the value chain, and this could constitute the most significant new competition to the U.S. economy in the future. (See "Five Things the U.S. Can Learn from China.")

For much of the past three decades, China focused its efforts on building up its physical infrastructure. It didn't need to invest in its people; the country was aiming to produce mainly low-wage, low-margin goods. As long as its workers were cheap and worked hard, that was good enough. But the factories needed to be modern, the roads world-class, the ports vast and the airports efficient. All these were built with a speed and on a scale never before seen in human history.

Now China wants to get into higher-quality goods and services. That means the next phase of its economic development, clearly identified by government officials, requires it to invest in human capital with the same determination it used to build highways. Since 1998, Beijing has undertaken a massive expansion of education, nearly tripling the share of GDP devoted to it. In the decade since, the number of colleges in China has doubled and the number of students quintupled, going from 1 million in 1997 to 5.5 million in 2007. China has identified its nine top universities and singled them out as its version of the Ivy League. At a time when universities in Europe and state universities in the U.S. are crumbling from the impact of massive budget cuts, China is moving in exactly the opposite direction. In a speech earlier this year, Yale president Richard Levin pointed out, "This expansion in capacity is without precedent. China has built the largest higher-education sector in the world in merely a decade's time. In fact, the increase in China's postsecondary enrollment since the turn of the millennium exceeds the total postsecondary enrollment in the United States."

The Benefits of Brainpower
What does this unprecedented investment in education mean for China — and for the U.S.? Nobel Prize–winning economist Robert Fogel of the University of Chicago has estimated the economic impact of well-trained workers. In the U.S., a high school-educated worker is 1.8 times as productive, and a college graduate three times as productive, as someone with a ninth-grade education. China is massively expanding its supply of high school and college graduates. And though China is still lagging far behind India in the services sector, as its students learn better English and train in technology — both of which are happening — Chinese firms will enter this vast market as well. Fogel believes that the increase in high-skilled workers will substantially boost the country's annual growth rate for a generation, taking its GDP to an eye-popping $123 trillion by 2040. (Yes, by his estimates, in 2040 China would be the largest economy in the world by far.) (See portraits of Chinese workers.)

Whether or not that unimaginable number is correct — and my guess is that Fogel is much too optimistic about China's growth — what is apparent is that China is beginning a move up the value chain into industries and jobs that were until recently considered the prerogative of the Western world. This is the real China challenge. It is not being produced by Beijing's currency manipulation or hidden subsidies but by strategic investment and hard work. The best and most effective response to it is not threats and tariffs but deep, structural reforms and major new investments to make the U.S. economy dynamic and its workers competitive.


Read more: http://www.time.com/time/world/article/0,8599,2024090,00.html#ixzz12A35Rai4
Title: Strat" REE part one
Post by: Crafty_Dog on October 12, 2010, 09:40:48 AM
second post of the morning:


China and the Future of Rare Earth Elements
October 12, 2010 | 1213 GMT
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A recent diplomatic spat between China and Japan has heightened territorial tensions and called attention to China’s growing forcefulness with foreign powers. One of the more intriguing aspects of this development was China’s suspension of the export of “rare earth” elements (REE) to Japan. REE comprise 17 metallic elements with a variety of modern industrial and commercial applications ranging from petroleum refining to laptop computers to green energy applications to radar. China produces roughly 95 percent of the global supply of REE and Japan is the largest importer. China’s disruption of REE shipments to Japan has caused alarm among other importer countries, bringing new urgency to the search for new supplies and substitutes.


The China Factor

Chinese control of the base of the REE supply chain has increasingly made China the go-to location for the intermediate goods made from REE. In time, China hopes to extend production into the final products as well. As new REE supplies cannot be brought online overnight, the Chinese will enjoy a powerful position in the short term. The Chinese Ministry of Commerce reports that China has ratcheted down REE export quotas by an average of 12 percent per year over the past five years, further leveraging this position. Reflecting that and the current China-Japan spat, the average price for REE has tripled in the year to date.

Rare earth elements are not as rare as their name suggests, however. Before the Chinese began a dedicated effort to mass-produce REE in 1979, there were several major suppliers. Pre-China, the United States was the largest producer. Appreciable amounts of REE were also produced in Australia, Brazil, India, Malaysia and Russia. Any sort of real monopoly on REE, therefore, is not sustainable in the long-run. But before one can understand the future of the REE industry, one must first understand the past.

The story of REE is not the story of cheap Chinese labor driving the global textile industry into the ground. Instead, it is a much more familiar story (from STRATFOR’s view) of the Chinese financial system having a global impact.

Unlike Western financial systems, where banks grant loans based on the likelihood that the loans will be repaid, the primary goal of loans in China is promoting social stability through full employment. As such, the REE industry — like many other heavy or extractive industries — was targeted with massive levels of subsidized loans in the mid-1980s. At the same time, local governments obtained more flexibility in encouraging growth. The result was a proliferation of small mining operations specializing in REE. Production rates increased by an annual average of 40 percent in the 1980s. They doubled in the first half of the 1990s, and then doubled again with a big increase in output just as the world tipped into recession in 2000. Prices predictably plunged, by an average of 95 percent compared to their pre-China averages.

Most of these Chinese firms rarely turned a profit. Some industry analysts maintain that for a good portion of the 2000s, most of them never even recovered their operating costs. At the same time, an illegal REE mining industry ran rampant, earning meager profits by disregarding worker safety and the environment and ruthlessly undercutting competing prices. With an endless supply of below-market loans, it did not matter if the legitimate mining concerns were financially viable. It was in the environment of continued Chinese production despite massive losses that nearly every other REE producer in the world closed down — and that the information technology revolution took root.

In fact, if not for China’s massive overproduction, the technological revolution of the past 15 years would not have looked the same. In all likelihood, it would have been slowed considerably.

Before 1995, the primary uses for REE were in the manufacture of cathode ray tubes (primarily used in television sets before the onset of plasma and LCD screens) and as catalysts in the refining industry and in catalytic converters (a device used in cars to limit exhaust pollution). Their unique properties have since made them the components of choice for wind turbines, hybrid cars, laptop computers, cameras, cellular phones and a host of other items synonymous with modern life. Chinese overproduction in the 2000s — and the price collapses that accompanied that overproduction until just this year — allowed such devices to go mainstream.

With numerous large REE deposits outside China, the long-term sustainability of a monopoly is questionable at best. This does not mean China will not create some destabilizing effects in the medium term as it attempts to leverage the current imbalance to its benefit, however. That its prolific, financially profitless and environmentally destructive production of REE has largely benefited foreign economies is not lost on China, so it is pushing a number of measures to alter this dynamic. On the supply side, China continues to curb output from small unregulated mining outfits and to consolidate production into large state-controlled enterprises, all while ratcheting down export quotas. On the demand side, Chinese industry’s gradual movement up the supply chain toward more value-added goods means more demand will be sequestered in the domestic economy. In fact, in the years just before the financial crisis and accompanying recession, global demand outpaced China’s ability (or willingness) to supply the market, resulting in bouts of price volatility. As the economic recovery proceeds, it is no stretch to envision outright gaps in exports from China within two to five years, even without the kinds of political complications the REE market has suffered in recent days.

Many states already have REE-specific facilities in place able to restart mining in response to this year’s price surge.

The premier Australian REE facility at Mount Weld plans to ramp up to 19,000 metric tons of rare earth oxides by the end of 2011. The top American site — Mountain Pass in California — aims to produce a similar amount by the end of 2012. Those two sites will then collectively be producing 25-30 percent of global demand.

Before China burst on the scene, most REE production was not from REE-specific mines. REE are often found co-mingled not simply with each other, but in the ores extracted for the production of aluminum, titanium, uranium and thorium. As China drove prices down, however, most of these facilities ceased extracting the difficult-to-separate REE. There is nothing other than economics stopping these facilities from re-engaging in REE production, although it will take at least a couple of years for such sites to hit their stride. Such locations include sites in Kazakhstan, Russia, Mongolia, India and South Africa as well as promising undeveloped sites in Vietnam, Canada (Thor Lake) and Greenland (Kvanefjeld). And while few have been exploring for new deposits since the 1970s given the lack of an economic incentive, higher prices will spark a burst of exploration.

Getting from here to there is harder than it sounds, however. Capital to fuel development will certainly be available as prices continue to rise, but opening a new mine requires overcoming some significant hurdles. Regardless of jurisdiction, a company needs to secure the lease (usually from the central government) and obtain a considerable variety of permits, not the least of which is for handling and storing the toxic — and in the case of REE, radioactive — waste from the mine. Even if the governments involved want to streamline things, vested interests such as the environmental lobby and indigenous groups appear at every stage of permitting to fight, lobby and sue to delay work. And depending on the local government, successfully mining a deposit could involve a considerable amount of political uncertainty, bribe paying or harassment. Only after clearing these hurdles can the real work of building infrastructure, sourcing inputs like electricity and water, and actually digging up rocks begin — itself a herculean task.

To add more complication, many of the best prospects are in jurisdictions undergoing significant changes. In the United States, activists are working to reform the federal mining law dating to 1872, which has ensured that U.S. jurisdictions remain among the most attractive mining destinations in the world. Initiatives like the Hardrock Mining and Reclamation Act of 2007 would drastically constrain mineral companies and increase project costs across the board. In Australia, ongoing negotiations over the implementation of a so-called “super tax” has dampened enthusiasm in one of the world’s premier mining jurisdictions and home to Lynas Corporation’s Mount Weld project. The tax, which sought to impose a 40 percent tax on mining profits, has since been watered down, but the debacle has left a discernable mark on the country’s resource extraction industry. And for an industry that is positively allergic to uncertainty, events like the BP oil spill in the Gulf of Mexico and the Chilean mine collapse only portend tighter regulation worldwide.

Re-opening an existing mine is somewhat easier since some infrastructure remains in place, and the local community is accustomed to having a mine. Old equipment may need to be brought up to spec, and the regulatory questions will still affect how miners and bankers view the project’s profitability, but the figuring margins are simpler when the basic geology and engineering already have been done.

Unfortunately, there is more to building a new REE supply chain than simply obtaining new sources of ore. A complex procedure known as beneficiation must be used to separate the chemically similar rare earth metals from the rest of the ore it was mined with. Beneficiation proceeds through a physical and then chemical route. The latter differs greatly from site to site, as the composition of the ore is deposit-specific and factors into the choice of what must be very precise reaction conditions such as temperature, pH and reagents used. The specificity and complexity of the process make it expensive, while the radioactivity of some ores and the common use of chemicals such as hydrochloric and sulfuric acid invariably leave an environmental footprint. (One reason the Chinese produced so much so fast is that they did not mind a very large environmental footprint.) The chemical similarity among the REE that was useful to this point now becomes a nuisance, as the following purification stage — the details of which we will leave out to avoid a painfully long chemistry lecture — requires the isolation of individual REE. This stage is characterized by extraordinary complexity and cost as well.

At this point, one still does not have the REE metal, but instead an oxide compound. The oxide must now be converted into the REE’s metallic form. Although some pure metals are created in Japan, China dominates this part of the supply chain as well.

In any other industry, this refining/purification process would be a concern that investors and researchers would constantly be tackling, but there has been no need, as Chinese overproduction removed all economic incentive from REE production research for the past 20 years (and concentrated all of the pollution in remote parts of China). So any new producer/refiner beginning operations today is in essence using technology that has not experienced the degree of technological advances that other commodities industries have in the past 25-30 years. It is this refining/purification process rather than the mining itself that is likely to be the biggest single bottleneck in re-establishing the global REE supply chain. It is also the one step in the process where the Chinese hold a very clear competitive advantage. Since the final tooling for intermediate parts has such a high value added, and since most intermediate components must be custom-made for the final product, whoever controls the actual purification of the metals themselves forms the base of that particular chain of production. Should the Chinese choose to hold that knowledge as part of a means of capturing a larger portion of the global supply chain, they certainly have the power to do so. And this means that short of some significant breakthroughs, the Chinese will certainly hold the core of the REE industry for at least the next two to three — and probably four to five — years.

Luckily, at this point the picture brightens somewhat for those in need of rare earths. Once the REE have been separated from the ore and from each other and refined into metallic form, they still need to be fashioned into components and incorporated into intermediate products. Here, global industry is far more independent. Such fashioning industries require the most skill and capital, so as one might expect, these facilities were the last stage of the REE supply chain to feel competitive pressure from China. While some have closed or relocated with their talent to China, many component fabrication facilities still exist, most in Japan, many in the United States, and others scattered around Europe.

All told, a complete regeneration of the non-Chinese REE system will probably take the better part of the decade. And because most REE are found co-mingled, there is not much industry can do to fast-track any particular mineral that might be needed in higher volumes. And this means many industries are in a race against time to see if alternative REE supplies can be established before too much economic damage occurs.
Title: REE 2
Post by: Crafty_Dog on October 12, 2010, 09:41:30 AM

Affected Industries

Everyone who uses REE — which is to say, pretty much everyone — is going to feel a pinch as REE rapidly rise in value back toward their pre-Chinese prices. But some industries are bound to feel less a pinch than a death grip. REE applications broadly fall into six different categories, with the first being the least impacted by price increases and the sixth being the most impacted.

The first category consists of cerium users. Cerium is the most common REE and the most critical for refining and catalytic converters. As the average global crude oil gets heavier, cerium is needed more and more to “crack” the oil to make usable products. As clean air requirements tighten globally, automobile manufacturers need more cerium to ensure cars run as cleanly as possible. Cerium thus remains in high demand.

Luckily for cerium users, the steady phasing-out of cathode ray tubes means that supplies rapidly are being freed up for other applications. Between the sudden demand drop and ongoing REE production in China, there are actually substantial cerium stockpiles globally. This means that cerium users are not likely to face serious price increases even though their REE has the most inelastic demand. Petroleum and automotive companies use the most cerium, which also is used for polishing agents for glass and semiconductor chips, UV-proof glass, self-cleaning ovens, and some steel alloys.

The second category comprises non-cerium goods with inelastic demand. This includes items that will be built regardless of cost, either because they are irreplaceable or because they are luxury items. This list includes satellites, which use yttrium in their communications systems; europium, used in LED screens in TVs; lanthanum, used for fish-eye lenses in iPhones; scandium, used for lighting systems in movie studios; and neodymium and gadolinium, indispensable for MRIs. These are all items that people — in particular Americans — would not stop purchasing without a large increase in prices. Luckily, while REE are critical to these devices, they make up a rather small proportion of their total cost. So while the world will certainly see REE price increases, those price increases are unlikely to affect the luxury market.

The third category comprises defense goods. Somewhat similar to luxury goods in terms of how REE demand and prices will affect them, demand for defense goods is extremely unlikely to shift due to something as minor as a simple price increase. Military technology that uses REE — ranging from the samarium in the guidance module in joint-direct attack munition kits to the yttrium used in the “magic lantern” that locates subsea mines — is going to be in demand regardless of price. Demand for urgently needed military technology is quite inelastic regardless of price in the short run, and militaries — in particular the American military — have robust budgets that dwarf the additional costs of components whose contribution to the final cost is negligible. The only reason STRATFOR places defense uses as likely to suffer a greater impact than luxury goods is that China itself is aiming to be a producer of luxury goods, so such products will most likely have a Chinese supply chain. By contrast, few militaries in the world with the high-end capabilities likely to be impacted by REE prices are interested in purchasing military technologies from China, so there will be a large constituency pushing for alternative production of REE as well as a large market for alternative products. This could turn out to be a boon for the American industry: Anyone seeking to increase REE production is going to find a friend in the Pentagon, and no one can lobby Congress quite like the military.

The fourth category comprises goods in which REE are a critical component and a significant price impact but that are made by industries with a long habit of adapting to adverse price shifts. The poster child for this is the Japanese auto industry. There is a long list of vehicle systems that the Japanese have adapted over the years as the price of various inputs has skyrocketed. In 2000, the Russian government banded together the country’s disparate platinum group metals (such as palladium and platinum, critical in the manufacture of catalytic converters) exports into a single government-controlled cartel. Platinum group metal prices subsequently skyrocketed. By March 2001, Honda had announced a new advance that reduced the need for palladium by roughly half. Platinum group metal prices subsequently plummeted.

In anticipation of this type of disruption, the Japanese have been developing substitutes to REE. Presently, the Toyota Prius uses roughly one kilogram of neodymium. At pre-2010 spike prices, that neodymium used in one Prius cost $20, a marginal impact on the Prius’ sticker price. Should prices rebound to pre-China levels, however, the average Prius buyer would notice a roughly $450-price hike due to magnetic components alone. One week into the China-Japan REE spat, government-funded researchers announced a magnet system design that can completely replace the neodymium used in the Prius.

This hardly solves the problem overnight; it will take months to years to retool Toyota’s factories for the new technology. Still, consumers of REE are going to find ways of lessening their use of REE. The information technology revolution has proceeded unabated since 2000 in part because REE have been one-tenth to one-twentieth of their previous prices. Absent any serious price pressures, industries have had no need to invest in finding means of cutting inputs or finding substitutes. (REE are so abundant that in China they are used in fertilizers and road building materials.)

The shift in prices could well give a much-needed boost to non-REE dependent technologies hampered by relatively inexpensive REEs. For example, the REE lanthanum is a leading component in the Prius’ nickel metal-hydride battery system. (The Prius uses ten kilograms of lanthanum). Toyota has been edging toward replacing the nickel-hydride system with REE-free lithium-ion batteries, but has demurred due to the low price of lanthanum. Increase that cost by a factor of 20, of the factor of three of recent months — and add in the threat of a full cutoff — and Toyota’s board is likely to come to a different conclusion.

Computer hard drives may fall into a similar category. A major cause of the increased demand for REE has been the demand for neodymium in particular and a specific intermediate product made from it, the neodymium-iron-boron magnet (which also uses some dysprosium). The magnets are a critical component in hard drives, particularly for laptops. But like lithium-ion batteries, a new technology is gaining market share: solid-state hard drives. Currently, the consumer’s cost difference between the two is a factor of four, but sustained price hikes in the cost of neodymium and NdFeB magnets could cause demand to plummet.

The fifth category comprises goods where the laws of supply and demand are likely to reshape the industries in question. These are goods where price is most certainly an issue, and where consumers will simply balk should the bottom line change too much. Compact fluorescent light bulbs that use phosphors heavy in terbium, LED display screens that use europium and various medical techniques that use erbium lasers all fall into this category. None of these industries will disappear, but they are extremely likely to see far lower sales as none of these products are economically indispensable and all have various product substitutes.

The sixth category comprises goods for which there are very low ore and metal stockpiles for which demand is both high and rising rapidly, and for which it will take the longest to set up an alternate supply chain. The vast majority of these industries depend on the same type of neodymium magnets used in hard drives, but do not have a replacement technology waiting in the wings. These magnets are a critical component in the miniaturization (and convergence) of electronic devices such as cellular phones, MP3 players, computers and cameras. They are also central to the power exchange relays for electricity-generating wind turbines used in today’s wind farms.

But even within this category, not all products will be impacted similarly. Many of the miniaturized electronic consumer goods manufacturers will face growing pains as they find their supply chain increasingly concentrated in China. But cheaper production costs could offset rising materials costs, and technological innovation will also help lessen the impact. Alternative energy is not likely to be as lucky. Neodymium magnets are critical to windmill turbines, one of the specific areas the Chinese hope to dominate. Each 1-megawatt windmill uses roughly a metric ton of NdFeB magnets.

For green energy enthusiasts, this is a double bind. First, green power must compete economically with fossil fuels — meaning rather small cost increases in capital outlays could be a deal breaker. Second, the only way to get around the price problem is to advocate greater neodymium production. And that means either tolerating the high-pollution techniques used in China, or encouraging the development of a not-particularly-green mining industry in the West.

Read more: China and the Future of Rare Earth Elements | STRATFOR
Title: Appeasement
Post by: G M on October 12, 2010, 09:54:25 AM
http://www.washingtontimes.com/news/2010/oct/11/obama-loosens-sanctions-on-c-130s-to-china/print/

Koutou.
Title: Re: China
Post by: Crafty_Dog on October 12, 2010, 11:36:46 AM
Kow tow?  Or Manchurian candidate?
Title: OMG-- Krugman?
Post by: Crafty_Dog on October 18, 2010, 05:31:58 AM
Rare and Foolish
By PAUL KRUGMAN
Published: October 17, 2010
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CloseLinkedinDiggMixxMySpaceYahoo! BuzzPermalink Last month a Chinese trawler operating in Japanese-controlled waters collided with two vessels of Japan’s Coast Guard. Japan detained the trawler’s captain; China responded by cutting off Japan’s access to crucial raw materials.

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Fred R. Conrad/The New York Times
Paul Krugman

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And there was nowhere else to turn: China accounts for 97 percent of the world’s supply of rare earths, minerals that play an essential role in many high-technology products, including military equipment. Sure enough, Japan soon let the captain go.

I don’t know about you, but I find this story deeply disturbing, both for what it says about China and what it says about us. On one side, the affair highlights the fecklessness of U.S. policy makers, who did nothing while an unreliable regime acquired a stranglehold on key materials. On the other side, the incident shows a Chinese government that is dangerously trigger-happy, willing to wage economic warfare on the slightest provocation.

Some background: The rare earths are elements whose unique properties play a crucial role in applications ranging from hybrid motors to fiber optics. Until the mid-1980s the United States dominated production, but then China moved in.

“There is oil in the Middle East; there is rare earth in China,” declared Deng Xiaoping, the architect of China’s economic transformation, in 1992. Indeed, China has about a third of the world’s rare earth deposits. This relative abundance, combined with low extraction and processing costs — reflecting both low wages and weak environmental standards — allowed China’s producers to undercut the U.S. industry.

You really have to wonder why nobody raised an alarm while this was happening, if only on national security grounds. But policy makers simply stood by as the U.S. rare earth industry shut down. In at least one case, in 2003 — a time when, if you believed the Bush administration, considerations of national security governed every aspect of U.S. policy — the Chinese literally packed up all the equipment in a U.S. production facility and shipped it to China.

The result was a monopoly position exceeding the wildest dreams of Middle Eastern oil-fueled tyrants. And even before the trawler incident, China showed itself willing to exploit that monopoly to the fullest. The United Steelworkers recently filed a complaint against Chinese trade practices, stepping in where U.S. businesses fear to tread because they fear Chinese retaliation. The union put China’s imposition of export restrictions and taxes on rare earths — restrictions that give Chinese production in a number of industries an important competitive advantage — at the top of the list.

Then came the trawler event. Chinese restrictions on rare earth exports were already in violation of agreements China made before joining the World Trade Organization. But the embargo on rare earth exports to Japan was an even more blatant violation of international trade law.

Oh, and Chinese officials have not improved matters by insulting our intelligence, claiming that there was no official embargo. All of China’s rare earth exporters, they say — some of them foreign-owned — simultaneously decided to halt shipments because of their personal feelings toward Japan. Right.

So what are the lessons of the rare earth fracas?

First, and most obviously, the world needs to develop non-Chinese sources of these materials. There are extensive rare earth deposits in the United States and elsewhere. However, developing these deposits and the facilities to process the raw materials will take both time and financial support. So will a prominent alternative: “urban mining,” a k a recycling of rare earths and other materials from used electronic devices.

Second, China’s response to the trawler incident is, I’m sorry to say, further evidence that the world’s newest economic superpower isn’t prepared to assume the responsibilities that go with that status.

Major economic powers, realizing that they have an important stake in the international system, are normally very hesitant about resorting to economic warfare, even in the face of severe provocation — witness the way U.S. policy makers have agonized and temporized over what to do about China’s grossly protectionist exchange-rate policy. China, however, showed no hesitation at all about using its trade muscle to get its way in a political dispute, in clear — if denied — violation of international trade law.

Couple the rare earth story with China’s behavior on other fronts — the state subsidies that help firms gain key contracts, the pressure on foreign companies to move production to China and, above all, that exchange-rate policy — and what you have is a portrait of a rogue economic superpower, unwilling to play by the rules. And the question is what the rest of us are going to do about it.
Title: Re: China - Krugman
Post by: DougMacG on October 18, 2010, 08:08:36 AM
Did I just read a Krugman column where the whole thing almost made sense and the facts were  accurate?  Our environmental standards caused the surrender of a crucial market to China.

I especially like the part where Krugman is shocked and disappointed that a murderous, tyrannical, totalitarian, dictatorial regime hasn't yet risen to the responsibilities of their superpower status.  Who knew?

"China accounts for 97 percent of the world’s supply of rare earths, minerals that play an essential role in many high-technology products, including military equipment."

This Idaho editorial says that we closed our last rare earth mine for environmental risks that must not scare the Chinese:

"Fifteen years ago, the United States was the world’s largest producer of rare earth minerals. But the last major rare earth mine in the U.S. was closed in 2002. Last year China produced more than 97 percent of the world’s rare earth minerals even though it has only 36 percent of the world’s reserves."

http://voices.idahostatesman.com/2010/10/04/rockybarker/rare_earth_minerals_put_idaho_middle_us_china_relations

A global production chart at Wikipedia shows that the US had the lion's share of the production as recent as the mid-1980s.  
http://en.wikipedia.org/wiki/Rare_earth_element

Small point of learning here.  When we think of passing a law to ban production of something here to save the earth but we know it will just be done by our competitors and enemies anyway, ask what is gained?  Production of wind turbines and hybrid cars according to our EPA pose unacceptable environmental risks (because of the mining of rare earth elements).  Once again, who knew that banning production here, buying it elsewhere and then subsidizing those purchases would cause a market imbalance threatening our leadership in technology and manufacturing.

I should add that I support 'urban mining' but the recycling of old computers and electronics as a primary strategy for developing new technologies sounds very much like a guarantee of never again being the leader in anything.

Decline is a choice.
Title: Re: China
Post by: G M on October 18, 2010, 08:58:59 AM
Recycling electronics is expensive and creates serious environmental impacts. Most of our e-waste is sent to China for processing.
Title: Re: China
Post by: G M on October 19, 2010, 08:10:38 AM
http://www.cbsnews.com/video/watch/?id=4586903n

The Electronic Wasteland

November 18, 2008 9:04 AM

Where do the millions of computer monitors, cell phones and other electronic refuse our society generates end up? Scott Pelley reports.
Title: Re: China- Electronic waste
Post by: DougMacG on October 19, 2010, 09:36:39 AM
Seems to me that like nuclear 'waste', e-waste could be condensed and stored safely as a future resource until the technology to safely mine it for resources catches up.  The original point remains, we pass production restriction laws here and then consume the same product produced elsewhere.  That saves the earth nothing, eliminates a US business, costs the consumer and enriches our competitor/ enemy.  In this case - China.

What bugs me most about ordinary recycling is that we think we save energy and the earth by requiring huge diesel trucks to drive regularly down all our streets, and charge us for it.
Title: Unrestricted economic warfare
Post by: G M on October 19, 2010, 06:53:19 PM

http://www.nytimes.com/2010/10/20/business/global/20rare.html?pagewanted=print
October 19, 2010
China to Halt Some Exports to U.S.
By KEITH BRADSHER

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of those materials to the United States and Europe, three industry officials said on Tuesday.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle.

“The embargo is expanding” beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities.

They said Chinese customs officials imposed the broader restrictions on Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions.

China mines 95 percent of the world’s rare earth elements, which have broad commercial and military applications, and are vital to the manufacture of products as diverse as cellphones, large wind turbines and guided missiles. Any curtailment of Chinese supplies of rare earths is likely to be greeted with alarm in Western capitals, particularly because Western companies are believed to keep much smaller stockpiles of rare earths than Japanese companies.
Title: Re: China
Post by: JDN on October 19, 2010, 07:32:23 PM
Tit for tat.
Everyone plays the cards they hold.

What do you suggest America should do?
In the short run?

In the long run, as Doug seemed to imply exceptions should be made.
I'm all for clean air, but national defense comes first.
Title: Re: China
Post by: JDN on October 19, 2010, 07:44:41 PM
Maybe it's time to make some changes....

And article back in March, 2008 had a good point....


Lifton has also suggested that many U.S. companies have not jumped into the market because China's state-owned mines keep rare earth prices artificially low. But if U.S. companies do not begin mining American rare earth deposits soon, they may be left scrambling if China does one day stop exporting rare earths.

But Cowle, the CEO of U.S. Rare Earths, seems hopeful that momentum has already begun building for the U.S. government to encourage development of its own rare earth deposits.

"From what I see, security of supply is going to be more important than the prices," Cowle said.

http://www.technewsdaily.com/us-sitting-on-mother-lode-of-rare-tech-crucial-minerals-0281/
Title: Re: China
Post by: G M on October 19, 2010, 07:50:38 PM
Playing protectionist games with China will hurt us far worse than it will them. I cringe to think how this will play out with the cokehead in chief doing the decision making.
Title: Re: China
Post by: Crafty_Dog on October 20, 2010, 10:06:46 AM
Trade wars are very bad things and tend to have consequences far beyond those originally envisioned.

That said, we must consider the possibility that China is starting one with us whether we like it or not.  In case such is the case, then we need a clear-headed assessment of who "wins" (i.e. loses less).

GM, you've been a serious observer of China for some time now.  Why do you say they win a trade war with us?
Title: Re: China
Post by: G M on October 20, 2010, 11:40:29 AM
China sells to the world. China buys our debt, and Chinese consumers are increasingly buying US made products. The cheaper yuan means the American consumer's dollar goes farther at Walmart. Obama's pandering to his union goons will not end up creating jobs, just making consumer goods more expensive.

The Smoot–Hawley Tariff Act supporters though it was going to bring jobs back in the great depression, instead it like much of what was done by the dems lengthened and worsened it. China believes it can take the pain, and if needed, it will let the PLA party like it's 1989 should the street protests get out of hand.

We, on the other hand can tolerate much less pain as a society. China calculates that we will blink first, and China is correct in that assessment. So all this financial saber rattling will accomplish is to place China in a better position than when we started.
Title: Re: China
Post by: Crafty_Dog on October 20, 2010, 11:47:59 AM
Perhaps I read too much into what you say, but I am not seeing a point at which you would draw a line.
Title: Re: China
Post by: G M on October 20, 2010, 12:03:48 PM
We are in no position to get into a trade war with anyone, much less China. We need free trade and we need them to ignore how they are throwing money away continuing to fund our irresponsible spending habits. Like I said before, the low yuan actually helps US consumers. A 40% increase in Chinese made goods would cause tangible pain for us and would not result in comparable increase in employment domestically.
Title: Re: China
Post by: DougMacG on October 20, 2010, 12:24:12 PM
Again I agree.  People forget how low prices from a consumer point of view raise our standard of living.  The benefit of freedom to trade goes both ways.  We would lose the low price and wide availability of widgets and happy meal toys. They would lose their second largest customer, cash flow they depend on and have widespread factory shutdowns and layoffs with a regime that derives its consent only from the security and continuous economic growth it can provide.  The damage of ending that relationship economically goes both ways. I think we could withstand the disruption and resulting economic depression better than they could, but not by much and not with any certainty.
Title: Re: China
Post by: Crafty_Dog on October 22, 2010, 12:51:24 PM
"we need them to ignore how they are throwing money away continuing to fund our irresponsible spending habits"

GM, I am going to nit pick a bit on this one.  NO we do NOT need to fund our irresponsible spending habits.  Rather we need to spend responsibly.  We can get along quite nicely without the plastic knicknacks and poison laced products (including children's toys! :x) and we can get along quite nicely without further increasing their leverage over us.
Title: Re: China
Post by: G M on October 22, 2010, 01:19:58 PM
Believe me, I in no way want us to continue our destructive spending habits. We MUST address it immediately. However, until we get our feces coagulated, we had better not make things worse with a neo-Smoot-Hawley act.
Title: Re: China
Post by: Crafty_Dog on October 22, 2010, 03:03:34 PM
To quote myself:

"That said, we must consider the possibility that China is starting one with us whether we like it or not.  In case such is the case, then we need a clear-headed assessment of who "wins" (i.e. loses less)."

In other words, I am not advocating Smoot Hawley, I am asking what to do if China starts it up.

Title: Re: China
Post by: G M on October 22, 2010, 03:22:18 PM
Our salvation, no matter what China does or does not do, is to get back into a free market, innovation based economy. Cut corporate taxes and watch foreign investment flood in. It is an utter shame that right now, it's easier to start up a cutting edge tech company in China rather than here. If we do not reverse this and other trends, our best option in the future will be as a tourism destination for wealthy asians.
Title: Re: China
Post by: JDN on October 23, 2010, 08:16:50 AM
That is very interesting JDN, from what you say, China seems to have a plausible claim at least.  Should I want to cite a source, what source would that be?



Last weekend, angry young protesters in China and Japan took to the streets to demonstrate to the international community their countries' claims over what Tokyo calls the Senkaku Islands and Beijing refers to as the Diaoyu.

One of the sides must be wrong, historically. But which side? Each government, of course, says it has the better claim.

http://search.japantimes.co.jp/cgi-bin/nn20101023x1.html
Title: Re: China
Post by: ccp on October 23, 2010, 09:58:32 AM
From the recent Economist:

China's succession
The next emperor
A crown prince is anointed in a vast kingdom facing vaster stresses. China is in a fragile state
Oct 21st 2010

“WITH you in charge, I am at ease,” Mao Zedong is supposed to have told his successor, Hua Guofeng. It proved a disastrous choice. Mr Hua lasted a couple of years before being toppled in 1978. A decade later succession plans once again unravelled spectacularly, against a backdrop of pro-democracy unrest. Only once, eight years ago, has China’s Communist Party managed a smooth transfer of power—to Hu Jintao. Now a new transition is under way. The world should be nervous about it for two reasons: the unknown character of China’s next leader; and the brittle nature of a regime that is far less monolithic and assured than many foreigners assume.

The man ordained to take over Mr Hu’s twin roles as party chief in 2012 and president the following year is hardly a household name. On October 18th Vice-President Xi Jinping was given a new job as vice-chairman of China’s Central Military Commission, which Mr Hu heads. This is a position for leaders-in-waiting. The portly son of one of Communist China’s founders, little known to the outside world until a few years ago, Mr Xi is preparing to take the helm of a country with the world’s second-biggest economy and its biggest armed forces—and which is in the midst of wrenching social change.

Quite how he has risen so high in a party that, for all its growing engagement with the world, remains deeply secretive, is unclear. Mr Xi’s appointment was eerily similar to the recent anointing of Kim Jong Un in North Korea: he too was made vice-chairman of a military commission after a closed-door party conclave, without public explanation. China’s leaders at least offered a sentence on Mr Xi’s appointment, albeit at the end of an arid 4,600-character communiqué after the fifth party congress (see article).

Related items
China's economy: A new epic
Oct 21st 2010
China's next leader: Xi who must be obeyed
Oct 21st 2010On the positive side, Mr Xi has held some big posts in the most economically dynamic and globally integrated parts of the country: the coastal provinces of Fujian and Zhejiang as well as, briefly, Shanghai. He is a relatively cosmopolitan figure. His wife is a popular singer. But it is impossible to assess how well qualified he is to run the country or how assured his succession is. On the face of it, one engineer whose father was denounced during the Cultural Revolution is handing over to another. But Mr Xi is a relative newcomer to the inner circle; he has not served as long as Mr Hu had in 2002. There are plenty in the party who resent the rise to power of well-connected “princelings” like Mr Xi. A two-year transition will be a test.


All this one day will be yours

All the same, it is the immensity of the task, not the obscurity of the man, that should make the world nervous. For all their outward expressions of unity, there are signs of disagreement among Chinese leaders over what the country’s priorities should be—both on the economy and on political reform.

The economy is sprinting along by Western standards, but China faces a hard adjustment to wean itself off excessive investment and exports in favour of more reliance on consumption. The communiqué unveiled guidelines for a new five-year economic plan (see article). This calls for a more sustainable pace of growth, with wage-earners getting a bigger share of the national income. This would be good for China and the world, helping to narrow the trade surplus that annoys America so much. But the change will not be painless. Exporters fear business will suffer if wages soar or the yuan rises fast. Powerful state-owned enterprises, used to cheap credit, land and energy, will resist threats to these privileges.

As for political reform, Chinese leaders have talked about democracy for the past 30 years, but done little. Rapid growth and the spread of the internet and mobile phones have enabled Chinese citizens to communicate, vent their grievances and pursue their dreams more freely than before, so long as they do not attack the party. But some are now demanding more say in how the country is run. In the past few weeks China’s more liberal newspapers have enthused about calls by the prime minister, Wen Jiabao, for “political reform”. Conservative newspapers have censored them.

There is next to no chance of the cautious Mr Hu bringing in big reforms before he steps down. This week’s communiqué hailed the “political advantages of China’s socialist system” and mentioned political reform only briefly, saying—as Chinese leaders so often do—that it will require “vigorous yet steady” effort. Even Mr Wen, who will step down at the same time as Mr Hu, has wanted to move at glacial speed.


Expect paranoia and you may be pleasantly surprised

Might Mr Xi speed things up? There is no shortage of conservatives arguing for caution, but there is also a pragmatic argument for change: China’s economic gains could be jeopardised by a failure to loosen the party’s hold. Explosions of public discontent, fuelled by resentment of government callousness towards ordinary citizens, are becoming increasingly common in villages, towns and cities across the country. The (admittedly patchy) official data show a more than tenfold increase in the annual number of large protests and disturbances since 1993, with more than 90,000 cases reported in each of the past four years. In the past China’s leaders have relied on growth to secure social stability. If and when a more serious slowdown strikes, popular grumbles could increase.

The right path for Mr Xi should be clear: relax the party’s grip on dissent, lift its shroud of secrecy and make vital economic reforms. But the rest of the world would be unwise to assume that reason will prevail. In times of uncertainty, the regime is wont to appeal to nationalist sentiment. Large anti-Japanese protests erupted during the latest party meeting. America and the West have also been subjected to tongue-lashings. The party meeting called on officials to strengthen “the country’s comprehensive national power”.

Too many Westerners, including those urging trade sanctions over the yuan, assume that they are dealing with a self-confident, rational power that has come of age. Think instead of a paranoid, introspective imperial court, already struggling to keep up with its subjects and now embarking on a slightly awkward succession—and you may be less disappointed.

Title: Re: China
Post by: G M on October 23, 2010, 10:22:15 AM
Good thing we'd never put someone lacking experience and ability in a national leadership position.
Title: I guess we know who calls the shots in asia now
Post by: G M on October 24, 2010, 07:49:54 PM
http://blogs.voanews.com/breaking-news/category/asia/eap/

South Korean media reported Sunday that Seoul and Washington have called off plans to hold a major joint naval exercise in the Yellow Sea this month.

Yonhap news agency quoted government sources as saying the exercise involving a U.S. nuclear-powered aircraft carrier has been postponed to avoid tensions on the Korean peninsula during the upcoming G20 summit in Seoul.

There was no official confirmation of the reports.

The Chinese government has fiercely opposed the deployment of the U.S. aircraft carrier George Washington in the regional waters.

The U.S. and South Korea have been holding a series of joint military exercises as a warning to North Korea after the sinking of a South Korean warship.

An international investigation concluded that the March 26 sinking of the Cheonan was caused by a torpedo launched from a North Korean ship. Pyongyang has called the report a fabrication.
Title: China: Yes we can!
Post by: G M on October 24, 2010, 08:57:02 PM
http://www.afpc.org/publication_listings/viewArticle/1064

This situation was further complicated when a North Korean midget submarine sank a South Korean corvette on March 26, 2010, killing 46 sailors. In the aftermath, Washington and Seoul announced a series of naval exercises to demonstrate resolve in the face of North Korean aggression while China refused to condemn the attack. It was initially reported, on June 1st, that those exercises would take place in the Yellow Sea, which separates China and South Korea, and would involve the USS George Washington, the most advanced aircraft carrier in the US Navy. However, as China repeatedly announced its “resolute opposition” to any carrier-led exercises in Yellow Sea, the military drills were repeatedly delayed. The George Washington had traversed the Yellow Sea as late as October 2009 with no protest from Beijing, but suddenly Communist Party of China mouthpieces were filled with op-eds from hawkish PLA generals warning Washington about drilling in the Yellow Sea.

Weeks passed and the standoff became a diplomatic game of chicken: would President Barack Obama send the George Washington into the Yellow Sea, or would he give Beijing a veto over US freedom of action in the Pacific?

First, Mr. Obama tried to split the difference, hosting exercises led by the George Washington in the less contentious Sea of Japan, off Korea’s eastern coast. However, the move was interpreted by allies and enemies alike as a cessation of American authority in Asia and an embarrassment to South Korea, which had gone on record insisting the George Washington would stand by its side in the Yellow Sea.

The message carried particular salience in the capitals of Southeast Asia, where tensions with China are fast on the rise.  After years of an effective Chinese charm offensive, many East and Southeast Asian nations have become alienated by hardening Chinese territorial claims in the Pacific. The South China Sea, where island chains such as the Spratlys and Paracels are disputed by China and Vietnam, Malaysia, Brunei, the Phillipines and Taiwan, has become a particular flashpoint.

China has arrested hundreds of Vietnamese fishermen in recent years. It has elevated its claim in the South China Sea to a “core issue” on par with Taiwan, Xinjiang and Tibet. Wary capitals in the region have been snapping up military hardware and drawing nearer to Washington. Even regional heavyweight Indonesia, which has stayed above the fray and does not claim any islands in the South China Sea, recently took up the defense of its ASEAN allies at the United Nations, stating China’s claim “clearly lacks international legal basis.” Secretary Hillary Clinton did the same on July 23 at the ASEAN Regional Forum, insisting “freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea” were in America’s “national interest.” Beijing is still outraged that the U.S. has waded into the South China Sea imbroglio.

But Mrs Clinton’s stand risks being undermined by Mr Obama’s provocative weakness in the Yellow Sea. After weeks of coyness, Pentagon spokesman Geoff Morrell announced in August that the George Washington would take part in scheduled military exercises in the Yellow Sea in the coming months. James Steinberg, deputy secretary of state, told China it had no one to blame but itself: "China is suffering the indignity of exercises close to its shores, and though they are not directed at China, the exercises are a direct result of China's support for North Korea and unwillingness to denounce their aggression."  However, the administration again changed course on August 20th, when a military spokesman announced the George Washington would not participate in September’s exercises, adding only that it “would operate in the waters off the Korean peninsula in future exercises.”

From the first sign of hesitation, Mr Obama signalled to China that US policy is subject to intimidation. Each subsequent reversal has only emboldened Beijing. Much of the political leadership of China still seems to prefer co-operation over confrontation with the United States, and ties between the two countries have grown remarkably broad if not particularly deep. But hardliners in the Communist Party, and particularly in the PLA, clearly resent America’s influence in Asia and are growing more assertive by the year in their attempts to roll that influence back. Damage has been done to US credibility by this whole episode, but the Obama administration must stand by its initial pledge to send the George Washington to the Yellow Sea.  With tensions between Japan and China fast on the rise after the arrest of the Chinese trawler captain, there is no better time to send a message to America’s allies that US influence in Asia will not be compromised by China’s rise. 
Title: A re-militarized Japan?
Post by: G M on October 24, 2010, 09:20:16 PM
http://mdn.mainichi.jp/mdnnews/news/20101024p2g00m0fp039000c.html

Security situation around Japan getting more severe: Kan
Prime Minister Naoto Kan delivers a speech as he attends the inspection parade of the Ground Self-Defense Force at Asaka base on Oct. 24. (Mainichi)

TOKYO (Kyodo) -- Prime Minister Naoto Kan said Sunday the security situation around Japan has become more severe, given North Korea's missile and nuclear developments, as well as China intensifying its marine activities.

While attending the inspection parade of Ground Self-Defense Force at Asaka base in Tokyo and referring to China's military enhancement, Kan said, "We need to keep a posture that enables us to cope with various situations effectively."

"In order to build a truly effective defense capability, we will compile an outline of a new defense program by the end of the year that will meet future needs," he said.

He also showed willingness to enhance the Japan-U.S. alliance and promote activities to improve international security.

(Mainichi Japan) October 24, 2010
Title: POTH: Reality hits BO over head with baseball bat
Post by: Crafty_Dog on October 26, 2010, 09:53:27 AM
Taking Harder Stance Toward China, Obama Lines Up Allies
By MARK LANDLER and SEWELL CHAN
Published: October 25, 2010WASHINGTON — The Obama administration, facing a confrontational relationship with China on exchange rates, trade and security issues, is stiffening its approach toward Beijing, seeking allies to confront a newly assertive power that officials now say has little intention of working with the United States.

In a shift from its assiduous one-on-one courtship of Beijing, the administration is trying to line up coalitions — among China’s next-door neighbors and far-flung trading partners — to present Chinese leaders with a unified front on thorny issues like the currency and their country’s territorial claims in the South China Sea.

The advantages and limitations of this new approach were on display over the weekend at a meeting of the world’s largest economies in South Korea. The United States won support for a concrete pledge to reduce trade imbalances, which will put more pressure on China to allow its currency to rise in value.

But Germany, Italy and Russia balked at an American proposal to place numerical limits on these imbalances, a step that would have further isolated Beijing. That left the Treasury secretary, Timothy F. Geithner, to make an unscheduled stop in China on his way home from South Korea to discuss the deepening tensions over exchange rates with a top Chinese finance official.

Administration officials speak of an alarming loss of trust and confidence between China and the United States over the past two years, forcing them to scale back hopes of working with the Chinese on major challenges like climate change, nuclear nonproliferation and a new global economic order.

The latest source of tension is over reports that China is withholding shipments of rare-earth minerals, which the United States uses to make advanced equipment like guided missiles. Administration officials, clearly worried, said they did not know whether Beijing’s motivation was strategic or economic.

“This administration came in with one dominant idea: make China a global partner in facing global challenges,” said David Shambaugh, director of the China policy program at George Washington University. “China failed to step up and play that role. Now, they realize they’re dealing with an increasingly narrow-minded, self-interested, truculent, hyper-nationalist and powerful country.”

To counter what some officials view as a surge of Chinese triumphalism, the United States is reinvigorating cold war alliances with Japan and South Korea, and shoring up its presence elsewhere in Asia. This week, Secretary of State Hillary Rodham Clinton will visit Vietnam for the second time in four months, to attend an East Asian summit meeting likely to be dominated by the China questions.

Next month, President Obama plans to tour four major Asian democracies — Japan, Indonesia, India and South Korea — while bypassing China. The itinerary is not meant as a snub: Mr. Obama has already been to Beijing once, and his visit to Indonesia has long been delayed. But the symbolism is not lost on administration officials.

Jeffrey A. Bader, a major China policy adviser in the White House, said China’s muscle-flexing became especially noticeable after the 2008 economic crisis, in part because Beijing’s faster rebound led to a “widespread judgment that the U.S. was a declining power and that China was a rising power.”

But the administration, he said, is determined “to effectively counteract that impression by renewing American leadership.”

Political factors at home have contributed to the administration’s tougher posture. With the economy sputtering and unemployment high, Beijing has become an all-purpose target. In this Congressional election season, candidates in at least 30 races are demonizing China as a threat to American jobs.

At a time of partisan paralysis in Congress, anger over China’s currency has been one of the few areas of bipartisan agreement, culminating in the House’s overwhelming vote in September to threaten China with tariffs on its exports if Beijing did not let its currency, the renminbi, appreciate.

The trouble is that China’s own domestic forces may cause it to dig in its heels. With the Communist Party embarking on a transfer of leadership from President Hu Jintao to his anointed successor, Xi Jinping, the leadership is wary of changes that could hobble China’s growth.

There are also increasingly sharp divisions between China’s civilian leaders and elements of the People’s Liberation Army. Many Chinese military officers are openly hostile toward the United States, convinced that its recent naval exercises in the Yellow Sea amount to a policy of encircling China.

Even the administration’s efforts to collaborate with China on climate change and nonproliferation are viewed with suspicion by some in Beijing.

Mr. Obama’s aides, many of them veterans of the Clinton years, understand that especially on economic issues, there are elements of brinkmanship in the relationship, which can imply more acrimony than actually exists.

But the White House was concerned enough that last month it sent a high-level delegation to Beijing that included Mr. Bader; Lawrence H. Summers, the departing director of the National Economic Council; and Thomas E. Donilon, who has since been named national security adviser.

“We were struck by the seriousness with which they shared our commitment to managing differences and recognizing that our two countries were going to have a very large effect on the global economy,” Mr. Summers said.

Just before the meeting, China began allowing the renminbi to rise at a somewhat faster rate, though its total appreciation, since Beijing announced in June that it would loosen exchange-rate controls, still amounts to less than 3 percent. Economists estimate that the currency is undervalued by at least 20 percent.

Meanwhile, trade tensions between the two sides are flaring anew. The administration recently agreed to investigate charges by the United Steelworkers that China was violating trade laws with its state support of clean-energy technologies. That prompted China’s top energy official, Zhang Guobao, to accuse the administration of trying to win votes — a barb that angered White House officials.

Of the halt in shipments of rare-earth minerals, Mr. Summers said, “There are serious questions, both in the economic and in the strategy realm, that are going to require close study within our government.”

Beijing had earlier withheld these shipments to Japan, after a spat over a Chinese fishing vessel that collided with Japanese patrol boats near disputed islands. It was one of several recent provocative moves by Beijing toward its neighbors — including one that prompted the administration to enter the fray.

In Hanoi in July, Mrs. Clinton said the United States would help facilitate talks between Beijing and its neighbors over disputed islands in the South China Sea. Chinese officials were livid when it became clear that the United States had lined up 12 countries behind the American position.

With President Hu set to visit Washington early next year, administration officials said Mrs. Clinton would strike a more harmonious note in Asia this week. For now, they said, the United States feels it has made its point.

“The signal to Beijing ought to be clear,” Mr. Shambaugh said. “The U.S. has other closer, deeper friends in the region.”

Title: Re: China
Post by: G M on October 26, 2010, 11:59:38 AM
http://www.telegraph.co.uk/finance/financetopics/g20-summit/5071299/Unhappy-China-bestseller-claims-Beijing-should-lead-the-world.html

On the eve of the G20 summit in London, "Unhappy China" has stirred debate about whether China should have a greater role on the world stage. Although the country will soon overtake Japan as the world's second-largest economy, China is not included in the G8 and is a second tier member of the G20. Beijing has little influence in the World Bank or the International Monetary Fund and is highly vulnerable to changes in the value of the dollar.

"We still feel suppressed because we are sometimes condemned or criticised by the western world," said Zhang Xiaobo, the book's publisher.


The five authors of the book advocate a tougher line against China's enemies, including punishment for President Nicholas Sarkozy of France, who met the Dalai Lama last year. The book takes a robust view of Western criticism of China's behaviour in Tibet. "You can start a war if you have the guts, otherwise shut up!" it says.

Another passage reads: "If China stood as the world's top country, it would not act like the United States, which has been irresponsible, lazy and greedy and engaged in robbery and cheating. They have brought economic recession to the whole world."

The book is the latest sign of growing Chinese nationalism, a trend that became highly visible during the riots in Tibet last March.

Spurred on by the government, Chinese nationalists vented their anger at the depiction of Tibet in the West and at the protests over the Olympic torch passing through Paris and London.

Meanwhile, the recent confrontation between America and China over the harassment of a US surveillance ship in the South China sea and Beijing's proposal that the dollar should be replaced as the global reserve currency, have shown China's potential for greater military and economic power.

"Unhappy China" is already into its second print run, while China's major web portals and social networking sites have their own "Unhappy China" forums.
Title: Re: China
Post by: G M on October 27, 2010, 09:05:20 PM
http://www.breitbart.com/article.php?id=CNG.18a92e9878f71f90e7b491d0afd4b1a3.501&show_article=1

Rampant issuance of dollars by the United States is saddling China with "imported inflation", Chinese commerce minister Chen Deming was quoted as saying by state media on Wednesday.

"Given the current situation, companies have thought ahead and prepared for exchange rate fluctuations as well as an increase in labour costs," Chen said, according to the state-run China Business News.

"But because the issuance of dollars is out of control, and international commodities prices are continuing to rise, China is confronted with imported inflation, which has created major uncertainties for businesses," he said.

The comments came ahead of a meeting of the US Federal Reserve next week at which the central bank is expected to announce additional stimulus measures.

While critics in the United States accuse China of artificially undervaluing its currency to give exporters an unfair advantage, Beijing says Washington is foisting its economic woes on the rest of the world by printing more money.
Title: Re: China
Post by: DougMacG on October 28, 2010, 07:10:35 AM
I hate it when our enemies are right about us.  OTOH, China and some other Asian economies have benefited greatly over the last 30 years IMHO by delegating their monetary policy to our Fed.
Title: Yet again we're not number one
Post by: Crafty_Dog on October 28, 2010, 07:58:41 AM
China Wrests Supercomputer Title From U.S.By ASHLEE VANCE
Published: October 28, 2010


 A Chinese scientific research center has built the fastest supercomputer ever made, replacing the United States as maker of the swiftest machine, and giving China bragging rights as a technology superpower.

The computer, known as Tianhe-1A, has 1.4 times the horsepower of the current top computer, which is at a national laboratory in Tennessee, as measured by the standard test used to gauge how well the systems handle mathematical calculations, said Jack Dongarra, a University of Tennessee computer scientist who maintains the official supercomputer rankings.

Although the official list of the top 500 fastest machines, which comes out every six months, is not due to be completed by Mr. Dongarra until next week, he said the Chinese computer “blows away the existing No. 1 machine.” He added, “We don’t close the books until Nov. 1, but I would say it is unlikely we will see a system that is faster.”

Officials from the Chinese research center, the National University of Defense Technology, are expected to reveal the computer’s performance on Thursday at a conference in Beijing. The center says it is “under the dual supervision of the Ministry of National Defense and the Ministry of Education.”

The race to build the fastest supercomputer has become a source of national pride as these machines are valued for their ability to solve problems critical to national interests in areas like defense, energy, finance and science. Supercomputing technology also finds its way into mainstream business; oil and gas companies use it to find reservoirs and Wall Street traders use it for superquick automated trades. Procter & Gamble even uses supercomputers to make sure that Pringles go into cans without breaking.

And typically, research centers with large supercomputers are magnets for top scientific talent, adding significance to the presence of the machines well beyond just cranking through calculations.

Over the last decade, the Chinese have steadily inched up in the rankings of supercomputers. Tianhe-1A stands as the culmination of billions of dollars in investment and scientific development, as China has gone from a computing afterthought to a world technology superpower.

“What is scary about this is that the U.S. dominance in high-performance computing is at risk,” said Wu-chun Feng, a supercomputing expert and professor at Virginia Polytechnic Institute and State University. “One could argue that this hits the foundation of our economic future.”

Modern supercomputers are built by combining thousands of small computer servers and using software to turn them into a single entity. In that sense, any organization with enough money and expertise can buy what amount to off-the-shelf components and create a fast machine.

The Chinese system follows that model by linking thousands upon thousands of chips made by the American companies Intel and Nvidia. But the secret sauce behind the system — and the technological achievement — is the interconnect, or networking technology, developed by Chinese researchers that shuttles data back and forth across the smaller computers at breakneck rates, Mr. Dongarra said.

“That technology was built by them,” Mr. Dongarra said. “They are taking supercomputing very seriously and making a deep commitment.”

The Chinese interconnect can handle data at about twice the speed of a common interconnect called InfiniBand used in many supercomputers.

For decades, the United States has developed most of the underlying technology that goes into the massive supercomputers and has built the largest, fastest machines at research laboratories and universities. Some of the top systems simulate the effects of nuclear weapons, while others predict the weather and aid in energy research.

In 2002, the United States lost its crown as supercomputing kingpin for the first time in stunning fashion when Japan unveiled a machine with more horsepower than the top 20 American computers combined. The United States government responded in kind, forming groups to plot a comeback and pouring money into supercomputing projects. The United States regained its leadership status in 2004, and has kept it, until now.

At the computing conference on Thursday in China, the researchers will discuss how they are using the new system for scientific research in fields like astrophysics and bio-molecular modeling. Tianhe-1A, which is housed in a building at the National Supercomputing Center in Tianjin, can perform mathematical operations about 29 million times faster than one of the earliest supercomputers, built in 1976.

For the record, it performs 2.5 times 10 to the 15th power mathematical operations per second.

Mr. Dongarra said a long-running Chinese project to build chips to rival those from Intel and others remained under way and looked promising. “It’s not quite there yet, but it will be in a year or two,” he said.

He also said that in November, when the list comes out, he expected a second Chinese computer to be in the top five, culminating years of investment.

“The Japanese came out of nowhere and really caught people off guard,” Mr. Feng said. “With China, you could see this one coming.”

Steven J. Wallach, a well-known computer designer, played down the importance of taking the top spot on the supercomputer rankings.

“It’s interesting, but it’s like getting to the four-minute mile,” Mr. Wallach said. “The world didn’t stop. This is just a snapshot in time.”

The research labs often spend weeks tuning their systems to perform well on the standard horsepower test. But just because a system can hammer through trillions of calculations per second does not mean it will do well on the specialized jobs that researchers want to use it for, Mr. Wallach added.

The United States has plans in place to make much faster machines out of proprietary components and to advance the software used by these systems so that they are easy for researchers to use. But those computers remain years away, and for now, China is king.

“They want to show they are No. 1 in the world, no matter what it is,” Mr. Wallach said. “I don’t blame them.”

Title: Re: China
Post by: G M on October 28, 2010, 08:14:49 AM
“What is scary about this is that the U.S. dominance in high-performance computing is at risk,” said Wu-chun Feng, a supercomputing expert and professor at Virginia Polytechnic Institute and State University. “One could argue that this hits the foundation of our economic future.”
Title: Re: China
Post by: DougMacG on October 28, 2010, 08:24:37 AM
The trend is bad but in my experience the supercomputer was made obsolete in the 1990s by American technology such as Fibre Channel that allow the linking of the processors of separate workstations at the speed of light eliminating the need or desirability of having massive number of processors in one box. Maybe that has changed by now in a lower price environment but I doubt the technology inside the box, processors and linking of processors, is of Chinese origin.
Title: China - Rere Earth Elements
Post by: DougMacG on October 29, 2010, 09:16:39 AM
Washington Post wanders belatedly into this story:
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/28/AR2010102806319.html

"China's rationale matters less than its conduct. Export quotas are hardly in the spirit of Beijing's responsibilities as a member of the World Trade Organization."

Imagine that, shocked when totalitarian dictators do not live up to their social responsibilities.  (And we snubbed CANADA from getting on the UN security council.)
Title: More on REEs
Post by: Crafty_Dog on October 29, 2010, 04:00:29 PM
MCP has been all over the place the last five days.

======================

Oh Jeez, The Rare Earth Bubble Is About To Go Into OverdriveSilicon Alley Insider(Wed 2:15PM EDT)
Van Eck To Launch 'Strategic Metals' ETFat Barrons.com(Wed 2:11PM EDT)


Title: New Spy Game: Firms’ Secrets Sold Overseas
Post by: G M on October 29, 2010, 06:29:51 PM
http://www.nytimes.com/2010/10/18/business/global/18espionage.html?pagewanted=all

New Spy Game: Firms’ Secrets Sold Overseas
By CHRISTOPHER DREW
Published: October 17, 2010

 

For five years, Mr. Huang was a scientist at a Dow Chemical lab in Indiana, studying ways to improve insecticides. But before he was fired in 2008, Mr. Huang began sharing Dow’s secrets with Chinese researchers, authorities say, then obtained grants from a state-run foundation in China with the goal of starting a rival business there.

Now, Mr. Huang, who was born in China and is a legal United States resident, faces a rare criminal charge — that he engaged in economic espionage on China’s behalf.

Law enforcement officials say the kind of spying Mr. Huang is accused of represents a new front in the battle for a global economic edge. As China and other countries broaden their efforts to obtain Western technology, American industries beyond the traditional military and high-tech targets risk having valuable secrets exposed by their own employees, court records show.

Rather than relying on dead drops and secret directions from government handlers, the new trade in business secrets seems much more opportunistic, federal prosecutors say, and occurs in loose, underground markets throughout the world.

Prosecutors say it is difficult to prove links to a foreign government, but intelligence officials say China, Russia and Iran are among the countries pushing hardest to obtain the latest technologies.

“In the new global economy, our businesses are increasingly targets for theft,” said Lanny A. Breuer, the assistant attorney general in charge of the Justice Department’s criminal division. “In order to stay a leader in innovation, we’ve got to protect these trade secrets.”
Title: More on REEs 2
Post by: Crafty_Dog on October 30, 2010, 09:10:01 AM
Rarick:

Good point.
======================
POTH so caveat lector


BAOTOU, China — When Japanese mineral traders learned in late September that China was blocking shipments of a vital commodity, the word came not from a government announcement but from dock workers in Shanghai.

In Baotou, a smoggy city in China’s Inner Mongolia, the air this week has an acrid, faintly metallic taste. Half of the global supply of rare earths comes from the hills north of the town.  And on Thursday, the traders began hearing that the unannounced embargo of so-called rare earth minerals was ending — again, not from any Chinese government communiqué, but though back-channel word from their distributors.

Throughout the five weeks of the embargo, even when China expanded the rare earth shipping halt to include the United States and Europe, Beijing denied there was a ban. Whatever it was called, a shipping suspension that started amid China’s diplomatic dispute with Japan over a wayward fishing trawler escalated into a broader international trade issue.

The episode alarmed companies around the world that depend on rare earths, minerals that help make a wide range of high-tech products, including smartphones and smart bombs. China currently controls almost all of the world’s supply of rare earths, for which demand is soaring.

To many outsiders, the undeclared embargo looked like a pure power play — a sign China would wield its growing economic might and apply its chokehold on an important industrial resource with little regard for the conventions of international trade. The export quotas China continues to impose on rare earths, even when it does let ships leave the docks, are restricting global supplies and causing world market prices to soar far beyond what Chinese companies pay.

From the Chinese perspective, though, the issue looks very different.

China feels entitled to call the shots because of a brutally simple environmental reckoning: It currently controls most of the globe’s rare earths supply not just because of geologic good fortune, although there is some of that, but because the country has been willing to do dirty, toxic and often radioactive work that the rest of the world has long shunned.

Despite producing 95 percent of the world’s rare earths, China has only 37 percent of the world’s proven reserves. Sizable deposits are known to exist in the United States, Canada, Australia, India and Brazil, among other places.

Many of those countries, responding to the rising demand for rare earths and alarmed by the recent embargo, are now scrambling to develop new mines or renovate ones long considered not to be worth the effort. That includes an abandoned mine in California that the American company Molycorp is trying to refurbish.

But experts say that any meaningful new production from outside China is at least five years away, and that it will come with its own environmental cost calculus.

“China’s rare earth output cannot be raised fast enough to meet the entire world’s needs, as there are environmental factors to be taken into consideration with an increase in rare earth production,” said Zhang Peichen, the deputy director of the government-backed Baotou Research Institute of Rare Earths, the main research group for the Chinese industry.

Across China, rare earth mines have scarred valleys by stripping topsoil and pumping thousands of gallons of acid into streambeds. The environmental costs are palpable here in Baotou, a smoggy mining and steel city in China’s Inner Mongolia, where the air this week had an acrid, faintly metallic taste.

Half of the global supply of rare earths comes from a single iron ore mine in the hills north of Baotou. After the iron is removed, the ore is processed at weather-beaten refineries in Baotou’s western outskirts to extract the rare earths minerals.

The refineries and the iron ore processing mill pump their waste into an artificial lake here. The reservoir, four square miles and surrounded by an earthen embankment four stories high, holds a dark gray, slightly radioactive sludge laced with toxic chemical compounds.

The deadly lake is not far from the Yellow River watershed that supplies drinking water to much of northern China. The reservoir covers an area 100 times the size of the alumina factory waste pond that collapsed this month in Hungary, inundating villages there and killing at least nine people.

============

Page 2 of 2)



Even before the Hungary disaster, Baotou authorities had begun a program to reinforce the levee here. Huge bulldozers are adding a thick surface layer of crushed stone to the embankments to protect them from the region’s harsh weather.

China Is Said to Resume Shipping Rare Earth Minerals (October 29, 2010)
But the bottom of the reservoir was not properly lined when it was built decades ago, according to a rare earth engineer who insisted on anonymity because of the Chinese government’s sensitivity about the problem. The sludge, he said, has caused a slowly spreading stain of faint but detectable radioactivity in the groundwater that is spreading at a rate of 300 yards a year toward the Yellow River, seven miles to the south.

Much of the radioactivity associated with rare earths comes from the element thorium, which is not a rare earth but is typically found in the same ore. With the exception of unusual clay formations in southern China that contain medium and heavy rare earths with virtually no thorium, every other known commercial-grade rare earth deposit in the world is laced with thorium.

In Australia, engineers and lawyers have been working for three decades to find a safe, legal way to produce rare earths from a very rich deposit in the center of the country at Mount Weld. The mine’s current owner, Lynas Corporation, hopes to begin small-scale production there late next year, although technical challenges remain.

The only American rare earths mine, the Molycorp complex at Mountain Pass, Calif., was at one time the world’s leading producer. That was before it leaked faintly radioactive fluid into the nearby desert in the late 1990s, causing a costly cleanup that contributed to the mine’s closing in 2002. By then, very low Chinese prices had made the mine less economically viable.

Now Molycorp, which raised money in a public stock offering this past summer, is hoping to re-open the mine with higher safety and environmental standards. And it is betting that new technologies can drive its operating costs lower than the level of Chinese mines. Large-scale production, though, may still be several years away.

The mines of southern China are essentially free of thorium and have rare earths that are easily separated from the clay by dumping the ore in acid. But this relatively easy process, and soaring prices on the world market, has led to the development of many illegal mines, which sell to organized crime syndicates that pay for rare earth concentrate with sacks of cash.

Beijing officials have sent out police squads since May to shut down the outlaw mines, arrest their operators and destroy their equipment with blowtorches, rare earth industry officials said.

“The damage that has been done in south China is considerable,” said Judith Chegwidden, a managing director specializing in rare earths at the Roskill Consulting Group in London.

To point out China’s environmental and supply concerns is not to overlook the economic benefits the nation accrues by restricting exports. The global shortage gives foreign companies a reason to move even more of their rare earth-dependent operations to China, to produce key components for a wide range of products.

A Chinese official has acknowledged as much. “To use moderation in the control of the production of rare earth resources and reduce exports to an acceptable level is to attract more Chinese and foreign investors into the region,” Zhao Shuanglian, the vice chairman of Inner Mongolia, said last year, according to China’s official Xinhua news agency.

Meanwhile, China’s own fast-growing manufacturing industries now consume more rare earths than the rest of the world combined. And Beijing has done nothing to curb that domestic demand.

That apparent double standard could prove important if, as some trade experts have predicted, the United States, Europe and Japan bring a World Trade Organization case accusing China of unfairly restricting exports through a system of quotas and duties.

Alan Wolff, a former American trade official who now heads the international trade practice at the law firm Dewey & LeBoeuf in Washington, said China might face a skeptical audience at the W.T.O.

“A panel would sympathize with a genuine environmental objective,” Mr. Wolff said. “But I do not think it would sympathize with cutting off supply disproportionately to foreign users in the name of saving the environment.”
Title: Two from POTH
Post by: Crafty_Dog on October 31, 2010, 07:38:54 AM
HANOI, Vietnam — China’s military expansion and assertive trade policies have set off jitters across Asia, prompting many of its neighbors to rekindle old alliances and cultivate new ones to better defend their interests against the rising superpower.

A whirl of deal-making and diplomacy, from Tokyo to New Delhi, is giving the United States an opportunity to reassert itself in a region where its eclipse by China has been viewed as inevitable.

President Obama’s trip to the region this week, his most extensive as president, will take him to the area’s big democracies, India, Indonesia, South Korea and Japan, skirting authoritarian China. Those countries and other neighbors have taken steps, though with varying degrees of candor, to blunt China’s assertiveness in the region.

Mr. Obama and Prime Minister Manmohan Singh of India are expected to sign a landmark deal for American military transport aircraft and are discussing the possible sale of jet fighters, which would escalate the Pentagon’s defense partnership with India to new heights. Japan and India are courting Southeast Asian nations with trade agreements and talk of a “circle of democracy.” Vietnam has a rapidly warming rapport with its old foe, the United States, in large part because its old friend, China, makes broad territorial claims in the South China Sea.

The deals and alliances are not intended to contain China. But they suggest a palpable shift in the diplomatic landscape, on vivid display as leaders from 18 countries gathered this weekend under the wavelike roof of Hanoi’s futuristic convention center, not far from Ho Chi Minh’s mausoleum, for a meeting suffused by tensions between China and its neighbors.

China’s escalating feud with Japan over another set of islands, in the East China Sea, stole the meeting’s headlines on Saturday, and Secretary of State Hillary Rodham Clinton proposed three-way negotiations to resolve the issue.

Most Asian countries, even as they argue that China will inevitably replace the United States as the top regional power, have grown concerned at how quickly that shift is occurring, and what China the superpower may look like.

China’s big trading partners are complaining more loudly that it intervenes too aggressively to keep its currency undervalued. Its recent restrictions on exports of crucial rare earths minerals, first to Japan and then to the United States and Europe, raised the prospect that it may use its dominant positions in some industries as a diplomatic and political weapon.

And its rapid naval expansion, combined with a more strident defense of its claims to disputed territories far off its shores, has persuaded Japan, South Korea, Vietnam and Singapore to reaffirm their enthusiasm for the American security umbrella.

“The most common thing that Asian leaders have said to me in my travels over this last 20 months is, ‘Thank you, we’re so glad that you’re playing an active role in Asia again,’ ” Mrs. Clinton said in Hawaii, opening a seven-country tour of Asia that included a last-minute stop in China.

Few of China’s neighbors voice their concerns about the country publicly, but analysts and diplomats say they express wariness about the pace of China’s military expansion and the severity of its trade policies in private.

“Most of these countries have come to us and said, ‘We’re really worried about China,’ ” said Kenneth G. Lieberthal, a China adviser to President Bill Clinton who is now at the Brookings Institution.

The Obama administration has been quick to capitalize on China’s missteps. Where officials used to speak of China as the Asian economic giant, they now speak of India and China as twin giants. And they make clear which one they believe has a closer affinity to the United States.

“India and the United States have never mattered more to each other,” Mrs. Clinton said. “As the world’s two largest democracies, we are united by common interests and common values.”

As Mr. Obama prepares to visit India in his first stop on his tour of Asian democracies, Mr. Singh, India’s prime minister, will have just returned from his own grand tour — with both of them somewhat conspicuously, if at least partly coincidentally, circling China.

None of this seems likely to lead to a cold war-style standoff. China is fully integrated into the global economy, and all of its neighbors are eager to deepen their ties with it. China has fought no wars since a border skirmish with Vietnam three decades ago, and it often emphasizes that it has no intention of projecting power through the use of force.

At the same time, fears that China has become more assertive as it has grown richer are having real consequences.

India is promoting itself throughout the region as a counterweight to China; Japan is settling a dispute with the United States over a Marine air base; the Vietnamese are negotiating a deal to obtain civilian nuclear technology from the United States; and the Americans, who had largely ignored the rest of Asia as they waged wars in Afghanistan and Iraq, see an opportunity to come back in a big way.

In July, for example, Mrs. Clinton reassured Vietnam and the Philippines by announcing that the United States would be willing to help resolve disputes between China and its neighbors over a string of strategically important islands in the South China Sea.

============

China’s foreign minister, Yang Jiechi, reacted furiously, accusing the United States of plotting against it, according to people briefed on the meeting. Mr. Yang went on to note that China was a big country, staring pointedly at the foreign minister of tiny Singapore. Undaunted, Mrs. Clinton not only repeated the American pledge on the South China Sea in Hanoi on Saturday, but expanded it to include the dispute with Japan.  (Marc:  This seems to me a significant play by Clinto)

China’s rise as an authoritarian power has also revived a sense that democracies should stick together. K. Subrahmanyam, an influential strategic analyst in India, noted that half the world’s people now live in democracies and that of the world’s six biggest powers, only China has not accepted democracy.

“Today the problem is a rising China that is not democratic and is challenging for the No. 1 position in the world,” he said.

Indeed, how to deal with China seems to be an abiding preoccupation of Asia’s leaders. In Japan, Prime Minister Naoto Kan and Mr. Singh discussed China’s booming economy, military expansion and increased territorial assertiveness.

“Prime Minister Kan was keen to understand how India engages China,” India’s foreign secretary, Nirupama Rao, told reporters. “Our prime minister said it requires developing trust, close engagement and a lot of patience.”

South Korea was deeply frustrated earlier this year when China blocked an explicit international condemnation of North Korea for sinking a South Korean warship, the Cheonan. South Korea accused North Korea of the attack, but China, a historic ally of the North, was unwilling to hold it responsible.

India has watched nervously as China has started building ports in Sri Lanka and Pakistan, extending rail lines toward the border of Nepal, and otherwise seeking to expand its footprint in South Asia.

India’s Defense Ministry has sought military contacts with a host of Asian nations while steadily expanding contacts and weapons procurements from the United States. The United States, American officials said, has conducted more exercises in recent years with India than with any other nation.

Mr. Singh’s trip was part of his “Look East” policy, intended to broaden trade with the rest of Asia. He has said it was not related to any frictions with China, but China is concerned. On Thursday, People’s Daily, the Communist Party newspaper, ran an opinion article asking, “Does India’s ‘Look East’ Policy Mean ‘Look to Encircle China’?”

That wary view may well reflect China’s reaction to the whole panoply of developments among its neighbors.

“The Chinese perceived the Hanoi meeting as a gang attack on them,” said Charles Freeman, an expert on Chinese politics and economics at the Center for Strategic and International Studies. “There’s no question that they have miscalculated their own standing in the region.”

===============

===============

HANOI, Vietnam — With tensions between China and Japan spilling out at an East Asian summit meeting here, the United States is trying to defuse an escalating diplomatic row over their competing claims to a cluster of small islands in the East China Sea.

On Saturday, Secretary of State Hillary Rodham Clinton proposed a three-way meeting with China and Japan to resolve the dispute, which has raged since last month when Japan detained the captain of a Chinese fishing vessel that struck two Japanese patrol boats near the islands.

“We have certainly encouraged both Japan and China to seek peaceful resolution of any disagreements that they have,” Mrs. Clinton said at a news conference after the summit meeting ended. “It is in all of our interest for China and Japan to have stable, peaceful relations.”

In private conversations with Chinese and Japanese diplomats, Mrs. Clinton “made very clear to both sides that we want the temperature to go down on these issues,” a senior official said. American officials said they were troubled by what one called a sudden, drastic increase in tensions.

As the United States, Russia and 16 Asian nations gathered in Hanoi to discuss regional cooperation, China’s aggressive maritime and territorial claims were sowing unease with several of its neighbors.

When Japan last week reasserted its sovereignty over the islands — which it calls the Senkaku and China calls the Diaoyu — a senior Chinese official accused it of ruining the atmosphere of the summit meeting.

The United States, which had been mostly a bystander in such disputes, has taken a more active role under the Obama administration. Though it has no position on the sovereignty claims, Mrs. Clinton said the United States viewed the islands as protected under the terms of its defense treaty with Japan, which means it will defend them from any foreign attack.

That statement brought a rebuke from the Chinese Foreign Ministry spokesman, Ma Zhaoxu, who said China “will never accept any word or deed that includes the Diaoyu Islands within the scope” of the treaty.

On another issue that has caused friction lately — China’s halting of shipments of strategically important minerals to the United States, Japan and Europe — the Chinese government seemed eager to reassure.

In a meeting with Mrs. Clinton, Foreign Minister Yang Jiechi gave “very clear indications” that China would fulfill its contracts and be a “reliable supplier,” according to an American official.

“While we’re pleased by the clarification received from the Chinese government,” Mrs. Clinton said, “we still think the world as a whole needs to find alternatives” to China as a supplier of the minerals, known as rare earth metals.

China began curtailing shipments to the United States and Europe of these minerals, which are used to make products like cellphones and wind turbines, after the dispute with Japan and a trade investigation by the Obama administration. Then last week, without explanation, Chinese officials said the shipments would resume.

Japan, which released the Chinese captain under heavy pressure from Beijing, had proposed a meeting with Chinese leaders in Hanoi to clear the air. But hopes for that were dashed when Japan’s foreign minister, Seiji Maehara, asserted Japan’s control over the islands last week.

Prime Minister Wen Jiabao of China refused to meet one-on-one with Prime Minister Naoto Kan of Japan, though Mr. Yang said China would consider Mrs. Clinton’s proposed trilateral meeting.

In her formal remarks to the Asian leaders, Mrs. Clinton reiterated that the United States stood ready to help resolve another territorial dispute: one that pits China against Vietnam, the Philippines and other countries over a string of strategically significant islands in the South China Sea.

“The United States has a national interest in the freedom of navigation and unimpeded lawful commerce,” she said. “And when disputes arise over maritime territory, we are committed to resolving them peacefully based on customary international law.”

The administration’s position angers China, which has also sparred with the United States over currency policy and trade. Chinese officials have expressed concern that all the friction could get in the way of a visit to the United States early next year by President Hu Jintao.

At Beijing’s request, Mrs. Clinton added a last-minute China stop to her itinerary, meeting the state councilor for foreign affairs, Dai Bingguo, on Saturday on Hainan Island, east of Vietnam. She pressed Mr. Dai to use Beijing’s influence on North Korea to discourage it from “provocative” acts before the Group of 20 leaders’ meeting in Seoul next month.
Title: Re: China
Post by: G M on October 31, 2010, 09:01:18 AM
(Marc:  This seems to me a significant play by Clinto)

Agreed. I wonder how much direction Hillary gets from Barry, given his general detachment from the job.
Title: The One-Sided Compromise
Post by: G M on October 31, 2010, 01:04:48 PM
http://www.europac.net/commentaries/one_sided_compromise

The One-Sided Compromise
October 28, 2010 - 1:35pm — europac admin
By:
John Browne
Thursday, October 28, 2010

Last weekend, the G-20 finance ministers met in South Korea to find areas of agreement in preparation for the main G-20 gathering in November. The Chinese rebuffed renewed American pleas for them to revalue their yuan. They rejected Secretary Geithner’s suggestion of a four percent cap on current account surpluses. However, in return for accepting America’s continued dollar debasement, the Chinese did agree to “look into” a revaluation of the yuan and the management of trade surpluses. They also agreed to an international self-policing regime to curb currency manipulation. This 'one-sided' compromise was hailed in the Western media as a triumph for Mr. Geithner. The US stock markets and dollar rallied. All looked good for the election season in November.

Unfortunately, compromises are never one-sided; they are only construed as such. Though the reporting failed to emphasize it, Mr. Geithner actually agreed to a massive shift of monetary power in exchange for China's empty concessions. The shareholdings and board composition of the huge and powerful International Monetary Fund (IMF) have now been shifted. China will now become the third largest shareholder of the IMF and the developing economies will get a six percent larger voting share. Two European states will lose their seats on the IMF's board in favor of developing countries.

Meanwhile, China, supported by Russia, India, and even Brazil, continued to lobby hard for the US dollar’s privileged role as the international reserve currency to be replaced by a wide basket of currencies and gold. To this end, the IMF has recently been given additional “emergency” lending facilities. These could be used in a coming sovereign default crisis to 'bail out' Western countries, at which point they would be unable to resist global economic governance under the guise of the reformed IMF.

In short, Secretary Geithner’s “victory” at the G-20 was one only King Pyrrhus could love.

But the blame cannot be laid entirely with Mr. Geithner. The fact that he left the meeting at least saving a bit of face for his delegation is a monumental achievement, considering the dismal condition of the US economy.

Fed Chairman Bernanke appears desperate to flood the United States with another round of quantitative easing (QE-2). In a $13 trillion economy, a release of anything less than $1 trillion would not be seen as effective. Remember, the Fed already injected over $1 trillion after the credit crunch – and we are still in recession. How much will it take to right this listing ship?

When Geithner pledged to China a “gradual” debasement of the dollar, it is astonishing that they didn’t laugh him out of the room.

If he were to make good on his pledge and convince Bernanke to cut QE-2 to, say, $500 billion, the US GDP and stock markets would almost certainly begin to contract. This would threaten the banking system with a second crisis borne out of the ashes, or toxic assets, of the first.

For a frame of reference, the US home mortgage market is valued at some $10.6 trillion. Indeed, foreclosures and past-due loans amount already to some 14 percent of the market, or about $1.5 trillion. Of this staggering figure, the loans delinquent or in foreclosure to which the top three banks (Bank of America, Wells Fargo and JP Morgan) are exposed amount to more than $600 billion, an amount roughly equal to the original TARP bailout fund.

At the same time, thanks to falsely low interest rates, the banks' net interest margins, or the difference between what they earn in loan interest and what they pay to their creditors, are being squeezed severely, while their non-interest earnings are falling, due to lower economic activity and the prohibitions contained in FinReg.

Finally, there is the murky question of how exposed the banks are to the massive derivatives market, a house of cards with a shaky foundation.

As we have described for several years, the US economy is virtually locked into a long arc of decline. There are no politically palatable solutions to this quandary. Until Americans are ready to take their lumps and accept a steep drop in their standard of living, the US government will have no leverage with the creditor nations and no ability to keep its promises. Therefore, we should celebrate when China even gives our Treasury Secretary an audience.

If China does manage to topple the US dollar from its perch as the international reserve currency, our economy will very likely move into free fall as decades of inflation come pouring back into the country. We will be forced to live within our means or face hyperinflation. Losing a few votes at the IMF is a small cost to delay this eventuality, but it also puts us one step closer to it.
Title: Hillary in Cambodia
Post by: Crafty_Dog on November 03, 2010, 05:05:30 AM
Stratfor:

Summary
U.S. Secretary of State Hillary Clinton stopped in Cambodia for two days during an Asia-Pacific tour, becoming the first U.S. secretary of state to visit Cambodia since 2003. Clinton’s visit comes as China is becoming more assertive in its periphery. China has a strong foothold in Cambodia, and the United States is attempting to counterbalance Beijing’s influence in the country.

Analysis
U.S. Secretary of State Hillary Clinton made a stop Oct. 31-Nov. 1 in Cambodia as part of an Asia-Pacific tour including visits to Vietnam, China, Malaysia, Papua New Guinea, New Zealand and Australia. Although this is Clinton’s sixth trip to Asia in the past two years, it is the first time a U.S. secretary of state has visited Cambodia since 2003. The visit comes as China is becoming more assertive, particularly in its periphery as it focuses on its relationships with Pakistan, Nepal, Cambodia and the South Pacific islands, and on territorial disputes in the East China Sea and South China Sea. As China’s assertiveness grows, the United States is taking steps toward a more concrete involvement in Asian affairs.

Speaking at a joint press conference with Cambodian Deputy Prime Minister and Foreign Minister Hor Namhong, Clinton pledged to strengthen the partnership between the United States and Cambodia. When asked by Cambodian students about China’s rising influence, Clinton called on Cambodia to avoid becoming too dependent on any one power and pointed out issues that Cambodia could raise with China, including the dams China built along the Mekong River that could threaten the water supply in downstream countries. Clinton’s statement reflects Washington’s intention to seek a balance of power against China in the country.

Beijing has a strong foothold in Cambodia. China was Cambodia’s top patron and provided military and economic assistance during the country’s Khmer Rouge regime, partly to counter the Soviet Union’s growing influence during the Cold War. After the collapse of the Khmer Rouge, Beijing maintained close ties with Cambodia under King Sihanouk and later Prime Minister Hun Sen. Over the years, China has been Cambodia’s top investor and aid provider. Chinese state-owned news agency Xinhua estimated that China has invested $5.7 billion — more than 20 percent of Cambodia’s total foreign direct investment — between 1994 and 2008. Beijing’s aid to Phnom Penh in 2008 accounted for more than one-fourth of total international aid to the country. Much like its economic assistance to other developing nations, China’s aid to Cambodia does not have as many conditions as aid from Western countries. Chinese aid built infrastructure including bridges, mines, power plants and roads across Cambodia, provided Cambodia with military equipment and helped train hundreds of Cambodian officials, students and soldiers. Moreover, Beijing’s aid programs always go directly to the government, which benefits the officials and improves ties at the governmental level.

From China’s perspective, though Cambodia is not as geopolitically significant as other countries like Myanmar, relations with Phnom Penh are an important counterbalance to Vietnam, a country with which China has had conflicts and long-term territorial disputes over areas of the South China Sea.

Cambodia and the U.S. Strategy in Asia
As part as the broader U.S. strategy to re-engage Southeast Asia, which began in 2009, Washington is adopting both a multilateral approach — including participation in summits related to the Association of Southeast Asian Nations (ASEAN) — and a bilateral approach of dialogue with U.S. allies and nations that Washington previously neglected. Cambodia is no exception. Cambodia fits into broader U.S. interests, but it is not in itself geopolitically significant. Engaging a country where China has such strong influence will require more effort and strategy, and the result of such efforts is not clear (as opposed to dealing with U.S. allies in the region like the Philippines and Thailand, where it is easier to predict whether Washington will achieve its goals). However, Cambodia could benefit from even the initial steps of U.S. re-engagement.

U.S. military assistance to Cambodia resumed in 2005 after a ban following Hun Sen’s seizure of power in 1997. In 2007, U.S. direct assistance to Cambodia also resumed. Since then, the United States has provided more than $4.5 million worth of military equipment and direct assistance, which means Cambodia ranks third among Asia-Pacific countries that have received U.S. aid. Cambodia was also able to expand its military cooperation with the United States and take a broader security role in the region. This was exemplified in mid-July when Cambodia hosted the Angkor Sentinel 2010 military exercise, run jointly with the U.S. departments of defense and state and involving more than 1,000 troops from 26 countries.

In 2009, the Obama administration removed Cambodia from the list of Marxist-Leninist states, which allowed for increased U.S. investment through easier financing and loans. However, Washington suspended military assistance to Cambodia again earlier in 2010 — a move believed to be associated with the deportation of 20 Uighurs to China during Chinese Vice President Xi Jinping’s visit in December 2009. China seized upon this and later offered to provide a greater amount of the same military equipment to Cambodia without being asked. This highlighted the competition between China and the United States in the country, but it also served as a reminder to both sides that options remain open for Cambodia amid the larger powers’ rivalry.

Another benefit Cambodia can gain from Washington’s renewed interest has to do with the $445 million it has owed since the 1970s under the Lon Nol military government, which came into power in a U.S.-backed coup. Phnom Penh has called it a “dirty debt” and insists it cannot afford to repay it. Cambodia has requested that the United States write off the debt, citing China as one of the countries that has forgiven Cambodian debt in the past. Although Clinton’s visit is not meant to settle the matter, the United States and Cambodia have agreed to reopen negotiations over the issue. For Washington, the debt clearance is largely a symbolic matter, as it arranged a debt swap with Vietnam in 2000, but the issue does give the United States more leverage over Cambodia. Phnom Penh is also requesting that Washington grant more tax exemptions for Cambodian exports to the U.S. market to assist Cambodia’s economic development.

Though Cambodia stands to gain from Washington’s re-engagement with Phnom Penh, it must be cautious in managing the balance between China and the United States. Cambodia clearly does not want to jeopardize its relations with China, especially without concrete plans and a preferable offer from the United States. Cambodia’s loyalty to China was evident when, during the recent ASEAN summit, Cambodia backed China’s preference for one-on-one negotiations regarding territorial disputes in the South China Sea and called on ASEAN to avoid internationalizing the issue.

As long as the competition between the United States and China remains peaceful, small nations like Cambodia will look to benefit from the ongoing contest. Although Cambodia has displayed the ability to play a role in power games, it primarily will use offers it gets from both sides to demonstrate that its options remain open. Regardless, it is still difficult for Cambodia to make any sacrifices in the name of Washington because of China’s remaining economic, political and military influence.



Read more: Renewed U.S. Outreach to Cambodia | STRATFOR
Title: Re: China
Post by: G M on November 06, 2010, 11:03:00 AM
http://www.dailymail.co.uk/debate/article-1327158/JOHN-HUMPHRYS-China-A-nation-edge-superpower-anarchy.html

The China powder keg: JOHN HUMPHRYS on a nation that's either on the edge of becoming THE superpower - or exploding into anarchy

Title: Re: China
Post by: Crafty_Dog on November 06, 2010, 06:52:02 PM
If I understand the article correctly, amongst other things it is saying that a trade war with the West could trigger massive economic contraction and social disorder.
Title: Re: China
Post by: G M on November 06, 2010, 07:05:30 PM
It could. It could here as well.
Title: Re: China
Post by: DougMacG on November 06, 2010, 10:25:31 PM
Total US trade with China is about $400 Billion a year (330 in imports, 70 in exports, 2008).  Only in a full scale war would that go to zero.  Let's say we have have a trade interruption of half that - $200 Billion in lost business between the countries.  Our economy is 3 1/2 times larger than theirs.  Just from a numeric standpoint we are 3 1/2 times more able to absorb that loss. 

Now let's say that loss causes economic contraction and social disorder on both sides.  Our system is designed for revolution - to throw the bums out.  We did it last week.  Their system is not.  They have a new generation entering leadership at the PRC politburo but really the same regime since 1949.  A lot has changed in Chinese society since Tiananmen 1989.  If they had a new uprising, I don't think anyone has any clear idea how it would play out.  The leadership must carry a substantial fear of that, IMHO.
Title: Re: China
Post by: G M on November 06, 2010, 10:40:25 PM
I have said several times that the PRC no longer has a belief in communism, not even the party members. Nationalism, stability and an improved standard of living is what the chinese power structure offers now to the masses. They literally must run as fast as they can just to stay in one place to keep the majority of the population that is still living as their impoverished grandparents did compliant. Still, the chinese withstand suffering very few if any of us can't imagine, and the PRC has a massive internal security structure more than willing to machinegun protesters en mass. Put today's Americans in the conditions of the great depression and see how ugly things get in short order. We may well just find out.
Title: Re: China
Post by: Crafty_Dog on November 07, 2010, 04:51:13 AM
So exactly what would be the costs for us of a trade war with China?

a) less trinkets
b) disruption of REEs
c) higher interest rates due to Chinese not buying our bonds?  (Is this inevitable anyway?)
d) what else?
Title: Taoism in China today
Post by: Crafty_Dog on November 07, 2010, 04:52:21 AM
YIN XINHUI reached the peak of Mount Yi and surveyed the chaos. The
47-year-old Taoist abbess was on a sacred mission: to consecrate a newly
rebuilt temple to one of her religion’s most important deities, the Jade
Emperor. But there were as yet no stairs, just a muddy path up to the
pavilion, which sat on a rock outcropping 3,400 feet above a valley. A team
of workers was busy laying stone steps, while others planted sod, trees and
flowers. Inside the temple, a breeze blew through windows that were still
without glass, while red paint flecked the stone floor.


The revival of ancient religious practices in China is partly about belief —
and partly about money.


“Tomorrow,” she said slowly, calculating the logistics. “They don’t have
much ready. . . .” Fortunately, a dozen of her nuns had followed her up the
path. Dressed in white tunics and black trousers, their hair in topknots,
the nuns enthusiastically began unpacking everything they would need for the
next day’s ceremony: 15 sacred scriptures, three golden crowns, three bells,
two cordless microphones, two lutes, a zither, a drum, a cymbal and a sword.
Soon the nuns were plucking and strumming with the confidence of veteran
performers. Others set up the altar and hung their temple’s banner outside,
announcing that for the next few days, Abbess Yin’s exacting religious
standards would hold sway on this mountain.

The temple she was to consecrate was born of more worldly concerns. Mount Yi
is in a poor part of China, and Communist Party officials had hit upon
tourism as a way to move forward. They fenced in the main mountain, built a
road to the summit and declared it a scenic park. But few tourists were
willing to pay for a chance to hike up a rocky mountain. Enter religion.
China is in the midst of a religious revival, and people will pay to visit
holy sites. So the local government set out to rebuild the temple, which was
wrecked by Red Guards during the Cultural Revolution, modestly rebuilt then
torn down when the park was first constructed. Officials commissioned a
30-foot statue of the Jade Emperor, had it hauled to the peak and encased in
the brilliant red pavilion. They then built a bell and a drum tower, as well
as another set of halls devoted to minor deities.

All that was missing was a soul. For that, the temple had to be properly
consecrated. The officials got in touch with Abbess Yin, widely regarded as
a leading expert in Taoist ritual, and soon she was driving the 350 miles
from her nunnery to Mount Yi.

As her rehearsals drew to a close, the abbess went over the next day’s
schedule with a local official. All was in good shape, he said, except for
one detail. Government officials were due to give speeches at 10:30 a.m. She
would have to be finished by then, he said.

“No,” she replied. “Then it won’t be authentic. It takes four hours.” Could
she start earlier and wrap up by then? No, the sun won’t be in the right
position, she replied. The official peered up from the schedule and took a
good look at her — who was this?

Abbess Yin smiled good-naturedly. At a little over five feet tall, she was
solidly built, with a full, smooth face tanned from spending much of her
life outdoors in the mountains. Her dress was always the same plain blue
robe, and she did not wear jewelry or display other signs of wealth. She
shunned electronics; her temple did not have a phone or Internet access. But
over the past 20 years she had accomplished a remarkable feat, rebuilding
her own nunnery on one of Taoism’s most important mountains. Unlike the
temple here on Mount Yi — and hundreds of others across China — she had
rejected tourism as a way to pay for the reconstruction of her nunnery,
relying instead on donors who were drawn to her aura of earnest religiosity.
She knew the real value of an authentic consecration ceremony and wasn’t
about to back down.

The official tried again, emphasizing the government’s own rituals: “But
they have planned to be here at 10:30. The speeches last 45 minutes, and
then they have lunch. It is a banquet. It cannot be changed.”

=======

Page 2 of 5)



She smiled again and nodded her head: no. An hour later the official
returned with a proposal: the four-hour ceremony was long and tiring; what
if the abbess took a break at 10:30 and let the officials give their
speeches? They would cut ribbons for the photographers and leave for lunch,
but the real ceremony wouldn’t end until Abbess Yin said so. She thought for
a moment and then nodded: yes.


The construction of holy sites (like the Taoist complex on Mount Mao) is
seen by officials as a boon for the tourism industry.

RELIGION HAS LONG played a central role in Chinese life, but for much of the
20th century, reformers and revolutionaries saw it as a hindrance holding
the country back and a key reason for China’s “century of humiliation.” Now,
with three decades of prosperity under their belt — the first significant
period of relative stability in more than a century — the Chinese are in the
midst of a great awakening of religious belief. In cities, yuppies are
turning to Christianity. Buddhism attracts the middle class, while Taoism
has rebounded in small towns and the countryside. Islam is also on the rise,
not only in troubled minority areas but also among tens of millions
elsewhere in China.

It is impossible to miss the religious building boom, with churches, temples
and mosques dotting areas where none existed a few years ago. How many
Chinese reject the state’s official atheism is hard to quantify, but numbers
suggest a return to widespread religious belief. In contrast to earlier
surveys that showed just 100 million believers, or less than 10 percent of
the population, a new survey shows that an estimated 300 million people
claim a faith. A broader question in another poll showed that 85 percent of
the population believes in religion or the supernatural.

Officially, religious life is closely regulated. The country has five
recognized religions: Buddhism, Islam, Taoism and Christianity, which in
China is treated as two faiths, Catholicism and Protestantism. Each of the
five has a central organization headquartered in Beijing and staffed with
officials loyal to the Communist Party. All report to the State
Administration for Religious Affairs, which in turn is under the central
government’s State Council, or cabinet. This sort of religious control has a
long history in China. For hundreds of years, emperors sought to define
orthodox belief and appointed many senior religious leaders.

Beneath this veneer of order lies a more freewheeling and sometimes chaotic
reality. In recent months, the country has been scandalized by a Taoist
priest who performed staged miracles — even though he was a top leader in
the government-run China Taoist Association. His loose interpretation of the
religion was hardly a secret: on his Web site he used to boast that he could
stay underwater for two hours without breathing. Meanwhile, the government
has made a conscious effort to open up. When technocratic Communists took
control of China in the late 1970s, they allowed temples, churches and
mosques to reopen after decades of forced closures, but Communist suspicion
about religion persisted. That has slowly been replaced by a more
laissez-faire attitude as authorities realize that most religious activity
does not threaten Communist Party rule and may in fact be something of a
buttress. In 2007, President Hu Jintao endorsed religious charities and
their usefulness in solving social problems. The central government has also
recently sponsored international conferences on Buddhism and Taoism. And
local governments have welcomed temples — like the one on Mount Yi — as ways
to raise money from tourism.

This does not mean that crackdowns do not take place. In 1999, the
quasi-religious sect Falun Gong was banned after it staged a 10,000-person
sit-down strike in front of the compound housing the government’s leadership
in Beijing. That set off a year of protests that ended in scores of Falun
Gong practitioners dying in police custody and the introduction of an
overseas protest movement that continues today. In addition, where religion
and ethnicity mix, like Tibet and Xinjiang, control is tight. Unsupervised
churches continue to be closed. And for all the building and rebuilding,
there are still far fewer places of worship than when the Communists took
power in 1949 and the country had less than half the population, according
to Yang Fenggang, a Purdue University professor who studies Chinese
religion. “The ratio is still radically imbalanced,” Yang says. “But there’s
now a large social space that makes it possible to believe in religion.
There’s less problem believing.”

Taoism has closely reflected this history of decline and rebirth. The
religion is loosely based on the writings of a mythical person named Laotzu
and calls for returning to the Dao, or Tao, the mystical way that unites all
of creation. Like many religions, it encompasses a broad swath of practice,
from Laotzu’s high philosophy to a riotous pantheon of deities: emperors,
officials, thunder gods, wealth gods and terrifying demons that punish the
wicked in ways that make Dante seem unimaginative. Although scholars once
distinguished between “philosophical Taoism” and “religious Taoism,” today
most see the two strains as closely related. Taoist worshipers will often go
to services on important holy days; they might also go to a temple, or hire
a clergy member to come to their home, to find help for a specific problem:
illness and death or even school exams and business meetings. Usually the
supplicant will pray to a deity, and the priest or nun will stage ceremonies
to summon the god’s assistance. Many Taoists also engage in physical
cultivation aimed at wellness and contemplation, like qigong breathing
exercises or tai chi shadowboxing.

As China’s only indigenous religion, Taoism’s influence is found in
everything from calligraphy and politics to medicine and poetry. In the
sixth century, for example, Abbess Yin’s temple was home to Tao Hongjing,
one of the founders of traditional Chinese medicine. For much of the past
two millenniums, Taoism’s opposite has been Confucianism, the ideology of
China’s ruling elite and the closest China has to a second homegrown
religion. Where Confucianism emphasizes moderation, harmony and social
structure, Taoism offers a refuge from society and the trap of material
success. Some rulers have tried to govern according to Taoism’s principle of
wuwei, or nonaction, but by and large it is not strongly political and today
exhibits none of the nationalism found among, say, India’s Hindu
fundamentalists.

===========

Page 3 of 5)



During China’s decline in the 19th and 20th centuries, Taoism also weakened.
Bombarded by foreign ideas, Chinese began to look askance at Taoism’s
unstructured beliefs. Unlike other major world religions, it lacks a Ten
Commandments, Nicene Creed or Shahada, the Muslim statement of faith. There
is no narrative comparable to Buddhism’s story of a prince who discovered
that desire is suffering and sets out an eightfold path to enlightenment.
And while religions like Christianity acquired cachet for their association
with lands that became rich, Taoism was pegged as a relic of China’s
backward past.

But like other elements of traditional Chinese culture, Taoism has been
making a comeback, especially in the countryside, where its roots are
deepest and Western influence is weaker. The number of temples has risen
significantly: there are 5,000 today, up from 1,500 in 1997, according to
government officials. Beijing, which had just one functioning Taoist temple
in 2000, now has 10. The revival is not entirely an expression of piety; as
on Mount Yi, the government is much more likely to tolerate temples that
also fulfill a commercial role. For Taoists like Abbess Yin, the temptation
is to turn their temples into adjuncts of the local tourism bureau. And
private donors who have helped make the revival possible may also face a
difficult choice: support religion or support the state.
Zhengzhou is one of China’s grittiest cities. An urban sprawl of 4.5
million, it owes its existence to the intersection of two railway lines and
is now one of the country’s most important transport hubs. The south side is
given over to furniture warehouses and markets for home furnishings and
construction materials. One of the biggest markets is the five-story Phoenix
City, with more than four million square feet of showrooms featuring real
and knockoff Italian marble countertops, German faucets and American lawn
furniture. Living in splendor on the roof of this mall like a hermit atop a
mountain is one of China’s most dynamic and reclusive Taoist patrons, Zhu
Tieyu.

Zhu is a short, wiry man of 50 who says he once threw a man off a bridge for
the equivalent of five cents. “He owed me the money,” he recalled during a
nighttime walk on the roof of Phoenix City. “And I did anything for money:
bought anything, sold anything, dared to do anything.” But as he got older,
he began to think more about growing up in the countryside and the rules
that people lived by there. His mother, he said, deeply influenced him. She
was uneducated but tried to follow Taoist precepts. “Taoist culture is
noncompetitive and nonhurting of other people,” he says. “It teaches
following the rules of nature.”

Once he started to pattern his life on Taoism, he says, he began to rise
quickly in the business world. He says that by following his instincts and
not forcing things — by knowing how to be patient and bide his time — he was
able to excel. Besides Phoenix City, he now owns large tracts of land where
he is developing office towers and apartment blocks. Although he is reticent
to discuss his wealth or business operations, local news media say his
company is worth more than $100 million and have crowned him “the king of
building materials.” Articles almost invariably emphasize another aspect of
Zhu: his eccentric behavior.

That comes from how he chooses to spend his wealth. Instead of buying
imported German luxury cars or rare French wines, he has spent a large chunk
of his fortune on Taoism. The roof of Phoenix City is now a
200,000-square-foot Taoist retreat, a complex of pine wood cabins, potted
fruit trees and vine-covered trellises. It boasts a library, guesthouses and
offices for a dozen full-time scholars, researchers and staff. His Henan
Xinshan Taoist Culture Propagation Company has organized forums to discuss
Taoism and backed efforts at rebuilding the religion’s philosophical side.
He says he has spent $30 million on Taoist causes, a number that is hard to
verify but plausible given the scope of his projects, including an office in
Beijing and sponsorship of international conferences. His goal, he says, is
to bring the philosophical grounding of his rural childhood into modern-day
China.

Title: Taoism in China today-2
Post by: Crafty_Dog on November 07, 2010, 04:53:11 AM
Third post of the morning

Page 4 of 5)



Last year, Zhu invited several dozen European and North American scholars of
Chinese religion on an all-expenses-paid trip to participate in a conference
in Beijing. The group stayed in the luxurious China World Hotel and were
bused to Henan province to visit Taoist sites. Demonstrating his political
and financial muscle, Zhu arranged for the conference’s opening session to
be held in Beijing’s Great Hall of the People, the Stalinesque conference
center on Tiananmen Square. It is usually reserved for state events, but
with the right connections and for the right price, it can be rented for
private galas. In a taped address to participants, Zhu boasted that “I’ll
spend any amount of money” on Taoism.

Zhu’s chief adviser, Li Jinkang, says the goal is to keep Taoism vital in an
era when indigenous Chinese ideas are on the defensive. “Churches are
everywhere. But traditional things are less so. So Chairman Zhu said: ‘What
about our Taoism? Our Taoism is a really deep thing. If we don’t protect it,
then what?’ ”

Balancing this desire with the imperatives of China’s political system is
tricky. While the Communist Party has allowed religious groups to rebuild
temples and proselytize, its own members are supposed to be good Marxists
and shun religion. Like many big-business people, Zhu is also a party
member. Two years ago, he became one of the first private business owners to
set up a party branch in his company, earning him praise in the pages of the
Communist Party’s official organ, People’s Daily. He has also established a
party “school” — an indoctrination center for employees. His company’s Web
site has a section extolling his party-building efforts and has a meeting
room with a picture of Mao Zedong looking down from the wall. Although it
might seem like an odd way to mix religion and politics, Taoism often
deifies famous people; at least three Taoist temples in one part of China
are dedicated to Chairman Mao.

Until recently, Zhu mostly ignored the contradiction, but he has become more
cautious, emphasizing how he loved Taoist philosophy and playing down the
religion. Still, Zhu continues to support conventional Taoism. His staff
takes courses in a Taoist form of meditation called neigong, and he has sent
staff members to document religious sites, like the supposed birthplace of
Laotzu, who is worshiped as a god in Taoism. He also has close relations
with folk-religious figures and plans to establish a “Taoist base” in the
countryside to propagate Taoism. “The ancients were amazing,” Zhu says.
“Taoism can save the world.”

WHEN ABBESS YIN started to rebuild her nunnery in 1991, she faced serious
challenges. Her temple was located on Mount Mao, among low mountains and
hills outside the eastern metropolis of Nanjing. It had been a center of
Taoism from the fourth century until 1938, when Japanese troops burned some
of the temple complex. As on Mount Yi, communist zealots completed the
destruction in the 1960s. Her temple was so badly damaged that the forest
reclaimed the land and only a few stones from the foundation could be found
in the underbrush.

Unlike Mount Yi, Mount Mao is an extensive complex: six large temples with,
altogether, about 100 priests and nuns. Just a 45-minute drive from Nanjing
and two hours from Shanghai, it is a popular destination for day-trippers
wanting to get out of the city. Even 20 years ago, when Abbess Yin arrived,
tourism-fueled reconstruction was in full swing on Mount Mao. Two temples
had escaped complete destruction, and priests began repairing them in the
1980s. The local government started charging admission, taking half the gate
receipts. But the Taoists still got their share and plowed money back into
reconstruction. More buildings meant higher ticket prices and more
construction, a cycle typical of many religious sites. Although pilgrims
began to avoid the temples because of the overt commercialism, tourists
started to arrive in droves, bused in by tour companies that also got a cut
of gate receipts. Last year, ticket sales topped $2.7 million.

Abbess Yin opted for another model. Trained in Taoist music, she set up a
Taoist music troupe that toured the Yangtze River delta in a rickety old
bus, stopping at communities that hired them to perform religious rituals.
When I first met her in 1998, she used the money to rebuild one prayer hall
on Mount Mao but refused to charge admission. Word of her seriousness began
to spread around the region and abroad. Soon, her band of nuns were
performing in Singapore, Hong Kong and Taiwan.

More nuns began to join. In the Quanzhen school of Taoism, which Abbess Yi
follows, Taoist clergy members live celibate lives in monasteries and
nunneries, often in the mountains. (In the other school, known as Zhengyi,
they may marry and tend to live at home, making house calls to perform
ceremonies.) For Abbess Yin’s young nuns, her temple provided security and
calm in a world that is increasingly complicated. “Here, I can participate
in something profound,” said one nun who asked to be identified only as
Taoist Huang. “The outside world has nothing like this.” For Abbess Yin, the
young people are a chance to mold Taoists in the image of her master. “The
only people who are worth having are older than 80 or younger than 20.”

===================



Page 5 of 5)



Even now, Abbess Yin’s temple is low-key. There are no tourist attractions
like cable cars, gift shops, teahouses or floodlit caves — and, unlike at
most temples, still no admission fee. The atmosphere is also different.
While in some temples, priests seem to spend most of their time hawking
incense sticks or offering to tell people’s fortunes, her nuns are quiet and
demure. Maybe this is why even in the 1990s, when her temple was reachable
only by a dirt road, locals said it was ling — that it had spirit and was
effective. In 1998, I saw a group of Taiwanese visitors abandon their bus
and walk two miles to the temple so they could pray. “This is authentic,”
one told me. “The nuns are real nuns, and it’s not just for show.”

With a growing reputation came donations. One reason that city people often
underestimate Taoism is that its temples are mostly in the mountains, and
its supporters rarely want to discuss their gifts. But one way to gauge its
support is to look at the lists of benefactors, which are carved on stone
tablets and set up in the back of the temple. In Abbess Yin’s temple, some
tablets record 100,000 yuan ($15,000) donations, while others show 10,000
yuan gifts. But even those making just 100 yuan contributions get their
names in stone. With the donations came the current plan to build the $1.5
million Jade Emperor Hall halfway up the mountain, making the Mount Mao
complex visible for miles around. It is due to open on this weekend, with
Taoists from Southeast Asia and across China expected to participate.

Abbess Yin’s success led the China Taoist Association to invite her to
Beijing for training. She learned accounting, modern management methods and
the government’s religious policy. Earlier this year she was placed on one
of the association’s senior leadership councils. She has also begun speaking
out on abuses on the religious scene, urging greater strictness inside
Taoist temples and less emphasis on commerce. Many Taoists, she wrote in an
essay reprinted in an influential volume, have become obsessed with making
money and aren’t performing real religious services but just selling
incense. Too many traveled around China, using temples as youth hostels
instead of as places to study the Tao or to worship.

“Taoism is a great tradition, but our problem is we’ve had very fast growth,
and the quality of priests is too low,” she told me. “Some people don’t even
know the basics of Taoism but treat it like a business. This isn’t good in
the long-term.”

THE DAY AFTER Abbess Yin’s standoff with the official, the big event on
Mount Yi was due to start. She arrived early, making sure her nuns were
ready at 7. The muddy path was now covered with stones that farmers had just
hosed down, making them glisten in the early-morning sun. Workers scraped
paint off the floor, inflated balloons and hung banners, while a television
crew set up its equipment to film the politicians.

Inside the Jade Emperor Pavilion, the nuns milled around, checking one
another’s clothes and hair. All, including the abbess, were wearing their
white tunics and black knee breeches. They pulled on fresh blue robes and
pink capes, while the abbess donned a brilliant red gown with a blue and
white dragon embroidered on the back. She and her top two lieutenants
affixed small golden crowns to their topknots. She was now transformed into
a fashi, or ritual master. Something was about to happen.

Abbess Yin walked over to a drum about two feet in diameter and picked up
two wooden sticks lying on top. She began pounding in alternating rhythms.
The nuns knew their roles by heart and lined up in two rows, flanking the
statue of the Jade Emperor, golden and beautiful, the god’s eyes beatific
slits and his mouth slightly parted as if speaking to the people below.
Still, for now the statue was just a block of wood. The ceremony would
change that. It is called kai guang or “opening the eyes” — literally,
opening brightness. Abbess Yin could open them, but it would take time.

Five minutes passed and sweat glistened on her forehead. Then, six of the
nuns quietly took their places and started to play their instruments. A
young woman plucked the zither, while another strummed the Chinese lute, or
pipa. Another picked up small chimes that she began tinkling, while a nun
next to her wielded a cymbal that she would use to punctuate the ceremony
with crashes and hisses. Abbess Yin stopped drumming and began to sing in a
high-pitched voice that sounded like something out of Peking Opera. Later
during the ceremony she read and sang, sometimes alone and at other times
with the nuns backing her. Always she was in motion: kneeling, standing,
moving backward, turning and twirling, the dragon on her back seeming to
come alive. It was physically grueling, requiring stamina and concentration.
During the occasional lull, a young nun would hand her a cup of tea that she
delicately shielded behind the sleeve of her robe and drank quickly.
Gradually, people began to pay attention. The wives of several officials
stood next to the altar and gawked, first in astonishment and then with
growing respect for the intensity of the performance. When a police officer
suggested they move back, they said: “No, no, we won’t be a bother. Please,
we have to see it.” Workers, their jobs finished, sat at the back. Within an
hour, about 50 onlookers had filled the prayer hall.

On cue, at 10:30, she stopped. A group of local leaders had assembled
outside the hall. They announced the importance of the project and how they
were promoting traditional culture. A ribbon was cut, applause sounded and
television cameras whirred. Then the group piled into minibuses and rolled
down to the valley for the hotel lunch.

The speeches were barely over when Abbess Yin picked up again. As the
ceremony reached its climax, more and more people began to appear, seemingly
out of nowhere, on the barren mountain face. Four policemen tried to keep
order, linking arms to barricade the door so the nuns would have space for
the ceremony. “Back, back, give the nuns room,” one officer said as the
crowd pressed forward. People peered through windows or waited outside,
holding cameras up high to snap pictures. “The Jade Emperor,” an old woman
said, laying down a basket of apples as an offering. “Our temple is back.”
Abbess Yin moved in front of the statue, praying, singing and kowtowing.
This is the essence of the ritual — to create a holy space and summon the
gods to the here and now, to this place at this moment.

Shortly after noon, when it seemed she had little strength left, Abbess Yin
stopped singing. She held a writing brush in one hand and wrote a talismanic
symbol in the air. Then she looked up: the sun was at the right point,
slanting down into the prayer room. This was the time. She held out a small
square mirror and deflected a sunbeam, which danced on the Jade Emperor’s
forehead. The abbess adjusted the mirror slightly and the light hit the god’s
eyes. Kai guang, opening brightness. The god’s eyes were open to the world
below: the abbess, the worshipers and the vast expanse of the North China
Plain, with its millions of people racing toward modern China’s elusive
goals — prosperity, wealth, happiness.
Title: Re: China
Post by: G M on November 07, 2010, 06:00:50 AM
So exactly what would be the costs for us of a trade war with China?

a) less trinkets
**China produces more than just trinkets. A very large percentage of our consumer goods come from China. A trade war will hurt lots of those already suffering and struggling to feed and clothe their families. As the dollar plunges downward, tariffs on chinese goods will make a tangible impact on our already declining standard of living.**

b) disruption of REEs
**Which tends to have a serious impact on high tech dependent nations.**

c) higher interest rates due to Chinese not buying our bonds?  (Is this inevitable anyway?)
**Higher interest rates may be inevitable, but let's try to avoid that, because if China stops buying our bonds and others do as well and the US loses it's AAA rating, the most likely result is the end of the USA as we know it.We need to maintain the status quo until we can unfcuk ourselves.**

d) what else?
**A struggling China may well decide to go for broke and move on Taiwan and other disputed territories, resulting in nothing good for asia or the rest of the world.**

Title: Re: China
Post by: DougMacG on November 07, 2010, 01:25:49 PM
"China produces more than just trinkets. A very large percentage of our consumer goods come from China."

GM has this right.  It isn't the happy meal toys it is the things that fill people's shopping carts at Walmart, Home Depot etc. that people consider household essentials. 

But it doesn't make any sense that China would stop selling to us short of war because that means to closing their cash register to our willing customers.  The REE situation is different, but they appear to already be tightening the screws there, and it is OUR fault for shutting down our own supplies.

The US Government could slap a 20% duty for example on these imports, but that is a highly regressive tax on American consumers, not a direct penalty on China.  Also I'm sure a violation of WTO trade agreements.

Maybe they attack Taiwan in a trade war but I don't see it unless they were planning to attack anyway.  I think instead they will be busy at home with millions of layoffs.

A shorter answer I think is that a trade war right now would bring down the global economy - so neither side will do it.  And I still think the economy and the regime in China is more fragile than ours.
Title: U.S.-China trade war feared
Post by: G M on November 07, 2010, 03:18:00 PM
U.S.-China trade war feared
 
In a visit to Miami, Chinese Ambassador Zhang Yesui said trade sanctions aren't the way to deal with China's undervalued yuan.
BY MIMI WHITEFIELD
mwhitefield@MiamiHerald.com

The Chinese ambassador to the United States said Thursday that if legislation allowing the U.S. to seek trade sanctions against nations it believes manipulate their currencies becomes law, it will set off a U.S.-China trade war.

In one of the most direct statements to date from a Chinese official, Ambassador Zhang Yesui said, ``If the president signs it, it will create a trade war between China and the United States. A trade war will not be good for anyone sitting in this room.''

Zhang made his comments in Miami during a forum organized by the U.S. Chamber of Commerce and the Greater Miami Chamber of Commerce to discuss business opportunities in China.

Critics say China should allow its yuan to float to address China's huge trade imbalance with the United States. Keeping the yuan cheap, they complain, gives China an unfair competitive advantage, making the price of Chinese products low for U.S. consumers and U.S. goods more expensive in the Chinese market.

As criticism mounts during this electoral cycle that China's big trade surplus contributes to U.S. job losses, calls for action against China have intensified.

In late September, the U.S. House of Representatives voted 348-79 for a bill that would allow the U.S. to take into account currency undervaluation to calculate duties on Chinese imports. A similar measure is expected to be introduced in the Senate after the midterm elections.

Zhang said he hopes the Senate doesn't take up a bill and laments that the issue has become politicized. ``I know politics can be very cruel sometimes,'' he said.

``Congress says the exchange rate is the main cause of the trade deficit, that if the currency appreciates it will create more U.S. jobs,'' said Zhang, who took up his post in March after serving as the Chinese ambassador to the United Nations.

``Theoretically speaking, academically speaking, that's not right,'' he said. ``Maybe politically speaking, it's right.''

Since 2000, he said, U.S. exports to China have grown by 33 percent -- and that has created more jobs for U.S. workers. China, the ambassador said, is actively expanding its domestic market and retail consumer sales are expected to reach $2 trillion this year.

Zhang also pointed out that from 2005 to 2007, when the Chinese currency appreciated against the dollar by 21 percent, the Chinese trade surplus with the United States still increased by about 20 percent.

Any disagreements over the impact of the yuan on the trade imbalance should be solved through dialogue and negotiation ``as equal partners,'' he said.

But frustration over China's undervalued yuan is clearly growing, and for some, the time frame for negotiation is just about over.

Earlier this week Treasury Secretary Timothy Geithner called the Chinese currency issue ``the central existential challenge facing the world economy'' and urged the International Monetary Fund to exert ``leverage'' on China.

One of the most outspoken critics of China has been New York Democratic Sen. Charles Schumer, who said he will push a sanction bill in the Senate.

While the House bill was being considered, Schumer said, ``China is merely pretending to take significant steps on its currency. This sucker's game is never going to stop unless we finally call their bluff.''

Schumer represents a state where some regions have suffered heavy job losses in recent years, and he points to outsourcing and unfair competition as the main culprits in the jobs exodus.

In Miami, Zhang spoke to a friendly crowd eager to hear about business possibilities in an economy that is growing at more than 9 percent a year. Last year, total trade between China and the Miami Customs District reached $3.9 billion, making China the region's fourth most important trading partner.


Read more: http://www.miamiherald.com/2010/10/08/v-fullstory/1862882/us-china-trade-war-feared.html#ixzz14dp2Y5h0
Title: "Mystery missile" theory
Post by: G M on November 10, 2010, 06:24:25 AM
I think it's reasonable to assume that the news chopper crew is familiar with the skies around LA and found this to be very atypical. It would be nice if someone were to FOIA the FAA control tower comms and radar returns for the date and time the footage was taken for LAX and other SoCal airports.

So here is a theory:

Means: The People's Liberation Army Navy (Yes, that's their real name) has made serious improvements to their "blue water navy" and has surprised us in the past with their upgraded sub technology.

Motive: China has been very unhappy with the US Navy's navigation of international waters off of China's coast. There have been multiple confrontations and aggressive moves made by the PLAN towards US naval assets in those waters. Tensions in those waters have increased with the still unresolved disputes between China and Japan over uninhabited islands in the East China Sea (see my posts on the topic). Early on in the dispute, the SecDef and Adm. Mullen (If I recall correctly) made statements reaffirming the US-Japan defense treaty. In addition, I recall at least one instance where a PLA general made a direct threat to Los Angeles, saying that China would be willing to trade Shanghai for it in a war with the US.

Opportunity: It is my understanding that the anti-submarine infrastructure we had in place during the cold war no longer exists, or is a shadow if it's former self, allowing a new, stealthy Chinese sub to approach the west coast and launch a test missile as both a proof of concept and a message to the president and DoD that a military conflict in the pacific today can involve both sides of the pacific.
________________________________________________________________________

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8121612/Missile-fired-off-California-coast.html

Robert Ellsworth, a former US Deputy Secretary of Defence, told KFMB, a CBS affiliate in San Diego, one theory might be that it was a military muscle-flexing ploy.

"It could be a test firing of an intercontinental ballistic missile from an underwater submarine, to demonstrate mainly to Asia, that we can do that", he said.

_________________________________________________________________________

http://www.telegraph.co.uk/news/worldnews/asia/china/1917167/Chinese-nuclear-submarine-base.html

Satellite imagery, passed to The Daily Telegraph, shows that a substantial harbour has been built which could house a score of nuclear ballistic missile submarines and a host of aircraft carriers.

In what will be a significant challenge to US Navy dominance and to countries ringing the South China Sea, one photograph shows China’s latest 094 nuclear submarine at the base just a few hundred miles from its neighbours.

Other images show numerous warships moored to long jettys and a network of underground tunnels at the Sanya base on the southern tip of Hainan island.

Of even greater concern to the Pentagon are massive tunnel entrances, estimated to be 60ft high, built into hillsides around the base. Sources fear they could lead to caverns capable of hiding up to 20 nuclear submarines from spy satellites.

The US Department of Defence has estimated that China will have five 094 nuclear submarines operational by 2010 with each capable of carrying 12 JL-2 nuclear missiles.

The images were obtained by Janes Intelligence Review after the periodical was given access to imagery from the commercial satellite company DigitalGlobe.

Analysts for the respected military magazine suggest that the base could be used for "expeditionary as well as defensive operations" and would allow the submarines to "break out to launch locations closer to the US".

It would now be "difficult to ignore" that China was building a major naval base where it could house its nuclear forces and increase it "strategic capability considerably further afield".

_________________________________________________________________

http://www.atimes.com/atimes/China/LC09Ad01.html

Yin Zhou has also called for China to build a naval base in the Middle East, which prompted China's Ministry of Defense to respond that, "China has no plans for an overseas naval base." [3]
A new book by PLA Air Force (PLAAF) Colonel Dai Xu also paints a very dark picture of the future. "China cannot escape the calamity of war, and this calamity may come in the not-too-distant future, at most in 10 to 20 years," writes Dai Xu, according to Reuters. "If the US can light a fire in China's backyard, we can also light a fire in their backyard." [4]

Dai Xu is a widely quoted military analyst who comments frequently about Chinese defense-related matters.

"In recent years, some parts of the Chinese media have become more commercialized. This has led some publishers to focus on publishing sensationalist and nationalistic views that can attract a mass audience," said Bonnie Glaser, senior fellow at the Center for Strategic and International Studies in Washington, DC.

"Academics and PLA officers have seized this opportunity to write books advocating controversial positions in order to make money. Several PLA officers appear as pundits on Chinese TV programs and write for newspapers, viewing this as a means to promote their hardline views, but also to supplement their salaries."

Glaser said that Luo Yuan and Rear-Admiral Yang Yi, an expert with the Institute of Strategic Studies at the National Defense University, were excellent examples of outspoken senior Chinese officers.

Abraham Denmark, a fellow at the Center for a New American Security in Washington, DC, added China's former chief of military intelligence, General Xiong Guangkai, to this list. After his retirement in 2005, Xiong took charge of China's Institute for International Strategic Studies.

"He was very outspoken and rose to the rank of deputy chief of the general staff," said Denmark.

Xiong made huge headlines 15 years ago. At the end of a meeting in 1995 with former US ambassador Chas Freeman - news of the meeting would not be made public until early 1996 and even then Xiong's identity was not revealed - he reportedly said, "And finally, you do not have the strategic leverage that you had in the 1950s when you threatened nuclear strikes on us. You were able to do that because we could not hit back. But if you hit us now, we can hit back. So you will not make those threats. In the end you care more about Los Angeles than you do about Taipei."

Freeman would admit years later that he did not interpret these words as a threat. [6]

However, Xiong's comments in 1995 were not spontaneous or off-script, according to Bhaskar Roy, a strategic analyst and consultant with New Delhi-based South Asia Analysis Group.

"This was a message to the US from China's Central Military Commission [CMC], headed then by Jiang Zemin," said Roy. "On many military and strategic issues, the top echelon use military officials to float proposals either openly or in print, or surreptitiously to pry out reactions."

China does not rely on the PLA exclusively to get the word out. China threatened a military response to the perceived separatist statements of former Taiwan president Lee Teng-hui - "If the Taiwan authorities think the mainland can only launch a propaganda or psychological war, they are mistaken" - in an August 1999 editorial in China's Global Times magazine.

In that article, Global Times even took aim directly at US aircraft carriers by declaring that China's neutron bombs were more than enough to handle them.

This appeared just as China was preparing to celebrate the 50th anniversary of Communist Party rule, and just a few months after the US had bombed the Chinese Embassy in Belgrade, killing three Chinese civilians in the process. So it is safe to say that the sense of Chinese national pride as well as the sense of collective outrage was running at fever pitch that year, and that the tone of these comments in Global Times probably reflected Chinese sentiments at the time.

"Over the past 10 years a clear pattern has emerged whereby Chinese military officers are allowed to be more outspoken - especially in response to US actions and decisions - whenever tensions over Taiwan are mounting. However, what we are seeing today is much milder than what we saw in 1999, for example," said Rodger Baker, director of East Asia analysis at Stratfor, a Texas-based global intelligence firm.

"Yang Yi and Luo Yuan have both been outspoken in reaction to the Taiwan arms sale. Note that both are now retired. PLA officers caution that those individuals do not speak for the PLA," said Glaser. "The Chinese government does not encourage any such outspoken rhetoric, but they also do not discourage it."

"It is likely that allowing such views to be aired in the media serves their interests. It is a way of letting those frustrated with the US vent their anger. It may stimulate others to echo those views, but it also causes others to challenge those views," said Glaser. "And allowing such a debate in the media is increasingly tolerated by the government/party/military. Debates over North Korea's nuclear test and how China should respond is another example in which this has occurred."

Rather than being outspoken, Roy described these PLA officers as merely reflecting China's growing military and economic power - which is "leading to arrogant statements".

"Military exercises such as 'Strike - 09' and the military parade commemorating the 60th anniversary of the PRC [People's Republic of China] last year were meant to demonstrate that China had arrived at the global table. All statements of national importance made by military officers are cleared by the CMC, if not also by a member of the politburo standing committee. Articles written by [military officials] also have clearance from the appropriate higher authorities," said Roy, who described Yang Yi as "one of the leading spokesmen for the CMC".

"[At the time of the 60th anniversary celebration], Yang Yi described this show as China's strategy of a 'rich nation and strong military' and 'active defense embodying the power to control a crisis situation in the neighborhood for a favorable security environment'. The Active Defense doctrine is China's right to intervene beyond its borders [land, sea and air]," said Roy.
Title: Ah so! Sulplise!
Post by: Crafty_Dog on November 10, 2010, 12:11:02 PM
A friend sends me this:
==================

http://www.dailymail.co.uk/news/article-492804/The-uninvited-guest-Chinese-sub-pops-middle-U-S-Navy-exercise-leaving-military-chiefs-red-faced.html#ixzz14tu4BSka

 

The uninvited guest: Chinese sub pops up in middle of U.S. Navy exercise, leaving military chiefs red-faced.   American military chiefs have been left dumbstruck by an undetected Chinese submarine popping up at the heart of a recent Pacific exercise and close to the vast U.S.S. Kitty Hawk - a 1,000ft super carrier with 4,500 personnel on board. By the time it surfaced the 160ft Song Class diesel-electric attack submarine is understood to have sailed within viable range for launching torpedoes or missiles at the carrier.

 

The lone Chinese vessel slipped past at least a dozen other American warships which were supposed to protect the carrier from hostile aircraft or submarines.

And the rest of the costly defensive screen, which usually includes at least two U.S. submarines, was also apparently unable to detect it.    They probably stole our stealth technology.
Title: Mystery missiles
Post by: G M on November 10, 2010, 04:46:15 PM
If my "China did it" theory is correct, the PLA should be crowing about it. Nothing from them. No whistleblowers from the FAA either.
Title: Re: China
Post by: G M on November 10, 2010, 05:39:42 PM
http://blogs.telegraph.co.uk/finance/jeremywarner/100008581/china-may-be-bigger-economy-than-us-within-two-years/

According to the Conference Board, a highly respected economic research association, China will overtake the US as the world’s biggest economy by 2012, or within two years.

OK, so in dollar terms, that’s obviously not going to be the case. It will be a lot longer than two years before China overtakes the US on that measure. But in terms of purchasing power parity, according to the Conference Board’s latest world economic outlook, China is already nearly there, and by 2020 will have reached a size of output which is nearly half as big again as the US.
Title: Re: China
Post by: Crafty_Dog on November 10, 2010, 06:53:51 PM
Now that I read it, I smack my forehead.  Of course! Given how undervalued the yuan is, that sounds plausible.
Title: Re: China
Post by: DougMacG on November 10, 2010, 10:10:20 PM
"China will overtake the US as the world’s biggest economy by 2012, or within two years."

Put me down as ... not buying it.  US GDP is 3 1/2 times that of China.  I don't think the currency under-valuation is off by 3 1/2 fold.

Strong dollar or weak dollar? Please think about it - which is better?  No country ever devalued its way to prosperity. A well known adage.  Yes a weak currency helps the exporter to win the business but only in the same way that lowering your price does.  Lowering your price means you make less.  Then you invest back in that economy and it costs you more.  Right? Undervaluation doesn't lead to prosperity according to (all?) economists.  Why would massive undervaluation be a good thing from anyone's point of view?  In business, why would anyone want to be more than a hair in price under their nearest competitor?
---
From one of the comments at the link: "Best thing in this article is the photo - look closely." - (Obama is bowing to a totalitarian dictator.)
Title: Re: China
Post by: Crafty_Dog on November 11, 2010, 08:24:52 AM
In my travel overseas (e.g. Slovenia, Switzerland this past year) my experience has been that on a PPP basis the US dollar is badly undervalued.  This applies much more I think we all can agree to the dollar/yuan rate.  While the group covered in the article may be overstating things quite a bit, the underlying premise of using PPP to more accurately compare the size of the two economies strikes me as sound.

I agree 100% that devaluing a currency in order to create jobs/export unemployment is a bad idea.
Title: Digital Weapons Help Dissidents Punch Holes in China's Great Firewall
Post by: G M on November 11, 2010, 07:38:21 PM
http://www.wired.com/magazine/2010/11/ff_firewallfighters/

The curt knock on the door of his hotel room woke Alan Huang with a start. He looked at the clock: 5:30 am. Huang had been in Shenzhen, China, for only a few days; who could be looking for him at this hour? He groggily undid the lock—and found a half-dozen police officers in the corridor. The cops were there, they said, because the 37-year-old software engineer was a follower of the Falun Gong spiritual movement. It was December 1999, and the Beijing government had outlawed the sect just months earlier.

In fact, that’s why Huang had left his home in Sunnyvale, California, to come to Shenzhen. A Chinese computer programmer who had long ago emigrated to the US, Huang was back in China to protest the government’s jailing of thousands of his fellow practitioners. He hadn’t expected to join them.

Huang ended up packed into a cold cell with 20 other men, sleeping on the floor in shifts and forced to clean pigpens every day. Huang’s wife, back in California with their 3-year-old daughter, was terrified. After a very long two weeks and the help of a few American politicians, Huang and two other US-based Falun Gong practitioners who had accompanied him were released. “I got lucky because I was a US resident,” he says. “Others were not so lucky.”

It was Huang’s first experience with prison, but not with Communist Party repression. When he was an electrical engineering student at Shanghai’s Fudan University in the 1980s, Huang marched in the pro-democracy protests that roiled China. But the heady days in the streets came to a bloody end when the government sent tanks into Tiananmen Square. Huang wasn’t arrested, but some of his acquaintances disappeared. And he was shocked by the way the government’s ensuing propaganda barrage convinced many Chinese that the protesting students were themselves to blame for the bloodshed. Disillusioned, Huang left China, got his graduate degree at the University of Toronto, and moved to Silicon Valley in 1992. He spent most of the 1990s quietly living the immigrant-American dream, starting a family and building a career. Along the way, he also became one of the Bay Area’s hundreds of Falun Gong practitioners, leading study sessions and group exercises. So when Beijing launched its crackdown on the sect, it felt to Huang like 1989 all over again: The government was brutalizing a peaceful movement while painting its adherents as dangerous criminals. This time, he was determined to fight back. His aborted trip to China and frightening weeks in jail only left him more resolute. “My experience told me that the persecution was more severe than what we can imagine,” Huang says in accented English. “I felt I needed to do something.”
Title: Re: China
Post by: Crafty_Dog on November 12, 2010, 06:23:33 AM
HONG KONG—A plunge in Chinese stocks erased nearly a quarter of a three-month surge, as investors feared that the central bank could soon tighten policy further.

The benchmark Shanghai Composite Index skidded 5.2%, its steepest decline in 14 months, a day after the country reported a sharper-than-expected rise in inflation. Other Asian markets also fell.

"Investors are in a rush to lock in profits as they are concerned that the central bank may launch more tightening measures over the weekend," said Wu Dazhong at Shenyin Wanguo Securities in China.

There was no official signal from Chinese government about any imminent moves.

Official data released Thursday showed China's consumer price index jumped by a more than expected 4.4% in October from a year earlier, boosting expectations for aggressive monetary tightening in coming days to battle rising inflation. China already has required banks to park more cash with the central bank. It also raised interest rates once and tightened controls on capital inflows into the country.

Other Asian markets opened weaker, but took their biggest lumps at the end of the day as European markets opened and global investors withdrew risky bets on stocks and currencies. Hong Kong's Hang Seng Index gave up 1.9% to 24222.58, Japan's Nikkei Stock Average lost 1.4% to 9724.81 and Taiwan's Taiex shed 1.4% to 8316.05.

Friday's drops were reminiscent of market gyrations in April, when the euro plunged and Greece's debt problems came to a boil. As then, investors fled riskier assets, including gold, for safe havens such as the U.S. dollar and the Japanese yen. The Australian dollar, Korean won and several other Asian currencies weakened.

"A lot of the places that were safe places to hide on bad days like are getting hit," said Mark Matthews, strategist at Macquarie Capital in Singapore.

The biggest drops outside China were in markets that have performed particularly strongly this year.

India's Sensex slid 2.1% to 20156.8, its sharpest one-day drop in nearly a month, on a slower-than-expected rise in industrial production during September. Indonesia's JSX index fell 2.1% to 3665.85, but it remains up 45% this year.

South Korea's Kospi eased 0.1% to 1913.12, supported by technology and financial shares after the benchmark skidded Thursday on selling pressure tied to the expiry of options.

Some saw Friday's drop as a natural pullback. Stocks, commodities and Asian currencies have rocketed in the past three months almost uninterrupted, spurred on by hopes the Federal Reserve's quantitative easing program would flood markets with cash. Even with today's fall, the Shanghai Composite Index is up 14.5% in the past three months. The Australian dollar is up 11% versus the greenback.

"The market has been very strong the last few months without any consolidation," said David Lai, a fund manager at Citic Securities in Hong Kong.

While some analysts said the People's Bank of China might raise interest rates by another quarter-point this year, Linus Yip, strategist at First Shanghai Securities in Hong Kong, cited speculation of a possible increase of 0.50 percentage points this year to cool inflationary expectations.

He added that the interest rate increases were unlikely to be "so damaging" to the economy or to the markets, as evidenced by the Indian markets, which recently hit a record high despite six rate increases by the Reserve Bank of India so far this year.

In China, stocks in commodity, airline and automobile sectors suffered heavy losses on mainland bourses. China Southern Airlines and Hong Yuan Securities tumbled the maximum 10% limit allowed by the market authorities. Jiangxi Copper lost 8.9%, SAIC Motor Corp. sunk 8.6% and Yunnan Aluminium Co. slid 9.4%.

Chinese property developers also declined. China Vanke Co. tumbled 7.1% in Shenzhen, Poly Real Estate Group lost 7.3% in Shanghai and Shimao Property Holdings gave up 3.6% in Hong Kong.

In South Korea, the Seoul market erased most early gains, after Thursday's late-session losses. The country's Financial Supervisory Service said Friday it has started a joint investigation with the Korea Exchange to examine heavy selling of Korean stocks by Deutsche Bank on Thursday. Deutsche Bank wasn't immediately available for comment.

The investigation dented shares in the securities sector. Woori Investment & Securities lost 4.7% and Samsung Securities tumbled 5.5%. On the upside, Samsung Electronics added 1.4% as it continues to extend its dynamic random access memory market share.

In Sydney, shares of Australia & New Zealand Banking Group fell 2.1% on speculation of a potential capital raising by the bank if it purchases a 57% stake in Korea Exchange Bank. ANZ is currently conducting due diligence for the stake purchase. Private-equity firm Lone Star, which owns 51% of KEB, is selling the stake in tandem with Export Import Bank of Korea, which owns 6%. KEB shares rose 0.8% in Seoul.

National Australia Bank, which was trading ex-dividend, fell 3.5%.

Banks dropped in Tokyo. Sumitomo Mitsui Financial Group fell 1.8% and Mizuho Financial Group dropped 2.3%.

Disco Corp. plunged 14% after semiconductor grinding-equipment maker slashed its profit outlook for the current fiscal year. Among other chip stocks, Tokyo Electron fell 3.5% and Advantest lost 2.9%.

In Mumbai, shares of tractor and utility vehicle maker Mahindra & Mahindra dropped 4.8%, property developer DLF skidded 5.5% and Hindalco Industries slid 4.7% after official data showed the country's industrial output growth for September slowed to 4.4%, compared with expectations of about 7%.

"With the exception of Indonesia and Korea, India had the weakest year-on-year industrial growth rate of any Asian country in September… The Reserve Bank of India has effectively signaled a pause its rate tightening cycle and today's release suggests this was a wise move," Credit Suisse economist Robert Prior-Wanderforde wrote in emailed comments.

Write to Shri Navaratnam at shri.navaratnam@dowjones.com

Title: Re: China
Post by: G M on November 14, 2010, 11:22:53 AM
http://news.yahoo.com/s/yblog_upshot/20101112/bs_yblog_upshot/chinese-workers-build-15-story-hotel-in-just-six-days

Chinese workers build 15-story hotel in just six days

**I wonder how far along we are on the WTC rebuild, 9+ years in.**
Title: This too is China
Post by: Crafty_Dog on November 15, 2010, 06:08:26 AM


http://www.nzwide.com/swanlake.htm
Title: Shanghai Fire
Post by: Body-by-Guinness on November 15, 2010, 07:41:10 AM
Of course maybe they need to put building up that fast in China. Towering inferno:

http://www.boingboing.net/2010/11/15/towering-inferno.html
Title: Re: China
Post by: Crafty_Dog on November 15, 2010, 09:33:49 AM
Also, IIRC somewhere in this thread there are a bunch of fotos of Chinese high rises that have simply fallen over , , ,
Title: Re: China
Post by: G M on November 15, 2010, 10:37:15 AM
http://seekingalpha.com/article/219599-3-etfs-to-play-america-s-crumbling-infrastructure?utm_utm_medium=twitter

With pathetic levels of job growth and declining consumer confidence, many investors worry that the economy is dangerously close to falling into a double dip recession. This concern over the immediate future has led many to overlook a long-term problem that is getting worse every year and could eventually stand as a significant hurdle to economic growth; much of the infrastructure in the U.S. has aged considerably, and is in desperate need of upgrades.

Although there have been recent plans for high-speed rail and road improvements, as well as continued investment from the recent stimulus bill, some believe there is still a long way to go. The United States currently has one of the worst infrastructure systems for a developed country, and needs to quickly ramp up spending in order to continue to be able to easily transport goods and people around the nation. According to the Infrastructure Report Card put out by the American Society of Civil Engineers, America’s infrastructure grade is a “D,” and we would need at least $2.2 trillion over the next five years in order to get this grade up to an acceptable level. According to a recent report, this large gap can largely be attributed to the nation’s lack of spending on the sector in favor of social programs and increased military spending; the U.S. is quickly falling behind other countries both developed and developing:

    Infrastructure spending as a percentage of Gross Domestic Product (GDP), has declined by 50 percent since 1960. The United States is currently investing less on infrastructure as a percentage of GDP than Europe, China, and many emerging economies. In total, emerging economies alone are likely to spend $1.2 trillion on infrastructure in 2008. America spends only about 2 percent of GDP per year on infrastructure investment (this includes federal, state, local, and private-sector spending). By contrast, that number is about 5 percent in Europe and between 9 percent and 12 percent in China. In developed economies, the average is about 3 percent of GDP, and for developing economies it is around 6 percent. While the United States is trying to make a dent in its massive repair bill, other countries are lapping us in new investment — further shrinking the competitiveness gap between America and the rest of the world.

According to the Report Card, among the worst sectors of America’s infrastructure are drinking water, inland waterways, levees, roads, and wastewater, all of which are given a grade of “D-” by the site. If the U.S. hopes to remain competitive globally–especially against rising powers who have put a premium on infrastructure development and now have boast some of the most modern airports and rail networks in the world–an increased focus on infrastructure is a must.
Title: Haste makes waste?
Post by: Crafty_Dog on November 15, 2010, 03:43:17 PM
a) This is a VERY important theme; into which thread should we continue this discussion?

b) BTW, our electrical system is very badly overloaded and out of date.

c) See pictures on post of June 29 (page two of this thread):
http://dogbrothers.com/phpBB2/index.php?topic=1138.50
Title: Re: China
Post by: G M on November 15, 2010, 03:54:00 PM
IMHO, our crumbling infrastructure should have it's own thread.
Title: Re: China
Post by: Crafty_Dog on November 30, 2010, 06:01:07 AM
Apparently amongst the Wili-leak revelations is that China was transhipping Nork nuke and missile tech to Iran.

What conclusions should be drawn from this for US foreign policy and what specific actions should be taken?
Title: Re: China
Post by: G M on November 30, 2010, 04:43:18 PM
Given the opaque nature of the Chinese power structure, it's difficult to know for sure if such actions were known of at the highest levels and had their approval. The PLA has had the tendency to act more like an organized crime cartel rather than a conventional military since the start of market reforms in China, if not earlier. The NorKs tend to act as cut outs for the PLA's covert actions or act in concert with the PLA generals when they seek to pad their retirement portfolios through less than accepted means.

A very insightful writer described the Chinese power structure as "5% Marxist-Leninist, 95% Sopranos".

My recommendation for a response would be for China to be given a back channel message to cease and desist or we start a tit for tat nuke and missile tech transfer to places they would not like to have it, like a small country called Taiwan.
Title: Re: China
Post by: Crafty_Dog on November 30, 2010, 08:51:55 PM
That seems reasoned to me.
Title: Re: China
Post by: G M on December 04, 2010, 09:53:59 AM
http://www.bloomberg.com/news/2010-12-02/china-nuclear-boom-sees-reactor-builders-risk-know-how-for-cash.html


Nuclear Boom in China Sees Reactor Builders Risk Their Know-how for Cash
By Bloomberg News - Dec 2, 2010 9:00 AM MT

The ballroom of the Grand Hyatt on Beijing’s East Chang An Avenue was packed. The occasion: the first-ever China International Nuclear Symposium, a gathering of China’s top nuclear players and the world’s nuclear power companies, including Westinghouse, Areva SA, and Hitachi-GE.

What brought the Chinese to the Hyatt on Nov. 24 and 25 was a hunger for the latest technology, Bloomberg Businessweek reports in its Dec. 6 issue. What brought the foreigners was money: According to Michael Kruse, consultant on nuclear systems for Arthur D. Little, the Chinese are ready to spend $511 billion to build up to 245 reactors.

Title: Sponge Bob in China
Post by: Crafty_Dog on December 05, 2010, 07:14:47 PM
http://www.youtube.com/watch?v=PxymwN7nYQQ
Title: Re: China
Post by: G M on December 06, 2010, 08:07:43 AM
**Rather than admit what happened, the Chinese gov't suppressed information about the HIV spread through the plasma collection, allowing HIV to gain a foothold in China and many more people to become infected. No government official has ever been held to account for this.**

http://www.unicef.org/infobycountry/china_21607.html

China's children affected by HIV/AIDS

HENAN PROVINCE, China, 11 June 2004—"Daddy died three years ago because of the disease called AIDS." Taohua (not her real name) is a skinny 11-year-old girl with a ponytail. She is shy but well spoken. "First he had headaches. Then he got very sick and went to see a doctor, but he just got sicker. My mom wanted to buy some medicine, but our family was too poor. My daddy didn’t want my mom to spend the money."

Remembering this difficult time, her eyes began to fill with tears. "He was sick at home for more than a year. After the funeral, one of my aunts bought some clothes for me. Other relatives and some of our neighbors gave us money and food, so we would have enough to eat."

Taohua’s family grows wheat, peanuts and fruit trees. They can’t afford any chickens or pigs. They live in a sleepy village in the middle of the vast flatland of Henan Province. The massive wave of urbanization in coastal China has not yet reached here.

But HIV/AIDS did.

In the early 1990s, several blood collection centers were set up near Taohua’s village. Many villagers sold blood to supplement their incomes, happy to earn money for each visit. In order to help them recover from blood loss so that they can sell blood again quickly, other plasma was pooled together from various blood sellers and pumped back into all the sellers' veins. The plasma was not tested for HIV viruses. As a result, HIV spread quickly in this conservative rural area where drug use and extramarital sex are rare. According to official statistics, more than 10,000 HIV/AIDS cases were reported in Henan Province in 2003.

"What I’m most worried about is my mommy. She hasn’t been feeling well lately," Taohua says in a small voice. She then adds: "Daddy sold blood twice, but mom has never done it." According to a local official, Taohua does not yet know that her mother is HIV-positive, most likely as a result of secondary transmission from her late husband.

Like Taohua, some 130 children in her village have already lost one or both parents to AIDS. In Henan Province, more than 2,000 children have been orphaned by AIDS, most of them between the ages of six and 15 years. Some of the children are HIV-positive also. If the surviving parent is too sick to take care of his or her children, the youngsters generally live with their grandparents or in a local welfare centre.
Title: Top Test Scores From Shanghai Stun Educators
Post by: G M on December 07, 2010, 05:42:12 PM
http://www.nytimes.com/2010/12/07/education/07education.html?_r=1&pagewanted=all

Top Test Scores From Shanghai Stun Educators
By SAM DILLON
Published: December 7, 2010


American officials and Europeans involved in administering the test in about 65 countries acknowledged that the scores from Shanghai — an industrial powerhouse with some 20 million residents and scores of modern universities that is a magnet for the best students in the country — are by no means representative of all of China.

About 5,100 15-year-olds in Shanghai were chosen as a representative cross-section of students in that city. In the United States, a similar number of students from across the country were selected as a representative sample for the test.

Experts noted the obvious difficulty of using a standardized test to compare countries and cities of vastly different sizes. Even so, they said the stellar academic performance of students in Shanghai was noteworthy, and another sign of China’s rapid modernization.

The results also appeared to reflect the culture of education there, including greater emphasis on teacher training and more time spent on studying rather than extracurricular activities like sports.

“Wow, I’m kind of stunned, I’m thinking Sputnik,” said Chester E. Finn Jr., who served in President Ronald Reagan’s Department of Education, referring to the groundbreaking Soviet satellite launching. Mr. Finn, who has visited schools all across China, said, “I’ve seen how relentless the Chinese are at accomplishing goals, and if they can do this in Shanghai in 2009, they can do it in 10 cities in 2019, and in 50 cities by 2029.”
Title: Re: Chinese test scores
Post by: DougMacG on December 08, 2010, 06:32:50 AM
Well noted in the story is that is Shanghai and not all of China.  A fairer comparison in the US would be a representative sample of 5100 Chinese American students in American schools.  I believe we have some demographic groups (like whites, blacks and Hispanics) that are not testing as well as Asian Americans.

The US stays ahead of China and everyone else because we have a system that fosters innovation, excellence, entrepreneurial spirit, capital formation and productivity...  Whoops. That line of thinking died in about 1963 with John F. Kennedy.

Americans may rank 15th out of the top 15, but they consistently rank first about how they feel about how they performed.
Title: Re: China
Post by: G M on December 08, 2010, 06:37:58 AM
If we were smart, we'd try to get these students to become Americans. Alas, we only care about those who break the law to get here.
Title: Re: China
Post by: JDN on December 08, 2010, 08:13:34 AM
If we were smart, we'd try to get these students to become Americans. Alas, we only care about those who break the law to get here.

I agree, (I am a bit surprised you posted this comment) we should selectively open up, double triple and expand legal immigration attracting the best and brightest from abroad.  Offer easy visa's and paths to citizenship to scientists, computer experts, mathematicians, physicians, engineers, etc. 

America is the land of opportunity.  Because of our openness and entrepreneurial spirit I think many qualified Chinese, Indians, Japanese, etc. would love to come
and help build America.

And you are also right, instead we seem to only concentrate and spend resources on those who break the law to get here.
Title: Re: China
Post by: Crafty_Dog on December 08, 2010, 08:26:17 AM
I too support the best and the brightest coming to the America.
Title: Re: China
Post by: G M on December 08, 2010, 01:40:58 PM

[/quote]

(I am a bit surprised you posted this comment)

[/quote]

Why?
Title: Re: China
Post by: JDN on December 08, 2010, 01:52:26 PM
Perhaps I am mistaken or I am confusing you with CCP but I thought in general you were
against increasing legal immigration.

Also, I thought it was your opinion that we don't care enough about those who
break the law to get here.  You implied that we care too much about this group.
Title: Re: China
Post by: G M on December 08, 2010, 09:18:23 PM
I am and always have been strongly in favor of LEGAL immigration. I am angered at those that encourage illegal immigration.
Title: Re: China
Post by: Crafty_Dog on December 09, 2010, 03:42:35 AM
That's the way I remember it JDN.
Title: Re: China
Post by: JDN on December 09, 2010, 06:46:55 AM
I am and always have been strongly in favor of LEGAL immigration. I am angered at those that encourage illegal immigration.

I too remember you saying that.  You have never objected to "legal" immigration.

But I was suggesting that we double and triple LEGAL immigration; truly open our
gates for the "best and the brightest" to come here.  I had thought that you
were against this, or as I mentioned perhaps it was CCP who I know is against significantly
increasing legal immigration.  There are points on both sides.

I understand and AGREE with your anger at those who encourage illegal immigration. 
For example I don't understand the DREAM bill.  And I really don't understand how these students
attended University throughout America paying only low cost subsidized resident rates.  I have many LEGAL foreign friends
who are attending college and ALL pay a surcharge because they are a foreigner and cannot be classified as a resident
no matter how long they live here full time.  Nor are they eligible for the so called Dream bill. 

However, in your comment I focused on "ALAS, we ONLY care about those who break the law to get here."
As if you have some "sorrow, grief, pity" for those who break the law to get here.

I have no pity, grief, or sorrow.  It was my mistake; I must have misinterpreted you; it seems you too
are simply "angered at those that encourage illegal immigration". 

Title: WSJ: Confucius Peace Prize
Post by: Crafty_Dog on December 09, 2010, 07:23:50 AM
By JEREMY PAGE
BEIJING—A ceremony Friday to mark the award of the Nobel Peace Prize to Liu Xiaobo, a jailed Chinese dissident, is turning into a global showdown.

China is preventing Mr. Liu, his family and friends from attending the ceremony in Oslo, making it the first time there will be no one at the ceremony to accept the award since 1936, when it went to Carl von Ossietsky, a German journalist held in a concentration camp by Nazi Germany.

A furious Chinese government has deployed its rapidly expanding global influence to challenge the Nobel Committee's legitimacy and to press other countries to boycott the ceremony, which will feature an empty chair with a photograph of Mr. Liu on it. The ceremony will be followed by a concert hosted by Hollywood stars Denzel Washington and Anne Hathaway.

A newly established Chinese organization has even introduced its own version of the award—the Confucius Peace Prize—which it says will be awarded on Thursday to Lien Chan, a politician from Taiwan who has promoted reconciliation with mainland China.

The Nazis and the Soviets both established their own prizes to rival the Nobels.

A key question for the Communist Party is whether its efforts will backfire by drawing domestic attention to Mr. Liu, who was little known in China until state media launched a vitriolic campaign to demonize him.

Mr. Liu, a former literature professor who took part in the pro-democracy protests in Beijing in 1989, was sentenced to 11 years in prison for "state subversion" over his role in organizing a dissident charter calling for multiparty elections.

For the Nobel Committee, meanwhile, the issue is whether this year's prize—which follows last year's controversial award to President Barack Obama—will promote democratic change in China, as it hopes, or reinforce the party's determination to stifle it.

The committee has, as usual, invited only the ambassadors of the 65 nations that have embassies in Oslo to attend the ceremony. But 20 have declined—double the number last year—including many that either have warming relations with China, or share its resentment of being pushed on human rights and democracy by the West.

The countries that have declined are Afghanistan, Colombia, Cuba, Egypt, Iran, Iraq, Kazakhstan, Morocco, Pakistan, the Philippines, Russia, Saudi Arabia, Serbia, Sri Lanka, Sudan, Tunisia, Ukraine, Venezuela, Vietnam and China itself.

One diplomat from Sri Lanka initially told The Wall Street Journal that its embassy in Oslo was sure to send someone "if nobody had a cold," but later said that no one would attend, saying: "We are a small country and China is now our friend."

China provided crucial economic aid, arms and diplomatic support to Sri Lanka during the final stages of the war against the Tamil Tiger rebel movement in 2009.

China also was outraged when the Dalai Lama, Tibet's exiled spiritual leader, won the prize in 1989, but made no effort to organize a boycott, isolated as it was after the military crackdown on pro-democracy protests around Tiananmen Square earlier that year.

Activist Laureates
See advocates for political change who have received the Nobel Peace Prize.

View Interactive

Reuters
 .."I don't think they held any kind of campaign in 1989—they just stayed away and showed their displeasure. Of course, China is much stronger now," Geir Lundestad, secretary of the Norwegian Nobel Committee, told The Wall Street Journal. "Even the Soviets did not mount a campaign like this."

When the Soviet dissident Andrei Sakharov won the prize in 1975, Moscow also declined to let him collect it, but did permit his wife, Yelena Bonner, to attend the ceremony.

In 1983, Communist authorities in Poland also permitted the wife of Lech Walesa—the dissident trade unionist—to receive his prize.

Aung San Suu Kyi, Burma's opposition leader, was under house arrest when she won in 1991, but her then-18-year-old son accepted the award on her behalf. Ms. Suu Kyi was released from house arrest last month.

The Nobel Committee, Western governments and human-rights activists have repeatedly urged China to free Mr. Liu, as well as his wife, Liu Xia, who has been under effective house arrest since he won the prize.

Vaclav Havel, the former Czech president, and Archbishop Desmond Tutu of South Africa—another Nobel Peace laureate—made a public appeal last week for China to release Mr. Liu and his wife or risk losing its credibility as a world power.

View Full Image

Getty Images
 
Protesters demand the release of jailed Nobel Peace laureate Liu Xiaobo in front of the Chinese Consulate in Los Angeles on Dec. 5, less than a week before the award ceremony in Oslo.
.However, China has gone on the offensive, denouncing the award as part of a Western conspiracy. It has detained scores more dissidents, and prevented dozens of others from leaving China in case they try to attend Friday's ceremony.

It has delayed talks on a trade deal with Norway, even though the government there says it has no influence over the Nobel Committee, and has warned other countries that they will have to "bear the consequences" if they attend the ceremony.

Jiang Yu, a Chinese Foreign Ministry spokeswoman, Tuesday called the Nobel Committee "clowns" and accused the Norwegians of "orchestrating an anti-China farce by themselves."

She said more than 100 countries and organizations have expressed explicit support for China's opposition to this year's Peace Prize.

The Nobel Committee countered by saying that ambassadors from 44 of the 65 countries invited would attend the ceremony—along with about 30 to 40 of Mr. Liu's supporters from around the world. But only one of those was on a list of 143 that Liu Xia invited to attend, as most have been unable to leave China. He is Wan Yanhai, an AIDS activist who moved to the U.S. last year. "The ceremony is really important—it's a symbolic event for the Chinese democratic movement," Mr. Wan said in an interview. "This will be like a catalyst in a chemical process. What the Communist Party is doing now is to show how ugly authoritarian government is."

Title: Re: China
Post by: DougMacG on December 09, 2010, 08:44:36 AM
The accusation that GM changed his mind has turned out to be unfounded.   :wink:
Title: Re: China
Post by: G M on December 09, 2010, 08:45:46 AM
I was being sarcastic. Whenever in doubt, it's pretty safe to assume that's what I'm doing.  :-D
Title: Shanghai test scores
Post by: G M on December 10, 2010, 05:36:52 PM
http://news.yahoo.com/s/csm/20101209/wl_csm/348667

Shanghai test scores have everyone asking: How did students do it?
The Christian Science Monitor

   
By Ariel Zirulnick Ariel Zirulnick – Thu Dec 9, 5:14 pm ET

When the results of an international education assessment put Shanghai and several other Asian participants ahead of the US and much of Western Europe, many Americans were shocked. “Top test scores from Shanghai stun educators” read the headline in The New York Times.

Meanwhile, many education and Asia experts felt vindicated. After years of saying that China was rapidly catching up or surpassing the US and the rest of the West in education, here was hard proof.

The assessment, released Tuesday and conducted by the Programme for International Student Assessment (PISA), measures academic capabilities in math, science, and reading among OECD member nations and a few dozen other countries and what it calls economic partners, such as Shanghai. The scores come from the results of a test taken by 15-year-olds in these countries. There was no evaluation of China as a whole. Shanghai, Hong Kong, and Macao were all assessed separately.

RELATED: US students halt academic 'free-fall,' but still lag in global testing

Shanghai trounced the OECD average: in reading, it got a 556, versus a 493 OECD average; in science, the score was 575 versus 501; and in math, there was a difference of more than 100 points – a 600 in Shanghai versus a 496 average. For a country that emerged only 30-plus years ago from the Cultural Revolution – when education was saturated with politics and many children lost years of schooling – the results left many observers with one question: How did they do it?

Experts ascribe Shanghai’s success to China's assessment that academic achievement is foremost the result of hard work rather than a good teacher or innate talent.

“Students not only work harder, but they attribute their academic success to their own work,” says James Stigler, a professor of psychology at UCLA who has conducted research on the Chinese educational system. “Chinese students say the most important factor is studying hard. They really believe that’s the root of success in learning.”

That emphasis on hard work is complemented by several other key practices: active engagement by parents, early efforts to build up attention spans, and families' emphasis on spending long hours in school and on homework while doing little else. Parents and students alike believe that buying in has a payoff – future success.
Title: I am worried
Post by: Crafty_Dog on December 13, 2010, 07:51:03 AM
Pravda on the Hudson is now starting to say things I have been saying here:

For nearly two years, China’s turbocharged economy has raced ahead with the aid of a huge government stimulus program and aggressive lending by state-run banks.

But a growing number of economists now worry that China — the world’s fastest growing economy and a pillar of strength during the global financial crisis — could be stalled next year by soaring inflation, mounting government debt and asset bubbles.

Two credit ratings agencies, Moody’s and Fitch Ratings, say China is still poised for growth, yet they have also recently warned about hidden risks in its banking system. Fitch even hinted at the possibility of another wave of nonperforming loans tied to the property market.

In the late 1990s and early this decade, the Chinese government was forced to bail out and recapitalize these same state-run banks because a soaring number of bad loans had left them nearly insolvent.

Those banks are much stronger now, after a series of record public stock offerings in recent years that have raised billions of dollars from global investors.

But last week, an analyst at the Royal Bank of Scotland advised clients to hedge against the risk that a flood of cash into China, coupled with soaring inflation, could result in a “day of reckoning.”

A sharp slowdown in China, which is growing at an annual rate of about 10 percent, would be a serious blow to the global economy since China’s voracious demand for natural resources is helping to prop up growth in Asia and South America, even as the United States and the European Union struggle.

And because China is a major holder of United States Treasury debt and a major destination for American investment in recent years, any slowdown would also hurt American companies.

Aware of the risks, Beijing has moved recently to tame its domestic growth and rein in soaring food and housing prices by raising interest rates, tightening regulations on property sales and restricting lending.

At the end of the Central Economic Work Conference, a high-level annual economic policy meeting that concluded on Sunday, Beijing promised to combat inflation and stabilize the economy. Those pledges came just days after the central bank ordered banks to set aside larger capital reserves in a bid to slow lending, the sixth time it has done so this year. And the government reported on Saturday that the consumer price index had climbed 5.1 percent in November, the sharpest rise in nearly three years.

Analysts say more tightening measures are expected in the coming months but that the challenges are mounting.

“There are so many moving pieces,” said Qu Hongbin, the chief China economist for HSBC in Hong Kong. “It wouldn’t be honest to say things aren’t complicated.”

Optimists say China has been adept at steering the right economic course over the last decade, ramping up growth when needed and tamping it down when things get too hot.

But this time, Beijing is not just struggling with inflation, it is also trying to restructure its economy away from dependence on exports and toward domestic consumption in the hopes of creating more balanced and sustainable growth, analysts say.

China is also facing mounting international pressure to let its currency, the renminbi, rise in value. Some trading partners insist China is keeping its currency artificially low to give Chinese exporters a competitive advantage.

Beijing contends that raising the value of its currency would hurt coastal factories that operate on thin profit margins, forcing them to lay off millions of workers.

The most immediate challenge appears to be inflation, which some analysts say may be even more serious than the new figures suggest. Housing prices have skyrocketed. And prices for milk, vegetables and other foods have soared this year.

“The money supply is too large,” said Andy Xie, an economist based in Shanghai who formerly worked at Morgan Stanley. “They increased the money supply to stimulate the economy. Now land prices have jumped 20 times in some places, 100 times in others. Inflation is broad-based. Go into a supermarket. Milk is more expensive in China than it is in the U.S.”

In Shanghai, where the average monthly wage is about $350, a gallon of milk now costs about $5.50.

Wages have also risen sharply this year in coastal provinces amid reports of labor shortages and worker demands for higher pay. Many analysts expect more wage increases next year.

That may be good for workers, analysts say, but it will also change the dynamics of the Chinese economy and its export sector while contributing to higher inflation.

Beijing is now under pressure to mop up excess liquidity after state banks went on a lending binge during the stimulus program that got under way in early 2009. Analysts say a large portion of that lending was diverted to speculate in the property market.

=======

In addition to restricting lending at the big state banks, Beijing recently moved to close hundreds of underground banks and attempted to restrain local governments from borrowing to build huge infrastructure projects, some of which may be wasteful, according to analysts.

Some economists say the real solution is for Beijing to privatize more industries and let the market play a bigger role. After the financial crisis hit, the state assumed more control over the economy.
Now, state banks and big state-owned companies are reluctant to surrender control over industries where they have monopoly power, analysts say.

“Inflation is not the most serious problem,” says Xu Xiaonian, a professor of economics at the China Europe International Business School in Shanghai. “The most fundamental problem we have to resolve is structural. We need more opening up and reform policies. Look at the state monopolies in education, health care, telecom and entertainment. We need to break those up. We need to create more jobs and make the economy more innovative.”

Zhiwu Chen, a professor of finance at Yale, agrees.

“The state economy and the local governments will be where the future problems occur,” Professor Chen said in an e-mail response to questions on Sunday. “They will be the sources of real troubles for the banks and the financial system.”

Though no economist is forecasting the end to China’s decades-long bull run, many have turned more cautious. And Fitch Ratings recently released a study it conducted with the forecasting consultancy Oxford Economics that examined the effect a slowdown in China would have on the rest of the world.

Fitch expects China’s economy to grow at an annual rate of 8.6 percent next year, down from about 9.7 percent this year. But the report, which was released a few weeks ago, said that if growth slowed to 5 percent, the economies of many other Asian nations would suffer seriously. Steel, energy and manufacturing industries around the world would also be hard hit, it said.

Fitch analysts are careful not to forecast a sharp slowdown in China. But if one comes, they say, it is “most likely to stem from a combination of property crash and banking crisis.”
Title: POTH: US vulnerable for years on REEs
Post by: Crafty_Dog on December 15, 2010, 07:55:14 AM
HONG KONG — The United States is too reliant on China for minerals crucial to new clean energy technologies, making the American economy vulnerable to shortages of materials needed for a range of green products — from compact fluorescent light bulbs to electric cars to giant wind turbines.

Molycorp, an American company, stopped mining for rare earths in Mountain Pass, Calif., in 2002, but expects to reopen the mine in 2012.
So warns a detailed report to be released on Wednesday morning by the United States Energy Department. The report, which predicts that it could take 15 years to break American dependence on Chinese supplies, calls for the nation to increase research and expand diplomatic contacts to find alternative sources, and to develop ways to recycle the minerals or replace them with other materials.

At least 96 percent of the most crucial types of the so-called rare earth minerals are now produced in China, and Beijing has wielded various export controls to limit the minerals’ supply to other countries while favoring its own manufacturers that use them.

“The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes,” the report says, which also mentions some concerns about a few other minerals imported from elsewhere, such as cobalt from the Congo.

The Energy Department report is being released the same morning that cabinet officials from China and the United States will meet in Washington to discuss economic and commercial issues.

While no detailed agenda has been released, the talks are expected to include American objections to China’s tightening restrictions on rare earth exports — like a two-month halt this autumn on shipments to Japan, and a shorter-lived slowdown of exports to the United States and Europe.

And on Tuesday, China’s finance ministry announced on its Web site, and the official Xinhua news agency later reported as well, that China plans to increase its export taxes on some rare earths next year. The ministry did not say how much the taxes would increase. Although World Trade Organization rules ban export taxes, China has imposed them on rare earths for the last four years.

David Sandalow, the assistant secretary of energy for policy and international affairs, who oversaw preparation of the Energy Department report, said in a telephone interview that the timing of the report’s release and the American-China cabinet meetings was coincidental.

But the report reflects an emerging view within the American government that domestic sources of rare earths are needed, in addition to suppliers in many other countries, to ensure the viability of clean energy manufacturing in the United States.

“We can build a new industry and put our clean energy future on a sound footing, creating many new jobs in the process,” Mr. Sandalow said.

Still, the report presents a fairly gloomy assessment of the United States’ ability to wean itself from Chinese imports. For as long as the next 15 years, the supplies of at least five minerals that come almost exclusively from China will remain as vulnerable to disruption as they are absolutely vital to the manufacture of small yet powerful electric motors, energy-efficient compact fluorescent bulbs and other clean energy technologies, the report said.

The five minerals are medium and heavy rare earth elements of which China mines an estimated 96 percent to 99.8 percent of the world’s supply: dysprosium, terbium, neodymium, europium and yttrium.

China also increasingly dominates the manufacture of clean energy technologies that require such minerals, including the production of million-dollar wind turbines. Chinese export restrictions have added up to $40 a pound to world prices, which makes a big difference particularly for some of the less expensive rare earths, like lanthanum, that sell for several dollars a pound in China.

That is among the reasons, along with cheap labor and extensive Chinese government subsidies, that many clean energy manufacturers have found it cheaper to shift production to China.

Mr. Sandalow said that wind turbine manufacturers were capable of building very large turbines without rare earths. But using rare earths could reduce the per megawatt cost of wind energy and improve its competitiveness through savings on other materials, like steel and copper.

He cautioned that the United States had been putting far fewer resources than China into exploring ways to use the powerful magnetic and other properties of rare earths.

“There are thousands of rare earth researchers in China and dozens in the United States, and that underscores both the challenge and the opportunity,” he said. “Their expertise in this area is significant.”

China’s finance ministry, in announcing plans to raise export taxes on some rare earths, did not indicate which minerals might be affected.

=================

Page 2 of 2)



Since 2006, China has imposed an export tax of 15 percent on light rare earths like lanthanum and cerium, which are needed for oil refining and glass manufacturing, and 25 percent on heavy rare earths like dysprosium and terbium.

China mines about 92 percent of the world’s light rare earths.
Dysprosium, which helps rare earth magnets preserve their magnetism at high temperatures, is mined almost exclusively in southern China and sells for $95 a pound in China and $135 a pound outside, including the export tax.

Dysprosium has emerged as the mineral most vital to clean energy industries yet most vulnerable to supply disruptions, the report said.

Dudley Kingsnorth, a prominent rare earth mining consultant in Perth, Australia, said he agreed that a dysprosium shortage was likely. He added that he expected that a rare earth shortage would slow the overall adoption of new rare earth technologies by clean energy industries for at least the next five years.

American and Japanese officials have said that they might file a legal challenge at the World Trade Organization to China’s taxes on rare earth exports, as well as on quotas that China imposes on rare earth exports.

Until this autumn, Chinese officials had portrayed their rare earth policies as an effort to force high-tech companies to move their factories to China and retain supplies for domestic industries. The Chinese government has recently shifted to describing the export restrictions as an environmental measure, noting that extracting and processing the minerals can be a highly toxic process that has also resulted in leaks of radioactive mining waste into the groundwater in northern China.

But while W.T.O. rules allow export restrictions for environmental reasons, that is only if a country also restricts domestic consumption, which China has not done.

Demand for rare earths and China’s virtual chokehold on supplies have prompted some overseas companies to enter, or re-enter, the field.

Molycorp, an American company that in August made an initial public offering of its shares on the New York Stock Exchange, plans to open in 2012 a large rare earth mine at Mountain Pass, Calif., that closed in 2002 after prices were undercut by Chinese competitors. Molycorp announced on Monday that it had received the last of the construction permits needed to proceed.

The Lynas Corporation of Australia plans to open at the end of next year a large rare earths mine at Mount Weld, Australia.

But both the Molycorp and Lynas mines will produce mostly light rare earths and relatively little of the medium and heavy rare earths needed for magnets and other significant clean energy applications.

Dozens of small mining companies hope to open new mines in the United States and elsewhere that could tap reserves of medium and heavy rare earths. But these small companies face formidable legal, financial, marketing and management obstacles, the Energy Department report said.
Title: Poor China.....
Post by: G M on December 17, 2010, 08:25:15 AM
http://news.yahoo.com/s/ap/20101217/ap_on_re_as/as_china_japan

Beijing says Japan making irresponsible remarks


– Fri Dec 17, 4:22 am ET

BEIJING – Beijing is accusing Japan of making irresponsible remarks in its new defense guidelines targeting China.

Foreign Ministry spokeswoman Jiang Yu says China is a force for peace and development in Asia and threatens no one.

**Let's see, China and Russia threaten Japan, now China protests when Japan recognizes the looming threats.**
Title: WSJ: China squeezes foreign companies
Post by: Crafty_Dog on December 29, 2010, 10:58:08 AM
By SHAI OSTER, NORIHIKO SHIROUZU And PAUL GLADER
BEIJING—Foreign companies have been teaming up with Chinese ones for years to gain access to the giant Chinese market. Now some of the world's biggest companies are taking a risky but potentially rewarding second step—folding pieces of their world-wide operations into partnerships with Chinese companies to do business around the globe.


General Electric Co. is finalizing plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic brains of aircraft. The deal with Aviation Industry Corp. of China would give GE access to a Chinese government project aimed at challenging Boeing Co. and Airbus in the civilian-aircraft market.

General Motors Co. established a joint venture this year with SAIC Motor Corp., its longtime partner in China, to produce and sell their no-frills Wuling-brand microvans in India, and eventually in Southeast Asia and other emerging markets as well.

The two deals show China Inc.'s growing international ambitions, as well as its increasing leverage over foreign partners. To make the GE deal happen, GE Chief Executive Jeffrey Immelt made an extraordinary concession, agreeing to fold into the venture all of GE's existing world-wide business in nonmilitary avionics. GM, in its deal, contributed technology, its manufacturing facilities in India and use of its Chevrolet brand name in that market.

Several forces are motivating China's foreign partners to strike global deals that would have been unthinkable a few years back. China's big government-backed companies now have enormous financial resources and growing political clout, making them attractive partners outside China. In addition, the Chinese market has become so important to the success of multinational companies that Beijing has the ability to drive harder bargains.



Joint Flight
Western companies working on China's C919 jet mostly through joint ventures

General Electric Co.
Avionics, cockpit-display systems, on-board maintenance systems and flight recorders.

Rockwell Collins Inc. Communication, navigation and surveillance systems.

Eaton Corp.
Fuel and hydraulic systems, cockpit-panel assemblies and dimming-control system.

Hamilton Sundstrand Corp.
Electrical power systems.

Honeywell International Inc. Flight-control systems, auxiliary-power unit, wheels and brakes.

Liebherr-Aerospace Toulouse SAS
Landing gear and air-management systems.

Parker Hannifin Corp.
Hydraulics, flight-control and fuel-tank systems.

But such deals also carry risk. Several earlier joint ventures inside China have soured over concerns that Chinese partners, after gaining access to Western technology and know-how, have gone on to become potent new rivals to their partners.

"Foreign partners are seeing they will have to sometimes sacrifice or share the benefits of the global market with the Chinese partner," says Raymond Tsang, a China-based partner at consultancy Bain & Co. "Some of the [multinational corporations] are complaining. But given the changing market conditions, if you don't do it, your competitors will."

Big energy companies, too, have been pursuing international deals with Chinese companies. China has supplanted the U.S. as the world's biggest energy consumer, making access to its market vital for global companies. Foreign firms hope that teaming up with Chinese companies abroad will help on that front. Foreign companies supply technology and experience, and their Chinese partners provide geopolitical clout, low-cost labor, and easy access to credit that China's government-backed companies enjoy.

State-owned China National Petroleum Corp. was one of the first foreign oil companies to sign a major contract in Iraq. BP PLC teamed up with it last year for a $15 billion investment to increase output at the giant Rumaila field. Over the summer, Royal Dutch Shell PLC joined with PetroChina Co., a publicly traded subsidiary of China National Petroleum, on a $3.15 billion acquisition of assets from Australian energy company Arrow Energy Ltd.

China has been gaining clout in some resource-rich parts of the developing world where U.S. companies don't have strong footholds, partly by spending lavishly on infrastructure projects, and it can help broker deals in places like Venezuela and Myanmar, where it has good relations.

In financial services, foreign banks long have coveted access to China's fast-growing securities business. China has allowed a number of companies into the market in recent years through joint ventures, with their stakes capped at about 33%. Chinese regulators also restrict which parts of the securities business they can do.

Crédit Agricole SA already is involved in such a joint venture through its Asian brokerage arm, called CLSA Asia-Pacific Markets, but it is a minor player in China. In May, its investment-banking unit announced a preliminary deal with China's government-owned Citic Securities Co. to form a joint venture beyond China's borders. The French company plans to contribute CLSA and other pieces of its international operation. Citic Securities would throw in its small international unit, based in Hong Kong. Crédit Agricole hopes that helping Citic Securities realize its international ambitions will enable the French bank to expand its business in China.


But talks have gone slower than expected. The two companies said this month that they had agreed on certain key terms, but extended a year-end deadline for a final deal to June 30, without explaining the delay.

Some joint ventures in China have stumbled because of spats with local partners or because the partnerships enable Chinese companies to learn enough about industries to become new competitors to their Western partners.

Kawasaki Heavy Industries Ltd. and Siemens AG, for example, worked with Chinese partners to help build China's high-speed rail network. Now the Chinese companies are bidding against them for international contracts—using products at least partly based on the foreign firms' technology. Last year, France's Groupe Danone SA accepted a cash payment to terminate its joint ventures with China's Hangzhou Wahaha Group Co. after a nasty public feud. The French company had alleged that Wahaha's boss had produced and sold Wahaha-branded beverages supposedly owned by the joint venture through a separate network he owned. Wahaha denied the accusation.

GE's avionics deal with Aviation Industry, or AVIC, also is vulnerable, says Jim Wasson, president of Growth Strategies International LLC, an aerospace and defense consulting firm, and a former GE Aviation executive. The fear is that "once AVIC knows enough about how to do this, they'll kick [GE] out and be on their own," he says.

Lorraine Bolsinger, chief executive of GE Aviation Systems, acknowledges there were concerns within GE about protecting technology. "It was very controversial," she says of the proposed deal. "It was really us knuckle-dragging technology guys that think we had a lot to protect." In the end, she says, "when we and the Chinese together create intellectual property, we are darn right going to protect it."
These days, big Chinese state companies with access to cheap funds and other government support are gunning to dominate some of the same industries that firms like GE have targeted as growth opportunities, from clean technology to turbines.

Even so, GE has such high hopes for China that Mr. Immelt has called it "our second home market." Two years ago, Mr. Immelt said China revenue would double to $10 billion by 2010. But last year it reached just $5.3 billion.

GE saw working with AVIC as a chance to boost its avionics business, which has lagged behind Honeywell International Inc. and Rockwell Collins Inc. The planned venture, to be based in Shanghai, has been chosen to supply China's planned C919 jet, which has the potential to grab a big slice of the Chinese civilian-aviation market. Boeing estimates that market will be worth more than $400 billion over the next 20 years, second only to the U.S.

In negotiations, GE is asking AVIC to match the value of the technology GE is contributing with a cash investment, according to people at GE. If a deal is finalized, all of GE's existing and future civilian avionics contracts will go to the joint venture. Negotiations were supposed to be done by mid-2010, but the parties now hope to finish them by early 2011.

GE executives say the AVIC deal is their closest cooperation ever with a Chinese partner. GE has 45 people in China on the project now, and it is hiring or moving several hundred more people there, even before final terms are hammered out.

AVIC, which makes fighter jets and helicopters in addition to civilian products, has ambitions outside of China. "For the aviation industry, there is no regional market, only the global market," the company said in a statement. "AVIC's strategy is to actively integrate itself into the industrial chain of the world's aviation industry, and to become a truly global company."

Last month, China unveiled the first life-size mock-up of the C919. Other foreign companies have negotiated similar joint ventures to make other parts.

"Our hope and desire is that this joint venture maintains a working-together partnership that benefits both," says Kent Statler, executive vice president at Rockwell Collins, which has a joint venture to supply the C919 with communications systems. "But let's not be naive. We realize that this could turn into a competitor."

For GM, the stakes are especially high: China became the world's largest auto market last year.

Back in 1997, GM decided to plow more than $1 billion into a 50-50 joint venture with SAIC to make Buicks. At the time, it was seen as a risk because car sales had yet to take off in China. This year, GM's China ventures are on track to sell nearly 2.27 million vehicles in the country, compared to 2.18 million sold by GM in the U.S., according to research firm IHS Automotive.

Much of GM's recent growth in China has come through a second joint venture set up in 2002 with SAIC and another Chinese company. The venture, SAIC GM Wuling Automobile Co., makes boxy microvans costing as little as $4,500, which have proven popular in China's smaller cities and towns. Last year Wuling became the first brand in China to sell a million cars in a year. This year, it's expected to account for nearly one-sixth of GM vehicle sales world-wide. Last month, GM reached a deal to buy an additional 10% interest in Wuling for $51 million from the venture's third investor, raising GM's stake to 44%. SAIC owns 50%.

The India joint venture, which began operating in February, is part of GM's effort with SAIC to replicate its China success in other markets. It will produce cars based on its Chinese Wulings, but will sell them under the Chevrolet brand. GM contributed its brand, India factories and dealer network, while SAIC contributed about $300 million to $350 million, a senior GM executive said when the deal was announced.

"We think the business model we have in China with SAIC and the product lineups we have in China are ripe for export to other parts of the world," says Kevin Wale, chief of GM's China operations.

GM and SAIC already have made less ambitious forays abroad together. They export Chevy Sail compacts designed and made in China to Chile and Peru, and are jointly developing more new models to be sold globally, such as the Buick LaCrosse, a sedan designed by teams in Shanghai and Warren, Mich., and sold in China and the U.S.

The India deal takes that cooperation a step beyond shipping jointly produced vehicles overseas. GM and SAIC executives and engineers will be posted in India to design, produce and market cars locally—something SAIC currently has almost no experience with.

One risk to GM is that the venture will better position SAIC to compete abroad on its own—against GM.

Already, SAIC has grown into a powerhouse at home, in part through learning from GM. In 2006, SAIC launched its own solo brand in China, called Roewe. It now competes domestically with the Buicks that SAIC makes with GM. The Roewe brand, which is based it on technology acquired from the now-defunct MG Rover Group Ltd., along with a related nameplate, MG Mingju, sold 146,323 cars in the first 11 months of this year, up 78% from the year-earlier period, according to J.D. Power & Associates. Buick's sales in China, while more than three times as large, grew one-third as fast over the same period.

"Roewe offers comparable products at lower price points and is taking away from GM and others," says Michael Dunne, an auto-industry veteran who heads Hong Kong-based investment advisory firm Dunne & Co.

Last year, GM agreed transfer 1% of its stake in Shanghai GM, its main Chinese joint venture, to SAIC, giving its Chinese partner 51% and effective control. GM said at the time the move would give it better access to credit from Chinese banks, and pave the way for its bigger stake in the Wuling venture.

Last month, GM said the two companies are looking at the possibility of selling SAIC's MG-branded cars through GM's world-wide sales channels. The move could open the door for SAIC's cars to make inroads into Britain, where the MG brand was once based, according to an individual close to GM. Also last month, SAIC paid $500 million for a 1% stake in GM as part of the Detroit auto maker's initial public offering.

SAIC is "very well situated to meet Western [car companies] head on," says Michael Robinet, a U.S.-based senior analyst with consulting firm IHS Automotive. "There's no doubt in my mind, MG and Roewe are going to be both very good launch pads for SAIC to look at new markets beyond China."

Write to Shai Oster at shai.oster@wsj.com, Norihiko Shirouzu at norihiko.shirouzu@wsj.com and Paul Glader at paul.glader@wsj.com
Title: What a War Between China and the United States Would Look Like
Post by: G M on December 31, 2010, 07:07:17 AM
http://www.popularmechanics.com/technology/military/navy-ships/what-a-war-between-china-and-the-us-would-look-like

What a War Between China and the United States Would Look Like
Any Chinese move to take over Taiwan would trigger a confrontation with the U.S. Navy and Air Force. Is the U.S. prepared to counter this growing threat?
Title: Re: China
Post by: Crafty_Dog on December 31, 2010, 08:32:51 AM
I thought that a good article; it brings into play all variables that have engaged my attention (e.g. killer satelliites, cyber disruptions of our communications, etc).
Title: Re: China
Post by: G M on December 31, 2010, 08:41:07 AM
Yes. China isn't looking to meet us ship for ship, plane for plane. Instead, they are looking to technological leaps to nullify our advantages while staging a fight that favors their strengths.
Title: Re: China
Post by: Crafty_Dog on December 31, 2010, 08:45:31 AM
Exactly so, but lets take this conversation over to the new "US-China" thread that I just started.  Indeed, would you be so kind as to paste the Popular Mechanics article there as well?
Title: Re: China
Post by: G M on January 01, 2011, 02:36:27 PM
http://www.newsweek.com/2010/12/29/in-china-pushing-the-talmud-as-a-business-guide.html

Selling the Talmud as a Business Guide
In China, notions of Jewish business acumen lead to a publishing boom—and stereotyping.
P Deliss / Godong-Corbis

A page from the Talmud, the book consisting of early rabbinical writings that inform the Judaic tradition.

Jewish visitors to China often receive a snap greeting when they reveal their religion: “Very smart, very clever, and very good at business,” the Chinese person says. Last year’s Google Zeitgeist China rankings listed “why are Jews excellent?” in fourth place in the “why” questions category, just behind “why should I enter the party” and above “why should I get married?” (Google didn’t publish a "why" category in Mandarin this year.) And the apparent affection for Jewishness has led to a surprising trend in publishing over the last few years: books purporting to reveal the business secrets of the Talmud that capitalize on the widespread impression among Chinese that attributes of Judaism lead to success in the financial arts.
Title: Stratfor: Center to periphery: Slow down!
Post by: Crafty_Dog on January 07, 2011, 10:02:22 PM
Beijing Tells the Provinces To Slow Down

Zhang Ping, director of China’s powerful National Development and Reform Commission (NDRC) — the leading economic planner — called on China’s provinces to slow down their economic growth targets for 2011 and take into consideration the effects of growth on “energy, environment, water and land.” Zhang said only five or six provinces have lowered their growth targets to 8 or 9 percent — 8 percent being the Communist Party’s estimated rate of growth necessary to maintain sufficient job creation. The others have targeted 10 percent growth rates or higher, and some aim to double their total output in five years.

Zhang’s comments point to the central government’s pragmatic desire for the provincial growth targets to be consistent with the national target. Beijing also does not want provinces to set themselves up for a deadline-driven rush that will increase costs or intentionally use fake numbers to please the central government. Beijing eventually wants to reduce its emphasis on using economic indicators to judge political performance, since it sets rapid growth as the sole good, which has led to a variety of economic policy abuses and social distortions. The government wants a more accurate picture, and is urging the provinces to prepare for lower and — ideally — more sustainable growth. It is also trying to alleviate the massive pressure on China’s domestic resources and ability to acquire sufficient resources from abroad.

“The provinces show no self-restraint because they are profiting from the easy credit and endless economic boom and, on a deeper level, because they fear a recession would create unemployment-charged uprisings that would see them alone in their tower under siege.”
But Zhang’s comments are also emblematic of a deep tension in China’s system. Struggles between the central political power and the provincial powers define Chinese history. The country has three core economic and population regions — the North China Plain and Yellow River Delta (Beijing), the Yangtze Delta (Shanghai), and the Pearl River Delta (Guangdong) — with mountains splitting the south from the north. In addition, there are other populous enclaves like the Northeast or Sichuan Basin, the far western deserts and wastelands, and the breakaway province of Taiwan. The country is equally disposed to division and warring kingdoms as it is to unity through rigidly centralized bureaucracy. The center demands the regions adhere to its edicts and remain unified to protect against foreign exploitation or invasion; the regions amass wealth for themselves, compete with each other, and ignore or resist the center.

The Communist Revolution marked a 30-year period of national reformation and central consolidation. But eventually, China found it needed economic growth, and the opening up of 1978 gave room for special zones and eventually entire provinces to re-engage in market activity. The result was an explosion of economic growth that continues. Within this growth, the economy has waxed and waned, primarily responding to the central government’s devolving power to the provinces to allow them to race, and then struggling to tighten the reins.

Now, China is manifestly nearing the peak of that super-cycle of economic expansion. The failure of the growth model is particularly a problem after the global crisis when exports collapsed. China poured credit into the economy to skip over the recession, but at the expense of rising costs for the natural resources necessary to maintain this growth and deepening disparities in wealth and social frustrations. Small steps to tighten growth in 2010 had limited effects, giving way to a reassertion of the desire for growth. Thus, the top technicians in control of the country’s financial system face the dilemma of making forceful demands to slow the economy at the risk of driving it into the ground — or continuing with small adjustments and thereby revealing their weak will and emboldening the provincial warlords. The provinces show no self-restraint because they are profiting from the easy credit and endless economic boom and, on a deeper level, because they fear a recession would create unemployment-charged uprisings that would see them alone in their tower under siege.

Beijing has faced the dilemma before — notably in the late 1980s and mid-1990s — but it is especially hesitant to force its way now because of a monumental political change approaching. The older generation of leaders is passing the torch in 2012-13, and power transitions cannot yet be said to be a casual or comfortable affair in the People’s Republic. So, a generational division overlays the central-provincial divisions — some of the young leaders, finding support from the central policy specialists, are more inclined to impose controls on the economy and try to engineer a smooth descent, so that they do not inherit an about-to-burst or already bursting bubble and instead have the option of reaccelerating when they take power to benefit their personal networks and consolidate power.

But some powerful voices in the older generation, aided by the provincial warlords and their patrons, seem to lack the appetite for risky policy moves. They are constrained by the niggling fear that however well planned, an attempt to moderate growth now could trigger an irreversible slowdown and the conclusion of the growth super-cycle that has held for the past 30 years. An economic disjunction of that magnitude could in turn precipitate the kind of totalizing socio-political revolution that has occurred every 30 or 40 years in China’s modern history. They are demanding a proud legacy when they retire and the regime is demanding a smooth transition for its own sake. But there is no guarantee they will get this, and, for now, the policy tug-of-war intensifies.

Title: POTH: Chinese inflation
Post by: Crafty_Dog on January 12, 2011, 02:38:53 AM
BEIJING — When garment buyers from New York show up next month at China’s annual trade shows to bargain over next autumn’s fashions, many will face sticker shock.

Though many Chinese are earning higher salaries, the government has become worried that rising inflation could lead to social unrest.
“They’re going to go home with 35 percent less product than for the same dollars as last year,” particularly for fur coats and cotton sportswear, said Bennett Model, chief executive of Cassin, a Manhattan-based line of designer clothing. “The consumer will definitely see the price rise.”

Inflation has arrived in China. And after Tuesday’s release of crucial financial statistics by China’s central bank, few economists expect Beijing officials to be able to tame rising prices any time soon.

While American importers of Chinese goods will feel the squeeze, the effect on American consumers may be more subtle and the overall impact on United States inflation may be minimal.

There are simply too many other markups along the way — from transportation to salesclerks’ wages — that affect the American retail prices of Chinese-made products. Excluding those markups, imports from China are equal to little more than 2 percent of the overall American economy.

The bigger consumer impact is in China itself. As China’s booming economy enables more of its own citizens to buy the goods pouring out of its factories, Chinese consumers are feeling inflation directly. And Beijing is increasingly worried about the social unrest that could result.

In China, consumer prices were 5.1 percent higher in November than a year earlier, according to official government data. And many economists say the official figures actually understate the rate of inflation, which might in reality be twice as high.

“Four percent, China can bear it — beyond 5 percent, people will complain a lot,” said Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation here.

Higher global commodity prices, as well as rising wages in China, play roles in the increasing cost of Chinese goods. But economists say the main reason for the inflation now is China’s foreign exchange reserves, which surged by a record amount in the fourth quarter.

The central bank has been pumping out currency at an ever-accelerating pace over the past decade to limit the renminbi’s appreciation against the dollar. That strategy has helped preserve a competitive advantage of Chinese exporters by keeping their prices relatively low on global markets — while also protecting the jobs of tens of millions of Chinese workers in export factories.

Now, though, that cheap currency policy seems to be reaching its limits. The extra renminbi are feeding inflation. That is starting to undermine exporters’ price competitiveness — just as a stronger renminbi would do if Beijing was not intervening to begin with.

Money supply figures for December, which the central bank released on Tuesday, showed that cash and bank deposits were increasing at a rate twice as fast as even China’s soaring economy. Ever more renminbi are available to buy goods and services.

Victor Fung, the group chairman of Li & Fung in Hong Kong, a 35,000-employee trading company that supplies most of the world’s big retailers with Asian goods, said that contracts signed late last year would produce a jump of 10 to 20 percent in the import prices of consumer goods arriving at American ports by the second quarter of this year.

“By the middle of this year, you’ll see considerable diversion of trade away from China,” which will start to bring down the United States trade deficit with China, Mr. Fung said in an interview.

But there are only limited alternatives to China as a supplier of cheap goods. As American retail chains scramble to shift orders to other countries like Bangladesh and the Philippines, they are finding that inflation is emerging as an issue across much of Asia.

What is more, the far smaller factories in other Asian countries have little capacity to absorb the huge orders that Chinese factories routinely handle, corporate executives and economists said.

In China, there is little question that the consumer price index understates the true extent of inflation

=============

Page 2 of 2)



A holdover from the days of central planning, the Chinese consumer price index includes apartment rents but excludes soaring costs for owner-occupied housing. And it is based heavily on the prices of an outdated list of consumer products that are no longer popular. Garments qualify for inclusion only once they have been on sale continuously for at least six months, for example, which frequently means that they are no longer in style.

Hu Xingdou, an economist at the Beijing Institute of Technology, said that a more accurate gauge of inflation would show consumer prices rising 10 percent a year. The National Bureau of Statistics has said it is actively studying ways to improve the consumer price index.
Inflation in China is not just the result of China’s currency market intervention, although Mr. Hu and other economists describe it as the biggest single cause. Another cause is aggressive lending by Chinese banks, despite repeated demands by regulators to slow things down.

Rising prices for exports are also caused by wage increases for Chinese blue-collar workers, whose pay has been climbing as much as 15 percent a year. Those workers have more clout than they once did because the supply of factory labor from rural areas, which once seemed inexhaustible, is starting to dry up — a result of three decades of China’s “one child” policy of family planning, as well as a big expansion in university enrollment.

And globally, strong demand from consumers in China and other emerging economies is pushing up not only gasoline prices, but also the prices of cashmere, rabbit fur, cotton, copper and many other commodities.

Candy Chen, the sales manager of the Zhenjiang Weishun Toys Company in Zhenjiang, China, said that the cost of plastic stuffing for the company’s toy animals had nearly doubled in the past year, while wages were up 10 to 15 percent.

The effect of higher prices in China on broad measures of American inflation is far from clear. The rule of thumb for many consumer products, from shoes to garments to toys, is that the import price is only a quarter to two-fifths of the final retail price, which also includes transportation within the United States and the wages, rent, electricity bills and other costs incurred by stores.

After showing little change for nearly two years, import prices for goods arriving from China at American docks rose from September to November at a rate equivalent to an annual rise of 3.6 percent.

In another indicator that the Chinese central bank released Tuesday, China’s foreign reserves leaped by $199 billion in the fourth quarter. The increase was much larger than economists had expected, and they suggested that China had roughly doubled its intervention in currency markets to around $2 billion a day.

China’s reserves, at $2.85 trillion, dwarf those of the world’s second-largest holder, Japan, with $1.04 trillion. The United States, by contrast, holds only $46.4 billion of foreign reserves because it prints dollars, the main reserve currency.

Mr. Model of Cassin, who is visiting Beijing this week from his company headquarters just off Seventh Avenue, said that the world had changed and that Chinese manufacturers were now more interested in catering to their domestic market than in offering rock-bottom prices to big American companies.

“All of a sudden, they’re more interested in selling domestically,” he said. “The American wholesaler will fight them on $5. The domestic retailer doesn’t care as much.”
Title: Mao's mass murders
Post by: Crafty_Dog on January 12, 2011, 06:32:45 AM
Second post of the morning:

A little trip down memory lane:

Mao's Great Leap Forward 'killed 45 million in four years'
By Arifa Akbar, Arts Correspondent
Friday, 17 September 2010


Mao Zedong, founder of the People's Republic of China, qualifies as the
greatest mass murderer in world history, an expert who had unprecedented
access to official Communist Party archives said yesterday.

Speaking at The Independent Woodstock Literary Festival, Frank Dikötter, a
Hong Kong-based historian, said he found that during the time that Mao was
enforcing the Great Leap Forward in 1958, in an effort to catch up with the
economy of the Western world, he was responsible for overseeing "one of the
worst catastrophes the world has ever known".

Mr Dikötter, who has been studying Chinese rural history from 1958 to 1962,
when the nation was facing a famine, compared the systematic torture,
brutality, starvation and killing of Chinese peasants to the Second World
War in its magnitude. At least 45 million people were worked, starved or
beaten to death in China over these four years; the worldwide death toll of
the Second World War was 55 million.

Mr Dikötter is the only author to have delved into the Chinese archives
since they were reopened four years ago. He argued that this devastating
period of history – which has until now remained hidden – has international
resonance. "It ranks alongside the gulags and the Holocaust as one of the
three greatest events of the 20th century.... It was like [the Cambodian
communist dictator] Pol Pot's genocide multiplied 20 times over," he said.

Between 1958 and 1962, a war raged between the peasants and the state; it
was a period when a third of all homes in China were destroyed to produce
fertiliser and when the nation descended into famine and starvation, Mr
Dikötter said.

His book, Mao's Great Famine; The Story of China's Most Devastating
Catastrophe, reveals that while this is a part of history that has been
"quite forgotten" in the official memory of the People's Republic of China,
there was a "staggering degree of violence" that was, remarkably, carefully
catalogued in Public Security Bureau reports, which featured among the
provincial archives he studied. In them, he found that the members of the
rural farming communities were seen by the Party merely as "digits", or a
faceless workforce. For those who committed any acts of disobedience,
however minor, the punishments were huge.

State retribution for tiny thefts, such as stealing a potato, even by a
child, would include being tied up and thrown into a pond; parents were
forced to bury their children alive or were doused in excrement and urine,
others were set alight, or had a nose or ear cut off. One record shows how a
man was branded with hot metal. People were forced to work naked in the
middle of winter; 80 per cent of all the villagers in one region of a
quarter of a million Chinese were banned from the official canteen because
they were too old or ill to be effective workers, so were deliberately
starved to death.

Mr Dikötter said that he was once again examining the Party's archives for
his next book, The Tragedy of Liberation, which will deal with the bloody
advent of Communism in China from 1944 to 1957.

He said the archives were already illuminating the extent of the atrocities
of the period; one piece of evidence revealed that 13,000 opponents of the
new regime were killed in one region alone, in just three weeks. "We know
the outline of what went on but I will be looking into precisely what
happened in this period, how it happened, and the human experiences behind
the history," he said.

Mr Dikötter, who teaches at the University of Hong Kong, said while it was
difficult for any historian in China to write books that are critical of
Mao, he felt he could not collude with the "conspiracy of silence" in what
the Chinese rural community had suffered in recent history.

http://www.independent.co.uk/arts-entertainment/books/news/maos-great-leap-forward-killed-45-million-in-four-years-2081630.html

Title: WSJ: China's next buying spree
Post by: Crafty_Dog on January 24, 2011, 08:58:44 AM
I think this author misses fails to discuss some key points e.g. Chinese governmental control of the purchased companies towards geopolitical ends, but the piece does inform nonetheless.
==========================================

By CHARLES WOLF JR.
From 2007 through the first half of this year, Chinese buyers—state, private and in between—acquired 400 companies located outside of the country. The acquisitions span a wide range: mining companies in Australia, Vietnam and South America; oil and gas companies in Africa and the Middle East; banking, financial services and insurance companies in Europe; and electronics, telecommunications and lab testing companies in the U.S. The total cost? $86 billion.

That may sound like a big number, but in fact it's relatively small. The number of companies at play in global cross-border M&A markets during this period exceeded 12,400, with acquisition costs of more than $1.3 trillion. China's share of the total number was 3.2%, and its share of total acquisition value was 6.6%. China ranks sixth in both number of deals and in acquisition value: behind the U.S., U.K., France, Germany and Japan, though just ahead of the United Arab Emirates. Cross-border acquisitions by U.S. investors numbered over 5,000 (42.1% of all transactions), and nearly $400 billion by value (30.1% of aggregate value).

China's acquisitions beyond its borders are also modest compared with foreign investors' acquisitions within China. Currently, China's annual cross-border acquisitions are about half of annual foreign direct investments in the country.

What is significant about China's acquisitions over the past few years is the change they represent from the negligible amounts in the past. Prior to 2007, nearly all China's foreign investments involved buying U.S. debt, along with lesser purchases of euro and yen debt. China currently holds more than $1.6 trillion of U.S. government debt and an additional $1 trillion of non-U.S. government debt and other assets.

It didn't used to be in the business of acquiring foreign companies. That's changed, and I expect that China's acquisitions will at least double in the next five years, and perhaps quadruple by 2020.

There are three principal drivers behind this forecast. First is China's extraordinarily high rate of domestic savings—above 45% of GDP. As long as this rate appreciably exceeds China's not-quite-so-high rate of domestic investment (about 35% of GDP), China will have a large global trade surplus, regardless of fluctuations in its exchange rate. This surplus, together with China's net receipts from other sources—including earnings from its prior foreign investments, the excess of inbound versus outbound investment, and remittances from Chinese residents abroad—will generate a current account surplus of $300 billion to $350 billion annually. This will provide a ready source of financing for foreign acquisitions.

Second, China has shifted its focus away from investing in U.S. government debt. While it will continue to invest in such holdings, the investments will be much smaller than in the past. China is aiming to strengthen the renminbi's role as a potential international reserve, thus it will be less willing to shore up the dollar by purchasing large amounts of U.S. government debt. The result is that it will use its surplus to acquire foreign companies.

The third and perhaps strongest driver of a growing Chinese role in international M&A markets is Beijing's interest in acquiring foreign companies that possess one or more of the following characteristics: rich holdings of natural resources, high-technology or emergent technologies, and financial know-how and close connections with other financial institutions. Because of the recession, such acquisitions may be available at more attractive prices than usual.

If this forecast is accurate, it will have significant consequences for China and global markets.

Externally, China will be a more active and influential player in global M&A markets. In some cases, China may exercise its financial leverage to successfully challenge competing bidders from other dominant countries. This competition could help integrate China more fully into the global economy.

China's prominence could also lead to increased tension with host countries, especially in light of the marked disparities between the restrictions that it imposes on foreign investors' acquisitions within China and the looser ones usually applied on China's acquisitions abroad. Demands for equivalent and reciprocal treatment shouldn't come as a surprise.

Yet such demands can be expected to evoke strong resistance within China, especially if reciprocal treatment is sought in fields like energy, natural resources, rare earths, chemicals and infrastructure that are dominated by large state-owned companies such as Sinopec, Cnooc and Chinalco.

China's foreign acquisitions will have other repercussions within China. Experience gained from corporate governance in companies it acquires abroad may be a good influence on the often obscure governance practices of Chinese companies. More diligent governance practices—like independent audits and transparent executive compensation—are likely to be met with favor from China's Securities Regulatory Commission, but resistance from corporate management. But if the more advanced governance practices prevail, it would be beneficial for China and the rest of the world.

Mr. Wolf holds the distinguished corporate chair in international economics at the RAND Corporation and is a senior research fellow at the Hoover Institution.

Title: Meet the hardliners who now run China’s foreign policy.
Post by: G M on February 09, 2011, 10:14:38 AM
http://www.tnr.com/article/politics/magazine/82211/china-foreign-policy?page=0,0&passthru=MzQ2ZDBiYmM0MzgzNWFlYTFiOTcwNmY0NTkzYjgzY2M&utm_source=Editors%20and%20Bloggers&utm_campaign=15bad5c325-Edit_and_Blogs&utm_medium=email

Meet the hardliners who now run China’s foreign policy.
Title: China gets ready to stomp
Post by: G M on February 20, 2011, 09:19:45 AM
China tries to stamp out 'Jasmine Revolution'

(AP) – 5 hours ago

BEIJING (AP) — Jittery Chinese authorities wary of any domestic dissent staged a concerted show of force Sunday to squelch a mysterious online call for a "Jasmine Revolution" apparently modeled after pro-democracy demonstrations sweeping the Middle East.

Authorities detained activists, increased the number of police on the streets, disconnected some mobile phone text messaging services and censored Internet postings about the call to stage protests at 2 p.m. in Beijing, Shanghai and 11 other major cities.

The campaign did not gain much traction among ordinary citizens and the chances of overthrowing the Communist government are slim, considering Beijing's tight controls over the media and Internet. A student-led, pro-democracy movement in 1989 was crushed by the military and hundreds, perhaps thousands, were killed.

On Sunday, police took at least three people away in Beijing, one of whom tried to lay down white jasmine flowers while hundreds of people milled about the protest gathering spot, outside a McDonald's on the capital's busiest shopping street. In Shanghai, police led away three people near the planned protest spot after they scuffled in an apparent bid to grab the attention of passers-by.

Many activists said they didn't know who was behind the campaign and weren't sure what to make of the call to protest, which first circulated Saturday on the U.S.-based, Chinese-language news website Boxun.com.

The unsigned notice called for a "Jasmine revolution" — the name given to the Tunisian protest movement — and urged people "to take responsibility for the future." Participants were urged to shout, "We want food, we want work, we want housing, we want fairness" — a slogan that highlights common complaints among Chinese.
Title: A First-Hand Report from a ‘Jasmine Rally’ in Shanghai
Post by: G M on February 27, 2011, 08:02:31 PM
http://pajamasmedia.com/blog/first-hand-report-from-a-jasmine-rally-in-shanghai/?singlepage=true

A First-Hand Report from a ‘Jasmine Rally’ in Shanghai
Will the wave of change sweeping the Middle East spread to the Far East and hasten political reform in the world’s largest unelected dictatorship?
February 27, 2011 - by John Parker


In mid-February, as the anti-authoritarian wave sweeping the Middle East continued to gather momentum, a Twitter user using the account name of Shudong posted a tweet announcing that “Jasmine Revolution” rallies would be held on February 20th in every large city in China, and announced that the details would be posted later elsewhere. This information was indeed posted as promised, apparently on the U.S.-based website Boxun.com; it called for rallies to be held on the 20th in Beijing, Shanghai, Tianjin, Nanjing, and other major cities around the country, and repeated every seven days thereafter, until such time as the organizers’ concerns were met.

According to a translation posted on the China Digital Times website, which often reports on dissident and other pro-democracy activities, the Jasmine organizers cited a number of grievances as the reason for their action, including:

    * corruption (“a government that grows more corrupt by the day…”)
    * high inequality (“Why is it that in just the last few decades China has gone from being a country with the smallest gap between the rich and the poor to one with the largest?”)
    * high inflation (“The excessive printing of currency is recklessly diluting the value of the people’s wealth.”)
    * lack of judicial independence (“we are resolute in asking the government and the officials to accept the supervision of ordinary Chinese people, and we must have an independent judiciary.”)
    * the one-party system itself (“China belongs to every Chinese person, not to any political party…. The Chinese people’s thirst for freedom and democracy is unstoppable”.)

Interestingly, the “freedom and democracy” language was a direct quote from China’s current premier, Wen Jiabao, and acknowledged as such. Premier Wen spoke those words during a remarkable CNN interview last year, where he appeared to support the idea of political reform, triggering speculation of a rift within China’s top leadership over fundamental political issues. On the morning of February 26th, in an action that seemed clearly timed to pre-empt the second weekly Jasmine Rally (scheduled for the afternoon of the 27th), Wen conducted a highly unusual web chat with Chinese citizens, in which he promised to address a number of the grievances raised by the Jasmine Rally organizers, including taming inflation, runaway property prices, and environmental damage. This chat was heavily covered by Xinhua, the Chinese Communist Party-controlled news service, but tellingly, no mention was made of political reform.

It was unclear whether this extraordinary chat was instigated by Wen himself, or by China’s top leaders as a whole. Regardless of which is the case, the lack of any similar action by President Hu Jintao was very conspicuous. This was consistent with Hu’s reputation: his unwillingness to consider even the most timid political reforms has been duly noted by China’s people, who have begun referring to him in sardonic Internet postings as “Hu-barak” or (more recently) “Hu-ammar Qaddafi.” These appellations are partly a response to the Chinese regime’s pervasive Internet censorship, which has cracked down heavily on postings that mention the fallen Arab dictators by name.

Unfortunately, the Wen chat was only the nice-guy public face of Beijing’s response to the Jasmine Rallies — the mere suggestion that its top leaders could end up like Hosni Mubarak appears to have given the CCP a serious case of the vapors, and its response was strikingly disproportionate to the actual act which triggered the rallies. Within hours of the first postings, according to Chinese sources cited by CDT, police were requesting server logs to hunt down “Shudong,” who had posted anonymously. Detentions of several top dissidents soon followed, while others were put under house arrest. CCP goons even threatened to rape the wife of one dissident, according to technology blogger Jason Ng. Ng also cited claims on some websites that the army had been issued live ammunition to deal with the protests.
Title: China (Libertarian Issues?): Beijing to Track People via Cell Phones
Post by: DougMacG on March 04, 2011, 07:52:24 AM
"anytime data like this is collected, there is a potential for misuse,"  - No!?!?!?!

http://www.pcworld.com/businesscenter/article/221349/beijing_to_track_peoples_movements_via_their_mobile_phones.html

Beijing to Track People's Movements via Their Mobile Phones

By Michael Kan, IDG News

China plans on tracking the movements of people in Beijing using their mobile phones, a measure that while aimed at relieving traffic congestion, could set off concerns over misuse.
   
China announced the plans in an article posted on a government website earlier this week. The system would work by tracking the movements of the 17 million users in Beijing currently signed on with the telecommunications carrier China Mobile. Once the users turned on their phone, the system could pinpoint their location and what direction they were heading.

The plan would tackle Beijing's growing traffic problem, which has resulted in highway jams that have lasted as long as nine days. But China has also gained a reputation for using technology to squelch dissent. The government has allegedly hacked the email accounts of human rights activists and launched cyberattacks against websites carrying online protest calls.

The new system would use mobile phone information to monitor traffic flows in different areas of the city, and see how residents are using the subway and bus systems. The article did not say when or exactly how the system will be implemented, only that it has passed expert review.

Users will be able to sign up and receive data from the system, the notice said. But it's unclear whether or not residents of Beijing can voluntarily bow out of the system to protect their privacy. The Beijing Science & Technology Commission behind the project could not be reached for comment.

Although the Chinese government intends to use the data for traffic purposes, "anytime data like this is collected, there is a potential for misuse," said Mark Natkin, managing director for Beijing-based Marbridge Consulting.

China has also made previous efforts to collect data on mobile phone users. Last year, the government began requiring people to use their real identities when setting up mobile phone accounts. China has more than 850 million mobile phone users, many of whom bought their numbers without using their actual ID.

Experts have said these past moves could be a part of a larger agenda by the Chinese government to reduce anonymity among the populace. In the case of China's plan for a tracking system in Beijing, it could potentially monitor an individual's movement, Natkin added.

"By U.S. standards, European standards, that would be considered a violation of a person's privacy, but not necessarily here (in China)," he said.

Not everyone sees a problem with the planned tracking system.

"The project seems like it will look at the data on a large scale. The data they are dealing with is so big, I don't think it will result with any privacy problems," said Zhao Wei, CEO of Chinese security company Knownsec. "I think it could actually be effective in solving traffic problems."
Title: Re: China
Post by: Crafty_Dog on March 04, 2011, 08:21:45 AM
With an intention of figuring out how to get away with doing this in the US,  highly placed anonymous sources who regularly read this forum for its penetrating insight, have asked us to see if we can ferret out GM's response to this development  :lol:
Title: WSJ: Philippines wondering WTF was that?
Post by: Crafty_Dog on March 04, 2011, 08:35:08 AM
Associated Press
MANILA, Philippines—The Philippines wants China to explain why two of its patrol boats harassed a Philippine ship searching for oil in a disputed area of the South China Sea, an official said Friday.

The incident occurred Wednesday at Reed Bank near the Spratly Islands, which are claimed by China, Brunei, Malaysia, Taiwan, Vietnam and the Philippines.

"We're in conversation with our Chinese friends and we are seeking an explanation from them," Foreign Secretary Albert del Rosario told a news conference.

Previously:
China Confronts Philippine Oil Vessel, Spurring Dispute

.Reed Bank—about 125 miles (200 kilometers) west of the Philippine province of Palawan—"is our territory," he added.

Lt. Gen. Juancho Sabban, commander of the military's Western Command headquartered in Palawan, said two warplanes were deployed Wednesday after oil explorers from the Philippine Department of Energy complained of harassment. When the planes reached the area, the Chinese vessels had left, he said.

Chinese Embassy spokesman Ethan Sun reiterated his country's claim to the Spratly Islands and adjacent waters, but said Beijing was committed to maintaining peace and stability in the area and resolving disputes through peaceful negotiations.

A Philippine military official said Thursday the Chinese boats maneuvered close to the Philippine vessel at least twice, apparently threatening to ram it but then turning away. They did not fire any warning shots, he said.

A Philippine navy patrol ship has been deployed to secure the oil exploration, which will resume, the official added.

The Spratlys have rich fishing grounds and are believed to sit atop vast oil and gas deposits. They also straddle busy sea lanes that are a crucial conduit for oil and other resources fueling China's fast-expanding economy and those of other Asian nations. They have long been regarded as a potential flash point for conflict in Asia.


Title: Re: China
Post by: G M on March 04, 2011, 10:21:47 AM
With an intention of figuring out how to get away with doing this in the US,  highly placed anonymous sources who regularly read this forum for its penetrating insight, have asked us to see if we can ferret out GM's response to this development  :lol:

That technology has been here a long time.  :roll:
Title: Re: China
Post by: G M on March 04, 2011, 11:11:21 AM
http://investigation.discovery.com/videos/solved-cell-phone-tracking.html

**A quick tutorial on cell phone location technology in the US. From what I understand, China's domestic security structure would use cell tracking technology to supplement what they use now, not making much difference in the overall capacity of the state to reach out after any dissidents.
Title: Re: China
Post by: G M on March 08, 2011, 06:05:55 AM
http://www.thedailybeast.com/blogs-and-stories/2011-03-06/worldwide-gender-gap-means-more-bachelors-in-asia/

"No country for young men."

Title: China's coming collapse
Post by: G M on March 10, 2011, 07:41:22 AM
From Canadian Business magazine, 14 March 2011
China's coming collapse

The Middle Kingdom's prosperity is an illusion. And when China finally falls, we'll all feel the pain.
By Jason Kirby

As fearmongering election campaign ads go, it's hard to top the "Chinese Professor," which flickered across the Internet just before Americans went to the polls last fall. In the spot, set in a sleek Beijing lecture hall 20 years in the future, a sharply dressed Chinese instructor explains to his Asian students why previous empires, from Ancient Greece to the U.S.A., turned to dust. The Americans failed because they lost sight of their principles, he says in Mandarin, with subtitles. They overspent, overtaxed and over–borrowed. "Of course, we owned most of their debt," he cackles, as the class joins in. "So now they work for us."

If you missed the ad, put out by the conservative group Citizens Against Government Waste, no matter. The notion that China's headed for superpower status at the expense of the United States has been repeated so often that many in the West now take it as an undisputable fact. With breathless enthusiasm economists predict China's red–hot economy will power past America's to become the world's largest in just 15 years. Bookstore shelves are filled with titles like China's Ascent and When China Rules the World: The End of the Western World and the Birth of a New Global Order, in which author Martin Jacques argues America is in denial about the fact China is its "usurper and ultimate replacement." Hollywood's even getting in on the act with a remake of the 1980s Cold War paranoia flickRed Dawn, in which Soviet soldiers overran a Midwest American town. Only this time, the marauders are Chinese. Having conquered American capitalism, the People's Liberation Army is coming for America's Capitol, too.

It's easy to find evidence that ostensibly confirms China's unstoppable ascent. Try this: Go to Google News and type in "China," along with any laudatory adjective, then add the suffix "–est." Do so, and you'll learn that China is building the world's third–tallest skyscraper ("China usurps U.S. in skyscrapers"); it produces the smartest children ("Chinese students outperform U.S. in recent test") and now boasts of the world's fastest trains ("China's fastest train leaves rest of world behind"). This super–country narrative has become so pervasive that the majority of Americans take it for granted. At the end of last year, pollsters for the Allstate/National Journal Heartland Monitor asked Americans which country "has the strongest economy in the world today." Half picked China, and just one in five selected the United States.

Yet for all the talk of China's economic might, skeptics are gathering force. Over the past year, a growing number of analysts and investors have argued all is not as it appears in the Middle Kingdom. What they see instead is a government desperately priming the pump to maintain an illusion of prosperity. Far from an economic powerhouse, China's economy remains a middleweight when its vast number of poor people is taken into account — the country's per capita GDP is only around US$4,500, 1/10th that of the U.S. And as a share of the economy, household incomes have actually declined over the past decade. With the domestic economy too weak to maintain China's high growth rates, and with exports to the West hurting, the Communist Party in Beijing and its regional offshoots have come to rely heavily on cheap exports and debt–fuelled investment to sustain China's fragile fortunes. And the problems will only get worse as China's massive population starts to age rapidly over the next decade. Investors in the West have become too focused on China's growth and interpret it as a sign of a healthy economy. But the country only maintains that growth rate because it doesn't worry about being profitable. As Jim Chanos, a U.S. hedge fund manager and China skeptic famously put it early last year, China "is on a treadmill to hell."

China is trying to transform itself from an agrarian backwater into a modern industrial power in the span of a single generation — a feat that took the West a century of ups and downs, harsh lessons and hard–won victories. Within its borders, China's dash for modernity has sparked a dangerous property bubble, led to astonishing overcapacity and generated enough toxic debt to put even a U.S. mortgage banker to shame. But the country's super–charged growth has also profoundly driven world events. Its massive stockpiles of foreign reserves and low–cost factories have suppressed long–term interest rates, kept global inflation in check and driven a boom in commodities that has benefited Canada immensely. In the same way, our interconnected economies mean a slowdown in China is likely to export pain to the rest of the world in ways we've never seen before.

So forget the collapse of the Greek or Irish economies, which grab headlines but ultimately matter little to the world economy. Investors are completely unprepared for the shock and upheaval that will come should China fail, and Canada in particular would feel the pain.

In a country that's often been called the world's factory floor, China's Pearl River Delta is the industrial engine that keeps the assembly lines running. So, when America's economy tanked in 2008, and western consumers stopped buying TVs and sneakers, the region was hit hard. Exports to the U.S. and the rest of the world plunged, and more than 100,000 factories shut their doors, throwing millions of Chinese labourers out of work. As protests broke out, officials worried the backlash could escalate. Their fears were justified. When workers at a steel mill in Dongguan rioted after learning about a new round of job losses, the mob beat a senior manager to death.

Faced with crisis, China's leaders swung into action with a mammoth stimulus plan. In November 2008, Beijing unveiled a US$600–billion rescue effort that, relative to GDP, was several times larger than what America put in place. More important, the government ordered its state–run banks to crank up lending, especially to residential and commercial developers. The banks promptly obliged, shovelling more than US$1.5 trillion of loans out the door last year, an amount equal to 30% of the country's economy. It worked better than the Chinese could have ever hoped — on paper at least. In the face of a global recession, China's GDP rocketed 8.9% in 2009. Soon, analysts were crediting Beijing with saving the global economy. The sharp rebound in oil and other commodity prices that came with China's renewed vigour certainly pulled Canada out of the pit.

To many, the episode was yet another sign of China's economic prowess. Anthony Bolton, a well–known British fund manager who moved to China to establish a special fund dedicated to the country, hailed "the effectiveness of the centrally run economy."

Instead, the crisis and the government's response exposed just how fragile China's economy has become. The problem is simple — for all the hype around China's emerging middle class, Chinese shoppers contribute very little to the country's fortunes. In any economy, domestic consumption typically makes up roughly 55% to 65% of GDP. The remainder is typically split between exports and investment. Not so in China. Over the past decade, domestic consumption's share of the economy has plunged from around half to a miniscule 35%, the lowest of any significant economy ever, according to Michael Pettis, a finance professor at Peking University whose online writings have become must–reads for those eager to divine what's really going on in China.

With almost nothing in the way of health insurance, welfare or a social safety net for retirement, Chinese feel pressure to save every penny they earn. At the same time, official policies that favour Chinese banks and exporters — namely artificially low interest rates, an undervalued yuan and cheap labour — come at the expense of household savers. This isn't to say consumers aren't spending more than they did a decade ago. A stroll through the busy retail shops along Shanghai's Nanjing Road, or hours spent in a Beijing traffic jam amid shiny Black Audis, will attest to that. It's just that the red–hot growth that has earned China its miracle status was overwhelmingly the result of exports and investment.

But the days of China being able to fall back on cheap exports is coming to an end, say experts. It's not just that consumers in developed countries have retrenched, though that's an immediate threat. China's policy of devaluing its currency to grab export market share from the West is now squarely in the crosshairs of politicians in the U.S. and Europe. "Unless Beijing shows real determination to move on the currency front, the likelihood of the U.S. slapping on a surcharge on China's imports in 2011 is high," Diana Choyleva, an analyst at Lombard Research in Hong Kong wrote in a report last fall. "The early 2010s could well turn out to mark the end of China's years of miraculous growth, with trend growth halving during this decade."

With the writing on the wall for China's export machine, officials have to scramble for an alternative way to juice the economy. So China has increasingly looked to investments in infrastructure and construction to keep Chinese workers employed. In 2009, the peak of China's stimulus campaign, fixed investments accounted for a whopping 95% of the country's GDP growth. Even last year, despite all the efforts by Beijing to rein in its stimulus efforts, investment in fixed assets was the fastest–growing segment of the economy. One report by Thomson Reuters suggested investment in fixed capital projects is "significantly above the levels that prevailed in Japan and the U.S. during their respective real estate bubbles."

Ironically, it is China's investment in these hard assets like airports, bridges, mines, railways and office towers that wow so many in the West. We look in awe at China's cities, with their shimmering skyscrapers, and the claim that another 10 New Yorks must be built over the next two decades to accommodate the country's surging middle class. With the West's infrastructure falling apart, we envy their vast network of high–speed railway lines — more extensive than in the rest of the world combined — never mind the 5,000 kilometres to be laid over the next two years alone. And while it can take years for cities in the West to decide whether or not to build a new airport, China is erecting terminals across the country at a rate of nearly 10 a year. Yet the glint from all that shiny metal and glass can easily obscure what's really going on. Traffic through many of the four–dozen terminals China has built in the past five years is a fraction of what was originally forecasted, according to an Los Angeles Times report. It's why Yasheng Huang, a professor at MIT and author of the book Capitalism with Chinese Characteristics, uses the term "Airportologists" to describe western pundits who draw sweeping conclusions about China's economy after passing through its massive terminals.

China's stellar GDP statistics may send western business leaders into raptures, but even the Chinese government doesn't believe them. In a diplomatic cable released by Wikileaks in December, Li Keqiang, executive vice–premier of China and a leading candidate to replace Premier Wen Jiabao, told a U.S. official China's GDP statistics are "man–made," and are "for reference only."

The fact is, says Vitaliy Katsenelson, director of research at Investment Management Associates in Denver, Colo., and a prominent China skeptic, China's frantic building boom over the past five years not only boosted GDP on paper and put millions to work but also produced a property bubble where neither investors nor developers are likely to ever recover their costs. "They already had a weak foundation, and on top of that you've had a government throwing enormous amounts of money at the economy in a chaotic way," he says. "This isn't going to end good."
Title: Coming collapse-2
Post by: G M on March 10, 2011, 07:43:01 AM
When Ma Zhiyuan's phone rang last year, and a real estate agent told him she had a client ready to pay cash for his Beijing apartment, he was stunned. What surprised him was not that she was offering stacks of Maos. China's new middle class are as thrifty as their parents and see apartments as the ultimate place to stash their accumulated savings. No, what struck Ma, a marketing manager, was that he hadn't even listed the place for sale. The realtor had simply hunted him down as the owner of the unit. And now she was offering 1.1 million yuan, or about $170,000 for the pad.

To someone in the West, that may not seem like an exorbitant amount for a highrise apartment in a major capital city. Yet, at that price the unit was 26 times greater than the average Beijinger's salary. Even so, Ma told her he'd have to think about it. (He'd been renting out the apartment and enjoyed the extra income.) Shortly afterward, the realtor called back to say her client would pay 100,000 yuan more. And when Ma rejected that, she offered another 100,000 yuan, and then another. It went on like this for weeks. Finally Ma agreed to a price: 1.6 million yuan, nearly 50% more than the place had been worth a month earlier. "They hadn't even seen the apartment," he says. "At that time, housing prices were going crazy."

"Crazy" fails to capture the utter insanity of what's gone on in China's property markets. In January, home prices in 70 Chinese cities jumped another 6.3% from the year before, and have more than tripled in the past five years. In prime markets like Beijing and Shanghai, prices have risen far faster. It's no longer surprising to find taxi drivers and teachers who claim to own two or even three apartments each. At one point, Shanghai economist Andy Xie cited local media reports that some 65 million urban homes reported zero electricity consumption over a six–month period, suggesting there are enough vacant homes in China to house 200 million people. While power companies denied that was the case, in the regions around Shanghai, Beijing and other cities, fancy new apartment blocks stretch off into the horizon, their surfaces pocked with black holes where windows would otherwise be. Policy–makers have attempted to deflate prices. They've limited the number of homes Chinese can buy, restricted many state–run companies from buying up land, and ordered banks to rein in their lending, yet still prices continue to rise.

It's not just the residential sector. Commercial developers have engaged in their own orgy of debt–fuelled construction projects, bidding up land values threefold last year and erecting countless office towers, malls and hotels. It's all adding to a glut of properties that are sitting vacant. In Beijing, where the official commercial vacancy rate is 30% but approaches 50% in many pockets, developers go to great lengths to make empty buildings look occupied, going so far as to paint silhouettes of office workers in stairwells. For instance, in the 29–storey Central Point towers, built three years ago, a handful of tenants finally moved in last fall, according to a property manager. However security guards were surprised to see a visitor come through the door, and appeared to be the only people in the building.

How could there be so many new buildings going up when, at the same time, so many others already sit empty? Simple. China is engaged in an elaborate shell game to hide a mountain of bad debts piling up on the balance sheets of its banks, developers and state–owned enterprises. In the case of real estate, it's a matter of turning a blind eye to staggering losses, says Patrick Chovanec, a professor at Tsinghua University's School of Economics and Management in Beijing. In an interview last year, he pointed to situations where buildings sit half empty, yet landlords refuse to lower their rental rates. To do so would sink the value of the underlying land, which was used as collateral for the developer's loans. "The rational response would be to lower the rental asking price, but that would mean the value of the collateral would be lowered and the bank would be forced to write down the loan," he says. "So the building stays empty. Economically it makes no sense."

This same scenario is playing out across the country on a massive scale, say experts. Beijing and the World Bank officially claim China's government debt remains very manageable, at less than 20% of GDP — far below levels in the industrial world — but the truth is, local governments are piling on new debt at a staggering pace. In research last year, Victor Shih, a political economist at Northwestern University, examined the borrowing records of 8,000 local–government entities. He found that at the end of 2009 local governments had taken on US$1.7 trillion in debt, with another US$1.9 trillion in lines of credit available. Coupled with other obligations, Beijing is on the hook for nearly US$6 trillion next year, bringing it to par with GDP — making China seem almost as profligate as America. The trillion–dollar question is: How much of that debt is going to go sour? For his part, Shih has warned of a "wave" of non–performing loans hitting the country in 2012, while in August there were reports the China Banking Regulatory Commission conducted a stress test and found 20% of loans to be in "trouble." By comparison, a stress test on America's largest banks in 2009 found that in a worst–case scenario, losses at the 19 banks would hit 9.1% of their loan portfolio, although, admittedly, many believe in reality it was far higher.

The final tally of dud loans in China could be far higher, sparking a financial crisis in the country. Consider the case of New Ordos, a city the government of Inner Mongolia built from scratch in just five years to house 100,000 people. There is plenty of public art and innovative architecture on offer in the city, including a reservoir with an artificial waterfall. The only thing missing is people. Most of the apartments are sold out but remain vacant, since speculators snapped them up as investment properties. The most striking building is the eight–storey library, built to resemble books standing side by side. Inside, however, it's nearly devoid of books and patrons. On a weekday morning last year, the only people using the computer lab, equipped with 100 new PCs, were two teenage boys playing video games.

New Ordos is far from alone. There are at least a dozen other ghost cities scattered across the country. In November, the government of Hebei said it plans to build three new cities in the region around Beijing over the next few years. In Dongguan, the city where rioting workers killed a factory manager, the New South China Mall lays claim to being the largest mall in the world, yet is bereft of tenants. Likewise, in Beijing, Pangu Plaza, a hotel and mall complex shaped like a dragon and which runs the length of seven football fields, is largely vacant of shops and people.

The list goes on and on. But for how much longer, wonder some China watchers. The rush to build over the past five years has left China drowning in overcapacity in many key sectors. In Liaoning province, the government is spending hundreds of millions of dollars to build five mega–ports over the next couple of years, even though China's ports are already operating far below capacity. Likewise, according to a report by Pivot Capital Management that analyzed China's manufacturing capabilities, China continues to build new steel mills, cement factories and aluminum smelters even though up to one–third of existing plants sit idle.

As for China's ever–expanding network of bullet trains, Chinese media report trains on several of the new lines frequently run with more than half their seats empty. Some worry China's high–speed rail experiment will lead to a debt crisis, since the mammoth project has already saddled China's railway ministry with US$150 billion in debt. Over just the next few years that figure is expected to rise to half a trillion dollars.
Title: Coming collapse-3
Post by: G M on March 10, 2011, 07:44:34 AM
It is at this point analysts and economists invariably argue none of China's overspending and debt really matters. All of those empty apartments, unused factories and ghost cities will eventually teem with people as rural Chinese move to the cities and grow rich. The theme of China's urbanization has become deeply entrenched, with the oft–repeated line that over the next 20 years China will add 350 million people to its urban areas — a migration greater than the entire population of the United States. Yet critics point to flaws in this argument that threaten to stunt rather than fuel China's growth.

For one thing, China under–counts the number of people already living in urban areas, says Katsenelson. China only considers a region to be urban if it has a population density greater than 1,500 people per sq. km, versus around 500 people in the West. By that measure, Edmonton wouldn't make the cut. Indeed, some so–called rural villages in China boast steel mills and factories, while one, Beishanmen, near the city of Xi'an, recently erected a 23–storey apartment tower. Katsenelson also argues that since local officials are tasked with meeting specified growth targets on a per capita basis, there's an incentive to downplay the size of the local population. "There are probably a lot more people living in cities already, but they're just not in the numbers," he says. Besides, for the hundreds of millions of rural peasants who have already migrated to cities — supplying factories with an endless supply of cheap labour — life in cities like Shanghai, Beijing or Shenzhen means being treated like second–class citizens, since their access to social services and education for their children is tightly limited.

But above all, China faces a demographic time bomb that's as bad, if not worse, as the one plaguing Europe. Largely as a result of the country's one–child policy, instituted in the 1970s, China's population is aging fast. The number of workers aged 20 to 29 will peak in about four years, then drop sharply over the next 15. At a point in the not distant future, China's population will actually begin to shrink. All of those factors will curtail the number of people who are likely to move to cities and take up new jobs. "Their labour force is getting old and shrinking," says Katsenelson. "I don't think migration is going to be as big a force as people are expecting it to be."

We've seen all this before. Remember that campaign ad about the Chinese professor? Rather than look 20 years in the future to see what China holds in store, the world would be wise to cast its gaze back a couple of decades instead. In the '80s and '90s, U.S. newspaper and magazine headlines trilled the rise of an Asian superpower and the decline of America's influence abroad. That country was Japan, and business leaders couldn't contain their enthusiasm for Tokyo's economic miracle. One–time presidential candidate Walter Mondale warned Americans that unless things changed, there would be no future for their children other than to sweep the factory floors between Japanese–made computers.

That's not at all how things turned out, of course. Japan's overreliance on cheap exports and debt–fuelled investment backfired. The refusal to acknowledge the bad debts incurred by banks during its property bubble plunged Japan into its "lost decade" and ended talk about Japanese global domination. (Driving home that point, China recently overtook Japan to become the world's second–largest economy.)

Two decades of stagnation didn't tip Japanese society into chaos, but if China's economy goes bust, don't expect the fallout to be nearly so smooth. "The problem for China is compounded by the fact that, unlike Japan, the vast majority of Chinese have not participated in this boom," says George Friedman, CEO of Stratfor, a global intelligence company. In simple terms, the Japanese got rich before they got old, but the Chinese will get old before they get rich. "For them, unemployment, especially for those several hundred million who came to the cities to get jobs, is personally catastrophic, so they have a serious problem."

Many argue China's US$2 trillion in foreign reserves would protect it from any crisis, but Chovanec points out there have only been two times in modern history when a country accumulated such large reserves — America in the '20s and Japan in the '80s. And if history repeats itself, it's not just going to be their problem. China is inextricably tied into the global economy. What happens there will have far reaching repercussions, especially in countries like Canada and Australia that have supplied China with the raw material to remake itself.

To grasp what a slowdown in China would do to Canada's economy, it's worth stepping back a moment to look at how all those Chinese skyscrapers, railway lines and steel mills have reshaped the economic and political landscape here. Last January, Canfor, Canada's largest lumber company, mothballed its sawmill in Quesnel, B.C. The move came as a result of the collapse of America's housing market, which evaporated demand for B.C. lumber. Then, several months later Canfor surprised locals by announcing it would bring everyone back to work. Only now the entire output from the mill is loaded onto freighters and shipped to China. The Asian giant may still accounts for only 15% of the province's lumber exports, but exports to China are up 71% in just one year, and many believe it's only a matter of time before China, and not the U.S., becomes B.C.'s largest forestry customer.

What's happened in tiny Quesnel has played out across the country over the past decade on a massive scale. By some estimates, demand from China is behind half the rise in global commodity prices, such as copper, oil, nickel, iron ore, coal and potash — all resources hauled from the Canadian landscape. China has become Canada's fastest–growing trading partner, and three–quarters of what we now sell to them comes from the ground. This dynamic shielded us from the brunt of the global recession. In 2009, Canada's exports fell 28% from the year before because of the crisis in the U.S., yet at the same time our exports to China actually rose 7%.

Some have argued the resource sector isn't all that crucial to Canada's well–being, since mining and oil and gas extraction directly account for just 4.5% of the economy. But this figure fails to capture the wider influence the commodity boom has had here. While conventional manufacturers in the automotive, steel and textile sectors have struggled, companies building equipment for the energy and mining sectors barely blinked. Banks and investment firms have reaped windfalls from merger and IPO activity in the resource sector, while the boom is lucrative for investors in the domestic market. Meanwhile, China's boom has spilled into Canada's real estate market. In Vancouver, according to condo marketer Bob Rennie, between 60% and 80% of all real estate sales in the city's West Side are now to mainland Chinese, while markets like Calgary and Saskatoon have soared thanks to all the new oil and potash wealth.

In plain terms, should China's economic miracle turn out to be a mirage, all of that would be at risk. "If China fails, or even if this fixed investment model fails, countries like Australia and Canada are in deep trouble," says John Lee, a foreign–policy expert at the Hudson Institute who is also a research fellow at the Centre for Independent Studies in Sydney, Australia. For one thing, commodity prices are likely to plunge. That could throw a wrench in plans for the oilsands, which require high oil prices to remain profitable, and crimp much of the manic exploration activity in mining. Canada's resource sector was one of the primary drivers for employment over the past decade, according to Statistics Canada, so a correction in China would also rob this country of a key engine for job growth. It would also sap provincial and federal governments of needed tax and royalty revenue, hurting their balance sheets.

A slowdown in China would have repercussions far beyond commodity prices. If China's growth slumps, experts see civil unrest as the likely outcome. China already faces dozens of large–scale "mass incidents" — the government's term for riots — each year, but they're largely contained to rural areas. That could change with a prolonged downturn. "At the moment, they have unrest, but it's in rural areas, not the cities," says Lee. "The whole strategy of [the Chinese Communist Party] to stay in power is to keep the urban people happy. If growth slows down, they won't have the means to keep those people happy." For instance if China's housing bubble were to collapse, urban property owners would be hard hit. In a recent report the Chinese Academy of Social Sciences argued house prices in 11 cities, including Beijing, Shanghai and Shenzhen are overvalued by between 30% and 50%. The obvious fear within the Chinese government is a repeat of the Tiananmen Square protest and crackdown in 1989. After the incident, it took three years for the economy to fully recover.

But the world is a much more interconnected place than it was even 20 years ago, and China's role is vastly greater. The International Monetary Fund recently stressed China's importance to global growth when it updated its growth forecast for the country — at 10.5% in 2010 and 9.6% in 2011. "China's strong and sustained growth over the past several years has served as a linchpin for global trade, benefiting exporters of commodities and capital goods," the fund said in a report. Anything hinting of a revolution would undoubtedly shock investors and spark a crisis of confidence among economists who have come to view China as the cornerstone of the economy decades into the future. There's a reason paranoid officials tried to block Chinese netizens from reading about populist uprisings in Egypt and elsewhere.

Some observers are hopeful the aftershocks of a Chinese economic collapse would be muted. Pettis at Peking University has argued on his blog that a slowdown in Chinese growth "might not be the disaster for the world that many believe." If China's massive trade surplus with the rest of the world contracts, that could act as a boost to its trading partners. He argues everything depends on whether China rebalances its economy amid a sharp slowdown by raising interest rates and wages. If that happened, a recession would be borne by state–owned enterprises, and not consumers, he says.

There are also those who insist China's blistering growth rate is sustainable, saying predictions about the demise of China's economy are nothing new. And they're right. It's been nine years since the book The Coming Collapse of China first hit bookshelves.

But simply because China has twisted and contorted its economy to generate empty growth doesn't mean its future success is guaranteed. Quite the opposite. China has failed to learn the most important lesson of being a modern, thriving economy, says Chovanec at Tingshua University. "Failure is very important for any economy. To have businesses fail, to have people lose money, to have the stock market and real estate go down, is all really critical, because it teaches people what is a good investment, and what is a waste of resources," he says. "Unless you have that, then people will think they can put their money into whatever they want, and they'll always make more money, until the costs get socialized and everybody wonders why everyone in China is so poor."

Not that you'll hear frank talk like that from most investment bankers, business consultants or in corner offices in the West. Otherwise ardent free market capitalists, they remain strangely convinced that China's socialist brain trust is capable of correctly pulling all the levers of its massive economy to keep it on a path to prosperity. Perhaps this isn't so strange, though. After all, China offers all the elements of Wall Street's most cherished commodity — the investment story. Such a narrative must be easily packaged, sold and resold — think dot–coms, U.S. real estate or green energy — and China offers angles. As with all investment stories, critics pointing out the risks are easily dismissed, until it's too late.
Title: When a Billion Chinese Jump
Post by: Crafty_Dog on March 22, 2011, 07:15:23 AM
When a Billion Chinese Jump
The dark side of China's rapid industrialisation is terrible environmental damage, claims a British journalist.

When a Billion Chinese Jump | by Jonathan Watts | Scribner | 448 pages | 2010 | US$17
ISBN: 141658076X

 The odd title of this book by the Asia environment correspondent for The Guardian, “When a Billion Chinese Jump”, comes from a warning he heard as a child. If everyone in China jumped at the same time, he was told, the shock would knock the earth off its axis and kill everyone on the planet.  You don’t have to read too far into the book before you realize that the world’s second largest economy may be killing all of us in its head-long dash to modernise with scant regard for our planet.

Jonathan Watts argues that Chinese have so deep a cultural prejudice against nature that even the central government’s efforts to protect and improve the environment are ignored.

The book is more a travelogue than a scientific tome. Watts peels the onion of environmental degradation as he journeys across China, from the village in Yunnan (which supposedly is Shangri-la in the novel “The Lost Horizon”) to the more developed and industrialized cities of the coast, to its hinterland, coal fields in Shaanxi, and Inner Mongolia and the encroaching desert. He relates the environmental catastrophe through the voices of environmental activists, scientists, government officials and disenfranchised victims suffering disease and indignity.

Consider some of the following environmental crimes:

Since 1949 China has built 87,000 dams – most of them environmental catastrophes. Some Chinese and foreign seismologists have claimed that the devastating Sichuan earthquake of 2008 occurred because one of the dams placed so much weight on a fault line that “had been relatively inactive for thousands of years”.
In 2006 some 8.6 million tonnes of untreated sewage was pumped into the South China Sea by just two provinces – Guangdong and Fujian in the country’s industrialised south.
By 2020 the volume of urban rubbish in China is expected to reach 400 million tonnes – the equivalent of the rest of the world in 1997.
Half the world’s current airborne dust comes from China.
This is scary stuff. China’s voracious appetite threatens the world.

But scarier still is that the people interviewed by Watts on his journey across China speak as though man and nature are disconnected from each other. They tend to believe that nature is something to be conquered and used, rapaciously if we wish. Even Chinese scientists seem to believe this. One of them has suggested using 200 nuclear bombs to blast a hole through the Himalayas to improve wind circulation in China.

Watts attributes this to Confucianism. This ancient philosophy privileges social harmony and the material needs of society over nature. Mao Zedong’s Great Leap Forward in 1958 started a mad rush to industrialise that trampled everything in its path and created the world’s worst man-made famine. Although China’s current development spree is by no means so catastrophic, the environment is still being trashed because Chinese are still Confucians at heart. As Watts points out, fixing the environment will require more than legislation and government edicts from Beijing; it will require a deep cultural shift.

In such an impressive book there are some disappointing lapses.

Watts fails to mention China’s belief in its own superiority. This was most evident in imperial times, but it lingers on today. Other nations are regarded as barbarians who should pay homage to China. This seems to explain why China ignores neighbouring countries when disposing of its waste. China currently seeds clouds over Beijing and Inner Mongolia (part of China) with chemicals to force it to rain on its territory, ignoring the desertification of the grasslands of independent Mongolia.

Another fault is that Watt doesn’t look into a crystal ball. For example, what will happen when water becomes even scarcer than it is today? There is already discussion in Chinese scientific and military circles about harnessing the headwaters of the Ganges and diverting them away from India and into China. Forecasting is the real jump that could shake the world to its core, is it not?

Watts sees hope for the future in a myriad of small, community level initiatives throughout the country. But China is vast and each region has gigantic problems. Thinking locally is like sticking your finger in the crack in the dam. There are just too many cracks. What is needed is a concerted effort by the Central Government to coordinate national action.

China needs a cultural shift, not from Communism to capitalism, but from Confucianism back to Taoism – an older Chinese philosophy that taught man to live in harmony with nature. And then it needs to think of itself as a citizen of the world, not as the centre of the world.

Depressingly these changes seem very distant. In the meantime, China, which has the highest per capita rates of cancer and stillborn births in the world, will continue to poison itself -- and perhaps the rest of us as well.

Constance Kong is the pen name of a Shanghai-based business consultant.

This article is published by Constance Kong, and MercatorNet.com under a Creative Commons licence. You may republish it or translate it free of charge with attribution for non-commercial purposes following these guidelines. If you teach at a university we ask that your department make a donation. Commercial media must contact us for permission and fees. Some articles on this site are published under different terms.
Title: Doth Protest Too . . . **Click**
Post by: Body-by-Guinness on March 29, 2011, 09:47:55 AM
Chinese censorware nukes any voicecall that contains the word "protest"
Cory Doctorow at 12:26 AM Wednesday, Mar 23, 2011

Censors at the Chinese politburo have ramped up their electronic surveillance and censorship efforts; some piece of spyware is now monitoring all voice communications, and will terminate any phone call in which someone speaks the word "protest" in Mandarin or English (and presumably in other languages):

A Beijing entrepreneur, discussing restaurant choices with his fiancée over their cellphones last week, quoted Queen Gertrude's response to Hamlet: "The lady doth protest too much, methinks." The second time he said the word "protest," her phone cut off.

He spoke English, but another caller, repeating the same phrase on Monday in Chinese over a different phone, was also cut off in midsentence.


The Chinese firewalls are also blocking VPN connections, degrading Gmail connections, and randomly blocking access to sites from LinkedIn to the Hong Kong Stock Exchange. One analyst quoted in the NYT claims that the politburo is being deliberately ham-fisted in this crackdown in order to convey the message that they are in total control.

http://www.boingboing.net/2011/03/23/chinese-censorware-n.html
Title: WSJ
Post by: Crafty_Dog on March 30, 2011, 04:32:07 AM
China's crackdown on domestic dissenters continues, with a 10-year prison sentence issued on Friday to Liu Xianbin, a founder of the China Democratic Party and a signer of Charter 08, a pro-democracy charter. Mr. Liu was sentenced for subverting state power, which in China can mean anything the authorities want it to mean, even advocating for democratic freedoms.

Ten years is unusually harsh and especially so for the 43-year-old Mr. Liu, who has already served almost a decade behind bars. His wife, Chen Mingxian, was allowed to attend the trial otherwise closed to the public and she reports that Mr. Liu was routinely interrupted by the judge as he sought to defend himself. After serving his earlier prison term, Mr. Liu was harassed by security agents who made it difficult for him to hold a job.

Mr. Liu's latest jailing is part of a crackdown that started in February, when a U.S.-based website posted a call for peaceful democratic protests in China. Beijing proceeded to round up scores of activists, human rights lawyers and others. Some have been confined to house arrest; others, like blogger Ran Yunfei, have been criminally detained.

The most worrying cases are those who have simply "disappeared" into the maw of China's extralegal shadow jails. Human rights lawyer Gao Zhisheng, who has been tortured before, hasn't been seen since April 2010. Teng Biao, Jiang Tianyong and Tang Jitian haven't been heard from since February.

The government is also squeezing the media, both domestic and foreign. The South China Morning Post reports that an outspoken columnist for Southern Weekly, a relatively liberal publication by Chinese standards, was recently pressured into a two-year "sabbatical." Internet censorship remains heavy. Foreign journalists in China's biggest cities have had their movements restricted and some have been physically assaulted by security agents.

China's cruelties deserve to be widely publicized and condemned in the West, not least so the country's brave activists know they are not suffering in vain. As in the Middle East, the democratic aspirations of the Chinese people will one day be impossible to contain. Here's hoping that Mr. Liu and his courageous countrymen live to see that day.

Title: Re: China
Post by: G M on March 30, 2011, 06:21:56 AM
R2P? NFZ?
Title: WSJ: Where's WeiWei?
Post by: Crafty_Dog on April 06, 2011, 11:57:12 AM


Chinese artist Ai Weiwei posed an important question about the one-party state in this newspaper's Asian op-ed pages last year: "The question . . . is how a state based on limiting information flows and freedom of speech can remain powerful." And if that's possible, "what kind of monster" will it become?

Mr. Ai's detention Sunday at Beijing's airport as he attempted to travel to Hong Kong brings this juggernaut into sharp relief. The police have provided no information about the 53-year-old's whereabouts or explained why he was arrested. The same day, Mr. Ai's wife, nephew and a clutch of his employees were arrested and questioned. Authorities raided his Beijing studio and carted away computers and other items.

Mr. Ai has thus joined the growing ranks of China's new "disappeared." In February amid the popular Arab revolt, an online petition urged a similar Jasmine Revolution in China. The government has reacted by criminally detaining dozens, if not hundreds or thousands, of the country's most prominent human rights lawyers, bloggers, democracy activists and others.

The detention of Mr. Ai is especially notable because of his national stature. The son of a famous poet, he is a prominent artist, film-maker and architect in his own right, a popular Web communicator, and an advocate for the rule of law and individual freedoms. He is also unafraid: In 2009, when Mr. Ai tried to attend the trial of another activist, the police beat him so badly he got a brain bleed that almost killed him. He continued to speak out.

British Foreign Secretary William Hague called on the Chinese government Monday to "urgently clarify Ai's situation and well being" and called for his immediate release. Germany's Foreign Minister did the same.

The U.S. State Department managed to roll out spokesman Mark Toner, who said the U.S. government was "deeply concerned" but added "our relationship with China is very broad and complex, but it's an issue where we disagree and we continue to make clear those concerns." Secretary of State Hillary Clinton and President Obama have been mute.

Perhaps the Obama Administration should listen to Mr. Ai, whose op-ed for us included this statement: "Most discouraging to those of us who are fighting for increased freedom is the tendency for developed nations to lower the bar to please China. They make excuses not to concern themselves with violations of human rights. To espouse universal values and then blind oneself to China's active hostility to those values is irresponsible and naive."

The State Department says its top Asia official, Kurt Campbell, is set to visit Beijing Thursday to "prepare for the upcoming Strategic and Economic Dialogue." Maybe that trip should be postponed until Beijing tells the world in which dungeon it has dumped Ai Weiwei.

Title: Re: China
Post by: G M on April 06, 2011, 12:34:48 PM
Thomas Friedman unavailable for comment.   :roll:
Title: It Ain't Ordained
Post by: Body-by-Guinness on April 06, 2011, 12:50:45 PM
Reassessing China's Rise: Knowns and Unknowns by Ted Galen Carpenter
from Cato Recent Op-eds
2 people liked this
It has nearly become the conventional wisdom that China is an emerging superpower, and that Beijing will challenge Washington for global leadership within the next quarter century. That nation's huge population and spectacular economic growth over the past three decades make such predictions quite credible. But while they may turn out to be correct, other outcomes are also possible.

Certainly, China's already strong position is benefiting from a number of recent global developments. The earthquake, tsunami and nuclear disaster in Japan combine to weaken one of China's major economic and strategic competitors. The estimated cost of those horrible events is $300 billion — and that may turn out to be a very conservative estimate. The continuing problems with the nuclear power plants have knocked nearly 20% of Japan's electric power generating capacity off-line, and those problems are likely to persist for months. Experts already speculate that firms in China (along with those in South Korea and Taiwan) will be the principal beneficiaries of Japan's woes.

Beijing also gains some advantage from the economic, fiscal and foreign policy problems that the United States is encountering. Washington's spendthrift habits — which have produced an annual federal budget deficit of $1.5 trillion — not only weaken America, but they give China important diplomatic and economic leverage. China is now the largest foreign holder of US Treasury debt. Thus far, Beijing has been subtle about using that leverage, but US officials are all too aware of the vulnerability such dependence creates.

Washington's military adventures in the Muslim world also play into Beijing's hands. Not only do such controversial military missions increase the level of regional and global anger at the United States, they enable China to play the role of a less intrusive, more constructive partner to Islamic countries and other nations. America's military missions are also expensive, with combined costs of the Iraq and Afghanistan wars running between $130 and $175 billion a year. Washington's insistence on policing the planet and subsidizing the defense of its European and East Asian allies leads to an overall military budget of more than $700 billion — nearly as much as the rest of the world combined. That is a financial hemorrhage that Beijing can — and does — gleefully avoid.

Washington's need to secure Chinese support (or at least tolerance) of its military interventions also gives Beijing an opportunity to extract concessions. One wonders, in particular, what concessions the Obama administration had to make to get China to refrain from exercising its veto in the UN Security Council when the resolution authorizing coercive measures against the Libyan government came up for a vote. But it is a safe bet that concessions were required. The Chinese do not regard foreign policy as an altruistic enterprise, and Beijing's willingness to cast an abstention rather than a veto was quite important to the United States.

Nevertheless, greater caution — even skepticism — about the continuation of China's meteoric rise is warranted. There are three especially strong reasons to put up a caution light regarding the notion of China's "inevitable" rise to superpower status — much less its ability to displace the United States as global leader.

One reason is that too many (perhaps most) predictions of that nature are based on simplistic, linear projections of China's future economic growth. As the PRC's economic base becomes larger, and the economy becomes more mature, it will be harder and harder to sustain spectacular growth rates. A country beginning its economic progress from a position of dire poverty (as China did in the late 1970s) can, with the right economic policies, achieve annual growth rates of 8-10% or even higher. But large, more mature economies rarely experience such rates of expansion. No one expects the United States — or for that matter, such countries as Japan, Germany and Italy — to grow at such a brisk pace. For more mature economies, annual GDP growth of 5 or 6% is considered extremely vigorous. At some point, probably within the next decade, China will begin to make that transition and see its pace of economic progress decelerate.

That highlights the second reason for caution about China's emergence as a superpower. Such an achievement requires the continuation of social peace and political stability. There are already small but ominous signs on both fronts. Even the leadership of the Communist Party is acutely aware of the enormous gap between the coastal provinces and the interior of the country regarding the extent of economic progress and prosperity. In addition, legions of young people, especially young males, leave the countryside each year and need to be absorbed into the boom cities, mostly near the coast. Chinese officials become rather nervous when one asks them what is likely to happen to millions of rootless young men, if the economy begins to falter and they can't find jobs. The Chinese Communist Party is still enough of a Leninist party to understand the explosive revolutionary potential of that situation. Privately, Chinese scholars and opinion leaders express worry if GDP growth was to sag to a still healthy 7 or 8% — much less if it dropped to lower levels.

Worries about preserving social peace and political stability have become more acute over the past year or two. Small, but persistent, public demonstrations against governmental abuses and corruption are increasingly frequent, and Chinese officials have occasionally felt compelled to adjust policies to placate the public. At the same time, tightening of restrictions on the internet and harsh crackdowns on prominent political dissidents have grown in the past few years. The speed with which the Chinese regime moved to ensure that the upheavals sweeping the Middle East and North Africa would not be duplicated in China suggests a government that is uneasy at best. Even the extent of debate on economic policy, which seemed so vigorous in academic and think tank circles under Jiang Zemin, has gradually become narrower and more cautious as the era of Hu Jintao has gone on. That does not indicate a political system marked by confidence and stability. Premier Wen Jiabao's periodic calls for greater openness also hint that some members of the elite believe that modest political reform is essential, lest the party risk an explosion caused by the pent-up, frustrated demands of the country's rapidly growing middle class. Any rupture in China's social and political stability, of course, would have widespread, negative ramifications for economic growth and any superpower aspirations.

A third reason for caution is that many of China's diplomatic and political gains in the international arena are the direct or indirect result of America's self-inflicted wounds. Washington's decision to embark on not one but two military interventions and nation-building missions in the Muslim world will likely strike future historians as cases of appallingly bad judgment. If the current mission in Libya does not turn out to be a brief affair in which the United States plays a very limited role, that intervention will be added to the list of US foreign policy follies.

Perhaps China will be lucky, and the US political and policy elite will continue to pursue expensive, bloody chimeras in the sands of the Middle East and the mountains of Afghanistan. Perhaps US leaders will even add new military crusades to the burdens borne by the American armed forces and American taxpayers. But there is always a chance that wiser, more frugal, and more realistic leadership will emerge in Washington. And if that happens, China's gliding progress down the road toward superpower status may encounter a speed bump, perhaps even a large pothole.

China may yet become the leading power of the 21st century. But Western pundits and policy experts should stop acting as though that outcome is ordained. There are too many domestic economic, political and social variables, as well as too many international strategic and diplomatic variables, to be certain about China's future status.

Ted Galen Carpenter, vice president for defense and foreign policy studies at the Cato Institute in Washington, D.C., is the author of eight books and more than 400 articles and policy studies on international affairs.

http://www.cato.org/pub_display.php?pub_id=12937
Title: Re: China
Post by: Crafty_Dog on April 06, 2011, 02:25:24 PM
The piece is not all that it could be IMHO.  To my eye, not only is it written with an view to pushing libertarian non-interventionism by the US (so as to maintain our pre-eminent role in the world :?) it ignores some of the most poweful reasons that China may not become all that it seems destined to be:

1) Its bookkeeping is seriously dishonest.   There is good reason to think it a major bubble, perhaps even larger than ours of not so long ago.

2) The economic model is turning the country into a major toxic dumpsite.  Water is polluted and it seems quite likely that it is inevitable that water scarcity will become a major bottleneck in the near future.

3) Weird demorgraphic profile thanks to the one-child policy.
Title: Re: China
Post by: Body-by-Guinness on April 06, 2011, 06:03:52 PM
Agree, Crafty. I was surprised it didn't mention the banking hijinks other pieces I've posted dwell on, and the author's embrace of disengagement while raising the specter of Chinese preeminence was disingenuous. Still, the three take aways that inspired me to post it were the contrarian view of China's emergence, the question of what BHO gave away to keep China from vetoing action against Libya, and the door our military involvement has opened for Chinese engagement in that neck of the woods.
Title: Re: China
Post by: G M on April 06, 2011, 06:07:04 PM
China has exploited the opportunities the GWOT made possible. Probably going to exploit Obama's fcukup's to an even greater degree, such as becoming Saudi's new patron.
Title: Dim Prospect in China
Post by: Body-by-Guinness on April 11, 2011, 07:40:01 PM
China’s Crackdown and America’s Response: Supporting Liberty in Distant Places
Published on April 11, 2011 by Dean Cheng WEBMEMO #3221

As the “Jasmine Revolution” continues to unravel traditional power structures in the Middle East, Chinese authorities have been cracking down on dissidents and activists on a scale not seen in over a decade. On the eve of the next round of Strategic and Economic Dialogue talks, and with much less experienced Asia team members for the U.S.—many of whom have no China experience—there will be great pressure to overlook these harsh measures. But doing so would not help the dissidents but instead betray American ideals.

Reasons for the Crackdown
Western media has noted the arrest of Ai Weiwei, an internationally recognized artist. But other reports indicate that a host of activists, human rights lawyers, and dissidents have been detained. Reports suggest that at least 20, and perhaps between 50 and a hundred people have been arrested or have otherwise disappeared.[1]
Part of this effort is almost certainly in reaction to developments in the Middle East. Very clearly, the Chinese authorities are worried that the winds of popular discontent and demands for political reform will blow through China. This is likely exacerbated by possible similarities in the domestic situation in China and parts of the Middle East. These include increasing frustration with corruption and growing disparities between urban and rural populations. Both of these are likely factors in the mounting number of “mass incidents” reported throughout China, now likely exceeding 100,000 a year.

Less widely recognized is the issue of urban unemployment. In the Middle East, there is a large population of underemployed, educated youth in the cities. Officially, this is much less of a problem in China, where urban unemployment at the end of 2010 was only 4.1 percent. Yet Chinese articles nonetheless document a similar phenomenon of underemployed and unemployed youths congregating in cities such as Beijing, Nanjing, and Chongqing. Often referred to as “ants,” they are believed to number anywhere from a million to 3 million.[2] Like the urban youth in Tunisia and Egypt, they constitute potential tinder for any kind of popular movement against government controls—educated yet dissatisfied.

The current crackdown may be further motivated by the upcoming plenary meeting of the Chinese Communist Party (CCP). It is reported that this meeting may determine the makeup of the next Politburo Standing Committee, the true Chinese leadership. Instability in the streets not only may disrupt the plenum but would potentially also introduce unpredictable factors into the various factions’ maneuvering for power and advantage. For all the involved parties, there is likely to be great interest in limiting the potential for embarrassing incidents.

Don’t Get Your Hopes Up
Several recent Chinese publications provide additional food for thought regarding this crackdown. The Twelfth Five Year Plan (2011–2015) shows that Beijing will spend more on internal security forces than on the military.[3] In addition, the 2010 Chinese defense white paper, which was released only last week, prominently notes that a major task of the Chinese military is to “maintain social harmony and stability.”[4] The People’s Armed Police, part of the Chinese armed forces, is given this task on a day-to-day basis, but it is important to remember that the People’s Liberation Army is the armed wing of the CCP. There should be no doubt that, if necessary, the Party will use every available means to enforce its will.

Meanwhile, Global Times, part of the People’s Daily newspaper system published by the CCP, editorialized that Ai Weiwei’s arrest was not for his dissidence but for his violation of Chinese laws.[5] The editorial highlights a growing trend in Chinese suppression of dissidents: the aggressive use of the law as a rationalization for punishment. As one Chinese official warned foreign journalists who were assaulted by police, for those who seek to make trouble for China, the law is not a shield and offers no protection.[6]

This attitude of rule by law rather than rule of law should disabuse those optimists who had looked to Wen Jiabao’s speeches as presaging some kind of fundamental political reform or even the stirrings of democracy. That even high-profile dissidents can be legally punished simply for pushing the limits highlights how concepts of “legal warfare” apply not only internationally but domestically.

As long as the CCP remains in power, there will be little meaningful movement toward democracy. The CCP has little incentive to cede power. Indeed, recent events in the Middle East only underscore, from the Party’s perspective, that loss of power ultimately leads to exile and at worst to civil war—a very zero-sum view. Belief that democracy is “just around the corner” is, of course, foolish. But, as Wu Bangguo emphasized at the recent National People’s Congress, “We will never simply copy the system of Western countries or introduce a system of multiple parties holding office in rotation.”[7]

Recommendations
The U.S. should:
Retain the Tiananmen Square sanctions. Leaving aside the national security implications of the Tiananmen sanctions, it is important that the leadership in Beijing recognize that its actions have consequences. In particular, when a government turns its guns on its own people, it must know that this will be deemed unacceptable behavior and that it will not change simply with the passage of time. In this regard, Washington should also persuade its allies to keep those sanctions in place. Otherwise, they would have little meaning and less impact.

Link ideals and individuals. Supporting human rights is not only a matter of speeches and resolutions—it has individual faces as well. Foreign attention is often the only protection for many dissidents. It is also one of the most powerful means of assuring them that their struggle is not forgotten or ignored. American officials from the President to the Secretary of State to the Ambassador and embassy staff should not shy away from championing dissidents in their official dialogues, private discussions with Chinese officials, and public statements.

Support the study of legal warfare as a weapon of future conflict. Some Western scholars look at China’s efforts to create a judicial system—and especially a national code of laws—as somehow presaging a shift from Party rule to the rule of law. But Chinese actions make clear that the law will be increasingly used as an instrument of justifying various measures by the state, not as a means of ensuring justice. Just as the American military in the 1930s began to prepare for future conflicts by developing naval and land-based aviation, American policymakers today should be supporting efforts at studying the potential for legal warfare, both offensively and defensively. Military lawyers should incorporate the study of foreign—and especially Chinese—laws and legal warfare into their training.

What Does the U.S. Stand For?
The exceedingly dim prospects for democratic reform in China does not mean that the United States should abandon its support for it. Support for democracy worldwide is a fundamental American tenet, elemental to American ideals and principles. Both rhetoric and action are necessary.

Dean Cheng is Research Fellow in Chinese Political and Security Affairs in the Asian Studies Center at The Heritage Foundation.

http://www.heritage.org/Research/Reports/2011/04/Chinas-Crackdown-and-Americas-Response-Supporting-Liberty-in-Distant-Places
Title: Subsistence is Stable
Post by: Body-by-Guinness on April 12, 2011, 09:41:31 AM
China’s Fear
The Arab Spring has the Communist Party leadership on its toes.
10 April 2011

“Mohamed Bouazizi” is not an easy name to pronounce in Chinese. Ding Yfan, a well-known scholar and my official Communist Party contact in Beijing, tries anyway. Ding’s job is to answer “honestly” the questions of visiting Western intellectuals. Even before I raise the subject of the Arab uprisings—set in motion by Bouazizi’s self-immolation in Tunisia last December—Ding seeks to convince me that such revolts couldn’t happen in China. Unlike citizens in the Arab world, he insists, the Chinese are getting richer and therefore aren’t discontented. His reasoning is purely Marxist: only economics could drive a revolution, not ideas, and certainly not the hunger for freedom.

The Chinese are indeed getting richer. That’s particularly obvious in Beijing, which abounds with luxury shops and restaurants where millionaires’ children exhibit their new wealth. The nation’s economic expansion—powered by a 10 percent growth rate every year for the last 30 years—has given birth to an immensely rich class, which now tends to reproduce itself and holds both political power and economic influence. But while the Chinese Communist Party was becoming a wealthy oligarchy, the peasants of the eastern and central provinces might as well have been living in the Middle Ages. Now, thanks to migrations from the countryside to big construction sites and the industrial sector, Chinese peasants (or their children) are slowly entering the modern economy, even if salaries remain low.

Even if no Chinese version of Mohamed Bouazizi surfaces, the Middle Eastern uprisings have shown Chinese authorities how dangerous the Internet can be. Ding quotes Mao Zedong: “A spark can set fire to the whole meadow.” Bouazizi was that spark, and the Internet spread the fire, from Tunisia to all parts of the Arab world, including countries with growing economies. Economic growth generates hope, but hope can sometimes make a society more unstable and demanding precisely because the situation is improving—just not as quickly as people would like. Alexis de Tocqueville, looking back at the French Revolution, saw that dynamic at work: because freedom and prosperity had expanded throughout France, he argued, the French wanted everything, right there, right then.

In his own way, Confucius expressed this same sentiment 25 centuries ago: “Only subsistence societies are stable,” he wrote, “because their living conditions are equal for all.” In China, repression has become ever more severe: the Internet is censored, and connection speeds have been slowed. Dissident intellectuals face prison sentences of 11 years on average; lawyers who challenge the government in civil affairs vanish without warning. At the first sign of riot or strike, the police send peasant leaders or workmen to reeducation work camps for three-year sentences. Liu Xia, the wife of imprisoned Nobel Prize winner Liu Xiaobo, has been missing since January; the wife of democratic militant Hu Jia, also in prison, is forbidden to leave her house. And on April 3, artist and dissident Ai Weiwei was arrested and detained in Beijing.

It’s possible to miss this increased repression with the naked eye. The tourist, the entrepreneur, and the tradesman (and the rock musician, like Bob Dylan, who visited recently) can choose to ignore those social tremors that don’t affect their business—as long as the tremors don’t trigger an earthquake. Liu Jiming, a Beijing-based political scientist and free-market philosopher who bravely took over his friend Liu Xiaobo’s work, thinks, contrary to Ding Yfan, that China numbers millions of Mohamed Bouazizis. Everywhere, Chinese peasants try, like Bouazizi, to escape poverty and, as in the Arab world, see their small businesses destroyed by the Chinese police because they lack proper authorization (usually obtained by bribing a bureaucrat). The difference, according to Liu, is that China’s immense size makes a mass movement difficult. Even with the galvanizing potential of the Internet, it’s not easy to turn isolated rebellions into a general mutiny against the Communist Party.

Another important distinction between China and the Arab world is the ruthless efficiency of the Chinese police. Nothing works more effectively against a revolution than a powerful police force. But a general revolution will happen anyway, Liu believes, sooner or later. Only wealth allows the Communist Party to maintain its power. When economic growth slows, the Party will lose its grip on the police, the army, and the feudal landowners and apparatchiks, whose loyalty to the regime is purely financial. Unlike leaders in the Arab world, Chinese Communist leaders understand their society well. They know that they’re not popular with the people—but they remain feared.

And in fact, economic growth has slowed—down to 8 percent so far this year—and inflation has jumped to around 10 percent for basic food products. Can the Party retain legitimacy faced with these constrictions? It will not be able to rely on popular faith in Marxism, which no one believes in anymore. It is taught in schools and universities only as a compulsory, antiquated catechism—as is Confucianism. The thought of Confucius has been integrated into the school curriculum as part of the Communists’ effort to connect the past with the present, as if the Party incarnated an eternal China. For the Chinese, Confucius remains the father of all morality, the advocate of respect for authority and social order. The Party has thus erected a kitschy statue of Confucius in Tiananmen Square, not far from the tomb of Mao Zedong and next to the National History Museum, which is hosting a new exhibit extolling the continuous success of Party leaders since 1949—an exercise in pure propaganda. Chinese cultural centers overseas have been renamed Confucius Institutes. Confucianism, then—or more precisely, the superficial vulgate that has replaced its complex writings—has unanimous support among the Chinese. But despite the Party’s best efforts, it’s not likely that many ordinary Chinese link Confucianist morality with the Communist princes who govern their lives. It’s better for the Party’s sake if the people don’t read Confucius too closely, Liu Jiming says: his criticism of corrupt leaders and social inequality would only undermine the current apparatchiks.

As Liu points out, Confucius does not encompass the entirety of Chinese thought, whether classical or contemporary. Lao-Tse, the old master of Confucius, was in his time an advocate of complete anarchy; no Western political philosophy is as suspicious of power as Taoism. We could, Liu concludes, quickly sum up 2,500 years of Chinese culture as a dialogue between Lao-Tse and Confucius—between Taoism’s individual freedom and Confucianism’s enlightened despotism.

Jiming and his fellow dissident intellectuals (who must remain anonymous) have no illusions about their influence in today’s China. It is not philosophers, they concede, who will bring down the Party, but a mutiny from the Chinese Bouazizis. Confronting the Party head-on, they now believe, leads nowhere but jail, because the Party is physically too strong. Political manifestos, like the one that landed Liu Xiaobo in prison, are now a bit outdated. Manifestos belong to the old world of political struggle. Intellectuals have come to believe that real change today will rise from social unrest, not from ideological proclamations. This means that the main role for Chinese activists is to convey news of local rebellions—which occur nearly every day, somewhere, in this vast and restless country—with the hope that disseminating the images and information on the Internet will build links among local dissidents and eventually converge in a national movement.

Intellectuals now believe that their true role will come after the movement is underway: preparing the alternative institutions of civil society, formulating a confederation of provinces, and creating the democratic institutions that would govern them, so that democracy—not chaos or some other tyranny—could replace dictatorship. The Chinese democrats see that the Arab world, because it has not prepared itself for such a transition, could move from one tyranny to another. They appeal to Westerners—Europeans and Americans—for methodological guidance: how to build a democracy while avoiding the chaos that revolution so often brings? They believe that the Chinese people know well what democracy means. But as the Arab revolts demonstrate all too plainly, the path from revolution to democracy is never clear.

Guy Sorman, a City Journal contributing editor, is the author of Empire of Lies: The Truth about China in the Twenty-First Century and other books.

http://www.city-journal.org/2011/eon0410gs.html
Title: Dylan lyrics in China: Make a different set of rules...So much oppression
Post by: DougMacG on April 13, 2011, 03:17:34 PM
Interesting read on a story about censorship in China, where Google was helping the Chinese censor and Hillary removed the section of her book that bragged about her confronting China about women's rights in order to sell her book in China.

Bob Dylan went through all the Chinese censors screening his work to play there last week and still slipped through some protest messages according to this story,
http://www.getreligion.org/2011/04/dylan-works-around-chinas-bosses/ Opening with these words:
Gonna change my way of thinking, make myself a different set of rules
Gonna put my good foot forward, and stop being influenced by fools.
So much oppression, can’t keep track of it no more...
Title: Re: China
Post by: G M on April 13, 2011, 03:30:12 PM
As a native english speaker, I can't understand WTF he's saying, so I'm pretty sure he could give a long speech about democracy in China without tipping off his gov't minders there.
Title: Pop!
Post by: G M on April 14, 2011, 08:26:59 AM
Monday, April 11, 2011 - 23:15
Beijing March New House Prices Plunge 26.7% M/M: Press

BEIJING (MNI) - Prices of new homes in China's capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city's Housing and Urban-Rural Development Commission.

Average prices of newly-built houses in March fell 10.9% over the same month last year to CNY19,679 per square meter, marking the first year-on-year decline since September 2009.

Home purchases fell 50.9% y/y and 41.5% m/m, the newspaper said, citing an unidentified official from the Housing Commission as saying the falls point to the government's crackdown on speculation in the real estate market.

Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December, according to National Bureau of Statistics data.

The central government has launched several rounds of measures since last year designed to cool the housing market, though local government reliance on land sales to plug fiscal holes mean enforcement hasn't been uniform.

The NBS is expected to release March house price data on April 18.

beijing@marketnews.com ** Market News International Beijing Newsroom: 86-10-5864-5274 **
Title: Stratfor: End of the Deng Dynasty
Post by: Crafty_Dog on April 19, 2011, 08:15:22 AM
Well, that sounds rather significant!

============

China and the End of the Deng Dynasty
April 19, 2011


By Matthew Gertken and Jennifer Richmond

Beijing has become noticeably more anxious than usual in recent months, launching one of the more high-profile security campaigns to suppress political dissent since the aftermath of the Tiananmen Square crackdown in 1989. Journalists, bloggers, artists, Christians and others have been arrested or have disappeared in a crackdown prompted by fears that foreign forces and domestic dissidents have hatched any number of “Jasmine” gatherings inspired by recent events in the Middle East. More remarkable than the small, foreign-coordinated protests, however, has been the state’s aggressive and erratic reaction to them.

Meanwhile, the Chinese economy has maintained a furious pace of credit-fueled growth despite authorities’ repeated claims of working to slow growth down to prevent excessive inflation and systemic financial risks. The government’s cautious approach to fighting inflation has emboldened local governments and state companies, which benefit from rapid growth. Yet the risk to socio-political stability posed by inflation, expected to peak in springtime, has provoked a gradually tougher stance. The government thus faces twin perils of economic overheating on one side and overcorrection on the other, either of which could trigger an outburst of social unrest — and both of which have led to increasingly erratic policymaking.

These security and economic challenges are taking place at a time when the transition from the so-called fourth generation of leaders to the fifth generation in 2012 is under way. The transition has heightened disagreements over economic policy and insecurities over social stability, further complicating attempts to coordinate effective policy. Yet something deeper is driving the Communist Party of China’s (CPC’s) anxiety and heavy-handed security measures: the need to transform the country’s entire economic model, which carries hazards that the Party fears will jeopardize its very legitimacy.


Deng’s Model

Former paramount leader Deng Xiaoping is well known for launching China’s emergence from Mao’s Cultural Revolution and inaugurating the rise of a modern, internationally oriented economic giant. Deng’s model rested on three pillars.

The first was economic pragmatism, allowing for capitalist-style incentives domestically and channels for international trade. Deng paved the way for a growth boom that would provide employment and put an end to the preceding decade of civil strife. The CPC’s legitimacy thus famously became linked to the country’s economic success rather than to ideological zeal and class warfare.

The second pillar was a foreign policy of cooperation. The lack of emphasis on political ideology opened space for international maneuver, with economic cooperation the basis for new relationships. This gave enormous impetus to the Sino-American detente Nixon and Mao initiated. In Deng’s words, China would maintain a low profile and avoid taking the lead. China would remain unobtrusive to befriend and do business with almost any country — as long as it recognized Beijing as the one and only China.

The third pillar was the primacy of the CPC’s system. Reform of the political system along the lines of Western countries could be envisioned, but in practice would be deferred. That the reform process in no way would be allowed to undermine Party supremacy was sealed after the mass protests at Tiananmen, which the military crushed after a dangerous intra-Party struggle. The People’s Liberation Army (PLA) and the People’s Armed Police would serve as Deng’s “Great Wall of steel” protecting the Party from insurrection.

For three decades, Deng’s model remained mostly intact. Though important modifications and shifts occurred, the general framework stands because Chinese-style capitalism and partnership with the United States have served the country well. Deng also secured his policy by establishing a succession plan: He was instrumental in setting up his immediate successor, Jiang Zemin, and Jiang’s successor, current President Hu Jintao.

Hu’s policies have not differed widely in practice from Deng’s. China’s response to the global economic crisis in 2008 revealed that Hu sought recourse to the same export- and investment-driven growth as his predecessors. Hu’s plans of boosting household consumption have failed, the economy is more off-balance than ever, and the interior remains badly in need of development. But along the general lines of Deng’s policy, the country has continued to grow and stay out of major conflict with the United States and others, and the Party has maintained indisputable control.


Emergent Challenges

Unprecedented challenges to Deng’s model have emerged in recent years. These are not challenges involving individuals; rather, they come from changes in the Chinese and international systems.

First, more clearly than ever, China’s economic model is in need of restructuring. Economic crisis and its aftermath in the developed world have caused a shortfall in foreign demand, and rising costs of labor and raw materials are eroding China’s comparative advantage even as its export sector and industries have built up extraordinary overcapacity.

Theoretically, the answer has been to boost household consumption and rebalance growth — the Hu administration’s policy — but this plan carries extreme hazards if aggressively pursued. If consumption cannot be generated quickly enough to pick up the slack — and it cannot within the decade period that China’s leaders envision — then growth will slow sharply and unemployment will rise. These would be serious threats to the CPC, the legitimacy of which rests on providing growth. Hence, the attempt at economic transition has hardly begun.

Not coincidentally, movements have arisen that seek to restore the Party’s legitimacy to a basis not of economics but of political power. Hu’s faction, rooted in the Chinese Communist Youth League (CCYL), has a doctrine of wealth redistribution and Party orientation. It is set to expand its control when the sixth generation of leaders arrives. This trend also exists on the other side of the factional divide. Bo Xilai, the popular Party chief in Chongqing, is a “princeling.” Princelings are the children of Communist revolutionaries, who often receive prized positions in state leadership, large state-owned enterprises and the military. This group is expected to gain the advantage in the core leadership after the 2012 transition. Bo made himself popular by striking down organized-crime leaders who had grown rich and powerful from new money and by bribing officials. Bo’s campaign of nostalgia for the Mao era, including singing revolutionary songs and launching a “Red microblog” on the Internet, has proved hugely popular. It also has added an unusual degree of public support to his bid for a spot on the Politburo Standing Committee in 2012. Both sides appeal to the inherent value of the Party, rather than its role as economic steward, for justification.

The second challenge to Deng’s legacy has arisen from the military’s growing self-confidence and confrontational attitude toward foreign rivals, a stance popular with an increasingly nationalist domestic audience. The foreign policy of inoffensiveness for the sake of commerce thus has been challenged from within. Vastly more dependent on foreign natural resources, and yet insecure over prices and vulnerability of supply lines, China has turned to the PLA to take a greater role in protecting its global interests, especially in the maritime realm. As a result, the PLA has become more forceful in driving its policies.

In recent years, China has pushed harder on territorial claims and more staunchly defended partners like North Korea, Iran, Pakistan and Myanmar. This trend, especially observable throughout 2010, has alarmed China’s neighbors and the United States. The PLA is not the only institution that seems increasingly bold. Chinese government officials and state companies have also caused worry among foreigners. But the military acting this way sends a particularly strong signal abroad.

And third, Deng’s avoidance of political reform may be becoming harder to maintain. The stark disparities in wealth and public services between social classes and regions have fueled dissatisfaction. Arbitrary power, selective enforcement of the law, official and corporate corruption, and other ills have gnawed at public content, giving rise to more and more frequent incidents and outbursts. The social fabric has been torn, and leaders fear that it could ignite with widespread unrest. Simultaneously, rising education, incomes and new forms of social organization like non-governmental organizations and the Internet have given rise to greater demands and new means of coordination among dissidents or opposition movements.

In this atmosphere, Premier Wen Jiabao has become outspoken, calling for the Party to pursue political reforms in keeping with economic reforms. Wen’s comments contain just enough ambiguity to suggest that he is promoting substantial change and diverging from the Party, though in fact he may intend them only to pacify people by preserving hope for changes in the unspecified future. Regardless, it is becoming harder for the Party to maintain economic development without addressing political grievances. Political changes seem necessary not only for the sake of pursuing oft-declared plans to unleash household consumption and domestic innovation and services, but also to ease social discontent. The Party realizes that reform is inevitable, but questions how to do it while retaining control. The possibility that the Party could split on the question of political reform, as happened in the 1980s, thus has re-emerged.

These new challenges to the Deng approach reveal a rising uncertainty in China about whether his solutions are adequate to secure the country’s future. Essentially, the rise of Maoist nostalgia, the princelings’ glorification of their Communist bloodline and the CCYL’s promotion of ideology and wealth redistribution imply a growing fear that the economic transition may fail, and that the Party therefore may need a more deeply layered security presence to control society at all levels and a more ideological basis for the legitimacy of its rule. Meanwhile, a more assertive military implies growing fears that a foreign policy of meekness and amiability is insufficient to protect China’s access to foreign trade from those who feel threatened by China’s rising power, such as Japan, India or the United States. Finally, a more strident premier in favor of political reform suggests fear that growing demands for political change will lead to upheaval unless they are addressed and alleviated.


Containing the Risks

These emerging trends have not become predominant yet. At this moment, Beijing is struggling to contain these challenges to the status quo within the same cycle of tightening and loosening control that has characterized the past three decades. Though the cycle is still recognizable, the fluctuations are widening — and the policy reactions are becoming more sudden and extreme.

The country is continuing to pursue the same path of economic development, even sacrificing more ambitious rebalancing to re-emphasize, in the 2011-15 Five-Year Plan, what are basically the traditional methods of growth. These include massive credit expansion fueling large-scale infrastructure expansion and technology upgrades for the export-oriented manufacturing sector, all provided for by transferring wealth from depositors to state-owned corporations and local governments. Modifications to the status quo have been slight, and radical transformation of the overall growth model has not yet borne fruit.

In 2011, China’s leaders also have signaled a swing away from last year’s foreign policy assertiveness. Hu and Obama met in Washington in January and declared a thaw in relations. Recently, Hu announced a “new security concept” for the region. He said that cooperation and peaceful negotiation remain official Chinese policy, and that China respects the “presence and interests” of outsiders in the region, a new and significant comment in light of the U.S. re-engagement with the region. The United States has approved China’s backpedaling, saying the Chinese navy has been less assertive this year than the last, and Washington has since toned down its own threats. China’s retreat is not permanent, and none of its neighbors have forgotten its more threatening side. But China has signaled an attempt to diminish tensions, as it has done in the past, to avoid provoking real trouble abroad (while focusing on troubles at home) for the time being.

Finally, the security crackdown under way since February — part of a longer trend of security tightening since at least 2008, but with remarkable new elements — shows that the state remains committed to Deng’s general deferral of political reform, choosing strict social control instead.

The Deng model thus has not yet been dismantled. But the new currents of military assertiveness, ideological zeal and demand for political reform have revealed not only differences in vision among the elite, but a rising concern among them for their positions ahead of the leadership transition. Sackings and promotions already are accelerating. Unorthodox trends suggest that leaders and institutions are hedging political bets to protect themselves, their interests and their cliques in case the economic transition goes wrong or foreigners take advantage of China’s vulnerabilities, or ideological division and social revolt threaten the Party. And this betrays deep uncertainties.


The Gravity of 2012

As the jockeying for power ahead of the 2012 transition has already begun in earnest, signs of vacillating and conflicting policy directives suggest that the regime is in a constant state of policy adjustment to try to avoid an extreme shift in one direction or another. Tensions are rising between leaders as they try to secure their positions without upsetting the balance and jeopardizing a smooth transfer of power. The government’s arrests of dissidents underline its fear of these growing tensions, as well as its sharp reactions to threats that could disrupt the transition or cause broader instability. Everything is in flux, and the cracks in the system are widening.

One major question is how long the Party will be able to maintain the current high level of vigilance without triggering a backlash. The government effectively has silenced critics deemed possible of fomenting a larger movement. The masses have yet to rally in significant numbers in a coordinated way that could threaten the state. But the regime has responded disproportionately to the organizational capabilities that the small Jasmine protests demonstrated, and has extended this magnified response to a number of otherwise-familiar spontaneous protests and incidents of unrest.

As security becomes more oppressive in the lead up to the transition — with any easing of control unlikely before then or even in the following year as the new government seeks to consolidate power — the heavy hand of the state runs the risk of provoking exactly the type of incident it hopes to prevent. Excessive brutality, or a high-profile mistake or incident that acts as a catalyst, could spark spontaneous domestic protests with the potential to spread.

Contrasting Deng’s situation with Hu’s is illuminating. When Deng sought to step down, his primary challenges were how to loosen economic control, how to create a foreign policy conducive to trade, and how to forestall democratic challenges to the regime. He also had to leverage his prestige in the military and Party to establish a reliable succession plan from Jiang to Hu that would set the country on a prosperous path.

As Hu seeks to step down, his challenges are to prevent economic overheating, counter any humiliating turn in foreign affairs such as greater U.S. pressure, and forestall unrest from economic left-behinds, migrants or other aggrieved groups. Hu cannot allow the Party (or his legacy) to be damaged by mass protests or economic collapse on his watch. Yet, like Jiang, he has to control the process without having Deng’s prestige among the military ranks and without a succession plan clad in Deng’s armor.

More challenging still, he has to do so without a solid succession plan. Hu is the last Chinese leader Deng directly appointed. It is not clear whether China’s next generation of leaders will augment Deng’s theory, or discard it. But it is clear that China is taking on a challenge much greater than a change in president or administration. It is an existential crisis, and the regime has few choices: continue delaying change even if it means a bigger catastrophe in the future; undertake wrenching economic and political reforms that might risk regime survival; or retrench and sacrifice the economy to maintain CPC rule and domestic security. China has already waded deep into a total economic transformation unlike anything since 1978, and at the greatest risk to the Party’s legitimacy since 1989. The emerging trends suggest a likely break from Deng’s position toward heavier state intervention in the economy, more contentious relationships with neighbors, and a Party that rules primarily through ideology and social control.

Title: Asia's new reserve currency
Post by: G M on April 21, 2011, 08:19:43 AM
http://www.reuters.com/article/2011/04/19/singapore-china-yuan-idUSL3E7FI3NA20110419

China began allowing its currency to be used to settle international trades in 2009 through a scheme involving several Chinese cities along with Hong Kong, Macau and various Southeast Asian countries, including Singapore. The scheme was extended to the rest of the world in 2010.

Hong Kong is, however, currently the only place outside China where yuan trades can be settled via a Chinese bank. That is one of the main reasons why CNH, or offshore yuan in Hong Kong, trading volumes have surged and are expected to hit $1 billion a day this year.

"China needs more such centres after first data showed a slowdown in the pace of shift of China's trade to yuan, and Singapore needs the ability to clear trades in order to compete with Hong Kong," said Dariusz Kowalczyk, a senior economist and strategist at Credit Agricole in Hong Kong.

"Such a development would be in line with our expectation of China establishing more yuan offshore centres to speed up the process of yuan internationalization." he added. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Chin 's web of currency swap deals: [ID:nL3E7FI0L6] China may permit yuan FDI this year: [ID:nL3E7FJ01W] CNH market developments and news: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^


The Wall Street Journal, citing unnamed sources, reported last week that China was weighing steps to expand trading of its currency outside the mainland and may select Singapore as a second yuan-trading hub after Hong Kong. [ID:nL3E7FB0GW]

Monetary Authority of Singapore (MAS) Chairman Goh Chok Tong told reporters in Beijing that the People's Bank of China (PBOC) will soon pick an approved Chinese bank in Singapore to clear yuan trades.

PBOC may also give MAS a qualified foreign institutional investor (QFII) licence to invest in onshore Chinese financial products, Goh said.

Approval of such a license would allow financial institutions in Singapore to attract investors with the prospect of being able to invest directly in mainland Chinese markets. China's capital account is largely sealed, preventing foreign investors from gaining exposure to the fast-growing economy.

MAS already has a S$30 billion ($24 billion) currency swap agreement with China to ensure yuan liquidity in Singapore.


HONG KONG'S "CNH" MARKET TO STAY DOMINANT

Analysts said that while Singapore will likely grab a large slice of the fast-growing offshore yuan business, the PBOC will ensure that Hong Kong, a special territory of China, remains the paramount centre, a view that Goh also expressed.

"We have no ambition to try and rival Hong Kong. Singapore cannot rival it because Hong Kong is part of China. It is close to China; it has got much more trade with China," the Straits Times newspaper quoted Goh as saying on Tuesday.

Goh, Singapore's former prime minister, said that the city could play a primary role in facilitating yuan-denominated trade between China and the countries of Southeast Asia and India.

The Straits Times said the designated Chinese bank for clearing yuan trades in Singapore was likely to be either Bank of China or Industrial and Commercial Bank of China (ICBC) .

The Business Times newspaper noted ICBC recently set up a yuan-processing centre in Singapore for Southeast Asia. ICBC is lobbying hard to become the yuan clearing bank for Singapore, a source told Reuters.

Singapore is Asia's trading hub for many of the commodities that China imports. More than 3,000 mainland firms operate in the city and the offshore arm of China's CITIC Bank said recently it saw great potential for developing a yuan business in Singapore.

The city-state is also the world's fourth largest forex trading centre, behind New York, London and Tokyo but ahead of Hong Kong and Sydney.

While there is no official data on the amount of yuan deposits held in Singapore, the city-state's three big lenders DBS , Oversea-Chinese Banking Corp and United Overseas Bank , all offer yuan deposits.

Singapore is also Asia's biggest hub for private banking and investors have access to several funds that invest yuan-denominated bonds as well as shares listed on the Shanghai and Shenzhen exchanges.

Separately, a HSBC spokeswoman in Singapore told Reuters the bank has to-date raised over 1.5 billion yuan in yuan deposits in the Southeast Asia city-state.
Title: Re: Asia's new reserve currency
Post by: G M on April 21, 2011, 08:27:05 AM

http://online.wsj.com/article/SB10001424052748704740204576272802457892870.html

HONG KONG—China is accelerating efforts to push its currency deeper into world markets, racing ahead with a series of moves toward a new financial ecosystem with the yuan at its center.

A senior Hong Kong monetary official told The Wall Street Journal on Tuesday that China's central bank is "actively considering" new rules that would make it easier to bring yuan funds raised offshore back onto the Chinese mainland.

 
Javier David talks to Paul Vigna and George Stahl about the factors weighing on the U.S. dollar as well as China's efforts to push its currency into world markets.
.Changing those rules would remove a choke point threatening the fast-growing market for the Chinese currency—also known as the renminbi—that is developing in Hong Kong and elsewhere outside mainland China's borders. Currently, Chinese officials have to approve bringing any sizeable amount of currency—foreign and domestic—into the country. That system is aimed at closely managing the exchange rate and preventing speculation in the yuan.

New rules would make it easier and more attractive for global companies to access cheap funding in Hong Kong's yuan-bond markets and then use that money to boost their China business. They also bring the currency closer to a point where its value might be determined by the market, as are the values of the dollar, euro and all other major currencies.

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But while many people believe China will continue to institute changes, full convertibility could be a long way off, and China may opt to stick with limited convertibility.

Eventually, wider use of the yuan outside China could redefine the balance of power in global currency markets, and in the broader economy, as the rest of the world begins trading more yuan-based assets and settling its bills with China in renminbi instead of the U.S. dollar, the global standard since the end of World War II.

Western and Chinese companies would be able to issue bonds or stocks in yuan and invest the proceeds in China without having to convert into or out of dollars, euros or any other currency along the way, as they've had to in the past when raising money abroad.

 .
Ultimately, greater demand for renminbi could lessen demand for the dollar, raising U.S. interest rates and borrowing costs for everyone from the federal government to home owners.

Further evidence that Beijing is reducing its reliance on the dollar came Monday, when a state-run news agency reported that 7% of China's foreign trade in the first quarter was conducted in yuan, up from 0.5% a year earlier.

Concerns about the dollar's longer-term prospects contribute a sense of urgency to China's ambitions. China now holds more than $3 trillion in foreign exchange reserves, most of that in dollars.

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Reuters
 
China maintains tight control of its capital account, and some officials have expressed concern that excessive trade in the yuan outside China could allow speculators to destabilize the domestic monetary system. But despite that, officials in China and Hong Kong are pushing ahead with several plans that weave China's currency more closely into the global marketplace.
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The risks of dollar exposure were underscored when Standard & Poor's cut its outlook on U.S. government debt to "negative" Monday, unnerving global markets. Shares in both mainland China and Hong Kong fell on the news.

In a brief statement on the Chinese Foreign Ministry's website, ministry spokesman Hong Lei called on Washington to take "responsible policies and measures" to protect the interest of investors. A declining greenback hurts the value of China's vast dollar holdings.

The impact of such a change could be significant. Jun Ma, chief China economist for Deutsche Bank AG, noted that last year China attracted $100 billion in foreign investment. "If only a small percentage of that is in RMB, that will be a huge number," he said. Mr. Ma said he believed the new rules were "likely to come out in months."

Most of 44 multinational companies Mr. Ma surveyed said they would use yuan to invest in China if regulations allowed. Raising yuan offshore would reduce currency risks and would allow them to replace high-cost loans in China, where interest rates are over 6%, with low-cost financing from Hong Kong, where interest rates are around 2.6%.

China maintains tight control of its capital account, and some officials have expressed concern that excessive trade in the yuan outside China could allow speculators to destabilize the domestic monetary system.

But despite that, officials in China and Hong Kong are pushing ahead with several plans that weave China's currency more closely into the global marketplace.
Title: Ministry of Truth
Post by: Body-by-Guinness on April 24, 2011, 06:03:45 AM
Latest Directives From the Ministry of Truth, April 11-April 19, 2011

The following examples of censorship instructions, issued to the media and/or Internet companies by various central (and sometimes local) government authorities, have been leaked and distributed online. Chinese journalists and bloggers often refer to those instructions as “Directives from the Ministry of Truth.” CDT has collected the selections we translate here from a variety of sources and has checked them against official Chinese media reports to confirm their implementation.

http://chinadigitaltimes.net/china/ministry-of-truth/
Title: Ready to flex some muscles?
Post by: G M on May 22, 2011, 04:57:04 PM
http://globalspin.blogs.time.com/2011/05/21/facing-the-threat-of-piracy-china-starts-to-talk-like-a-superpower/

The PLA knows how to deal with hostile muslims. Just ask the Uighurs in Xinjiang.
Title: Surveillance
Post by: G M on May 26, 2011, 12:54:32 PM
http://www.abc.net.au/foreign/

Watch "True Believers".

The Chinese Ministry for State Security has a reputation for very advanced skills in the realm of physical surveillance. This video is very damaging to that reputation.
Title: Great leap forward!
Post by: G M on June 01, 2011, 12:52:28 PM
http://business.financialpost.com/2011/06/01/china%E2%80%99s-millionaires-leap-past-one-million/

China’s millionaires leap past one million

Nothing says marxism like a gold plated Infiniti.
Title: The Sad Truth of China’s Education
Post by: G M on June 03, 2011, 12:40:33 PM
http://the-diplomat.com/2011/06/03/the-sad-truth-of-china%E2%80%99s-education/



Next week, Chinese students take the national college entrance exam. It’s the soul-destroying culmination of years of study. And as good as it gets.
Title: How China could Fail - Financial Times
Post by: DougMacG on June 16, 2011, 09:52:50 AM
Wrong so far, but I always have doubts that China can continue forward as it is.  I wish for them a stumble only big enough to shake off their rule by the communist-oppressioninsts, and then nothing but continued economic growth and success.

http://ori.cnbc.com/id/43403189
How China Could Yet Fail Like Japan
14 Jun 2011
By: Martin Wolf

Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precursor of surprising failure? The answer is: yes.

Eightfish | Getty Images
Japan’s gross domestic product per head (at purchasing power parity) jumped from a fifth of U.S. levels in 1950 to 90 percent in 1990. But this spectacular convergence went into reverse: by 2010, Japan’s GDP per head had fallen to 76 per cent of U.S. levels. China’s GDP per head jumped from 3 percent of U.S. levels in 1978, when Deng Xiaoping’s “reform and opening up” began, to a fifth of U.S. levels today. Is this going to continue as spectacularly over the next few decades or could China, too, surprise on the downside?

It is easy to make the optimistic case. First, China has a proven record of success, with an average rate of economic growth of 10 percent between 1979 and 2010. Second, China is a long way from the living standards of the high-income countries. Relative to the U.S., its GDP per head is where Japan’s was in 1950, before a quarter century of further rapid growth. If China matched Japan’s performance, its GDP per head would be 70 percent of U.S. levels by 2035 and its economy would be bigger than those of the U.S. and European Union, combined.

Yet counter-arguments do exist. One is that China’s size is a disadvantage: in particular, it makes its rise far more dramatic for the demand for resources than anything that has gone before. Another is that the political effects of such a transformation might be disruptive for a country run by a Communist party. It is also possible, however, to advance purely economic arguments for the idea that growth might slow more abruptly than most assume.

Such arguments rest on two features of China’s situation. The first is that it is a middle-income country. Economists increasingly recognize a “middle-income trap”. Thus, sustaining rapid increases in productivity and managing huge structural shifts as the economy becomes more sophisticated is hard. Japan, South Korea, Taiwan, Hong Kong and Singapore are almost the only economies to have managed this feat over the past 60 years.

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Current DateTime: 11:21:13 15 Jun 2011
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Happily, China has close cultural and economic similarities with these east Asian successes. Unhappily, China shares with these economies a model of investment-led growth that is both a strength and a weakness. Moreover, China’s version of this model is extreme. For this reason, it is arguable that the model will cause difficulties even before it did in the arguably less distorted case of Japan.

Premier Wen Jiabao has himself described the economy as “unstable, unbalanced, uncoordinated and ultimately unsustainable”. The nature of the challenge was made evident to me during discussions of the 12th five year plan at the China Development Forum 2011 in Beijing in March. This new plan calls for a sharp change in the pace and structure of economic growth. In particular, growth is forecast to decline to just 7 percent a year. More important, the economy is expected to rebalance from investment, towards consumption and, partly as a result, from manufacturing towards services.

The question is whether these shifts can be managed smoothly. Michael Pettis of Peking University’s Guanghua School of Management has argued that they cannot be. His argument rests on the view that in the investment-led growth model, repression of household incomes plays a central role by subsidizing that investment. Removing that repression – a necessary condition for faster growth of consumption – risks causing a sharp slowdown in output and a still bigger slowdown in investment. Growth is driven as much by subsidized expansion of capacity as by the profitable matching of supply to final demand. This will end with a bump.

Investment has indeed grown far faster than GDP. From 2000 to 2010, growth of gross fixed investment averaged 13.3 percent, while growth of private consumption averaged 7.8 percent. Over the same period the share of private consumption in GDP collapsed from 46 per cent to a mere 34 percent, while the share of fixed investment rose from 34 percent to 46 percent. (See charts.)

Professor Pettis argues that suppression of wages, huge expansions of cheap credit and a repressed exchange rate were all ways of transferring incomes from households to business and so from consumption to investment. Dwight Perkins of Harvard argued at the China Development Forum that the “incremental capital output ratio” – the amount of capital needed for an extra unit of GDP – rose from 3.7 to one in the 1990s to 4.25 to one in the 2000s. This also suggests that returns have been falling at the margin.

If this pattern of growth is to reverse, as the government wishes, the growth of investment must fall well below that of GDP. This is what happened in Japan in the 1990s, with dire results. The thesis advanced by Prof Pettis is that a forced investment strategy will normally end with such a bump. The question is when. In China, it might be earlier in the growth process than in Japan because investment is so high. Much of the investment now undertaken would be unprofitable without the artificial support provided, he argues. One indicator, he suggests, is rapid growth of credit. George Magnus of UBS also noted in the FT of May 3 2011 that the credit-intensity of Chinese growth has increased sharply. This, too, is reminiscent of Japan as late as the 1980s, when the attempt to sustain growth in investment-led domestic demand led to a ruinous credit expansion.

As growth slows, the demand for investment is sure to shrink. At growth of 7 percent, the needed rate of investment could fall by up to 15 percent of GDP. But the attempt to shift income to households could force a yet bigger decline. From being a growth engine, investment could become a source of stagnation.

The optimistic view is that China’s growth potential is so great that it can manage the planned transition with ease. The pessimistic view is that it is hard for a country investing half of GDP to decelerate smoothly. I expect the transition to slower economic growth and greater reliance on consumption to be quite bumpy. The Chinese government is skilled. But it cannot walk on water. The water it is going to have to walk on over the next decade is going to be choppy. Watch out for the waves.
Title: Re: China
Post by: G M on June 16, 2011, 09:59:35 AM
China has been described as an ocean of gasoline just waiting for a spark. A serious global economic downturn could be that spark. Right now, the CCP keeps in power because enough rice bowls are being filled and the standard of living has improved for many. Any loss of the forward momentum and things get very unstable very quickly.
Title: Bloomberg: Why China’s Heading for a Hard Landing
Post by: DougMacG on June 27, 2011, 08:25:38 AM
The Chinese economy has had a hell of a roll.  Also has real structural weaknesses.  Predicting past growth rates will go on forever is

http://www.bloomberg.com/news/2011-06-27/why-china-s-heading-for-a-hard-landing-part-1-a-gary-shilling.html
Why China’s Heading for a Hard Landing, Part 1: A. Gary Shilling

Few countries are more important to the global economy than China. But its reputation as an unstoppable giant -- as a country with an unending supply of cheap labor and limitless capacity for growth -- masks some serious and worsening economic problems.

China’s labor force is aging. Its consumers save too much and spend too little. Its political and economic policy tools remain crude. Its state bureaucracy seems likely to curb spending just as exports weaken, and thus risks deflation. As U.S. consumers retrench, and as the global commodity bubble begins to dissipate, these fundamental weaknesses will combine in a way that’s unlikely to end well for China -- or for the rest of the world.

To start, China is much more vulnerable to an international slowdown than is generally understood. In late 2007, my firm’s research found that too few people in China had the discretionary spending capability to support its economy domestically. Our analysis showed that it took a per-capita gross domestic product of about $5,000 to have meaningful discretionary spending power in China.

About 110 million Chinese had that much or more, but they constituted only 8 percent of the population and accounted for just 35 percent of GDP in 2009, while exports accounted for 27 percent. Even China’s middle and upper classes had only 6 percent of Americans’ purchasing power.

With such limited domestic spending, why do so many analysts predict that China can continue its robust growth?

In part because they believe in the misguided concept of global decoupling -- the idea that even if the U.S. economy suffers a setback, the rest of the world, especially developing countries such as China and India, will continue to flourish. Recently -- after China’s huge $586 billion stimulus program in 2009; massive imports of industrial materials such as iron ore and copper; booms in construction of cement, steel and power plants, and other industrial capacity; and a pickup in economic growth -- the decoupling argument has been back in vogue.

This concept is flawed for a simple reason: Almost all developing countries depend on exports for growth, a point underscored by their persistent trade surpluses and the huge size of Asian exports relative to GDP. Further, the majority of exports by Asian countries go directly or indirectly to the U.S. We saw the effects of this starting in 2008: As U.S. consumers retrenched and global recession reigned, China and most other developing Asian countries suffered keenly.

Overconfidence in China’s ability to keep its economy booming is also partly psychological. It reminds me of the admiration and envy (even fear) that many felt toward Japan during its bubble days in the 1980s. As Japanese companies bought California’s Pebble Beach, Iowa farmland and Rockefeller Center in New York, what was safe from their zillions? Then the Japanese stock and real-estate bubbles collapsed, and Japan entered the deflationary depression in which it’s still mired.
Success and Complacency

What’s more, China’s recent successes have been so pronounced that they’ve led many to conclude that its economy is a juggernaut. And, indeed, the Chinese have much to be proud of: Last year, China passed Japan to become the world’s second largest economy, a huge achievement considering China started in the late 1970s with a tiny pre-industrialized economy.

But this success may have led to complacency. I suspect that the 2007-2009 global recession, and the dramatic transformation by U.S. consumers from gay-abandon borrowers-and- spenders to Scrooge-like savers, caught Chinese leaders flat- footed. They probably planned to encourage consumer spending and domestic-led growth, but later -- much later.

They were enjoying a well-oiled growth machine. Growing exports, especially to American consumers, stimulated the capital spending needed to produce yet more exports and jobs for the millions of Chinese streaming from farms to cities. Wages remained low, due to ample labor supplies, and held down consumer spending. So did the high Chinese consumer saving rate. Because Chinese could not invest offshore, much of that saving went into state banks at low interest rates. The money was then lent to the many inefficient government-owned enterprises at subsidized rates.

In a country where stability is almost worshipped, why would any leader want to disrupt such a smoothly running economy?

But before you worry about China’s becoming No. 1 any time soon, consider the remaining gap between its economy and the U.S. economy. In 2009, China’s GDP was $4.9 trillion, only 34 percent of the U.S.’s $14.3 trillion. Because China has 1.32 billion people, or 4.3 times as many as the U.S. has, the gap in per-capita GDP was even bigger: China’s $3,709 was only 8 percent of the U.S.’s $46,405.
Title: Re: China
Post by: Crafty_Dog on June 27, 2011, 08:49:39 PM
I've commented here more than once about China's weird demographic profile, its cooked bookkeeping, and its rape of its environment and that of the planet.  Doug's post seems sound to me.
Title: Shedlock: China Bubble?
Post by: Crafty_Dog on June 29, 2011, 07:25:45 AM
Lost in the worry over Greek debt defaults, China Daily reports on a default story of more significance. Please consider Local governments run up huge debts, risk defaulting

Local governments had an overall debt of 10.7 trillion yuan ($1.65 trillion) by the end of 2010, said China's top auditor on Monday in a report to the National People's Congress.

He warned that some were at risk of defaulting on payments.

It was the first time the world's second-largest economy publicly announced the size of its local governments' debts. The scale amounts to more than one-quarter of its GDP in 2010, which stood at 39.8 trillion yuan.

Concerns are rising that the problem of local government debt could destabilize the financial system of the country if it is not managed properly, especially after the central government's tightening of the housing market, which could affect local fiscal revenue that is highly dependent on land sales and make debt repayment more difficult.

In addition, China's ambitious plan to construct 36 million affordable homes during the coming five years, including 10 million in 2011 and 10 million in 2012, added to worries about increasing capital tension and rising non-performing loans in commercial banks.

About 79 percent of the local government loans were made by banks across the country, according to the NAO.

Lu Zhengwei, chief economist at the Industrial Bank, said the figures released were moderate compared with previous estimates, and risks lying in these loans are quite limited.

"Overdue loans take up only a small proportion of the total lending and local governments didn't pay them in a timely way mainly because deadlines were too concentrated, not because of deteriorated ability to repay."
$1.65 Trillion is a mountain of cash even to the US. How much of that is at risk is the question, but even 10% would be significant.

Moreover, it is certain that what cannot be paid back, won't be paid back. As in the US, once assets backing loans crash, so will willingness and ability to pay back the loans. Thus, efforts by some to downplay the odds should fall on deaf ears.

Speculation in China is as least as rampant as it was in the US. For example, please consider Ponzi Financing Involving Copper Trade Gone Wild In China.

Also consider Wave of Violent Protests, Rioting, Bombings Hits China; Expect More Riots When China's Credit Bubble Pops, Exposing Mountains of Fraud

Finally, please consider World's Biggest Property Bubble: China's Ghost Cities Revisited; 64 Million Vacant Properties

As long as credit bubbles expand, no one heeds warnings like that issued by China's top auditor. Then when the bubble bursts, everyone cries they were not warned, they were taken advantage of, and they deserve a bailout.

One thing's for certain, when China's credit bubble pops, it will rock the world.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
========================
Also see http://globaleconomicanalysis.blogspot.com/2011/03/worlds-biggest-property-bubble-chinas.html
Title: WSJ: Pot & the Kettle
Post by: Crafty_Dog on August 09, 2011, 12:18:08 PM
The Chinese government and its media outlets are using Standard & Poor's U.S. credit downgrade to give Washington a tongue lashing for its "debt addiction." And it's no surprise that Beijing would take the chance to score points domestically and rebuke the know-it-alls at the U.S. Treasury, having been on the receiving end of their hectoring for so long.

On the other hand, who are the Chinese kidding with their chest-pounding economic nationalism? A People's Daily commentary yesterday threatened to use China's holdings of U.S. debt as a "financial weapon" to deter arms sales to Taiwan. The official Xinhua news agency's Saturday editorial was a hilarious moral lecture, suggesting that an addicted America's ability to print dollars should be put under "international supervision." But if borrowing is really an addiction that has sapped America's self-discipline, China is both the pusher and a user.

The real reason Beijing is anthropomorphizing the bond market is to deflect domestic criticism over losses on the investment of its $3.2 trillion in foreign exchange reserves. Chinese are asking why Beijing continues to lend their wealth to Americans rather than using it on development at home. The question arises from a misconception that Beijing has encouraged, which is that the reserves represent the earnings of the Chinese people, their "blood and sweat."

The reality is less admirable. The People's Bank of China (PBoC) accumulated its forex reserves by borrowing yuan from the Chinese people. The U.S. dollar assets and yuan liabilities are roughly balanced on the central bank's balance sheet. If the U.S. government is addicted to debt, so is China's.

The purpose of that precarious balance sheet is to subsidize exports by keeping the yuan's value low and deferring inflation. An economy like China's that is enjoying rapid productivity growth would normally see rising real wages and hence benign inflation that would increase the cost of its exports. Because that process has been stopped, China's exporters remain competitive across a range of labor-intensive products such as shoes and garments in which the country no longer has a true comparative advantage.

Were the PBoC to stop buying U.S. Treasurys and other dollar assets, the result would be an immediate increase in the yuan's value. The losses on U.S. investments as the yuan slowly appreciates are one part of the cost for the export-subsidy policy.

View Full Image

Getty Images
 .The Chinese economy has become dangerously dependent on exports and investment in future export capacity for growth. Unwinding that dependence and encouraging domestic consumption requires boosting household incomes, which have been depressed by low interest rates on savings—another cost of Beijing's policies. Chinese leaders have been talking about rebalancing the economy in favor of consumption for the better part of a decade, but that can't happen as long as they continue to accumulate reserves.

In the short term Chinese threats to stop buying U.S. debt are empty, since there are no other asset markets deep and liquid enough to absorb the purchases needed to keep the yuan stable. Were China to buy euros or yen in sufficiently large quantities, it would soon run into a protectionist backlash in Europe and Japan as those nations ran trade deficits. The U.S. willingness to run a persistent trade deficit is key to the dollar's status as a reserve currency.

In the longer term, the world should hope that China does stop buying U.S. debt and makes the yuan convertible. China's economic policy makers understand that they have to liberalize their financial system and integrate it into the world economy. But that also means freeing the system from Communist Party political control, as well as breaking with powerful state-owned enterprises that benefit from export subsidies and cheap credit. This makes agreement between President Obama and the tea party look easy by comparison.

The U.S. has certainly allowed unsustainable spending to continue too long. But the Chinese should refrain from self-congratulation. They'll endure more painful withdrawal symptoms than the U.S. will when the PBoC ends its own unsustainable borrowing.

Title: Re: China
Post by: G M on August 09, 2011, 12:29:41 PM
Things slow down enough in the global economy, the survival of the CCP would be in doubt.
Title: Aircraft carrier
Post by: ccp on August 15, 2011, 11:48:43 AM
China’s aircraft-carrier
Name and purpose to be determined
The Chinese navy takes a much-heralded step forward but its intentions are vague
Aug 13th 2011 | BEIJING | from the print edition
 

 It’s definitely big, and it floats
ON AUGUST 10th, after years of secretive work, the Chinese navy launched its first aircraft-carrier on its maiden voyage. The Chinese media hailed the vessel as a sign of China’s emergence as a sea power, one they insist has only peaceful intent. Its neighbours are not so delighted.

State-controlled media had been predicting the ship’s imminent launch for weeks, prompting Chinese military enthusiasts to converge on the north-eastern port city of Dalian in the hope of seeing it set out. One newspaper said a fire escape on a nearby IKEA store was a good vantage point, but the Chinese navy kept quiet about when the date would be.
It has reason to be diffident. The ship is hardly a symbol of China’s prowess in technology. It was bought in 1998 from Ukraine, where it had been rusting half-finished since its first launch a decade earlier. The Ukrainians were told it would be used as a floating casino (they sold it without weapons or engines). But unlike two other ex-Soviet carriers in China that ended up as theme parks, this one was taken to a navy shipyard where, in 2005, it got a telltale coat of Chinese military paint. It was not until July that China confirmed it had been refitting the ship.

China has been mulling plans to build an aircraft-carrier since at least the 1970s. Officials debated how useful one would be in a conflict over Taiwan, the military planners’ main preoccupation until a few years ago. Land-based aircraft and missiles could be deployed easily across the Taiwan Strait. But in the past decade China has become more focused on acquiring the means to project power farther afield, the better to defend shipping lanes, it says, and to help relief efforts.

Other countries in the region believe China also wants to assert territorial claims in the South China Sea more vigorously. Vietnam and the Philippines have been complaining in recent months about what they see as a more aggressive posture by China in that area. There had been speculation that the aircraft-carrier would be launched in time for the Communist Party’s 90th birthday on July 1st. It is possible that its leaders decided that a lower-key affair a few weeks later might avoid stoking the neighbours’ suspicions.

For the time being the region’s pre-eminent naval power, America, is showing little sign of concern. The Chinese carrier’s actual deployment might yet be years away. China will take longer still to gain the expertise needed to deploy a carrier-based battle group, with all its supporting vessels. It is reportedly building two more aircraft-carriers (from scratch, this time). But the Americans worry more about other bits of China’s rapidly improving arsenal, from carrier-busting missiles to submarines and land-based fighter jets.

Unlike the Soviets, the Chinese appear not to be trying to match the size and capability of America’s huge fleet. Officials describe the aircraft-carrier programme partly as a prestige project. China has been acutely conscious of being the only permanent member of the United Nations without a carrier. Its rival India has long had one. Thailand has one too. Japan, another rival, has a carrier for helicopters that could be adapted for fighters.

China’s ship does not yet have a name. In Soviet hands it was the Varyag (a sister ship is the only operational carrier in Russia’s navy). Chinese internet users have made many suggestions. Some believe it should be named after a province. Chinese heroes are also popular, especially Shi Lang, a Chinese admiral who conquered Taiwan in the 17th century. Officials would be wise to avoid that one.

from the print edition | Asia

Title: Re: Aircraft carrier
Post by: G M on August 15, 2011, 11:54:06 AM
China’s aircraft-carrier
Name and purpose to be determined
The Chinese navy takes a much-heralded step forward but its intentions are vague




Are they? Really?
Title: Re: China
Post by: ccp on August 15, 2011, 04:04:14 PM
GM,
That was a quote from the article in Economist not me.
Title: Re: China
Post by: G M on August 15, 2011, 06:30:39 PM
GM,
That was a quote from the article in Economist not me.

I know. I was making fun of them.
Title: Can Taiwan Escape China's Ever-Tightening Embrace?
Post by: ccp on August 23, 2011, 09:04:00 AM
As I think Doug pointed out the threat to Taiwan is akin to Israel's situation: 

****Can Taiwan Escape China's Ever-Tightening Embrace?

By Doug Bandow | Forbes – 20 hrs agotweet4Share0EmailPrintRelated ContentCan Taiwan Escape China's Ever-Tightening Embrace?
Kinmen Island, Taiwan—A half century ago the world seemed poised for war over the island of Kinmen, known then as Quemoy.  Today Kinmen has become a transit point between Taiwan and China, as tourists tread where bombs once fell.  But this peaceful traffic also may threaten Taiwan, albeit in a very different way.

In 1949 the Communist Party pushed Chiang Kai-shek's Republic of China off the Chinese mainland.  Chiang retreated to the island of Taiwan, seized by Japan in 1895 and returned at the end of World War II.  The ROC also retained control of several smaller islands off the mainland's coast, including Kinmen.

The newly created People's Republic of China attempted to forcibly reclaim the latter in October 1949, but failed after a three-day battle.  After that a Chinese Cold War ensued, with the Communist regime periodically shelling Kinmen and threatening another invasion.

The Nationalist government developed a vast underground military complex and honeycombed the island with bunkers.  Up into the 1980s the island was under military administration and official visitors would be flown in low over the water in military aircraft.   Although no shots had been fired in years, the potential for war seemed real.

The PRC and ROC maintained dueling claims as the sole legitimate government of China, but the balance steadily shifted in favor of the former.  Even the U.S. eventually switched recognition, though it kept close, unofficial ties with Taiwan.

Beijing's economic success has transformed the competition between the two Chinas.  Fifteen years ago China responded to Taiwan's presidential election—won by Lee Teng-hui, a strong advocate of Taiwan's sovereignty—with conveniently timed "missile tests."  Since then the PRC has abandoned overt military pressure, while refusing to formally eschew the use of military force.


Thus, the mainland's mailed fist still lurks in the background.  Indeed, both nations are engaged in almost continuous military shadow-boxing.  With great fanfare China recently launched its first aircraft carrier, the Varyag.  I was visiting Taiwan in early August when the ship began its first sea trials.  On the same day, Taiwan's Ministry of National Defense highlighted its newest cruise missile, the Hsiuing Feng III, as an "aircraft carrier killer."

But overall, worried Lin Wen-cheng, executive director of the Institute for National Policy Research, "because the balance of military power has been changed in recent decades, it is very hard to resist pressure from the PRC."  Clearly international good will is no defense.  Wang Jin-pyng, president of the Legislative Yuan (or parliament), observed:  "because there is so much unpredictability in Mainland China our security cannot solely depend on Mainland China."

So Taiwan continues to purchase weapons from the U.S.  In fact, one of the sharpest disagreements between Washington and Beijing is over U.S. arms sales to Taiwan.  While breaking relations with the ROC more than three decades ago, Washington promised to continue supplying Taipei's military.  However, China has grown increasingly angry over American transfers; after the Obama administration announced its latest package last year the PRC temporarily cut bilateral military ties.

Now the Administration reportedly has decided against selling the F-16 C/Ds needed by Taiwan to contest air superiority over the Taiwan Strait.  Vice Defense Minister Yang Nien-Dzu (Andrew) expressed concern that without the newer planes "we lose our leverage and immediately face the challenge of fulfilling our responsibility of preserving peace and stability in the region."   The issue has a diplomatic impact as well.  Explained Ambassador Chen S.F. (Stephen), now at the National Policy Foundation, a stronger defense would enhance Taiwan's bargaining power:  "when we enter into political negotiations with the mainland we need to go into negotiations from a position of strength."

With the election of Ma Ying-jeou as president in 2008, Taipei changed course, moderating its push for recognition as a separate country.  For instance, no longer is Taiwan pursuing its hopeless quest to get back into the United Nations.

China also eased the diplomatic competition.  Both governments closed their checkbooks and ended their expensive use of foreign aid to add or subtract to the 23 small nations which now recognize the ROC.

Most significant, the two nations now emphasize economic and cultural interdependence.  Investment and trade originally developed through Hong Kong.  But eventually the two Chinas dropped the pretense (and expense) of indirect dealings.

Today 70 percent of Taiwanese investment goes to the Mainland, where nearly 100,000 Taiwanese businesses operate.  The PRC accounts for 41 percent of Taiwan's international commerce.


Economic ties would increase naturally, but both Chinas are accelerating the process.  Chao Chien-min, Deputy Minister of the Mainland Affairs Council, said that Taipei is "trying to change the relationship from a one-way street to a two-way street."  So far the two countries—they actually deal with each other through unofficial organizations since neither formally recognizes the other—have reached 15 cross-strait agreements on issues ranging from tourism to fisheries to crime.

Taiwan has steadily loosened restrictions on Chinese tourists, who have become a common sight at the National Palace Museum and elsewhere.  Some 5.71 million Mainland residents have visited Taiwan since July 2008.

The most important accord, finalized last year, is the Economic Cooperation Framework Agreement, which significantly lowered economic barriers.  Tariffs on hundreds of products will be eliminated over time.

These growing economic ties have profited both sides.  However, the PRC wants more than closer relations.  It wants sovereign control.  Although Beijing has suggested some form of autonomy for Taiwan, there is no doubt where ultimate authority would lie.

Yet as economic links have tightened, the Taiwanese people have moved in the opposite direction politically, ever more determined to retain their independence, de facto if not de jure.  The more they learn about the PRC, the less it seems they want to be ruled by Beijing.

Observed Huang W.F. (David) of National Taiwan University, "more and more Taiwanese realize that they are different than people from the Mainland."  But even if they were the same, why would 23 million people wish to submerge their prosperous and robust democracy in a nation of 1.3 billion, topped by an oppressive autocracy and threatened by violent social unrest?

However, ECFA "is all about politics," wrote John Lee of Sidney's Centre for Independent Studies.  In China's view "this is about enmeshing the two economies in such a way that Taiwan's future is tied to China's."

Which is precisely what Professor Huang fears:  "our autonomy is eroding through closer economic integration with China."  He predicted that "If this goes on for ten years, Taiwan will lose its autonomy."  Huang particularly pointed to Chinese influence over the media.  Hsiao Bi-khim, a former legislator and head of the opposition Democratic Progressive Party's Department of International Affairs, voiced similar concern, stating that "some of the media practices self-censorship" in hopes of profiting from Mainland business.


Government officials respond that Chinese visitors are impressed by Taiwan's open political process and its people's willingness to criticize political leaders.  Ambassador Chen argued that Taiwan "may be the only country which can impact the development of the Mainland."  In his view, Chinese visitors "want to see the way of life here," including Taiwan's democracy.  Ding Shuh-fan (Arthur) of the Institute of International Relations contended that the way 'to improve the situation is to make people in Taiwan more identify with Taiwan," in which case they will keep their autonomy.

On the other hand, it is hard not to feel that some of these arguments are born of desperation:  Ending economic ties with the PRC is inconceivable, ergo they must be beneficial.  Hsiao Bi-khim is less sanguine:  "Instead of Taiwan trying to change China, we see China trying to change Taiwan."  This fear, she claimed, has caused an increasing number of businessmen to secretly support the DPP.

How to best preserve Taiwan's autonomy is an important issue with legislative and presidential elections scheduled for January.  Traditionally the ruling Kuomintang, or KMT, insisted that the ROC was the rightful ruler of all China.  Today the KMT promotes Taiwan's separate existence, while pressing for a more conciliatory policy towards Beijing.  President Ma has espoused "no unification, no independence, and no use of force."

Economic integration, exemplified by ECFA, is the centerpiece of KMT policy.  President Ma declared:  "We have transformed the Taiwan Strait from a danger zone into a peace corridor."  And the process is not over.  Chao Chien-min said that "if President Ma is reelected the current pace will be continued."

What of political integration, as desired by the PRC?  Ambassador Chen said President Ma has refused to talk about reunification:  "Maintenance of the status quo is his top priority."  However, some question the KMT's commitment to Taiwanese sovereignty.  Hsiao Bi-khim said "The perception of our supporters is that Ma is getting too close to China" and they "suspect that Ma would move faster [if reelected] toward political integration."

The opposition DPP once formally advocated independence.  Today it reluctantly accepts the status quo, while pushing to enlarge Taiwan's international space.  The DPP has been critical of Taiwan's growing economic dependence on the PRC.

Nevertheless, DPP presidential candidate Tsai Ing-wen has pledged to continue negotiating with China, but without preconditions.  Chao was skeptical, contending that "if the opposition wins we are going to have a problem" since the DPP does not agree with the so-called "92 consensus," by which Beijing and Taipei fudged the status of Taiwan (one China, interpreted differently).  Without that agreement, he argued, the Chinese may not continue negotiations, since doing so could lead to charges "of accommodating Taiwan's independence."  Lin Wen-cheng similarly warned that "the PRC may grow frustrated and discontinue talks" in the event of a DPP victory.

However, Hsiao Bi-khim responded that the "so-called 92 consensus is a very weak foundation."  There was no real consensus in 1992 between Taipei and Beijing, she argued, and "there is no domestically agreed to consensus."  The only real consensus might be "between the KMT and the Chinese Communist Party."


She noted that the PRC could be expected to attempt to contribute to the DPP's defeat, as in the past, but that does not mean Beijing would not talk with a Tsai government.  Hsiao said there is "no way to come up with a formulation to make China happy, so we won't try to play with words."  Instead, "we need to deal with China and build a stable framework with each other."  She said that former President Chen, the first DPP president, tried to be flexible after his election in 2000, but the PRC "was not prepared to respond" and "the window of opportunity closed quickly."

As for ECFA and the other deals, "We would constantly review them to see if they benefit or hurt the national interest."  However, "whether we should change or even eliminate them is another question."  The issue, Hsiao explained, would "need to be addressed as part of the normal democratic process like any other international agreement."

Although the DPP has emphasized domestic economic issues, Lin Wen-cheng figures that the KMT will press Tsai to answer the China question.  Until now, he said, she "has tried to avoid any discussion of this."  Yet no one really expects the DPP, even if it wins the presidency and control of the legislature, to tear up existing economic accords.

Indeed, Chang Chung-Young of Fo Guang University predicted that even "if the DPP takes power next year they might change their perspective and not go back to the confrontational perspective of three years ago."  Chyungly Lee of National Chengchi University suggested that practical necessity would triumph:  "cross-strait economic relations are irreversible."  They "cannot be reversed."

He's almost certainly correct.  Who in Taiwan wants to give up the extra money earned from commerce and tourism?  Who in Taiwan wants to listen to a renewed litany of threats from Beijing?  Who on Kinmen wants to head back to a bomb shelter to escape an artillery barrage from the Mainland?

Whoever wins in January will face only difficult choices.  As Chao Chien-min acknowledged, "China is doing everything to exploit its strength."  Today that influence in Taiwan is more economic than military.

How can Taiwan escape Beijing's potentially suffocating embrace?  It won't be easy.  Government Information Minister Yang Y.M. (Philip) observed:  "We need to be prudent and patient in dealing with cross-strait relations" in order to "maintain our independence and prosperity."

The Taiwanese people have built an engaging, vibrant, and free society.  One can only hope that sufficient prudence and patience exists on both sides of the Taiwan Strait.****

Title: Re: China
Post by: Crafty_Dog on August 23, 2011, 09:37:37 AM
JDN or anyone:

What does Huntsman have to say about this?
Title: Re: China/baidu
Post by: ccp on August 29, 2011, 09:29:21 AM
From the Economist:

****The internet in China
Bashing Baidu
State television fires on China’s Google
Aug 27th 2011 | from the print edition
 
LAST year Google remembered its motto (“Don’t be evil”) and stopped co-operating with China’s censors. Since then, Google has found it much harder to do business in mainland China. The chief beneficiary was Baidu, China’s leading search engine. Its share of internet searches, already vast, grew to a dominant 75%.

Robin Li, Baidu’s Chinese-born, American-educated co-founder, is only 42 but one of China’s richest men. That makes him a target, despite his scrupulous efforts not to upset the ruling Communist Party. Since August 14th Baidu has been the subject of a series of damning investigative reports on CCTV, the main state-run broadcaster. Using undercover cameras, CCTV exposed Baidu employees apparently helping firms circumvent laws that bar unlicensed companies from advertising online. The reports also suggested that the lack of transparency in Baidu’s advertising system could lead advertisers to overpay. A Baidu spokesman refused to comment.
It was not the first time that CCTV has bashed Baidu. Reports in 2008 made similar allegations, prompting Baidu to apologise publicly. The latest attacks go further, though. It might seem a bit rich for the state broadcaster of a secretive, authoritarian country to chide Baidu for murkiness. And it certainly surprises some China-watchers. Baidu has done all it can to comply with the government’s whims. It is also a national champion: its shares are listed on New York’s NASDAQ exchange, and foreigners can’t get enough of them.

So what might the criticism signify? Is CCTV attacking Baidu for political reasons, or commercial ones? CCTV has a search engine, too, which hardly anyone uses. So do two other big government-run media outfits—the People’s Daily newspaper and the Xinhua news agency. CCTV, though state-run, is not just a propaganda outfit. It is also expected to make money through advertising (and it does). It must be tempting to nobble a rival.

That no other state-run media outlets carried stories on Baidu suggests this is not a government-orchestrated campaign against the company or the internet more generally. However, the Communist Party is wary of the influence of private internet companies, and no doubt keen to see that Baidu doesn’t get too big for its boots.

The party was slow to grasp how big the internet was going to be in China, and it missed its chance to own the digital commanding heights. So it tries to control them indirectly. On August 23rd, for example, Beijing’s Communist Party chief paid a friendly visit to the offices of China’s biggest microblogging site, Sina Corp’s Weibo, and suggested that it “absolutely put an end to fake and misleading information”. Sina Corp, a private firm, deletes postings that annoy the party within hours. Not quick enough, said the party chief.

Perhaps the most likely motive for CCTV’s attacks on Baidu is that its journalists are trying to do their jobs. Public anger about toxic food, corporate mismanagement and official corruption has emboldened reporters. Journalists at CCTV led the extensive media coverage of a high-speed-rail crash at Wenzhou in July that killed 40 people, until the censors curbed them.

Such reporting embarrasses the party, which likes to boast that China builds big infrastructure projects faster and better than anyone else. The CCTV attack on Baidu could reflect a decision to go after a less protected target. Or not. This being China, no one knows for sure.****
Title: WSJ: China bubble theory challenged
Post by: Crafty_Dog on October 12, 2011, 12:25:51 PM
BY YIPING HUANG Investors have grown increasingly concerned about the risk of a hard landing in China, as shown by the decline of stock prices and the widening spreads on credit default swaps for its sovereign bonds in recent weeks.

These fears are overblown. China will not experience anything like the Asian financial crisis of 1997 given its large current account surplus, gigantic foreign exchange reserves, and undervalued currency.

Many experienced international investors look at a decline in housing prices as a signal of serious trouble to come. But Beijing itself has engineered this decline using policies that restrict house purchases. If this starts to cause major macroeconomic consequences, the government could easily reverse the restrictions. And even if house prices continue to decline, this is unlikely to cause the kind of forced deleveraging that hit Hong Kong in 1997 and the U.S. in 2007.

Chinese households' leverage ratio is still quite low. Total mortgage loans are only about 15% of GDP and less than one year's worth of households' saving. House prices declined significantly in Shanghai in 2004 and in Shenzhen in 2008. While housing investment slowed visibly in both cases, there were minimal macroeconomic consequences.

Concerns about small business troubles and their implications for informal lending are also exaggerated. The People's Bank of China has been tightening monetary policy for more than a year and economic activity has been moderating. It is entirely normal for a number of firms to fail as costs of both labor and capital rise.

Informal lending is risky by definition. At an estimated 4 trillion yuan ($627 billion), however, it is only about 8% of the banking sector's total credit.

Local governments, with total borrowing of 10.7 trillion yuan or 27% of GDP, are a potential problem for both the financial and fiscal systems. Much of the borrowing was used for investment projects, especially infrastructure, during the past three years. It will be difficult for local government-linked entities to immediately pay back the loans when they gradually mature, starting from this year. But the local governments have both strong political wills and sufficient state assets to keep these borrowings from turning bad.

Enlarge Image

CloseAgence France-Presse/Getty Images
 
Construction is still underway, despite fears of a property collapse.
.Most of the current economic problems are, in one way or another, related to incomplete restructuring of the financial system. Despite major reforms during past decades, the Chinese financial system remains highly repressive. Most importantly, financial institutions still act more like policy agents in allocating credit. Key interest rates are tightly regulated by the state, and the private sector's access to finance remains highly restricted.

Yet despite these problems—and an inevitable uptick in nonperforming loans following the 2008-09 credit-driven stimulus—the banks' balance sheets are quite healthy today. Their average nonperforming loan ratio is way below 2%, their average capital adequacy ratio is above 10%, and their reserve requirement ratio is at 21.5%. All these provide ample room for the banks to absorb bad assets without causing systemic financial risks.

Some investors worry about a recent decline in bank deposits, a trend that could strain banks' liquidity if it continues. This was not caused by a loss of confidence in the banks, but rather by depositors looking elsewhere for better returns than those available in regular accounts, which are subject to interest-rate regulation. As the default rate for informal lending vehicles rises, deposits may return to the banks.

The ultimate test for the Chinese economy lies with the fiscal sustainability question. If conditions continue to deteriorate, does the government still have the resources to stimulate the economy and prevent a hard landing?

After all, most of the financial institutions are still majority-owned by the state, and the dramatic credit expansion during the past years was directed by Beijing. Therefore the government will have to assume responsibility if bad assets grow rapidly.

The central government's public debts stand at about 18% of GDP. Adding local government borrowing and contingent liabilities in other areas, total liabilities are probably about 60% to 80% of GDP. The government still has a large pool of state-owned assets, which are worth about 15 times GDP. Therefore Beijing does have sufficient resources to prevent a systemic meltdown of the economy, at least in the short term.

Foreign investors are assuming that structural factors within China—falling property prices, rising bad loans or the like—will make for a hard landing. The greater threat is a double-dip recession abroad. Left to its own devices, China's growth would soften to just above 8%, down from 10% or more in recent years but still able to create jobs.

Only if there is another global recession would China suffer a hard landing as it suffers weak demand for its exports before it has had time to develop domestic markets.

Mr. Huang is chief economist for emerging Asia at Barclays Capital
Title: Re: China, no hard landing...
Post by: DougMacG on October 12, 2011, 02:10:03 PM
Asia's Wesbury?  :wink:

"Many experienced international investors look at a decline in housing prices as a signal of serious trouble to come. But Beijing itself has engineered this decline using policies that restrict house purchases. If this starts to cause major macroeconomic consequences, the government could easily reverse the restrictions."

Sounds a lot like an argument that could have been made in the U.S., how the resources and powers of the Treasury, the Federal Reserve and FDIC and federal GSEs guaranteeing loans would remove any risk beyond minor fluctuations in housing prices here.  How's that going?

In closing: "Only if there is another global recession would China suffer a hard landing..."

And what are the odds of that?
Title: Re: China, no hard landing...
Post by: G M on October 24, 2011, 02:15:18 PM
Asia's Wesbury?  :wink:

"Many experienced international investors look at a decline in housing prices as a signal of serious trouble to come. But Beijing itself has engineered this decline using policies that restrict house purchases. If this starts to cause major macroeconomic consequences, the government could easily reverse the restrictions."

Sounds a lot like an argument that could have been made in the U.S., how the resources and powers of the Treasury, the Federal Reserve and FDIC and federal GSEs guaranteeing loans would remove any risk beyond minor fluctuations in housing prices here.  How's that going?

In closing: "Only if there is another global recession would China suffer a hard landing..."

And what are the odds of that?

http://www.forbes.com/sites/gordonchang/2011/10/16/chinas-economy-the-correction-history-will-remember/2/

The stocks of Chinese banks fell this year and were trading at price-to-book ratios that assumed these institutions would suffer substantial losses on their loan portfolios.  Beijing’s sovereign wealth fund had to launch a rescue last week by announcing open-market share purchases of Chinese banks.

The move triggered a short rally, but it did not solve the fundamental problem: Credit Suisse last week said that bad debt could be as much as 60% of bank equity.  The 60% figure assumes that bad loans constitute only 12% of loan portfolios, but as in the bank crisis at the end of the 1990s, questionable assets are probably multiples of this figure.

The problem for Beijing is that this time, unlike the end of 2008, it has little flexibility to dump money in the economy to restart growth and save borrowers.  It already did that and has, in addition to inflation, created historically high property prices, vacant apartment buildings, and debt-swollen local government financing vehicles.  Yes, increasing liquidity would aid borrowers in the short-term, but that tactic would only make the debt bomb bigger.

Beijing could take foreign currency out of its reserves to recapitalize its largest banks—as it did in early 2004—but that just pushes the People’s Bank of China, the country’s central bank, deeper into insolvency.  In any event, recapitalization would buy only a little time.

The Chinese central government has, in past crises, sustained the momentum of the economy by creating circular flows of cash, using money from one state institution to bail out other ones.  Yet all artificial situations eventually end.  State-dominated economies have more ability to postpone the inevitable, but the corrections they suffer are often worse as a result of continual deferrals.

Like 2008, the Chinese economy is now emitting strong signals it wants to correct.  Last time, Beijing, flush with cash, chose to override the market and postpone the reckoning with its “tidal-wave” spending.  Now, Chinese technocrats are almost out of options.

As a result, the downturn in China this time is probably the one history remembers.
Title: WSJ: Approaching the fan
Post by: Crafty_Dog on October 25, 2011, 05:55:38 AM
By JOSEPH STERNBERG
Beijing

Among the many myths surrounding China's economy, the biggest relates to how Beijing averted a recession after the global financial crisis. The government was quick out of the gate with a stimulus program running to the trillions of dollars, and growth in gross domestic product (GDP) didn't dip as deeply in China as it did elsewhere. China bulls say this shows the government is smart and worth emulating.

But dig a little deeper and the opposite turns out to be true. China's stimulus took the form of a massive expansion of bank lending, rather than the kind of fiscal spending Westerners typically think of when they hear the word Keynesian. A glance at what has happened at the banks in the aftermath shows how Beijing has backed itself into a corner.

The stimulus opened a credit floodgate that so far has proven impossible to turn off. "There is a misconception that it was only limited to six months," says Charlene Chu, an analyst at Fitch Ratings here and one of the few people outside the government who seems to understand what's going on at China's banks. "But in reality the credit boom lasted a full two years." Fitch estimates that new financing for 2011 will hit 17.5 trillion-18 trillion yuan ($2.7 trillion-$2.8 trillion), equivalent to 37% or more of China's GDP. Financing expanded by an amount equal to 42% of GDP in both 2009 and 2010.

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CloseAFP/Getty Images
 .As a proportion of the economy's size, "that's like having $6 trillion in new credit in one year in the U.S., but for two years running," Ms. Chu points out. "In most countries, when banks encounter a difficult economic environment they pull back credit. They've learned over time that you do not want to increase your exposure in a worsening environment. Here, they like to do the exact opposite."

Beijing essentially did what it has done all along—heavy investments in infrastructure and fixed assets—only more so. But the marginal returns on this strategy are rapidly diminishing. In 2006, one yuan in credit expansion yielded 0.76 yuan in GDP growth, according to Fitch. In 2007 and 2008, that one yuan of credit continued to create at least 0.70 yuan in growth. But in 2009, as the credit stimulus got under way in earnest, one yuan of new stimulus credit created a paltry 0.18 yuan in additional GDP. That has improved somewhat since then, but for 2011 one yuan of credit still is expected to create only 0.42 yuan in GDP.

Many economists expect some large portion of those loans to go bad. Beijing probably does have the resources to engineer a bailout of some kind. Less discussed but more important, however, is the question of what that means for China's economy. A bailout will come at the cost of future economic reform and growth.

Consider the implications for rebalancing, or China's crucial shift to domestic consumption from export-led growth. Chinese banks are heavily dependent on deposits for funding, as opposed to the interbank lending markets used by their Western peers. The last time Beijing faced a bank-solvency crisis, in the late 1990s, the authorities recapitalized the banks via what's known as financial repression: Regulators set interest rates on household deposits below the rate of inflation, allowing banks to charge lower interest rates on loans while still gradually earning their way back into the black thanks to the guaranteed spread.

This amounts to a wealth transfer to the banks from households. Such a policy undermines the goal of encouraging those households to consume more. But Beijing may have little choice but to continue financial repression indefinitely given the large volume of nonperforming loans likely accumulating anew on bank balance sheets.

It gets worse. Sooner or later, China will have to fix its system for allocating capital. Introducing market interest rates would be the centerpiece, a way to shift capital away from inefficient state-owned enterprises and toward entrepreneurial, private-sector companies by pricing that capital in a way that encourages more productive uses.

That reform, though, is next to impossible now. Any increase in interest rates to the higher level more common for a developing country would risk pushing too many companies into default. Beijing can't afford that at a time when the banks already are bloated with loans of dubious quality.

Then there's monetary reform. Beijing has made waves with its talk about boosting the use of the yuan beyond China's borders. This would eventually require lifting capital controls, which would facilitate a more efficient allocation of capital across China's borders.

Easing capital controls is a nonstarter as long as the banks are under stress. The last round of bank bailouts, in the late 1990s, succeeded in large part because capital controls trapped depositors in the system. Controls remain strict, but it is somewhat easier now than it was then to take money out of the country. Already the banks are under strain as a result.

As the authorities have increased the required reserve ratio—the percentage of a bank's assets it must keep on deposit at the central bank—banks that were once flush with cash suddenly find themselves in a squeeze. Banks are even trying to securitize risky loans on the sly (sound familiar?) to develop "wealth-management products" with which to attract depositors. So Beijing won't risk any more capital flight by lifting exchange controls.

Ironically, then, China's stimulus, hailed in some quarters of the West as Beijing's greatest success, could become one of the most severe risks to face the Communist Party in a generation. Already inflation is re-emerging on the back of the credit expansion, with consumer-price rises above 6% in recent quarters. Inflation and regime change historically have gone hand-in-hand in China; the 1989 Tiananmen Square protests were preceded by a bout of inflation.

Meanwhile, the stimulus is denting Beijing's ability to undertake reforms it will have to pull off to keep the economy growing. This is dangerous for a regime whose legitimacy rests solely on its ability to deliver rapid growth.

China's 9.1% growth rate for the July-September period may compare favorably to the situation in the U.S. and Europe right now, but don't read too much into it. Beijing has only delayed a moment of reckoning. It has not avoided one.

Mr. Sternberg is an editorial page writer at The Wall Street Journal Asia.

Title: A popping noise heard around the world?
Post by: G M on October 26, 2011, 09:12:05 PM
**This could will have cascading effects felt globally.

http://www.sovereignman.com/expat/obvious-signs-of-a-slowdown-in-china/


Obvious signs of a slowdown in China

by Simon Black · View Comments



October 26, 2011
 Shanghai, China
 
Stunned. That probably best describes the mood of China’s vast pool of property owners. For the last few years, anyone with as much as a taxi driver’s salary has been speculating in the real estate market, scooping up off-plan properties at terms that would make a Countrywide mortgage broker blush.
 
And why not? Chinese culture has almost universally adopted the attitude that property prices never go down. Minor fluctuations and corrections over the last several months have been written off as statistical error.  Well, reality has now uncomfortably set in.
 
Recent reports from the National Bureau of Statistics show that home prices have fallen up to 50% in many parts of the country in the period from July to September. But who gives a damn about government reports? The real evidence is on the ground.
 
Here in Shanghai, nearly 300 angry customers stormed a sales office of Longfor Properties Co Ltd after finding out that the developer had slashed prices on one of its projects by nearly 25%… practically overnight.
 
Another angry mob in Shanghai assembled outside the sales office of China Overseas Property Group Co after that company made similar price concessions for new buyers.
 
These were obviously the poor suckers who bought in months (or years) ago at a much higher price… and they’re not especially happy about a property crash.
 
The most significant contributor to the price decline is tightening credit; after dumping trillions of dollars into the economy to ward off the effects of the global financial crisis, the Chinese government is now pressuring banks to reduce loans.
 
This is bringing much of China’s credit-intensive economy to a screeching halt. So much for China leading the world out of the global financial crisis. And it doesn’t just affect the property market.
 
Auto dealers are having the same issues, with many luxury brands ranging from BMW to Mercedes offering steep discounts up to 20% to lure buyers onto the showroom floor.
 
Growth has definitely slowed dramatically, and the tightening of credit is having widespread effect across the economy… and the prospect for increased social unrest here is growing.
 
Taking a page from America’s playbook, the government is responding by playing up threats of terrorism. It’s an easy distraction, and it keeps people in line. In fact, China’s government is revising its policy to ensure that anyone who might rock the boat is branded a ‘terrorist’ and will be subject to asset seizure.
 
Many people with money or significant assets in China see the writing on the wall and are lining up to diversify internationally– citizenships, trusts, foreign bank accounts, etc. I should know, I just spent the day in a room packed with Chinese people trying to learn about their internationalization options. I’ll tell you more about that tomorrow.
Title: Re: A popping noise heard around the world?
Post by: G M on November 08, 2011, 07:35:36 AM

http://www.marketwatch.com/story/watch-out-for-chinas-freak-economy-2011-10-25?pagenumber=2

You can see a proxy for the Chinese housing bust in the performance on Wall Street of E-House (China) Holdings /quotes/zigman/477117/quotes/nls/ej EJ -3.61%  , a real estate broker with a U.S. listing. The stock has collapsed in a year from $17 to less than $7, and the company recently reported it swung to a second-quarter loss thanks to “tough market conditions.”

The credit bubble is imploding.

What would a housing bust be without a credit bust? This will be the mother of all implosions, too.

In the past two and a half years, China has witnessed a staggering credit bubble. Total lending has come to about $7.8 trillion.

To put this in context, that is twice the entire net government debts of the European so-called “PIIGS” — the troubled countries of Portugal, Ireland, Italy, Greece and Spain — put together.

What sort of accountability has there been to all this lending in a single party, Communist-run, Third World economy with little previous experience of credit?

Um…

An alarming report from Schroders said Chinese banking operates in a “twilight zone” of phony accounting and shadow money and it’s all coming apart. “Almost half of all credit creation in China is off balance sheet,” wrote the team at Schroders.


They think this situation could unravel “over the next three to six months,” producing a huge crisis with international implications. Most Chinese banks, they predict, will end up as “zombie banks.”

The canary in the coal mine might be the boom city of Wenzhou in the south. On a single day last month, nine company bosses all suddenly went on the lam to avoid bankruptcy. Nine on one day.

Reports put the figure in the town at 29 since April. One boss committed suicide.

The stock market is signaling trouble.

It’s a mistake to assume the stock market is always correct, but generally speaking when it signals a downturn it does so pretty clearly.

And what it’s saying about China is alarming.

Chinese stock prices have slumped by 22% since July, says FactSet. They are, on average, down to nine times forecast earnings, valuations last seen during the depths of the financial crisis in 2008-2009. Prices of property developers have collapsed, in many cases below book value.

And you can see in the prices of mining and other resources stocks elsewhere. They have in many cases slumped by a third or more. In London, mining giant Vedanta Resources /quotes/zigman/336962 UK:VED +3.04%  has halved in price since early last year.

In most cases, the stocks of resource companies have fared much worse, so far, than the prices of the underlying resources themselves. Maybe that makes them a buy. Or maybe the forward-looking equity market is seeing something sooner than the commodities markets — as was the case for gold mining stocks six weeks ago.

Albert Edwards at SG Securities warned that China’s long-running investment boom has no precedent and is bound to burst. “China is a ‘freak’ economy,” he wrote. “To my knowledge no other economy in history has experienced such high investment/GDP ratios and seen so many sequential years of strong investment growth.” The Asian tigers in the 1990s? Japan? Nothing comes close, says Edwards.

That boom has helped carry the world economy through the troubles of the past five years. What happens if it, too, ends?
Title: Vulnerabilities in Chinese model exposed by Europe's debt crisis
Post by: Crafty_Dog on November 10, 2011, 06:30:46 AM
Vice President of Strategic Analysis Rodger Baker explains how Europe’s debt crisis exposed the vulnerabilities inherent in the Chinese economic model.
Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy.
Related Links
•   China Political Memo: Wenzhou Backs Away from the ‘Wenzhou Model’
The Chinese continue to watch the way in which the Europeans are trying to deal with their financial and political crisis right now. For China this is particularly important. Number one, Europe has become China’s largest export market and that has a major impact, of course, on the way in which the Chinese operate their economy. Number two is that a continued or an even deeper crisis in Europe could pull the entire global economy into recession.
Chinese exports to Europe and to much of the rest of the world saw a particularly sharp drop in 2009. This was something that the Chinese government had to rush to stabilize — they counteracted that dip in exports with a huge increase in domestic investment. The Chinese had hoped, during that time, that the Europeans would simply build themselves back up, pull themselves out of this particular crisis and that China would be able to continue with its fairly rapid expansion of exports to Europe to keep its economy chugging along as China headed towards its 2012 leadership transition.
Although Chinese exports to Europe picked up a little bit in 2010, the rate of growth that the Chinese had been seeing in the previous four or five years slowed down quite a bit. The problem for China is that as the pace of export growth slows, the pace of import growth doesn’t. The Chinese still need a very large amount of commodities. They’re importing these commodities, not only to feed their export market, but to feed all of this new domestic investment. And that means that while the Chinese may not be making as much selling, they are having to buy still a very high market prices to be able to develop internally.
The European crisis, and really the slowdown in the United States as well, has brought home to the Chinese something that they already knew but they had hoped to be postponing — and that is the need to fundamentally restructure their economy. The Chinese base their economy very similar on what we’ve seen in other Asian economies; it was an economy that needed continuous growth. Continuous growth in exports, more money, more money every year and that would allow the Chinese simply to borrow, to supply employment, to not have to worry about things like profits, but rather find some ways to funnel money down into the population.
If we look at the Chinese then we see that there’s maybe 300 million people who are part of the really economically active part of China. However, that leaves out more than a billion people from being part of this Chinese economic growth, this Chinese economic activity. Historically, it’s not from the coastal areas, it’s not from the wealthy areas that trouble comes in China. It’s from the rural areas, it’s from the people who are poor, it’s from the people who aren’t connected to this economic system.
One of the solutions the Chinese have tried to follow is urbanization: the idea that if they build it, people will come and if people move to the cities they will suddenly have jobs and in having jobs in the cities and living in a city, they’re going to become consumers. And certainly this is not for the entire billion of the population that’s not active, but maybe another hundred million, 200 million, 300 million. And that would help to better distribute wealth throughout China; it would also ease China off from their heavy dependence upon exports.
This boom in urbanization coincided with this government need to spend a lot more on domestic investment. It also fell right inside of what was already building as a speculative bubble in real estate investment. And that investment was coming not only from the coastal populations in China — the ones who are trying to find ways to save for the future and therefore invest in real estate — but also from businesses, from SOEs, who are buying real estate watching prices go up and then betting against that real estate, or investing or taking out loans against that real estate, to be able to continue to operate their businesses.
So we have a China that’s facing a real estate bubble in an attempt to build a new urbanized society, but the individuals who would be moving into that urbanized society can’t afford to move in because of the price rise in housing. The government is trying to find ways to slow down that rise in price, but if they move too quickly it can undermine the collateral for the loans from state-owned enterprises, it can pull away the nest egg from their middle class and that can cause a very rapid backlash against the central government.
For China then, what this European crisis has done is it has brought something that they’ve known for a long time right up into the front. They no longer have the ability, it seems, to simply keep pushing back economic change and perhaps even not the ability push back political change in the country because the European crisis has ended their ability to count on this continuous rise in exports.
Title: WTF China?
Post by: G M on November 14, 2011, 05:58:18 AM
http://gizmodo.com/5859081/why-is-china-building-these-gigantic-structures-in-the-middle-of-the-desert

 :?
Title: Chinese TV Host Says Regime Nearly Bankrupt
Post by: G M on November 15, 2011, 08:08:11 PM
http://www.theepochtimes.com/n2/china-news/chinese-tv-host-says-regime-nearly-bankrupt-141214.html

Chinese TV Host Says Regime Nearly Bankrupt

By Matthew Robertson
Epoch Times StaffCreated: November 13, 2011Last Updated: November 15, 2011.
 

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong. (Wu Lianyou/The Epoch Times)

China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.


 


In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.

Lang’s assessment that the regime is bankrupt was based on five conjectures.

Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

Several commentators have expressed broad agreement with Lang’s analysis.

Professor Frank Xie at the University of South Carolina, Aiken, said that the idea of China going bankrupt isn’t far fetched. Major construction projects have helped inflate the GDP, he says. “On the surface, it is a big number, but inflation is even higher. So in reality, China’s economy is in recession.”

Further, Xie said that official figures shouldn’t be relied on. The regime’s vice premier, Li Keqiang for example, admitted to a U.S. diplomat that he doesn’t believe the statistics produced by lower-level officials, and when he was the governor of Liaoning Province “had to personally see the hard data.”

Cheng Xiaonong, an economist and former aide to ousted Party leader Zhao Ziyang, said that high praise of the “China model” is often made on the basis of the high-visibility construction projects, a big GDP, and much money in foreign reserves. “They pay little attention to things such as whether people’s basic rights are guaranteed, or their living standard has improved or not,” he said.

Behind the fiat control of the economy, which can have the appearance of being efficient, there is enormous waste and corruption, Cheng said. It means that little spending is done on education, welfare, the health system, etc.

Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices.


According to Cheng, the goals of regime officials (to enrich themselves and increase their power) are in direct conflict with those of the people–so social injustice expands, and economic propaganda meant to portray the situation as otherwise prevails.

Few scholars inside the country dare to speak as Lang has, Cheng said. And that’s probably because he has a professorship in Hong Kong.
Title: Re: China
Post by: Crafty_Dog on November 16, 2011, 08:23:29 AM
Another perceptive reader of our forum!

GM:  Please double post that in the Military Science thread too.  Thank you.
Title: Re: WTF China?
Post by: G M on November 16, 2011, 08:35:31 PM
http://gizmodo.com/5859081/why-is-china-building-these-gigantic-structures-in-the-middle-of-the-desert

 :?


http://www.livescience.com/17052-mysterious-symbols-china-desert-spy-satellite-targets-expert.html

Mysterious Symbols in China Desert Are Spy Satellite Targets, Expert Says
Title: WSJ catches up with this forum re Chinese bookkeeping
Post by: Crafty_Dog on November 17, 2011, 04:39:16 PM
Email Print Save ↓ More .
.smaller Larger  By JOSEPH STERNBERG
With a thud akin to a tree falling in a Chinese woodland, a new report on doings at scandal-plagued Sino-Forest hit the street this week. The Toronto-listed company fell from grace in June when a short-selling research firm accused it of shady accounting. Now an independent committee of the company's board says that's all bunkum. The shorts are sticking to their story.

Does any of this matter? No.

We mean that in a broader sense. As regards the particulars of this alleged fraud story, the board's report is informative. If it turns out to be true (Canadian authorities are conducting an investigation of their own), it also stands as corroboration of a theory offered in this space in June that Sino-Forest could be a "real" company and still be unsuitable for listing on a Western exchange.

The crux of the charges leveled by short-sellers at Muddy Waters Research was that Sino-Forest had far overstated its forest holdings in China, and that it engaged in a complex tangle of related-party transactions that obscured the true nature and scope of its business. The charges spooked markets and the stock plunged some 74% before it was suspended in August. Regulators launched a probe.

The board committee offers a different story. It purports to have secured copies of much of the local-government documentation that it says proves Sino-Forest's rights to the timber assets it claims, although it notes that China's regulatory system doesn't churn out the sort of comprehensive property records auditors would expect of a Western firm. The report also offers a plausible explanation for a key gotcha passage in the shorts' research, the fact that various financial data reported to shareholders by Sino-Forest and associated companies don't jibe with data submitted to the State Administration for Industry and Commerce (SAIC).

The explanation? That's just the way things are done in China—the numbers often don't match up. Tellingly in this regard, the committee notes that some suppliers and other companies associated with Sino-Forest declined to speak with board investigators for fear that the government would get wind of any information disclosed.

Enlarge Image

CloseAssociated Press
 ."[M]any third parties explained their reluctance to provide requested documentation and information as being 'for tax reasons' but declined to elaborate," the report says. As we noted in June, it's likely that Sino-Forest's complex corporate structure and relationships with third parties stem in large part from attempts to manage its tax liabilities and those of its partners.

This report raises a question for Western investors: Even assuming there was no fraud, do you really want to put your money in a company that says it has no choice given China's regulatory environment but to conduct business through an astonishing array of offshore subsidiaries and hazy related parties, without normal proof of asset ownership?

That question, in turn, gets at the nub of the recent misadventures of Chinese firms listed abroad. Ultimately Sino-Forest has not only fallen victim to short-sellers or any fraud that might be proven to have occurred. It is also a victim, and a sign, of the changing zeitgeist—that is, of the willingness of foreigners to tolerate the risks of investing in Chinese firms.

When China's economy was the wonder of the world, companies like Sino-Forest made a lot of sense. It is a land and resources company in a country where both were booming so much that one could expect an enticing return despite some nagging concerns about corporate governance.

As broader skepticism mounts about China's economy and the quality of Chinese companies, investors suddenly are more receptive to those nattering nabobs of negativism on the short side. The genius of Muddy Waters—and perhaps of all short sellers—is timing, not research savvy. This is not to say that investors will uniformly spurn Chinese shares in the West; initial offerings are showing some signs of reviving. But gone will be the heedless enthusiasm, and investors will demand greater clarity.

This is bad news for Sino-Forest, since it means that whatever a special board committee reports and whatever the outcome of the legal wrangles, investor confidence is unlikely to return to a company forced to operate under the conditions in which any legitimate forestry company in China must.

Such has been the case at other Muddy Waters targets to emerge from special investigations, such as Orient Paper (down more than 50% despite repeated avowals that it's on the level). A company can defend itself against an accusation. But there's no defense against a mood.

Mr. Sternberg, an editorial page writer for The Wall Street Journal Asia, edits the Business Asia column.
Title: No Chinese money for EU
Post by: G M on November 18, 2011, 05:03:42 AM
http://www.chinapost.com.tw/commentary/reuters/2011/11/18/323278/Analysts-suspect.htm

Updated Friday, November 18, 2011 0:14 am TWN, By Kevin Yao ,Reuters


Analysts suspect China's forex may be weaker than perceived

BEIJING -- Europeans searching for a bazooka to blast away eurozone debt problems might well eye China's US$3.2 trillion foreign exchange arsenal with envy, but Beijing has far less firepower available than many assume.
 

Most of money in the world's biggest store of foreign exchange reserves is prudently kept in near-cash instruments to fund import and debt service bills in the event of an unforeseen domestic emergency, or invested in long-term assets that, if sold in size to help Europe, would spark panic on global financial markets.

 In fact, analysts reckon China's armory has only about US$100 billion to spare.

 “The sheer size of China's foreign exchange reserves is massive, but the actual amount of money available for investing in Europe each year isn't that big,” said Wang Jun, an economist at CCIEE, a top government think tank in Beijing.

 A crucial constraint is China's existing holdings of U.S. Treasury securities. Beijing is by far the biggest foreign owner, with an estimated 70 percent of the nation's reserves held in U.S. government bills, bonds and other dollar assets.

 Turn outright seller and the market value of the remaining holdings is likely to plunge.

 That's not a great investment strategy given the Chinese public's unhappiness about the roughly 38 percent decline in the nominal value of the dollar in the last 10 years.

 The government also may have to set aside some foreign exchange reserves to bailout the banking system if piles of loans to local governments and the property sector turn sour.

 China injected nearly US$80 billion in reserves into its big state banks from 2003 to 2008 to help them clean up their balance sheets so they could float shares.


Shrinking Exports, Smaller Surplus

 Meanwhile, China's trade surplus, essentially the money it has to invest overseas, is shrinking as Beijing does what critics in the developed world have been urging for years and rebalances its economy away from exports.

 Imports surged 28.7 percent year on year in October and the surplus of US$17 billion was well short of the US$24.9 billion forecast by economists.

 Beijing holds an estimated one-quarter of its reserves in euro-denominated assets, so keeping that steady implies a US$117.5 billion increase this year if the country's foreign exchange reserves grow by the US$470 billion estimated in 2011.

 That's roughly the amount economists expect China to invest in Europe in 2012.

 “Assuming the FX reserve accumulation does not slow significantly, I think China will put at least US$80-100 billion in euro assets per year in the next two years,” said Wei Yao, China economist at Societe Generale in Hong Kong.

 China recycles foreign exchange assets into overseas investments so outflows of cash roughly track inflows.

 The build-up in FX reserves, a result of the central bank's intervention to limit the yuan's appreciation, tends to fuel inflation pressures even as the central bank issues bills to mop up the amount of local currency it pumps into the economy.

 And it explains why foreign reserves cannot easily be used for domestic spending on infrastructure or shoring up pension systems, since simply converting the cash risks driving up both inflation and the value of the yuan currency.
Title: China Said to Warn Banks on Risks Tied to Local Government, Property Loans
Post by: G M on November 18, 2011, 05:49:05 AM
http://www.bloomberg.com/news/2011-11-17/china-said-to-warn-banks-on-risks-tied-to-local-government-property-loans.html

China Said to Warn Banks on Risks Tied to Local Government, Property Loans


 By Bloomberg News - Nov 17, 2011 8:16 PM MT .
Home sales plunged 25 percent in October from the previous month. Photographer: Nelson Ching/Bloomberg





 Oct. 24 (Bloomberg) -- Bloomberg Television's Stephen Engle reports from the Chinese city of Loudi on how farmers are being uprooted by the local government with inadequate compensation. Cities across China are increasingly seeking to cash in on real estate prices that have risen 140 percent since 1998, by appropriating land from peasants and flipping it to developers for huge profits. (Source: Bloomberg)


 July 14 (Bloomberg) -- Bloomberg's Stephen Engle reports from Loudi, China, on the construction of infrastructure financed by local government debt. Loudi is paying for the building of a 30,000-seat stadium, bulb-shaped gymnasium and swimming complex with 1.2 billion yuan ($185 million) in bonds, guaranteed by land valued at $1.5 million an acre. That’s about the same as prices in Winnetka, a Chicago suburb where the average household earns more than $250,000 a year. In Loudi, people take home $2,323 annually. (Source: Bloomberg)
.
China’s banking regulator warned lenders that some projects backed by local governments may run out of funds, and loans to property developers are likely to sour as sales slow, a person with knowledge of the matter said.

The China Banking Regulatory Commission told lenders last week to step up asset sales and debt restructuring for unprofitable local government financing vehicles that are struggling to repay loans, the person said, declining to be identified as the instructions were private. The watchdog also said banks should cut “high-risk” loans to developers, the person said.

China’s banking regulator tightened capital requirements and clamped down on off-balance sheet assets this year. Still, the International Monetary Fund this week called for closer oversight of the banks as risks increase. Home sales plunged 25 percent in October from the previous month. Industrial & Commercial Bank of China (1398) Ltd. and its three biggest local rivals have lost about $71 billion in market value this year.

“The government is still very careful about the property market as it doesn’t want volatility in housing prices,” Ivan Li, deputy head of research at Kim Eng Securities Hong Kong Ltd., said by telephone today. “You can see there are pressures building up: The government is worried that some developers may shut down, triggering defaults on bank loans.”

A Beijing-based press official for the banking watchdog said he couldn’t immediately comment. The regulator told banks to “pay close attention” to property loan risks as falling home prices and sales are straining developers’ finances, according to a third-quarter report posted yesterday on the CBRC’s website.

Shares Decline

Shares of the four largest banks fell, led lower by Agricultural Bank of China Ltd. (1288) The nation’s fourth-largest lender dropped 3.4 percent to HK$3.35 as of 11:05 a.m., and ICBC declined 3.1 percent to HK$4.44, helping pull the Hang Seng Index to a 1.9 percent loss.

China last month named its securities regulator Shang Fulin to replace Liu Mingkang as head of the CBRC, putting him in charge of a 106 trillion-yuan ($17 trillion) industry that includes four of the world’s eight largest lenders by market value. His appointment was part of the biggest reshuffle of financial officials in China in a decade.

Premier Wen Jiabao’s battle to lower housing prices in China began in April last year, when the cabinet raised minimum mortgage rates and down-payment ratios for some home purchases, saying “more forceful” steps were needed to cool speculation. Authorities tightened the rules further this year and imposed housing purchase restrictions in about 40 cities.

Home Prices Fall

Home prices fell in 33 of 70 cities monitored by the government in October, the statistics bureau said today. Prices may fall as much as 30 percent in the next year, Barclays Plc’s research unit said last week. They had risen by 140 percent from 1998 to the end of last year, according to the bureau.
Title: China’s Global Nightmare
Post by: G M on November 18, 2011, 07:46:49 PM
http://blogs.the-american-interest.com/wrm/2011/11/17/chinas-global-nightmare/

November 17, 2011


China’s Global Nightmare


Brazil is of course happy to let foreign companies invest in its vast but difficult to access offshore oil reserves. China is interested in that oil — perhaps too interested. The FT recently reported this story:
 

China’s second largest state-controlled oil major Sinopec has signed a $5.2bn deal to buy 30 per cent of the Brazilian assets of Galp Energia, which include operations in the pre-salt fields, so-called because they lie under two kilometres of the stuff.
 The deal is Sinopec’s second acquisition in the area after its $7.1bn investment in the Brazilian assets of Repsol YPF last year. Sinopec has also signed a $10bn oil-for-loan deal with Brazil. Elsewhere, Sinopec’s peer, Sinochem, has a $3.1bn stake in an offshore oil field in Brazil run by Norway’s Statoil…
 
But it is a partnership that will be fraught with difficulties with Brazil already growing suspicious of its increasingly close relationship with Beijing. China is now Brazil’s largest trading partner and last year was its biggest investor.
 
If Chinese state-owned companies are involved at every level of the pre-salt programme, Brazil may start to wonder whether it is ceding too much influence to a foreign government over what is considered a highly strategic asset.
 
So strategic, in fact, that former president Luiz Lula da Silva changed the law to give Petrobras the status of sole operator of the area. In one of his other last acts as leader, Lula da Silva also changed the land law to prohibit foreigners from acquiring large tracts of farmland, a measure seen as aimed at China.
 
The real importance of this story does not, however, have much to do with Brazil’s jittery nerves about Chinese investment.  It is to remind us about a key Chinese vulnerability that is often overlooked by pundits: China’s growing dependence on natural resources located far from its frontiers.
 
Beijing’s chosen national strategy — to achieve great power status by becoming the industrial workshop of the world — locks it into a complex and difficult set of dependencies and relationships with countries and markets all over the world. Access to those resources traps China in complicated geopolitical tradeoffs that can blow up in unexpected ways — as when China had to scramble to protect its citizens in Libya.  Chinese companies become the object of public anger if they are seen to be economically exploitative, unwelcoming to local labor, or environmentally destructive.  And, of course, in the event of a confrontation with the United States, China’s entire supply chain and overseas investments are helpless hostages.
 
Strategically, the only way out of this trap would be to build a blue water navy and air force that could threaten US command of the seas.  But a build up of that kind would not only trigger a massive US response; other countries like Japan, India and Australia would join together to ensure that China did not overturn a maritime status quo that is well trusted by other world powers.
 
We live in an interesting world.
Title: Re: China
Post by: Crafty_Dog on November 20, 2011, 09:21:53 PM
These are the sort of points that Stratford makes too, though I take a less sanguine view; not only are broke and slashing our military, but our interest payments to China are paying for its military expansion.
Title: Chinese nuke tunnels found by undergrads
Post by: bigdog on December 01, 2011, 03:19:36 AM
http://news.yahoo.com/digging-china-nuclear-tunnels-013008319.html

The Chinese have called it their “Underground Great Wall” — a vast network of tunnels designed to hide their country’s increasingly sophisticated missile and nuclear arsenal.

For the past three years, a small band of obsessively dedicated students at Georgetown University has called it something else: homework.

Led by their hard-charging professor, a former top Pentagon official, they have translated hundreds of documents, combed through satellite imagery, obtained restricted Chinese military documents and waded through hundreds of gigabytes of online data.

and the story continues
Title: Re: Chinese nuke tunnels found by undergrads
Post by: G M on December 01, 2011, 05:57:22 PM
http://news.yahoo.com/digging-china-nuclear-tunnels-013008319.html

The Chinese have called it their “Underground Great Wall” — a vast network of tunnels designed to hide their country’s increasingly sophisticated missile and nuclear arsenal.

For the past three years, a small band of obsessively dedicated students at Georgetown University has called it something else: homework.

Led by their hard-charging professor, a former top Pentagon official, they have translated hundreds of documents, combed through satellite imagery, obtained restricted Chinese military documents and waded through hundreds of gigabytes of online data.

and the story continues

http://www.telegraph.co.uk/news/worldnews/asia/china/8927580/China-hiding-up-to-3000-nuclear-warheads-in-secret-tunnels.html


China 'hiding up to 3,000 nuclear warheads in secret tunnels'

An unconventional project by US university students has concluded that China's nuclear arsenal could be many times larger than current estimates, drawing the attention of Pentagon analysts.


9:23AM GMT 01 Dec 2011


The Washington Post reported on Tuesday that Georgetown University students under the instruction of a former Pentagon official have assembled the largest body of public knowledge yet about a vast network of secret tunnels dug by China's secretive Second Artillery Corps, responsible for nuclear warheads.


The 363-page study has not yet been published, but has already sparked a congressional hearing and been circulated among top US defence officials, including the Air Force vice chief of staff, the Post reported.


"It's not quite a bombshell, but those thoughts and estimates are being checked against what people think they know based on classified information," it quoted an unnamed Defense Department strategist as saying.


The newspaper said critics of the report had questioned the students methods, which included using internet-based sources like Google Earth, blogs, military journals and even a fictionalised Chinese TV show.


But the Post also said the students were able to obtain a 400-page manual produced by the Second Artillery and usually only available to Chinese military personnel.


The students' professor, Phillip Karber, 65, spent the Cold War as a top strategist reporting directly to the secretary of defence and the chairman of the Joint Chiefs of Staff, the Post said.

Karber said that – based on the study of the tunnels – China could have up to 3,000 nuclear warheads, far higher than the current estimates, which range from 80 to 400, according to the Post.

US officials could not immediately be reached to comment on the report.


Title: Re: China
Post by: Crafty_Dog on December 01, 2011, 06:05:43 PM
Please post this in the Military Science and Issues thread as well.  Thank you.
Title: China to Prepare for Social Unrest
Post by: G M on December 05, 2011, 10:59:49 AM
http://www.cnbc.com/id/45544853

China to Prepare for Social Unrest
Published: Sunday, 4 Dec 2011 | 5:26 PM ET Text Size By: Patti Waldmeir and Jamil Anderlini, Financial Times   

Beijing has underlined its concern that an economic slowdown could lead to social unrest in China.
--------------------------------------------------------------------------------
 
Beijing has underlined its concern that an economic slowdown could lead to social unrest in China, with the country’s security chief urging local officials to do more to prepare for the “negative effects of the market economy”.

Zhou Yongkang, a member of the politburo, told provincial officials that they needed to find better methods of “social management” – a euphemism which can include everything from better internet censorship and strategic policing of violent unrest, to a better social safety net.

“It is an urgent task for us to think how to establish a social management system with Chinese characteristics to suit our socialist market economy,” he told a seminar on “social management innovation”.

“Especially when facing the negative effects of the market economy, we still have not formed a complete mechanism for social management,” he said. Mr Zhou also urged officials to limit spending on wasteful “vanity” projects that trigger public anger.

His comments are the clearest sign yet that Beijing is worried that the global economic crisis could lead to serious domestic social unrest. Mr Zhou’s remarks, published by the state-run Xinhua news agency on Saturday, came at the end of a week which saw evidence of a slowdown in Chinese manufacturing, an easing in credit policy to avert a sharper slowdown, and two outbreaks of violence.

Recent months have seen a rise in unrest – apparently linked to economic grievances, including workers’ fears about the economic dislocation caused by Beijing’s long-term plan to move away from low-value manufacturing to more creative and innovative industries.

Workers in Shanghai clashed last week with police at a Singaporean consumer electronics supplier during a strike over mass job losses due to a company relocation, the US-based group China Labor Watch said.

Tension spilt over in the central Chinese city of Xian on Friday, with Xinhua reporting hundreds of people overturning police and government cars after officers took more than two hours to arrive at a scene where a girl had been killed by a building truck. Ordinary citizens often complain that the government does too little to protect them from safety risks like dangerous driving by such trucks.

More than 10,000 workers in Shenzhen and Dongguan, two leading export centres in southern China, went on strike last month to protest against cuts in overtime – which they rely on to supplement meagre basic pay.

The ruling Communist party relies on rapid economic growth as its main source of legitimacy and Chinese leaders assume that if the economy slows too much it will be unable to contain the resulting social unrest.

Many analysts believe double-digit inflation and an economic slowdown were important contributors to the 1989 Tiananmen Square upheaval and resulting massacre.

In the midst of the 2008 global financial crisis the government identified 8 per cent gross domestic product growth as the level necessary to avoid political chaos and mobilised the entire state sector in a successful effort to “protect 8”.
Title: Inside Wukan: the Chinese village that fought back
Post by: G M on December 14, 2011, 12:50:53 PM
**I don't see this ending well. I don't think we'll see the UN invoke the "responsibility to protect" doctrine either.

http://www.telegraph.co.uk/news/worldnews/asia/china/8954315/Inside-Wukan-the-Chinese-village-that-fought-back.html


Inside Wukan: the Chinese village that fought back

 Something extraordinary has happened in the Chinese village of Wukan.


By Malcolm Moore, Wukan

8:30PM GMT 13 Dec 2011

For the first time on record, the Chinese Communist party has lost all control, with the population of 20,000 in this southern fishing village now in open revolt.
 

The last of Wukan’s dozen party officials fled on Monday after thousands of people blocked armed police from retaking the village, standing firm against tear gas and water cannons.
 

Since then, the police have retreated to a roadblock, some three miles away, in order to prevent food and water from entering, and villagers from leaving. Wukan’s fishing fleet, its main source of income, has also been stopped from leaving harbour.
 

The plan appears to be to lay siege to Wukan and choke a rebellion which began three months ago when an angry mob, incensed at having the village’s land sold off, rampaged through the streets and overturned cars.
 

Although China suffers an estimated 180,000 “mass incidents” a year, it is unheard of for the Party to sound a retreat.
But on Tuesday The Daily Telegraph managed to gain access through a tight security cordon and witnessed the new reality in this coastal village.
 
Thousands of Wukan’s residents, incensed at the death of one of their leaders in police custody, gathered for a second day in front of a triple-roofed pagoda that serves as the village hall.
 
For five hours they sat on long benches, chanting, punching the air in unison and working themselves into a fury.
 
At the end of the day, a fifteen minute period of mourning for their fallen villager saw the crowd convulsed in sobs and wailing for revenge against the local government.
 
“Return the body! Return our brother! Return our farmland! Wukan has been wronged! Blood debt must be paid! Where is justice?” the crowd screamed out.
 
Wukan’s troubles began in September, when the villagers’ collective patience snapped at an attempt to take away their land and sell it to property developers.
 
“Almost all of our land has been taken away from us since the 1990s but we were relaxed about it before because we made our money from fishing,” said Yang Semao, one of the village elders. “Now, with inflation rising, we realise we should grow more food and that the land has a high value.”
 
Thousands of villagers stormed the local government offices, chasing out the party secretary who had governed Wukan for three decades. In response, riot police flooded the village, beating men, women and children indiscriminately, according to the villagers.
 
In the aftermath, the local government tried to soothe the bruised villagers, asking them to appoint 13 of their own to mediate between the two sides – a move which was praised. But after anger bubbled over again local officials hatched another plan to bring the rebellious village back under control. Last Friday, at 11.45 in the morning, four minibuses without license plates drove into Wukan and a team of men in plain clothes seized five of the village’s 13 representatives from a roadside restaurant.
 
A second attack came at 4am on Sunday morning, when a thousand armed police approached the entrance to the village.
 
“We had a team of 20 people watching out, and they saw the police searchlights. We had blocked the road with fallen trees to buy us time,” said Chen Xidong, a 23 year old. “They banged the warning drum and the entire village ran to block the police.”
 
After a tense two-hour standoff, during which the villagers were hit with tear gas and water cannons, the police retreated, instead setting up the ring of steel around Wukan that is in force today. The village’s only source of food, at present, are the baskets of rice, fruit and vegetables carried across the fields on the shoulder poles of friendly neighbours.
 
Then, on Monday, came the news that Xue Jinbo, one of the snatched representatives, had died in police custody, at the age of 43, from a heart attack. His family believe he was murdered.
 
“There were cuts and bruises on the corners of his mouth and on his forehead, and both his nostrils were full of blood,” said Xue Jianwan, his 21-year-old daughter. “His chest was grazed and his thumbs looked like they had been broken backwards. Both his knees were black,” she added. “They refused to release the body to us.”
 
Mr Xue’s death has galvanised his supporters and brought the explosive situation in the village to the brink. “We are not sleeping. A hundred men are keeping watch. We do not know what the government’s next move will be, but we know we cannot trust them ever again,” said Mr Chen. “I think they will try to prolong the situation, to sweat us out.”
 
From behind the roadblock, a propaganda war has broken out. Banners slung by the side of the main road to Wukan urge drivers to “Safeguard stability against anarchy – Support the government!” Nearby, someone has scrawled, simply: “Give us back our land.”
 
The news of Wukan’s loss has been censored inside China. But a blue screen, which interrupts television programmes every few minutes inside the village, insists that the “incidents” are the work of a seditious minority, and have now been calmed. “It is all lies,” said Ms Xue.
 
Her brother, meanwhile, said life had improved since the first officials were driven out three months ago. “We found we were better at administration. The old officials turned out not to have had any accounts in their office, so they must have been swindling us. And we have a nightwatch now, to keep the village safe. We have all bonded together,” said Xue Jiandi, 19.
 
With enough food to keep going in the short-term and a pharmacy to tend to the sick, the leaders of Wukan are confident about their situation.
 
But it is difficult to imagine that it will be long before the Communist Party returns, and there are still four villagers in police custody.
 
“I have just been to see my 25-year-old son,” Shen Shaorong, the mother of Zhang Jianding, one of the four, said as she cried on her knees. “He has been beaten to a pulp and his clothes were ripped. Please tell the government in Beijing to help us before they kill us all,”
 
Title: Re: China
Post by: Crafty_Dog on December 14, 2011, 05:42:18 PM
Too bad they don't have a second amendment , , ,
Title: Re: China
Post by: G M on December 14, 2011, 05:56:13 PM
Too bad they don't have a second amendment , , ,

Well, they'd need a lot of anti-tank weaponry.....
Title: Wukan revolt
Post by: G M on December 17, 2011, 05:39:39 PM
"The communists will save us once again I hope"

Who is going to save these people, Andrew? Or are just more eggs to be broken on the way to Chomsky's paradise?

http://archive.frontpagemag.com/readArticle.aspx?ARTID=18389

Chomsky turned out to endorse a fairly orthodox band of socialist revolutionaries. They included the architects of communism in Cuba, Fidel Castro and Che Guevera, as well as Mao Tse-tung and the founders of the Chinese communist state. Chomsky told a forum in New York in December, 1967 that in China “one finds many things that are really quite admirable.” He believed the Chinese had gone some way to empowering the masses along lines endorsed by his own libertarian socialist principles:

"China is an important example of a new society in which very interesting and positive things happened at the local level, in which a good deal of the collectivization and communization was really based on mass participation and took place after a level of understanding had been reached in the peasantry that led to this next step."

When he provided this endorsement of what he called Mao Tse-tung’s “relatively livable” and “just society,” Chomsky was probably unaware he was speaking only five years after the end of the great Chinese famine of 1958–1962, the worst in human history. He did not know, because the full story did not come out for another two decades, that the very collectivization he endorsed was the principal cause of this famine, one of the greatest human catastrophes ever, with a total death toll of thirty million people.  


http://www.nytimes.com/2011/12/17/world/asia/wukan-revolt-takes-on-a-life-of-its-own.html?_r=1&hp=&pagewanted=all

(http://graphics8.nytimes.com/images/2011/12/17/world/17village2/17village2-articleLarge.jpg)

A mourner at a rally and mock funeral for Mr. Xue on Friday. Relatives said his body was covered in bruises, his nose bloodied and his thumb broken.

WUKAN, China — Each day begins with a morning rally in the banner-bedecked square, where village leaders address a packed crowd about their seizure of the village and plans for its future. Friday’s session was followed by a daylong mock funeral for a fallen comrade, whose body lies somewhere outside the village in government custody.


It has been nearly a week since the 13,000 residents of this seacoast village, a warren of cramped alleys and courtyard homes, became so angry that their deeply resented officials — and even the police — fled rather than face them. Now, there is a striking vacuum of authority, and the villagers are not entirely sure what to make of their fleeting freedom.

“We will defend our farmland to the death!” a handmade banner proclaims, referring to a possible land deal they fear will strip them of almost all their farmland. “Is it a crime,” another muses, “to ask for the return of our land and for democracy and transparency?”

How long they will last is another matter. As the days pass, the cordons of police officers surrounding the village grow larger. Armored trucks and troop carriers have been reported nearby. On local television, a 24-hour channel denounces the villagers as “a handful of people” dedicated to sabotaging public order, with the names of protesters flashing on a blue screen, warning that they will be prosecuted. Many here fear this will all end badly. “The SWAT teams and the police here are acting like they’re crime organizations, not police forces,” said Chen Dequan, a 50-year-old farmer and fisherman. “The entire village is worried.”

The dispute that emptied Wukan of its government officials is, on its face, like hundreds — if not thousands — of others that inspire protests here each year: villagers who believe their land was taken illegally take to the streets when their concerns are ignored.

But the suspicious death of a well-liked villager, who was selected to negotiate on the citizens’ behalf, appears to have turned this long-simmering grievance into a last-straw standoff with the authorities.

The land deal inspiring the protests involved one of China’s largest property developers, a Hong-Kong listed company called Country Garden that prides itself on fast-paced construction in mostly suburban areas. Yang Huiyuan, described by analysts as the company’s chairwoman, is often listed as one of the richest women in China.

The company has faced controversy before. Xinhua, China’s official news agency, said this year that it had bought Anhui Province land to build a golf course in a deal that smacked of “the typical collusion of real estate business and local government.” The agency’s signed commentary said more than 10 government officials had been punished after that transaction and other cases of illegal purchases and use of land there.

Here in Wukan, many residents believed that the national government had not yet intervened to resolve matters simply because it had been misled by nefarious local officials to believe that all was well.

So far, however, it seems from inside this locked-down village that government leaders at all levels are flummoxed at their blue-moon, if temporary, loss of control.

Lin Zuluan, 67, a retired businessman who is now the village’s de facto leader, said that officials had approached him to negotiate an end to the protest, but that talks had gone nowhere, in part because the officials would not meet villagers’ demands to return all their land.

“I do have concerns” over the lack of progress, he said. “But I do believe this country is ruled by law, so I do believe the central government will do whatever it has to do to help us.”

In the meantime, life here goes on in an aura of unreality as much as uncertainty, a mixture of grief and optimism and somewhat willful ignorance of the hints of trouble at every police roadblock and on every news broadcast.

Inside the village, citizens hail foreign journalists as visiting saviors, bombarding them with endless cigarettes, bowls of rice-and-seafood porridge and free rides on the backs of scooters. The villagers bristle at the government’s suggestion that they are being financed by unnamed foreigners, but are convinced that only reporting outside the state-run press will bring word of their plight to leaders in Beijing.

Corruption accusations against Country Garden, the developer, go back for years. In 2007, the Southern Weekly newspaper alleged irregularities in a hotel construction contract awarded to the company by a district government in Zhangjiajie, in Hunan Province. The paper suggested that the government heavily discounted the project’s land cost because most of Country Garden’s payment was secretly diverted to a company in which two Country Garden officials had invested.

In a faxed statement Friday, Country Garden said both the other projects in Anhui and Hunan were wholly aboveboard. The firm said the Anhui deal was free of corruption and the Zhangjiajie contract was awarded through open, transparent bidding. Officials have contended that the money supposedly diverted was in fact spent for legitimate public purposes related to the project.

In Wukan, two people familiar with the Country Garden proposal said the company planned to buy at least 134 acres of land for villa homes and shopping centers here. About half of that land is controlled by Fengtian Livestock, a pig-raising firm that holds a 50-year lease issued by the government; the rest is apparently in villagers’ hands.

Chen Wenqing, the livestock firm’s owner, said Country Garden was negotiating directly with the local authorities last spring when the deal fell through over a difference on price. Country Garden said it had intended to build a project but has signed no agreements.

But Mr. Lin, the retired businessman, said villagers became angry in September when they saw construction work at the pig-farm site. Officials of Lufeng city, a district that controls Wukan, ordered the building stopped, he said, and asked villagers to select a committee of locals to settle the controversy.

Negotiations to return the land to villagers produced little, however. On Dec. 9, unidentified men abducted one of the negotiators, a 42-year-old leather worker named Xue Jinbo, and four other men from a local restaurant.

The other four soon turned up in nearby jails, accused of inciting villagers to subvert the government. Mr. Xue was seen only on the night of Dec. 11, when local government officials summoned relatives to view his body at a mortuary.

They said that he had died of a heart attack in a hospital and that medical records of his care would be provided.

But family members say officials confiscated their mobile telephones before allowing them into the funeral home, apparently to prevent them from taking photographs. Mr. Xue’s nose was caked with blood, his body was black with bruises and his left thumb was broken, apparently pulled backward to the breaking point, one of them, a nephew named Xue Ruiqiang, said on Friday in an interview.

Word of Mr. Xue’s death brought the villagers into the streets and sent members of the village committee that was involved in the land negotiations fleeing.

Mr. Xue’s 21-year-old daughter, Xue Jianwan, said before the service that her father “was a straightforward man who always stood up for people.”

“Mom said that if he hadn’t been such a straightforward person, he probably wouldn’t have ended up like this,” she added.




Shi Da contributed research from Wukan, and Mia Li from Beijing. Sharon LaFraniere and Jonathan Ansfield contributed reporting from Beijing.
Title: Economist China and "Soft Power" Sun Tzu
Post by: ccp on December 19, 2011, 11:49:31 AM
China abroad
Sun Tzu and the art of soft power
China is using a new tool to boost its influence abroad. Is it the right one?
Dec 17th 2011 | Beijing, Guangrao and Huimin | from the print edition

IN HUIMIN COUNTY in the Yellow River delta, a push by China to build up the nation’s global allure has fired the enthusiasm of local officials. Young men and women dressed in ancient military costumes goosestep across a rain-soaked open-air stage. Their performance is in homage to the 6th-century-BC strategist, Sun Tzu, author of pithy aphorisms beloved of management gurus worldwide. Local cadres sitting on plastic chairs stoically endure the sodden spectacle.

Huimin county regards itself as the birthplace of Sun Tzu and thus the fountainhead of an ancient wisdom which, officials believe, can help persuade the world of China’s attractiveness. The damp display marks Sun Tzu’s supposed birthday. Organisers try to whip up enthusiasm with fireworks and a massive digital screen flashing images of the bearded sage and his one slim work, the “Art of War”, a 6,000-word booklet. Under an awning, journalists from the Communist Party’s newspaper, the People’s Daily, feed live video of the event onto their website. The world gets to see it, even if most locals have stayed at home.

At a local hotel, a Sun Tzu symposium is held. Colonel Liu Chunzhi of China’s National Defence University (also a leader of the China Research Society of Sun Tzu’s Art of War) told this year’s gathering that Sun Tzu was part of “the riches of the people of the world”. Promotion of his work, he said, was “an important step toward the strengthening of China’s soft power”. Sun Tzu may have written about stratagems for warfare, but Huimin’s assembled scholars prefer to tout him as a peacenik. Their evidence is one of the sage’s best-known insights: “The skilful leader subdues the enemy’s troops without any fighting.” What better proof, say his fans in China, that the country has always loved peace?

Chinese leaders, determined to persuade America that they mean no harm, have recruited Sun Tzu to their cause. In 2006 President Hu Jintao gave President George Bush silk copies of the “Art of War” in English and Chinese (not, it seemed, as a way of suggesting better ways of fighting in Afghanistan and Iraq, but of hinting that the wars need not have been fought in the first place). Jia Qinglin, the fourth-ranking member of the party’s supreme body, the Politburo Standing Committee, said in 2009 that Sun Tzu should be used to promote “lasting peace and common prosperity”. In July this year, Beijing’s Renmin University presented an “Art of War” to Admiral Michael Mullen, the chairman of America’s joint chiefs of staff, during a visit to the capital.

China has long been proud of Sun Tzu. Mao Zedong was a great fan, even sending aides into enemy territory during the civil war to find a copy of the “Art of War”. But it is only relatively recently that the party has seized upon the notion of building up soft power, a term coined 20 years ago by an American, Joseph Nye of Harvard University, a former chairman of America’s National Intelligence Council and senior Pentagon official, to describe “the ability to get what you want through attraction rather than coercion or payments”. President Hu’s use of it in 2007 signalled a shift in party thinking. Throughout the 1990s and into this century, China had been trumpeting Deng Xiaoping’s slogan of “economic construction as the core”. Over the past decade building soft power has emerged as a new party priority.

Mr Nye himself drew a link between soft power and Sun Tzu in a 2008 book, “The Powers to Lead”. Sun Tzu, he said, had concluded that “the highest excellence is never having to fight because the commencement of battle signifies a political failure”. To be a “smart” warrior, said Mr Nye, one had to understand “the soft power of attraction as well as the hard power of coercion”.

Mr Hu may have been slow to adopt Mr Nye’s term openly, but soon after he took office in 2002 he began trying to make China a more attractive brand. In June 2003 a small group of senior propaganda officials and foreign-policy experts met in Beijing for the first time to discuss the importance of soft power. Later that year officials began touting a new term, “peaceful rise”, to describe China’s development. Their message was that China would be an exception to the pattern of history whereby rising big powers conflict with established ones. Within months of the slogan’s launch, officials decided to amend it. Even the word “rise”, they worried, sounded too menacing. The term was changed to “peaceful development”. Mr Hu also adopted the word “harmonious”, sprinkling speeches with references to China’s pursuit of a “harmonious world” and a “harmonious society”.


The results have been mixed. With rich countries on the skids, China’s economic model is looking good. Development driven by the state as well as the market seems to be delivering dividends, and China’s success has helped popularise the idea that state-owned companies should have a large role in economies. Businesspeople around the world admire the efficiency of both the public and private sector in China. Chinese investment in African countries is giving the continent a welcome boost. Yet the economic model is inseparable from the political model; and, as the Arab spring has shown, authoritarianism has little appeal in the West or anywhere else. China’s hard power, in terms of cash, is certainly increasing; but its careless use of that power has not attracted admiration. Its truculent behaviour at the Copenhagen climate-change conference in 2009, its quarrels with Japan over fishing rights in 2010 and its more assertive behaviour recently in the South China Sea have created deep unease about the nature of its evolving power, not least among neighbours that once saw China’s rise as largely benign. Such concerns have been compounded by its persistent efforts internally to suppress dissent, control the internet and stifle the growth of civil society.

This is not how the party sees it. After a meeting in October this year, the party’s Central Committee declared that the soft-power drive had made “conspicuous gains”. But it said further efforts were urgently needed. Many Chinese would agree. The word “harmonise” is now widely used ironically by ordinary Chinese to mean suppressing dissent. Abroad, officials have been trying to win over Western audiences by pouring billions of dollars into the creation of global media giants to rival the soft power of brands such as CNN and the New York Times. A provincial propaganda official complained in January that America, with only 5% of the world’s population, “controlled” about 75% of its television programmes. “Combined with the influence of brands and products such as Hollywood, Kentucky Fried Chicken, McDonald’s, jeans and Coca-Cola, American culture has permeated almost the entire world,” he wrote.

China is hamstrung by a contemporary culture that has little global appeal. Its music has few fans abroad; indeed, China’s own youth tend to prefer musicians from Hong Kong, Taiwan, Singapore and America. Its political ideology has few adherents: Mao Zedong and his little red book no longer enjoy the cachet they did in Western counterculture during the 1960s. The goosestep of the Sun Tzu soldiers in Huimin county notwithstanding, officials are now well aware that to market China abroad they must avoid references to authoritarianism. The party and its ideology were barely hinted at in the pageantry of the opening ceremony of the Olympic games in Beijing in 2008. Since the present is a hard sell, China is having to lean heavily on the distant past.

The party has not bought into Mr Nye’s view that soft power springs largely from individuals, the private sector and civil society. So the government has taken the lead in promoting ancient cultural icons whom it thinks might have global appeal. Even here it has limited options. Buddhism, which is anyway a foreign import, has been cornered by the Dalai Lama. Both it and Taoism, a native religion, sit uncomfortably with an atheistic party doctrine. This leaves only a handful of figures to choose from.

At the forefront is Confucius. Few Westerners can quote a saying of Confucius. But most at least regard him as a bearded, wise dispenser of aphorisms, far more profound than America’s superficial consumerism. The party is promoting him as a kind of Father Christmas without the undignified jolliness; a sage whose role in the development of centuries of Chinese authoritarianism the party glosses over in favour of his philosophy’s pleasant-sounding mantras: benevolence, righteousness and (of importance to Mr Hu) harmony. So it was that China used Confucius’s name to brand the language-training institutes it began setting up abroad in 2004. There are now more than 300 Confucius Institutes worldwide, about a quarter of them in America.

But Confucius is problematic. Mao and his colleagues regarded Confucius’s philosophy as the ideological glue of the feudal system they destroyed; and so attempts to promote him are vulnerable to the growing split in the Communist Party. In January, with great fanfare, the National History Museum unveiled a bronze statue of him standing 9.5 metres (31 feet) high in front of its entrance by Tiananmen Square. Three months later the statue was quietly removed. The sage’s appearance so close to the most hallowed ground of Chinese communism had outraged hardliners. They saw it as an affront to Mao, whose giant portrait hung diagonally opposite.

Sun Tzu is not so tainted. His is the only big name among China’s ancient thinkers to have survived the communist era with barely a scratch. In the 1970s he was held up as an exemplar in Mao’s struggles against leaders he disliked. The study of Sun Tzu, said a typical tract published in 1975, offered useful guidance for “criticism of the rightist opportunist military line” and the “reactionary views of the Confucianists”. The party still keeps Confucius at the forefront of its soft-power drive, but Sun Tzu is making headway.

That’s partly because the West’s enthusiasm for Sun Tzu makes him an easy sell. The “Art of War” is widely used by after-dinner speakers short of ideas. Take, for example (from the 1910 translation by Lionel Giles, the first authoritative one in English): “The best thing of all is to take the enemy’s country whole and intact; to shatter and destroy it is not so good”; “all warfare is based on deception”; and “it is the business of the general to be still and inscrutable, to be upright and impartial”. Sun Tzu beat the Christmas-cracker industry by two –and-a-half millennia.


 .In the West Sun Tzu’s advice has been adapted for almost every aspect of human interaction from the boardroom to the bedroom. The publishing industry feeds on Sun Tzu spin-offs, churning out motivational works such as “Sun Tzu For Success: How to Use the Art of War to Master Challenges and Accomplish the Important Goals in Your Life” (by Gerald Michaelson and Steven Michaelson, 2003), management advice such as “Sun Tzu for Women: The Art of War for Winning in Business” (Becky Sheetz-Runkle, 2011) and sporting tips such as “Golf and the Art of War: How the Timeless Strategies of Sun Tzu Can Transform Your Game” (Don Wade, 2006). Amazon offers 1,500 titles in paperback alone. Paris Hilton, an American celebrity and author of an aphorism of her own: “Dress cute wherever you go, life is too short to blend in”, has been seen dipping into him (see picture).

The sage’s popularity in the West still owes more to Hollywood than China’s own effortsRather more seriously, in his recent book, “On China”, Henry Kissinger revealed how impressed he was by the ancient strategic wisdom Chinese officials seemed to draw upon when he visited the country in the 1970s as America’s national security adviser. Mao, he noted, “owed more to Sun Tzu than to Lenin” in his pursuit of foreign policy. To some historians Mao was a dangerously erratic despot. To Mr Kissinger, he was “enough of a Sun Tzu disciple to pursue seemingly contradictory strategies simultaneously”. Whereas Westerners prized heroism displayed when forces clashed, “the Chinese ideal stressed subtlety, indirection and the patient accumulation of relative advantage”, Mr Kissinger enthused in a chapter on “Chinese Realpolitik and Sun Tzu’s Art of War”. Praise indeed, from the West’s pre-eminent practitioner of Realpolitik, whose mastery of the art of ideology-free diplomacy enabled President Nixon’s visit to China in 1972.

Yet a closer look reveals Sun Tzu’s flaws as a tool of soft power. Chinese attempts to remould him as a man of peace stumble over the fact that his book is a guide to winning wars, avidly studied by America’s armed forces as it was by Mao. Sam Crane of Williams College in Massachusetts says that during the Abu Ghraib prison scandal in Iraq he delighted in telling students attending his Sun Tzu classes (some of whom were preparing to join the army) that the “Art of War” advised that prisoners be treated kindly. But, he says, “I think the thing that makes [the book] universal in a grim way is war and competition. War is not a Western construct: the Chinese have been really good at war for a long time.”

American strategists often read the “Art of War” to understand China not as an alluring and persuasive wielder of soft power, but as a potential enemy. A psychological operations officer in America’s Army Central Command, Major Richard Davenport, argued in the Armed Forces Journal in 2009 that China was making use of Sun Tzu’s advice to wage cyber warfare against America. The incriminating quotation was “Supreme importance in war is to attack the enemy’s strategy”.

The sage’s popularity in the West still owes more to Hollywood, source of much American soft power, than China’s own efforts. John Minford, whose translation was published in 2002, says that after Gordon Gekko, a villainous corporate raider played by Michael Douglas in the film “Wall Street”, quoted a line from Sun Tzu (“Every battle is won before it’s ever fought”), the book acquired a “mystique” among students of entrepreneurship.

Professor Minford says he is mystified by this. “I had to struggle with the book at the coal face, with the actual Chinese, and it’s a very peculiar and particularly unpleasant little book which is extremely disorganised, made up of a series of probably very corrupt bits of text, which is very repetitive and has extremely little to say.” He calls the work (whose authorship is even disputed) “basically a little fascist handbook on how to use plausible ideas in order to totally destroy your fellow man”.

Some Chinese say openly that using ancient culture to promote soft power is a bad idea. Pang Zhongying of Renmin University says it does not help the country boost its standing abroad. Instead, says Mr Pang, a former diplomat, it highlights what he calls “a poverty of thought” in China today. “There is no Chinese model, [so] people look back to Confucius and look back to Sun Tzu.” Mr Pang argues that democracy is the best source of soft power. President Hu gives short shrift to that notion.

As Mr Nye sees it, soft power stands a better chance of success when a country’s culture includes “universal values” and its policies “promoted interests that others share”. But China’s soft-power push has coincided with an increasingly strong rejection by Chinese leaders of the very notion of universal values. Among China’s leaders, the prime minister, Wen Jiabao, has come closest to supporting the universalists’ view, but his is a lone voice.

At least in Huimin, Mr Wen appears to enjoy some support. The title last year of the county’s annual Sun Tzu symposium was “Universal values in Sun Tzu’s Art of War and [the work’s] use in non-military realms”. But local officials are more preoccupied with revving up the economy of Huimin, whose dreary main street enjoys a burst of colour from the frontage of a 24-hour McDonald’s. Sun Tzu is seen as a potential new engine of growth; a draw for tourists to the agricultural backwater. In 2003, at a cost of 65m yuan ($7.9m), the county opened Sun Tzu Art of War City, a vast complex of mock-imperial buildings which hosted the rain-soaked birthday celebration. Huimin’s main urban district has been renamed Sun Wu (as Sun Tzu is also called).

But the vast empty car park outside the Art of War City and its near-deserted courtyards suggest the town is struggling. It is not being helped by fierce competition with another county 100km (60 miles) away, Guangrao, which in recent years has been laying a rival claim as Sun Tzu’s birthplace. In June the county, whose tyre, petrochemical and paper-making industries have made it much richer than Huimin, held a foundation-stone ceremony for its own Sun Tzu theme park. Chinese media say this is due to open in 2013 and will cost a prodigious 1.6 billion yuan ($250m).

But Guangrao too will have a hard time turning Sun Tzu into a soft-power icon. In April about 700km (430 miles) to the south, Disney broke ground in Shanghai at the site of an amusement park that it says will feature the world’s largest Disney castle. It is due to cost 24 billion yuan and open in five years. Xinhua, a government news agency, published a commentary on its website calling such theme parks “a big platform for soft-power competition between nations”. One widely reposted blog put it more bleakly. American soft power, it said, had “conquered 5,000 years of magnificent Chinese civilisation”.

Sun Tzu had an aphorism to suit China’s predicament: “Know the enemy, know yourself and victory is never in doubt, not in a hundred battles”. If China wants to influence the world, it needs to think hard about the values it promotes at home.

from the print edition | Christ
Title: A Prudent Response to Chinese Military Modernization
Post by: bigdog on December 19, 2011, 06:24:03 PM
http://www.huffingtonpost.com/lawrence-korb/defense-spending_b_1158413.html
Title: Wukan forces Chinese officials to release three villagers
Post by: G M on December 22, 2011, 09:11:13 AM
**I wouldn't pop the corks on the champagne just yet.....

http://www.telegraph.co.uk/news/worldnews/asia/china/8969702/Wukan-forces-Chinese-officials-to-release-three-villagers.html

Wukan forces Chinese officials to release three villagers

The rebellious Chinese fishing village of Wukan forced the ruling Communist Party to agree to the release of three villagers detained for protesting against corruption and land grabs on Wednesday.
 

Residents attend a rally in Wukan, a fishing village in the southern province of Guangdong  Photo: AFP/Getty Images
 

By Peter Simpson in Wukan

8:41AM GMT 21 Dec 2011

Chief village representative Lin Zuluan emerged from two hours of talks with the first high-ranking Chinese government official to intervene in the three-month long open revolt.
 

In a humbling rebuff of his administration’s authority, Guangdong provincial deputy-Communist Party Secretary Zhu Mingguo agreed to a series of demands, said Lin, starting with the release of the villagers.
 

“The three will be released one after another today and tomorrow,” Mr Lin announced to residents.
 

Mr Zhu also agreed to release “in due course” the body of Xue Jinbo, the protest leader allegedly beaten to death in police custody nearly two weeks ago, Mr Lin said.
 

Mr Lin did not say when the body of he 42-year old father of three would be released — police claim he died of a “sudden illness” but his family allege he was beaten to death.
 


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But he said deputy-secretary Zhu had agreed to launch a full reinvestigation into the death, with Mr Xue’s family closely involved.
 
And he said the authorities have agreed to legitimise the status of the 12-strong temporary village representatives, led by Lin and Yang Semao, until later agreed elections.
 
“We went with three demands and they met them all,” said Mr Lin.

A government working group is to be allowed to enter the village and investigate the land grabs from peasants by local officials who were – along with the police – kicked out of the village during the rebellion.
 
Mr Lin says he believes the authorities will keep their word to avoid more unrest.
 
“Zhu and other officials stressed over and over again they would not come in the village and arrest people,” he said.
 
To the relief of the authorities, a planned protest march on the local administrative town of Lufeng to brazenly confront officials and demand Xue’s body for burial has been called off indefinitely.
 
“We’ll protest again if f the government doesn’t meet its commitments,” village representative Yang warned.
 
Unrest is spreading in the wealthy southern boom province of Guangdong, with two reported deaths on Wednesday during riots in the nearby town of Haimen, situated 75 miles from Wukan.
 
There, residents fearing for their health because of planned coal-fired power plant clashed with security forced after storming government offices.
 
Officials have denied any deaths but more unconfirmed reports emerged last night of further protests, with thousands of people blocking a motorway.
 
Though unrelated to the revolt in Wukan, Haimen residents told Hong Kong reporters they had been following the villagers’ resistance closely.
 
After a rally informing the residents of the unique bluff calling, Wukan village chief Yang told The Daily Telegraph the government’s compromise was a “temporary victory” for the community.
 
“The real victory lies ahead. When we can elect our own leader and when we get back all the land the government sold too cheaply, and trace all the money the officials have embezzled and hand it back to the villagers, that will be a victory,” he said.
 
“I think people can see the miracle of democracy will happen in Wukan,” Yang said.
 
Title: learn all one can about the enemy and slowly gain advantage
Post by: ccp on December 23, 2011, 09:48:26 AM
Sun Tzu in practice.  I suspose Brockster thinks we will gain learn more about them then vice versa which will neutralize them

Historically the US seems to get duped every time with this sort of strategy.  We continue to give it all away:
 
Inside the Ring
By Bill Gertz
-
The Washington Times

7:51 p.m., Wednesday, December 21, 2011
NUKE SCIENTIST EXCHANGE PLANNED

Deputy Energy Secretary Daniel B. Poneman is working on a major Obama administration initiative that would renew scientist exchanges between U.S. nuclear weapons laboratories and Chinese nuclear facilities.

The idea is aimed at promoting openness and transparency by China’s military about its secret, large-scale buildup of nuclear weapons, according to U.S. officials.

Critics say the plan is similar to an exchange program in the 1990s that sent U.S. nuclear scientists to China and produced one of the worst cases of nuclear espionage. Secrets about every deployed warhead in the U.S. arsenal were compromised, including the W-88 small nuclear warhead deployed on submarine-launched missiles.

“We’ve seen this movie before, and it has a bad ending,” one official said.

Officials familiar with the plan told Inside the Ring that the initiative was discussed during a recent policy committee meeting of senior national security officials at the White House.

The initiative is part of the administration’s arms-control-centered security policies. According to the officials, the administration hopes to coax the reluctant Chinese communist leadership and its military into engaging the United States in strategic nuclear talks, something China so far has refused.

“This is a way to reach out to [the Chinese] with multilateral arms-control programs,” said a second U.S. official familiar with the plan.

The initiative likely will face opposition from Congress.

House Republicans added language to the 2012 Defense Authorization Act that restricts the Pentagon and Energy department from cooperating with Beijing in setting up a nuclear security center in China. The provision, when signed into law, will block funding for the center until the secretary of defense certifies that China has halted nuclear proliferation and that the center will be in line with U.S. interests.

U.S. intelligence has linked China to nuclear arms proliferation in Pakistan and other emerging nuclear states.

The second official said the plan evokes memories of the 1990s case of Los Alamos National Laboratory scientist Wen Ho Lee.

Former Energy Department intelligence chief Notra Trulock stated in his 2003 book that Lee, a scientist at Los Alamos’ weapons-designing X Division, provided sensitive nuclear weapons data to China during unreported meetings with nuclear weapons scientists as part of Energy’s exchange programs.

Lee was the U.S. government’s chief suspect in the compromise of W-88 warhead secrets to China.

The FBI, however, mishandled the case against him, and he was never charged with espionage. Instead, he pleaded guilty in September 2001 to a felony charge of mishandling classified information.

Lee denied being a spy and said he was targeted by the FBI because he is Chinese-American.

The FBI has said as recently as last year that it is still investigating the theft of U.S. nuclear secrets by China from the 1990s. But no one has been arrested for the crime since the Lee case.

U.S. counterintelligence in 1998 warned about China’s aggressive intelligence targeting of nuclear scientists. It stated that “rather than send its intelligence officers out to recruit knowledgeable sources at facilities such as the national laboratories, China prefers to exploit over time the natural scientist-to-scientist relationships.”

“Chinese scientists nurture relationships with national laboratory counterparts, issuing invitations for them to travel to laboratories and conferences in China,” the report on foreign spying against laboratories said.

Security officials say renewing the nuclear lab exchange also would reward China for massive cyberattacks against nuclear labs that have been ongoing for decades.

Story Continues →

‹‹ previous 1 2 next ››  About the AuthorBill Gertz
Bill Gertz is national security editor and a national security and investigative reporter for The Washington Times. He has been with The Times since 1985.

He is the author of six books, four of them national best-sellers. His latest book, “The Failure Factory,” on government bureaucracy and national security, was published in September 2008.

Mr. Gertz also writes a weekly .
Title: China and revolution
Post by: G M on February 10, 2012, 02:33:07 PM
**Make no mistake, a Chinese civil war would shake the world.

http://www.nytimes.com/2012/02/12/opinion/sunday/is-china-ripe-for-a-revolution.html?_r=1

Beijing has learned its lessons from the past. We see this in the swift and ruthless suppression of Falun Gong and other religious sects that resemble the Taiping before they became militarized. We can see it in the numbers of today’s “mass incidents.” One estimate, 180,000 in 2010, sounds ominous indeed, but in fact the sheer number shows that the dissent is not organized and has not (yet) coalesced into something that can threaten the state. The Chinese Communist Party would far rather be faced with tens or even hundreds of thousands of separate small-scale incidents than one unified and momentum-gathering insurgency. The greatest fear of the government is not that violent dissent should exist; the fear is that it should coalesce.

The rebellion holds lessons for the West, too. China’s rulers in the 19th century were, as they are today, generally loathed abroad. The Manchus were seen as arrogant and venal despots who obstructed trade and hated foreigners. All romance was on the side of the Taiping rebels, who at the onset were heralded abroad as the liberators of the Chinese people. As one American missionary in Shanghai put it at the time, “Americans are too firmly attached to the principles on which their government was founded and has flourished to refuse sympathy for a heroic people battling against foreign thralldom.”

As Mr. Xi prepares to visit the United States on Tuesday, a similar sympathy shapes our view of China’s current unrest. Just last weekend, Senator John McCain warned China’s vice foreign minister that “the Arab Spring is coming to China.” The dominant tenor of Western press coverage is that the Communist Party is finally receiving its comeuppance — for its corruption, for its misrule in the countryside, for its indifference to human rights and democracy. And below the surface, usually unspoken, lurks a deeply felt sense of schadenfreude — a desire to see the Communist Party toppled from power by its own people.

But we should be careful about what we wish for. For all of the West’s contempt for China’s government in the 19th century, when the Taiping Rebellion actually drove it to the brink of destruction, it was Britain that intervened to keep it in power. Britain’s economy depended so heavily on the China market at the time (especially after the loss of the United States market to the American Civil War in 1861) that it simply could not bear the risk of what might come from a rebel victory. With American encouragement, the British supplied arms, gunships and military officers to the Manchu government and ultimately helped tip the balance of the war in its favor.

We may not be so far removed. Given the precarious state of our economy today, and America’s nearly existential reliance on our trade with China in particular, one wonders: for all of our principled condemnation of China’s government on political and human rights grounds, if it were actually faced with a revolution from within — even one led by a coalition calling for greater democracy — how likely is it that we, too, wouldn’t, in the end, find ourselves hoping for that revolution to fail?


An associate professor of history at the University of Massachusetts, Amherst, and the author of “Autumn in the Heavenly Kingdom: China, the West, and the Epic Story of the Taiping Civil War.”
Title: Re: China
Post by: Crafty_Dog on February 10, 2012, 05:47:14 PM
Intuitively that argument doesn't make much sense to me, but then its a POTH opinion piece  :lol: 

BTW there was an interesting article in today's LA Times about China's car industry's sales doing very well in Latin America.  They've been reverse engineering what's out there and then sell it for 33-50% less.  Apparently there are about 15 Chinese car companies involved.
Title: Re: China
Post by: G M on February 10, 2012, 06:08:33 PM
It would be nice to see a greatly improved Chinese gov't, but the road to that point would be a bloodbath of mindboggling numbers.

As far as reverse engineering, it's not coincidental that every foreign car company in China has to have a domestic Chinese car company partnership.
Title: Bull in the China shop
Post by: bigdog on February 13, 2012, 04:57:07 AM
"Last month, as Barack Obama's administration began to prepare for Chinese Vice President Xi Jinping's visit to Washington, someone close to the U.S. vice president leaked that Joe Biden would "take over" China policy. The leaker made the case that Biden had a good rapport with Xi, thus priming the U.S. vice president to add the China mandate to his portfolio. According to a number of administration sources, however, this leak was nothing more than an instance of a Washington-style power play -- or score settling. But the episode does demonstrate how important the China relationship has become in the Washington power game, how the portfolio is troublingly up for grabs, and how wildly elbows swing (or pivot) to take control of it."

Continued at:

http://www.foreignpolicy.com/articles/2012/02/10/bull_in_the_china_shop?page=full
Title: Re: Bull in the China shop
Post by: G M on February 13, 2012, 06:57:40 AM
"Last month, as Barack Obama's administration began to prepare for Chinese Vice President Xi Jinping's visit to Washington, someone close to the U.S. vice president leaked that Joe Biden would "take over" China policy. The leaker made the case that Biden had a good rapport with Xi, thus priming the U.S. vice president to add the China mandate to his portfolio. According to a number of administration sources, however, this leak was nothing more than an instance of a Washington-style power play -- or score settling. But the episode does demonstrate how important the China relationship has become in the Washington power game, how the portfolio is troublingly up for grabs, and how wildly elbows swing (or pivot) to take control of it."

Continued at:

http://www.foreignpolicy.com/articles/2012/02/10/bull_in_the_china_shop?page=full

In case future historians want to trace the origins of the Sino-American wars of the 21st century.....
Title: Tibet
Post by: Crafty_Dog on February 20, 2012, 12:36:59 PM
Stratfor's VP of Strategic Intelligence Rodger Baker examines how ethnic conflict, fear of foreign intrusion and access to key freshwater sources will continue to keep China's attention focused on Tibet.

Video transcript:(Watch the video on Stratfor.com to see the maps & graphics!)

The Tibetan Plateau lies in the southwest of China, with Xinjiang to the north, Sichuan to the east and Yunnan to the southeast. It borders Myanmar, India, Bhutan and Nepal, linking China to Southeast Asia. Covering some 2.5 million square kilometers, it accounts for just shy of a quarter of Chinese territory.

The high mountains along the Himalayas and Tibetan Plateau (itself around 4,500 meters above sea level) provides a natural buffer for the Chinese heartland, protecting the Han Chinese through natural barriers and strategic depth.

From Beijing's perspective, if the Tibetan region were opened to foreign influence, it could leave the Chinese core vulnerable. China is particularly concerned about the traditional relations between Tibet and neighboring India.

Historically, Indian cultural and religious influence spread into and through Tibet, and prior to 1950 the majority of Tibetan trade was with India, not China. Beijing views India's hosting of the exiled Tibetan government as a clear sign of India's intent to undermine Chinese authority and to give New Delhi a strategic advantage in any regional competition or confrontation.

Through history, Chinese empires have had mixed relations with Tibet, and it was not until the Qing Dynasty that the Chinese made a substantial effort to not only dominate Tibetan territory, but also to gain authority over Tibetan cultural and social structures through control of Tibetan Buddhism. Historically, in China, when the central government is weak, control over buffer regions is weak, leaving those areas vulnerable to internal separatism or foreign influence.

The strength of the domestic and overseas Tibetan movement is seen as the single biggest ethnic challenge to Beijing. China's leaders fear if Tibet were to break away, it could trigger a domino effect, stripping China of much of its territory and its strategic buffers.

Potential Tibetan moves for independence also challenge China's attempts at overall territorial integrity. The Tibet Autonomous Region is close to 13 percent of Chinese territory but has a population of only around 3 million. Minority ethnic groups in China overall make up around 7 percent of the population, but ethnic areas of China comprise some 60 percent of territory.

There is another consideration for Beijing, beyond national unity and strategic depth. Tibet has been dubbed Asia's "water tower." The Qinghai-Tibet Plateau is the source of some 20 major rivers, and Tibet's glaciers and lakes hold some 400 billion cubic meters of fresh water.

Waters originating in Tibet supply around 30 percent of China's fresh water, through major rivers, including the Yellow and Yangtze, and supply other major regional rivers, including the Brahmaputra, the Mekong, the Irrawaddy and the Salween.

Availability and control over fresh water is growing more important as populations rise, regional climates adjust and water use increases. In addition to water, these rivers are seen as potential -- or realized -- sources of hydropower, and Beijing has already laid plans for both water diversion projects and additional dams along the major rivers -- some that can increase tensions with neighboring states.

Overall, Tibet remains one of the most important yet one of the most contentious of China's strategic buffer zones. Ethnic instability, perceived foreign interference and competition over key natural resources gives China little choice but to remain heavily involved and focused on Tibet.
Title: China and water
Post by: bigdog on February 20, 2012, 03:08:19 PM
Given all the current discussion about China and water, this book might interest some of you: http://www.amazon.com/Chinas-Water-Warriors-Citizen-Action/dp/0801446368.  

Also, here is a shorter, 20 page, journal article: http://falcon.arts.cornell.edu/am847/pdf/Unbuilt%20Dams.pdf.
Title: Xi Jinging "we welcome China"
Post by: ccp on February 25, 2012, 06:39:12 AM
Stated by Obama to the presumed next leader of China.  He has children going to Harvard and does business here in the US frequently.   He is also a son of a Mao Communist and perfectly capable of poltical crackdowns at home.

Seems to me Sun Tzu would be very proud.  They are not just "competing" with us.  They are at war with us for dominance IMO.

Larry Ellison the CEO of Oracle operates his business like a Samurai warrior.  Sun Tzu sells as much as a businees book as for military doctrine.

At the very least it seems clear to me China is competing with us as warriors. 

So do we play dumb in public like Obama and play rough behind the scenes (I think, I hope we are doing that) or do we publically call their bluff?

*** Breaking Now:Obama CampaignMiddle EastNational SecurityThe Obama EconomySearch   Xi Jinping: The Princelings’ Prince
Next leader of China sends daughter to Harvard, crushes dissent

Xi Jinping / AP
   
BY: Bill Gertz - February 16, 2012 5:00 am
During Chinese Vice President Xi Jinping’s visit to Washington, D.C., this week, the media glossed over several facts about the man expected to be China’s next supreme ruler, including his ties to the Chinese military, his connections to U.S. business interests, and his past role in violations of Tibet’s human rights.

Xi is the most powerful of China’s “princelings,” the term for powerful offspring of Chinese communist leaders past and present. Princelings control key sectors of China’s government and economy, drive western luxury cars, and send their spouses and children to the United States to live and work.

Xi is no exception.

At the powerful Central Military Commission (CMC), Xi worked as an office secretary under Gen. Geng Biao for three years beginning in 1979. The work for the military commission is significant since it holds the key to power in China.

Geng’s fortunes rose after he was ordered to take control of broadcast and television stations from the communist faction headed by Mao’s wife and three others known as the Gang of Four. The quelling of the gang led to the rise of reformer Deng Xiaoping, who put China on its current modernization path and away from the turmoil of the Cultural Revolution.

Xi’s wife is a singer in the People’s Liberation Army and performs in a PLA uniform, further highlighting his ties to the military. His daughter, Xi Mingze, secretly attends Harvard under a cover name and her two-dozen man security detail may be collecting intelligence for the Chinese, according to U.S. officials.

The son of Xi Zhongxun, a first-generation communist revolutionary who died in 2002, Xi was picked several years ago to become the party’s General Secretary in place of current Secretary Hu Jintao during a major conference expected this fall.

If the communist succession takes place as planned, observers predict Xi likely will get only half the power at first and Hu will remain head of the CMC, the party organ that runs the military and is the ultimate power in China.

Xi is one of a number of several princelings who have come under scrutiny in China from more doctrinaire communists. The power of the hardline element continues to grow in China; though they welcome China’s growing prosperity, they believe the regime is insufficiently Marxist-Leninist as developed under Mao Zedong.

One such hardliner is Bo Xilai, the provincial Party chief in Chongqing accused of corruption by deputy mayor Wang Lijun, a subordinate who tried to defect to the U.S. consulate in Chengdu but was turned away after spending the night in the consulate.

Bo is considered a “neo-Maoist” and is pushing for a seat on the nine-member Politburo Standing Committee, the collective dictatorship that controls China.

Bo, like Xi, is a princeling and his son, like Xi’s daughter, is a student at Harvard.

Many of the communist princelings live or travel frequently to the United States and are engaged in business dealings, interacting with and influencing American policy analysts and businessmen.

For example, during Xi’s Washington visit, the incoming leader met with former Secretary of State Henry Kissinger, who runs Kissinger Associates and who helps U.S. companies get business deals in China. Xi also met former Clinton administration National Security Adviser Sandy Berger during the visit. Berger’s Stonebridge International also does business in China.

Xi met with Defense Secretary Leon Panetta and a spokesman said the meeting included a “wide-ranging discussion, with Xi urging the U.S. and China to strengthen military exchanges.”

But a U.S. official said that Panetta was surprised by Xi’s lack of candor or response to questions regarding cyber intrusions and advanced weapons, among other issues.

A second U.S. official also said Panetta would travel to China.

Owing in part to his family position and in part to his future place in the Chinese hierarchy, it is difficult to pin down Xi’s exact policy sentiments.

Human rights issues are a stumbling block for Xi and his U.S. counterparts; human rights watchdogs have criticized Xi during the visit for his role in ongoing repression in China.

The group Chinese Human Rights Defenders (CHRD) issued a report that said the wining and dining of the communist leader in Washington is taking place at the same time China is cracking down on dissidents.

Tibet has been a major target of the Chinese in recent months, as several Tibetan monks have set themselves on fire to protest Chinese repression.

Xi traveled to Tibet in July with Chen Bignde, chief of the military’s general staff to celebrate the 60th anniversary of what China calls the “peaceful liberation of Tibet.” The Chinese takeover involved a military assault on the mountainous region that included mass killings and shelling of Buddhist monasteries.

“This seems a strange time for the U.S. to engage in diplomatic niceties or goodwill overtures to China’s likely future president,” said CHRD International Director Renee Xia. “The U.S. should instead hold Xi and other Chinese leaders to account for the Chinese government’s escalating human rights violations at home and its heartless position towards the suffering of the Syrian people.”

China vetoed a U.N. resolution earlier this month that would have condemned Syria’s government for the brutal crackdown in Syria.

Xia said the Obama administration should highlight the worsening human rights abuses in China.

President Obama, Vice President Joseph Biden, Secretary of State Hillary Clinton, and Defense Secretary Leon Panetta made only vague references in public during the Xi visit to China’s human rights abuses, its unfair trade and industrial practices, its military buildup, and its weapons proliferation to rogue states.

The CHRD said that it is “uncertain” whether Xi’s rise to power later this year will lead to improvements in China’s human rights or for future political reform.

CHRD said Xi was Communist Party secretary in Zhejiang from 2002 to 2007, one of the worst periods for democracy and human rights activists in the affluent coastal province, where rampant human rights violations were reported and for which Xi was not held accountable.

“While Xi held a position with the highest authority in the province, the Zhejiang government stood out in its zealous persecution of political dissidents, writers, underground Christians, and human rights activists,” the group said.

Xi also directed the round up and repression of democracy and rights advocates in China prior to the 2008 Olympics in Beijing.

This entry was posted in China and tagged China, hu jintao, Xi Jinping. Bookmark the permal
Title: Kissinger & China
Post by: Crafty_Dog on February 25, 2012, 06:49:23 AM
Just a quick yip to underline a passing point in that piece concerning Henry Kissinger:  A few years back an IDB article went into a goodly amount of depth on how former high ranking US figures were getting paid shocking sums of money to represent China's interests.  Near the top of the list or at the top of it was Kissinger.
Title: Here is one allusion to Kissinger
Post by: ccp on February 25, 2012, 08:01:22 AM
A little vague but there is a vague allusion to Kissinger being on the take to a Chinese government's technology tech company.

Well I guess he had to impress his celebrity girlfriends (Jill St John among others) somehow (money?).  Certainly not his looks though I guess it could have been his brains:

http://news.google.com/newspapers?nid=1891&dat=19830810&id=TZ8fAAAAIBAJ&sjid=HNYEAAAAIBAJ&pg=3089,1858930
Title: Re: China
Post by: Crafty_Dog on February 25, 2012, 01:20:24 PM
Good Google-Fu CCP!
 
Title: Question
Post by: ccp on February 26, 2012, 10:04:09 AM
"Fu"

Did you mean "follow up"?
Title: Re: Question
Post by: G M on February 26, 2012, 10:32:04 AM
"Fu"

Did you mean "follow up"?

Google-fu


Contents
  [hide]  1 English 1.1 Alternative forms
 1.2 Etymology
 1.3 Noun 1.3.1 Usage notes
 1.3.2 Related terms
 



[edit] English
 
[edit] Alternative forms
 google-fu, Google fu, google fu
 
[edit] Etymology
 
Blend of Google and kung fu
 
[edit] Noun
 
Google-fu (uncountable)
 1.Skill in using search engines (especially Google) to quickly find useful information on the Internet.  [quotations ▼]


[edit] Usage notes
 
Google-fu is often used as a generic term applying to any search engine, and is frequently written in the lowercase form, google-fu. Reliably published usage suggests some ambivalence on whether to place a hyphen between Google and fu.
Title: Google fu aka kung fu
Post by: ccp on February 26, 2012, 10:38:29 AM
I understand the clarification 8-)
Title: This could be quite significant
Post by: Crafty_Dog on March 05, 2012, 12:37:43 PM

http://online.wsj.com/article/SB10001424052970204276304577262882415736796.html?mod=WSJ_hp_LEFTWhatsNewsCollection

By BOB DAVIS
BEIJING—By lowering China's growth target to 7.5% this year, Premier Wen Jiabao has signaled that an era of supercharged expansion may be coming to an end, a shift with profound implications for countries like Australia and Brazil that have prospered from red-hot Chinese demand for commodities.
The NPC will set key economic priorities for 2012 but as the WSJ's Aaron Back tells Deborah Kan, it's often what goes on behind the scenes that's most telling.

China has announced it is lowering its target growth forecast to 7.5% from 8%. Not a big move but enough to send a few tremors through the world's financial markets. Andrew Peaple and Martin Essex discuss what this means for the global economy. Photo: AP
The adjustment suggests that China's leaders have reached a comfort level with slower growth, and that they don't intend to stimulate the economy through state-led investment, as they have in the past. Instead, they plan to let a long-touted shift away from export-led expansion take its course.
The consequences of this shift depend on how well Beijing manages the transition. China's trading partners are bound to be affected in different ways.
A reduced pace of investment in infrastructure, power generation and exports would likely mean slower growing imports of steel, concrete, oil and other commodities—potentially a blow to Brazil, the oil states of the Middle East, Australia and other commodity powerhouses.
"We think China's supercycle for commodities is behind us," said Credit Suisse analyst Dong Tao.
But with the shift will also come new opportunities, both at home and abroad.
A China that relies more on consumer spending may pollute less, easing global environmental worries, and produce more jobs. The shift could also lift imports of software, entertainment, tourism, and high-technology goods and services produced by the U.S., Europe and other wealthier nations.
"Accelerating the transformation of the pattern of economic development…is both a long-term task and our most pressing task at present," Chinese Premier Wen Jiabao on Monday told the opening session of the National People's Congress, China's version of a parliament, which meets once a year.
China's official growth target has been set at 8% since 2005. The target is largely symbolic: For the past seven years, the Chinese economy has grown at an average annual clip of 10.9%. However, analysts say the 7.5% GDP growth target for 2012 indicates the direction of the economy sought by the government's most senior officials. The International Monetary Fund forecasts Chinese growth of 8.2% this year, and analysts generally peg it at 8% to 8.5%.

CONtINUED
Title: Riding the Dragon
Post by: bigdog on March 08, 2012, 06:51:59 PM
From the Norwegian Coast Guard to Israeli drone technicians, 8 surprising winners of China's massive military buildup.

http://www.foreignpolicy.com/articles/2012/03/07/riding_the_dragon?page=full
Title: Re: China
Post by: DougMacG on March 09, 2012, 10:29:26 AM
Bigdog,  Very interesting and surprising implications pointed out at your link.  Thank you.
Title: Must read on China
Post by: G M on March 19, 2012, 03:03:00 PM
**This could be very, very bad.

VERY BAD.


http://www.forbes.com/sites/gordonchang/2012/03/18/chinese-leader-cultural-revolution-coming-to-china/

Chinese Leader: Cultural Revolution Coming to China


Will China descend into a decade of chaos?  Chinese Premier Wen Jiabao is worried that it will.

“Without successful political structural reform, it is impossible for us to fully institute economic structural reform and the gains we have made in this area may be lost,” he said on Wednesday morning in Beijing.  “The new problems that have cropped up in China’s society will not be fundamentally resolved, and such historical tragedies as the Cultural Revolution may happen again.”  Mao Zedong’s decade-long Great Proletarian Cultural Revolution killed millions and nearly destroyed Chinese society.

Wen, during his press conference that closed the National People’s Congress annual meeting last week, actually issued two stunning warnings about another Cultural Revolution.  One of them was made in connection with economic and political reform—the one described above—and another followed his remarks about the endlessly fascinating Wang Lijun incident.

While Americans were watching the Super Bowl, Wang, a high-level Chongqing official, attempted to defect to the U.S. at the American consulate in the Sichuan capital of Chengdu, carrying with him papers that many believe document the foreign assets of the wife of Bo Xilai, his former boss.

Bo, then the Chongqing Party secretary, tried to prevent Wang from getting away by ordering hundreds of his armed security troops to cross into neighboring Sichuan province to surround the Chengdu consulate.  The effort failed as Wang was escorted to Beijing by officials of the Ministry of State Security.  Wang, now detained, has been officially branded a traitor to the country and the Communist Party.

Bo has not fared well either.  He was stripped of his Chongqing post on Thursday, and virtually all analysts believe he has no chance of being named to the all-powerful Politburo Standing Committee this fall.  Many believe that Hu Jintao, China’s current supremo, engineered this bizarre incident as a means of sidelining Bo, but events could spiral beyond control as the Party’s factions scramble to take advantage of a fluid situation.

China watchers, for the longest time, seemed to believe that the form of the Chinese political system no longer mattered.  They told us that the Communist Party had institutionalized itself and had solved the problem that had plagued hardline governments since the beginning of time: succession.  We were told that the upcoming transfer of power, from the so-called Fourth Generation leaders to the Fifth, would be “smooth” and uneventful.

They were wrong.  For one thing, Bo is still holding on to his seats on the Central Committee and the Politburo, giving him the opportunity to fight back.  And at the height of the crisis in Chengdu, he ran to the 14th Group Army in Kunming, in Yunnan province.

Bo’s move is widely seen as an attempt to get the military involved on his side in this ever-widening struggle.  Hu Jintao tried the same maneuver last decade when he enlisted generals and admirals in his tussle with Jiang Zemin, his predecessor, who refused to gracefully yield power.

*Read it all, and hope it isn't correct.
Title: The Epoch Times
Post by: Crafty_Dog on April 03, 2012, 01:05:47 PM
This seems to be an interesting source for matters concerning China.  My impression is that it is the Falong Gong outside of China.  I read a hardcopy edition of the newspaper yesterday and was intrigued.

http://www.theepochtimes.com/
Title: Re: China-- Rotting from Within
Post by: bigdog on April 18, 2012, 11:29:45 PM
http://www.foreignpolicy.com/articles/2012/04/16/rotting_from_within?page=full

In many fields of international competition, China is less sanguine about its abilities than outsiders. Chinese leaders often remind Westerners that China is a developing country, with hundreds of millions of people living in poverty, an unbalanced economy, and high social tensions. What should most worry Beijing, and provide some comfort to those who fear Chinese military expansionism, is the state of corruption in the People's Liberation Army (PLA).

True, the world underestimated how quickly a four-fold jump in Chinese military spending in the past decade would deliver an array of new weaponry to prevent the United States from interfering in a regional military conflict. Top American generals have worried publicly about "carrier-killer" ballistic missiles designed to destroy U.S. battle groups as far afield as the Philippines, Japan, and beyond. Last year, China tested a prototype stealth fighter and launched its maiden aircraft carrier, to augment new destroyers and nuclear submarines. What is unknown, however, is whether the Chinese military, an intensely secretive organisation only nominally accountable to civilian leaders, can develop the human software to effectively operate and integrate its new hardware.
Title: Re: China
Post by: Crafty_Dog on April 19, 2012, 04:08:52 AM
We can hope, but hope is not a strategy cf our current president.

Militaristic nationalism could easily be a tempting strategy for a government faced with the internal contradictions that the Chinese are.
Title: Re: China
Post by: G M on April 19, 2012, 05:33:43 AM
We can hope, but hope is not a strategy cf our current president.

Militaristic nationalism could easily be a tempting strategy for a government faced with the internal contradictions that the Chinese are.

I fear that's exactly how it'll play out.
Title: Chinese book keeping
Post by: Crafty_Dog on May 10, 2012, 11:13:37 AM
http://online.wsj.com/article/SB10001424052702304203604577395423545473012.html?mod=WSJ_hp_LEFTTopStories

By DINNY MCMAHON And SHEN HONG
China has instructed the Big Four auditors to hand over control of their Chinese operations to local partners by the end of the year and put a Chinese citizen at the top within three years, adding to challenges facing the companies in a fast-growing market.

China's Ministry of Finance said no more than 40% of partners at Ernst & Young, KPMG, Deloitte Touche Tohmatsu and PricewaterhouseCoopers can have gained their qualification as a certified public accountant from overseas. That number can't exceed 20% by the end of 2017, according to the guidelines, which took effect May 2 but were only announced Thursday.

The new rules, which will apply to both partners and managing partners, will given local partners a majority of votes in the new partnership the firms are forming, and effective control

Foreigners were brought in to help build China's accounting business more than 20 years ago, and the accounting giants may struggle to find enough local employees with the necessary experience to run their operations. By one estimate, more than 90% of senior positions are now held by non-Chinese.

The Finance Ministry's move may also complicate efforts to reassure investors that auditing problems of recent years, in which instances of fraud and misrepresentation went undetected, are under control. That could be particularly true if the new rules result in a forced pace of promotion for partners and if the experienced foreign employees necessary to help train the firms' rapidly expanding workforce are sent home.

While the accounting firms have overhauled the way they audit small Chinese firms in an effort to catch reporting abuses that have slipped by in the past, experienced auditors are still necessary to help spot frauds that have plagued the market, accountants say.

The reputation of Chinese auditors has taken a beating over the last two years after many—including big foreign firms—signed off on the books of U.S. and Hong Kong-listed Chinese companies that were later accused of fraud and misrepresentation by short sellers. In some cases, the accounting firms disavowed their own audits from previous years after they discovered problems in the financial statements.

That has become a major point of tension between the U.S. and China. The U.S. has called for access to Chinese-based auditors so as to vouch for their quality, something Beijing has refused to allow.

Those tensions escalated on Wednesday, when the U.S. Securities and Exchange Commission said the refusal of Deloitte's Chinese arm to turn over documents tied to a U.S.-listed client under investigation by the SEC violates U.S. law. Deloitte said it is prohibited from turning over the documents by Chinese law, and is caught between the conflicting interests of two governments. The China Securities Regulatory Commission didn't immediately respond to a request for comment.

In most countries, only locally registered CPAs can be partners, so the new regulations represent a concession by Beijing.

While Chinese law requires that partners in accounting firms must be locally registered CPAs, the government had made an exception for the joint ventures of the Big Four when the country joined the World Trade Organization in 2001, The firms are required to starting restructuring into partnerships this year, which is the form accounting firms take in most parts of the world.

This could have resulted in Beijing demanding the full localization of the firms, as is the practice elsewhere.

China's accounting firms have traditionally drawn some of the best and brightest graduates from the country's universities, and young Chinese auditors have a reputation for being technically proficient and extremely hard working. However, the firms' cracking expansion pace and high turnover among junior staff means they are taking on thousands of inexperienced staff every year.

Local CPAs currently account for 50% of all Big Four partners, according to the Ministry of Finance. But the Big Four may have trouble meeting other conditions announced Thursday, such as ensuring that at least 60% of partners in management roles are held by local CPAs.

Another new rule is that within three years, the head of the firm needs to be a Chinese citizen.

Paul Gillis, a visiting professor of accounting at Peking University's Guanghua School of Management, estimates that more than 90% of management positions at the four accounting firms in China are held by foreigners.

"It's going to be tough for the firms to meet this," he said of the management transition. "I would have thought in the normal scheme of things, we wouldn't have seen a local senior partner for another 10 years," he added, referring to the top job at the firms.

Foreigners aren't barred from taking the CPA exam but it can only be taken in Chinese, a natural barrier for many who currently work in China, although that might prove less of a problem for native Chinese-speaking accountants from Taiwan and Hong Kong.

Other countries also require that CPAs take the exam in the local language.

PwC and Ernst & Young said in separate statements that they suppors the move toward localization and have been taking on more local partners in recent years.

Title: POTH: Chinese Deflation?!?
Post by: Crafty_Dog on July 09, 2012, 12:08:41 PM
Price Data Suggest Specter of Deflation in China
By KEITH BRADSHER
Pravda on the Hudson ;-)
Published: July 9, 2012
•   
HONG KONG — Prices are tumbling across the Chinese economy, according to government data released Monday, as a flood of goods pouring out of the country’s factories and farms exceeds anemic demand from Chinese households and businesses.
The downward trend makes it much harder for businesses to sell enough goods to repay loans that they took out, usually on the expectation of rising prices. Falling prices also discourage investment, which had slowed sharply this spring, and gave consumers an incentive to delay purchases until prices could fall further.

The news of falling prices, together with a pledge by Prime Minister Wen Jiabao on Saturday to maintain stringent bans on real estate speculation, produced a slide Monday in mainland Chinese stock markets. The main index of the Shanghai stock market dropped 2.4 percent, while the Shenzhen stock market’s benchmark fell 2.2 percent.

Consumer prices dropped 0.6 percent in June from May, the largest month-to-month drop in two years, the National Bureau of Statistics in Beijing announced Monday. Consumer prices were up 2.2 percent from a year earlier, but only because prices kept rising fairly briskly through January of this year before beginning what has now become an accelerating descent.

Producer prices, measured at the factory gate, were down 2.1 percent in June from a year earlier, and down 0.7 percent in June from May. Those prices had started to weaken late last summer, about six months before consumer prices began eroding.

Sun Junwei, a China economist at HSBC, noted that the month-to-month price data were not seasonally adjusted and that June has historically been a month of lower prices. Adjusting for that pattern, he said, could mean that consumer prices were flat in June compared with May.

But consumer and producer prices are clearly slowing even faster than expectations, many economists said, adding that the trend strengthened the case for further economic stimulus in China. The Organization for Economic Cooperation and Development said Monday in Paris that the Chinese and Indian economies were both entering more marked economic slowdowns.

Some company managers complain of having to cut prices for their wares even as labor costs continue climbing.
“Business is slower and more challenging this year compared to the same period last year — I would say prices are down over all by 5 percent this year,” said Elaine Yan, the manager of the import and export department at Wuxi Zontai International, a trading company in Wuxi, China, that sells leather gloves, handbags, scissors and embroidery.

Sopheia Wang, the sales manager at Kunshan Tianyuan Precision Industry, a manufacturer of coffeepots and mugs based near Shanghai, said that her company had resisted cutting prices so far because the local minimum wage had risen 21 percent last month.
“With the global economy not doing well, we are looking into developing the domestic market for our products, rather than actively adjusting downwards our pricing,” she said.

Companies are saving money on raw materials, however, as the global boom in commodity prices has swung into reverse since March.

Chinese economic policy makers did little to respond to the country’s slowing economy from mid-March to mid-May. That period happened to coincide with a factional struggle, as a prominent member of the Communist Party, Bo Xilai, was removed as party secretary of Chongqing in March and suspended from the Politburo in April.

The country’s leadership now seems to be reacting with policies aimed at offsetting the economic slowdown. Mr. Wen took an inspection tour of east central China over the weekend and called for more aggressive fiscal and monetary policies . The Chinese central bank has cut interest rates twice in the past month .

But Mr. Wen also reaffirmed over the weekend the central government’s commitment to improving the affordability of housing, through policies designed to discourage real estate speculation. Banks have been discouraged from issuing mortgages for second and third homes, for example.

China is expected to release a long list of economic indicators Thursday or Friday, but many economists are suspicious that Chinese statisticians “smooth” the data, by underreporting economic growth in good times and overreporting it during periods of slowdown. Some analysts have looked at electricity production and consumption data as a more reliable gauge, but the bank Standard Chartered issued a research report on Monday saying that even electricity figures were showing signs of inaccuracy.

A few economists are starting to ask whether China could face deflation, a sometimes intractable condition of falling prices that can become self-reinforcing, as Japan has found over the past two decades.

“Today’s inflation data show that deflation could become a larger concern for China than inflation,” said Ren Xianfeng, a China economist at IHS, a global consulting company.

But most economists are still skeptical that China faces a significant risk of sustained deflation. Regulated bank lending rates are at 6 percent, leaving a long way for them to be cut. While local government agencies are heavily indebted, the central government is not. And while one of the dangers of deflation is that banks cut back on lending, the Chinese government still heavily controls the country’s banking sector and dictates when to raise or lower the flow of loans.

Michael Pettis, a finance professor at the Guanghua School of Management at Peking University, said that falling prices could even be good for China. Chinese banks have allocated credit heavily to state-owned enterprises and politically connected individuals, who have prospered by borrowing money at 6 percent and investing it in an economy growing at twice that pace, before adjusting for inflation.

Households, which have few investment options available other than bank accounts, have paid a high price under the current system, earning only 3 percent in annual interest, or a quarter of the economic growth rate. The disappearance of inflation, and even falling prices, would help erase a huge annual transfer of wealth away from households and would help to rebalance the economy toward consumers, Mr. Pettis said.

Hilda Wang contributed reporting.

Title: Re: China
Post by: Russ on July 19, 2012, 05:45:16 AM
This is a piece I wrote in response to a request from a senior State Department officer who is an Asia hand, but has not focused directly on China during his career.  He was looking for an insider's view of the social turmoil occurring recently such as that in Wukan this past Winter.  His question was "are these events isolated, one-time occurrences, or signs of growing tension throughout China?"  It is in part based on discussions with a college professor of Chinese Policy, who is well traveled in China and fluent in Mandarin, and my Father, who follows geopolitics religiously.

Analysis of Local Protests in Rural Chinese Areas

On April 18th in Lijiang, Yunnan, thousands of local farmers surrounded government buildings to protest damage to their homes from coal mining activities, and the behavior of the local officials who unjustly supported the coal companies to the detriment of the local villagers (http://www.kanzhongguo.com/news/12/04/19/448717.html).  A warning shot from a police firearm scared the farmers into attacking a large group of officers with their edged weapons.  Fifteen officers were injured and the Deputy Chief of Police of Yunnan Province was killed.  Riot police were called in to rescue the officers, and many of the farmers were shot dead.

Events like this are not uncommon in China on a national level.  There is a lot of local discontent that boils over into various forms of protest and demonstration.  Last fall, there was a similar uprising in Wukan, Guangdong that led to the abduction and extrajudicial detainment of several of the protest leaders (http://en.wikipedia.org/wiki/Protests_of_Wukan), one of whom was killed.  This intensified the protest until thousands of police seized the town forcing a resolution.

The question here is if these events are isolated, one-time occurrences, or signs of growing tension throughout China.

What makes this incident unique is that it occurred in Lijiang.  Lijiang is a World Heritage Site and premier tourism center of China.  It is very wealthy, and a centerpiece of China’s program for successful minority relations.  The region is populated largely by non-Han people (Yi, Naxi, Hui, Tibetan, and Bai), although most of the police, and government officials are of the Han ethnicity.  The growing number of civil uprisings are not limited to the Han governed minority populated areas however.

"The data show that mass incidents are generally rooted in work-related grievances and seek address of immediate demands rather than seeking broad political changes"  (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1451828).  While the data, in a large part, reflects simple economic concerns, when do these incidents increase to the point where there are areas that become ungovernable due to the conflicts, simple in nature or not?

China has a history of breaking along certain fault lines that crack due to various strains.  So if you add nationwide scandal, like that of Bo Xi Lai, that shows the People how absent they really are in their leaders’ thoughts, to local grievances also related to quality of living and work, what will happen?

Typically, they air month long marathons of anti-Japanese WWII TV shows on every channel to take focus away from the Chinese Communist Party (“CCP”).  This has worked remarkably well to the point that I do not know one person in China that does not hate the Japanese, but they know basically nothing about the Gong Chan Dang/ CCP.

Before I left China earlier this year, I asked a lifelong member of the Gong Chan Dang what if my daughter can no longer speak Chinese after living in the United States for a while.  He said, "It doesn't matter.  China is nothing."  This was reflective of a newly found feeling that the Government doesn't take care of the people, and that they are trying to regulate them too closely and unfairly even when they fully comply with the Gong Chan Dang's agenda.  (see Member's Area for full story and analysis).

The most likely path from here is stabilization of conflicts and more Japanese WWII TV dramas.  However, it is interesting to examine the alternative.

There are several essential problems with creating an accurate picture about what is going on in China.  Most of the US/ foreign media and business interests tend to overhype any turmoil.  Academia tends to try to gain a balanced approach through careful analysis of trends and underemphasizes the turmoil as being common and not disruptive to progress or reform.  And, if you are actually on the ground there, you have little access to news of any events that are occurring, so you do not see or feel any turmoil unless you are in the midst of it.

In the end, what we have is a bunch of interest-biased information coming to us from all directions and people gravitating toward what fits their world image most closely.

What the lifelong member of the Gong Chan Dang said is instructive here.  He has benefited tremendously from the Chinese occupation of the Tibetan Plateau and has gone along with the Party's agenda for decades.  Still, he feels underrepresented and alien to his current Government.  The question is, will this feeling grow among the people like him, or can the Party control this sentiment?  I don't think any of us can predict the answer to that, or what will happen if it does grow beyond the Party's control.

Many Chinese feel that China is a dangerous place where those with money do as they please at the expense of everyone else.  They base this on the food quality issues, leadership abuses of their duties to take care of the People, and the token allowances given to minorities to appease them (financial and academic aid that only masks the vast disparities).  I am not aiming at getting into a comparative argument here between China and any other nation in terms of these issues, but rather to illustrate why people are frustrated to the point of despair about what is happening to their lives there.

There is no vehicle there for people to exert their rights, or to make gains other than through wealth.  And for those that do get wealth (media stars and business tycoons), they send their children overseas to escape the arbitrariness of that system.

On May 17, 2012, it was reported that a suicide bomber, a woman carrying a baby with explosives strapped to her body, killed several people at a government office in Qiaojia, Yunnan.  She was protesting authority’s plans to tear down her home for a development project.  
Quickly the story was revised by the Government to say that the bombing had been done by a disgruntled worker (http://www.theglobeandmail.com/news/world/worldview/death-and-justice-in-south-china/article2435484/page1/).  Rather than awaiting a full investigation of the incident, the chief of Yunnan’s Public Security Bureau declared the case closed and stated that he could stake his reputation and career on the decision.  This prompted the Chinese public to ask why proof of the crime was not being used to determine the outcome rather than this Chief’s reputation and career.

It is becoming obvious that people are losing respect for the Government and the police, and the public's perception of the Bo Xi Lai scandal could be fueling this disconnect between the two further.  One blogger commenting on the Qiaojia incident wrote: “I'm not law professional, nor police, of course not a Public Security Bureau chief, but I know there must be enough evidence before confirming that some suspected criminal is guilty, instead of basing it on deduction or a subjective assumption. Why are there so many suspicious facts in the case? Why is the whole country of China asking questions?”

Of course, the Chinese People deserve better than this.  Dramas about the Japanese during WWII will hopefully outlive their usefulness and social media will hopefully have a positive impact as well.

In China, I asked many people if they thought peoples’ lives were improving and they said no.  They could not trust the food because of all of the scandals involving tainted products of every kind.  People were getting sick and in the hospital often from tainted food they said.  This is just one example, but it is indicative of the greater problem.

If the sentiment is that their lives are not improving and that their Government does not support them, how long can the WWII Japanese dramas keep the masses sedated?  And if they do not remain sedated, what happens then?  Who knows?  Maybe nothing.  

This year before the CCP change of power is going to be unpredictable and very dangerous.  Similar tensions as these reported above are what have led to popular revolt in modern China.  You also have to factor in the impact of the new and ubiquitous communication technologies, and the inflationary potential of bloggers.  These factors magnify all of the tensions, and lend new leverage to organizational effort.  The incident in Wukan is quite instructive in this regard.

So an Apple Store on every corner may be more than just good business for Apple. Tiananmen Square took place at a time that "rhymes" with the present political instability.  That was appreciated by Mark Twain, who has been quoted as saying that "History does not repeat itself, but it does rhyme."
Title: Re: China
Post by: DougMacG on July 19, 2012, 11:12:10 PM
Russ,  Wow, great writing and analysis!  Nice to have you on board.

It's been 23 years since the Tiananmen protests and the regime's use of force against them.  I believe freedom will prevail but I've been wrong about the timing for a very long time.
Title: Re: China
Post by: bigdog on July 20, 2012, 05:07:49 AM
Russ,  Wow, great writing and analysis!  Nice to have you on board.

It's been 23 years since the Tiananmen protests and the regime's use of force against them.  I believe freedom will prevail but I've been wrong about the timing for a very long time.

I wholeheartedly agree with DougMacG. Welcome to the the forum, Russ.

On a side note, China is opening in interesting ways. I met 18 Chinese students this week, and had the opportunity to discuss the Constitution, in particular separations of power and the Bill of Rights with them for a couple hours. They are on site for a two week experience. Very interesting discussions.
Title: Re: China
Post by: Crafty_Dog on July 20, 2012, 07:23:13 AM
With highly subversive consequences to their way of thinking I'm guessing! 

I would love to hear more about this.
Title: Rich leaving China?
Post by: Crafty_Dog on September 04, 2012, 12:16:30 PM

 
The balance of payments
BoP until you drop
For the first time since 1998 more money leaves China than enters it
Aug 4th 2012 | HONG KONG | from the Economist print edition
 
..
 
MAINLAND China can now boast over 1m wealthy citizens (qianwan fuweng) each with over 10m yuan ($1.6m), says the latest edition of the “Hurun Report”, which keeps track of China’s capitalist high-roaders. But the mainland seems to be having trouble keeping them. According to the report, published on July 31st, more than 16% of China’s rich have already emigrated, or handed in immigration papers for another country, while 44% intend to do so soon. Over 85% are planning to send their children abroad for their education, and one-third own assets overseas.
 
The affluent 1m have profited handsomely from China’s economic boom. But only 28% of those asked expressed great confidence in the prospects over the next two years, down from 54% in last year’s report. That unease may also be visible in a more obscure report released on the same day, by China’s State Administration of Foreign Exchange (SAFE). It showed that China’s balance of payments had recorded a deficit in the second quarter, for the first time since 1998. Put simply, more money was leaving China than arriving.
 
The same phenomenon can be described less simply. The balance of payments records two different kinds of transactions: cross-border payments for goods and services (i.e., exports and imports), which are recorded in the “current account”, and cross-border payments for assets. China’s current account is still in surplus, largely because its exports exceed its imports. China is also attracting plenty of direct investment from foreigners eager to buy or build companies on the mainland. But both these inflows of foreign exchange were outdone by a record outflow of other kinds of capital, amounting to a net $110 billion. This left China’s overall balance of payments in deficit, diminishing China’s international reserves by $11.8 billion (or just under 0.4%).
 
The drop in reserves was such an unfamiliar twist in the data that Reuters initially reported it with the wrong sign. A SAFE spokesperson felt the need to say that these outflows did not amount to a mass rush for the exits. The exits are, in any case, partially blocked by China’s capital controls. Still, such regulations can stop neither multinational companies, which may repatriate profits, nor determined wealthy individuals, who travel frequently, hold foreign bank accounts and run their own cross-border businesses. Chinese individuals may take up to $50,000 out of the country each year without special permission. Victor Shih of Northwestern University reckons that the richest 1% of Chinese households own $2 trillion-5 trillion of property and liquid assets. If they took fright, they could overwhelm even China’s vast foreign-exchange reserves.
 
China’s rich often have inside knowledge of the economy’s condition, Mr Shih has pointed out. If their money is leaving, everybody else should take note. But Zhiwei Zhang, chief China economist at Nomura, a Japanese bank, is more sanguine. He thinks the capital outflow is not an alarming sign in itself, but just reflects economic worries that are already well-known. It is no surprise that firms and investors should reshuffle their portfolios given disappointments in China’s property market and the interruption in the yuan’s rise against the dollar.
 
Indeed, downward pressure on the currency is both a cause and a consequence of the capital outflows. From June 2010 to February this year, the yuan appreciated by over 8% against the dollar. Since then, it has slipped by 1% or so. The number of wealthy Chinese, according to the “Hurun Report”, may be growing strongly. But 10m yuan is not what it was.
 
From the print edition | China
 
 
 
Title: Re: China
Post by: JDN on September 19, 2012, 08:47:00 AM
I don't agree with everything, but the author makes some reasonable points.



West’s China hypocrisy
By Guy de Jonquières, Special to CNN
Editor's note: Guy de Jonquières is a senior fellow at the European Centre for International Political Economy. The views expressed are his own.

You do not need to be a panda-hugger or a Beijing apologist – and I am neither – to think that Western critics sometimes give China a bum rap. Not because China is innocent of the charges they make against it; but because when accusers point fingers or raise suspicions about its conduct, they tend to forget that many of the malpractices they condemn were common – indeed, even encouraged – in the West not long ago.

Take the recent two-week “disappearance” from public view of Vice Premier Xi Jinping, China’s presumed next president. Many commentators seized on Beijing’s stonewalling about his absence and its failure to respond to the ensuing frenzy of rumors that he had fallen ill as a glaring example of the unhealthy secrecy that cloaks activities at the top of the Communist party.

True, decision-making in Beijing remains frustratingly impenetrable – to the Chinese people, as well as to foreigners. However, China is not the first country to hush up sensitive or embarrassing information about one of its leaders. The U.S. did so in the case of several presidents, concealing from the public Grover Cleveland’s operation for jaw cancer, Dwight Eisenhower’s heart attack and John F. Kennedy’s excruciating back problems.
Equally, it took years for the truth to leak out about the ill-health of several British prime ministers while they were in office: Clement Attlee’s duodenal ulcers, Winston Churchill’s series of incapacitating strokes and Anthony Eden’s botched gallbladder operation at the height of the Suez crisis were all kept secret at the time. Eden actually “vanished” for three weeks to Jamaica to recuperate at the house of Ian Fleming, creator of James Bond, which had no direct telephone link to London.

Another frequent target of Western wrath is China’s poor record on intellectual property rights. But in making free with other people’s inventions and ideas, China is only following a path not only long trodden, but fiercely defended, by the United States.
The U.S. recognized foreign patents only well into the 19th century, until when American IPR pirates were free to steal and copy foreign inventions and technology with impunity. Washington took even longer – until 1891 –to legally recognize and protect foreign copyright, and delayed until 1988 signing up fully to the century-old Berne international copyright convention, to which most other industrialized countries had long subscribed.
Impassioned pleas by Charles Dickens failed to persuade Congress or the Supreme Court to halt the pirating of his novels by hordes of 19th Century American copyright thieves. That does not, of course, excuse Beijing’s weak IPR enforcement. But when America’s IPR lobbyists indignantly condemn Chinese piracy today, perhaps they should pause to ask themselves why what Washington strenuously asserted was good then is bad when China does it today.
There is a sniff of double standards, too, about Western criticisms of China’s “indigenous innovation” policy, which is intended to build up the country’s industrial base in advanced technologies at the expense of foreign competitors.

The latter have cried foul at the combination of large subsidies, discriminatory procurement and standards-rigging that China has employed. Yet these are much the same methods as were widely used by governments in Britain, France, Germany and other European countries from the 1960s until the mid-1980s, in an effort to breed “national champions” in computing, chip-making, telecommunications and other high-tech industries.
Arguably, none of China’s non-military activities excites more suspicion abroad than overseas expansion by its state-owned energy companies, as they snap up oil reserves around the world. To some foreign commentators, the companies making this “land grab” look like stalking horses for a stealthy international extension of power by the Chinese state itself.
Perhaps the reason they are suspicious is that in the West, the global interests of Big Oil have long been so tightly intertwined with those of political power. Often, those interests have been identical, such as when a U.S.- and British-backed coup deposed the democratically-elected government of Mohammed Mossadegh in Iran in 1953, after it nationalized the assets of the Anglo-Iranian Oil Company (known nowadays as BP).
Yet the evidence suggests that, in practice, the interests of China’s oil companies are aligned much less closely with those of its state. For one thing, little of the oil they raise abroad gets shipped back to China: most of it is sold or swapped on international markets. For another, Beijing has clearly been embarrassed more than once by the oil companies’ ruthless tactics abroad, such as Petrochina’s alleged human rights abuses in Darfur.
Furthermore, China has been conspicuously reluctant to involve itself in protecting the companies’ overseas operations against threats. When the Libyan uprising broke out in 2010, Beijing responded by hastily evacuating Chinese citizens working there – risking $20 billion of contracts in the process – despite popular pressure at home to adopt more muscular action in defense of its national interests.

True, China’s oil companies effectively control its energy ministry, out of which they were carved. However, they appear largely to set their own rules, separate from the country’s overall foreign policy agenda. Indeed, a report last year by the International Energy Agency, to which China does not belong, concluded that its oil companies generally operate independently of Beijing.

What most of these examples tell us is the exact opposite of what China’s critics often contend. Far from being a self-confident emerging global superpower, poised to sweep all before it, it is actually a rather large developing country that confronts the rest of the world from a position of relative weakness and often seems strangely behind the times.
Western governments may have gotten away 50 years ago with news blackouts about their leaders’ whereabouts and health. It is far harder for Beijing to do so today, when new media, instantaneous communications and a less deferential and more questioning public expose it to searching scrutiny at home and abroad. We may not know the truth about Xi’s “disappearance,” but official silence has only added to the Chinese public’s rising skepticism and mistrust of the ruling Communist Party.
China’s IPR piracy, infuriating as it is to companies operating there, is actually another sign of backwardness. Economies with strong knowledge and technology bases act to protect them: those without steal. As and when Chinese innovators start to produce real commercial breakthroughs, their incentive to embrace strong IPR rules will increase in tandem – just as it did in the United States.

As for China’s “indigenous innovation” policy, it seems destined to repeat the mistakes that made Europe’s state-backed “national champion” policies expensive failures. Europe’s experience showed that hefty subsidies, government-ordained standards and protection against global competition are not enough to leap to the forefront of commercial technologies, especially when the beneficiaries are the large and often inefficient established companies that are best placed to petition for government favors. Rather than turning China’s market into a springboard for international success, ringing it with artificial barriers could end up isolating it from advances made elsewhere.
Finally, overseas expansion by China’s oil companies does not threaten supplies to the rest of the world. It actually makes no difference, because oil is a fungible commodity and one extra barrel pumped by China means one more barrel available for everyone else. That would be true even if all the oil lifted by Chinese companies abroad were shipped home.
Concern about the companies acting as advance guards for the onward march of the Chinese state is equally misplaced. Indeed, the exact reverse is true. As China’s dependence on foreign sources of energy and raw materials grows, so will the need to protect those supplies and thus the likelihood of being drawn inexorably, just as western governments have been, into the political complexities of the countries that produce them.

That will test to the limit China’s adherence to “non-intervention” in other countries’ affairs as a central pillar of its foreign policy. Lacking the West’s diplomatic experience and intelligence networks and boasting few close international allies, it appears at present ill-equipped for the challenges ahead. If it is to meet those challenges – and a host of others – successfully, China still has a lot of catching up to do.
Title: 'Solyndra' scandal hits China too
Post by: DougMacG on October 07, 2012, 10:33:21 AM
Subsidizing products that don't make economic sense on their own, who knew that centrally planned economies make lousy investment decisions?
(Could also go in the energy and economic fascism threads.)

http://www.nytimes.com/2012/10/05/business/global/glut-of-solar-panels-is-a-new-test-for-china.html?pagewanted=all

Glut of Solar Panels Poses a New Threat to China
NY Times October 4, 2012

BEIJING — China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.

But now China’s strategy is in disarray.  Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

    The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

    China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.
Title: Stratfor: China's basis for sea power
Post by: Crafty_Dog on October 12, 2012, 09:28:26 AM
China's Basis for Sea Power
October 10, 2012 | 1103 GMT
Stratfor
By Robert D. Kaplan
 
The headlines about China involve two ostensibly unconnected issues: China's new naval aggressiveness in the Western Pacific, and the increasing fragility of China's one-party state in the face of economic trouble. But the two are deeply connected by a third element: China's stability on its vast land borders. By not having to worry about its frontier areas, China is in the position to go to sea like it has. And it is the safeguarding of such stability in its ethnic-minority borderlands that provides China's autocrats with yet another crucial incentive to hold on to power.
 
Securing its land borders and building a great navy are the ways in which China's leaders signal to the West that the period of humiliation for China is over. In the 1800s and early 1900s, China suffered gross territorial humiliation at the hands of the Western powers, with foreign troops occupying significant sections of Chinese cities -- the so-called treaty ports. In the 1930s and 1940s came occupation by Japan. Mao Zedong's portrait still hangs over the entrance to the Forbidden City in Beijing partly because -- despite the depredations of the Great Leap Forward and Cultural Revolution -- he unified China, thus providing the context for its current expansion in the Western Pacific.
 
Sea power, while obviously a prerequisite for island nations, is not altogether necessary for continental ones such as China. The fact that growing Chinese naval power is slowly altering the correlation of forces in the Western Pacific -- challenging the totality of U.S. naval dominance for the first time since the end of World War II -- is possible only because of China's successful management of the upland terrain beyond the ethnic-Han Chinese core: to the north, west and southwest. Indeed, for the first time since the High Qing Dynasty in the early 19th century, the interior of China -- for more than three decades now -- has not been in profound domestic turmoil. Projecting power into what China considers blue territorial space is a natural consequence of this happy fact. As one Chinese student told me fervently in Beijing last year, Chinese naval expansion is "harmonious" because it only serves to incorporate what is rightfully China's, while America's naval presence in the South China and East China seas is "hegemonic" because the United States has no business being half a world away from its own shores.
 
But despite the bravado, China is still vulnerable because a Tibet or a Uighur Turkic Xinjiang in serious, sustained upheaval could divert the attention of party chiefs away from the islands in the Western Pacific. A decaying authoritarian China might be able to deal with low-level insurgencies in both Tibet and the Uighur area and also send submarines into the South China and East China seas, but its military -- while dangerous and unpredictable in such a circumstance -- would lack the advantage of a focused civilian power structure behind it.
 
In other words, lurking behind China's intensifying political drama is a profound geographical one. As Beijing's one-party rule comes under increasing pressure in the months and years to come, China's cohesiveness as a sprawling, continental-sized state also comes into question. For more freedom means heightened ethnic awareness. The question now becomes whether the dominant Hans, who constitute more than 90 percent of China's population and live mainly in the arable cradle of China abutting the Pacific coast, are able to permanently keep the Tibetans, Uighur Turks and other minorities who live on the drier, higher-altitude peripheries under control.
 
China's arable cradle was first linked in the second century B.C. and then truly united between 605 and 611 A.D. with the building of the grand canal linking the Yellow and Yangtze rivers, making a singular civilization out of the wheat millet-growing northern area of the cradle and the rice-growing southern area. This eased the north's conquest of the south during the medieval Tang and Song dynasties, thus consolidating the core geography of agrarian China. China's rapid economic and technological development may make these distinctions now seem quaint, but they hold in terms of a densely populated Han island teeming with hundreds of millions of people embraced by more sparsely populated and poorer minority areas, whose elevated tablelands make up roughly half of China's territory and hold the water sources on which the island of Han culture depends. It is precisely in the minority areas where the oil, natural gas, copper, iron ore and other strategic natural resources are located. Coal, which provides roughly 80 percent of China's power generation, is mined mainly in the northern and western plateaus.
 
The minority areas are sometimes larger than they appear on the map, owing to the spread of communications between dissident ethnics by way of the Internet and cellphones. For example, of the more than 30 self-immolations of ethnic Tibetans protesting Han Chinese rule between March 2011 and April 2012, almost all occurred outside the Tibet Autonomous Region itself in adjacent ethnic Tibetan areas of Sichuan, Qinghai and Gansu. Thus ethnic unrest need not be confined to the legal confines of Tibet, for example, even as such unrest would be invigorated by democratic stirrings within the Han core.
 
There is also Xinjiang, the Turkic Uighur Autonomous Region. Xinjiang only became part of China in the middle of the 18th century. Mao Zedong's communists kept Xinjiang quiet, but in 1990 and again in 2009, there were riots and bloodshed protesting Chinese rule. Here, too, the political liberalization that the West urges is precisely what Beijing fears, because it could ignite further unrest in a peripheral plateau area twice the size of Texas. Indeed, freedom explodes in all directions, releasing individual identity as well as identity within an ethnic solidarity group. This is particularly true in Tibet and Xinjiang, where the large populations of Han immigrants are concentrated together in garrison cities such as Lhasa and Urumqi, while the rest of those areas are heavily Tibetan and Uighur.
 
The Inner Mongolia Autonomous Region to the north and northwest of Beijing is hard up against the border with Mongolia proper. Ethnic Mongolians constitute only 20 percent of the population of 24 million, yet the region has been rocked by ethnic protests over land seizures and pollution. A minor irritant by the standards of the Tibetan and Uighur problems, Inner Mongolia offers another demonstration of how China is, albeit to a much smaller extent than the former Soviet Union, a prison of nations waiting to express themselves once central authority weakens. In this prison, ethnic problems can become inflamed by their interaction with contentious issues such as the deteriorating physical environment, property rights and so on.
 
What China becomes in the 21st century will ultimately depend not on military hardware but on the ability of the arable Han core to project peace and prosperity into the dusty plateaus where minorities live. This is not easy. With its economy in structural crisis, Beijing lacks the budgetary bandwidth to simply buy off the minorities. Moreover, the minorities know that true autonomy is out of the question. China's best option is to address the underlying social stress in both Tibetan and Uighur areas: the perception of a loss of culture, language and history to the dominant, occupying "Hans." But encouraging local languages, as the authorities have started to do, is itself risky. Because different factions exist within the Tibetan and Uighur communities themselves, there is not one policy that can mitigate tensions across the board.
 
China's best hope is the evolution of a truly pan-ethnic Middle Kingdom identity rooted in the past. The Qing, themselves of foreign Manchu descent, governed both Inner and Outer Mongolia. The 13th and 14th century Yuan dynasty was Mongolian, not Chinese. The early medieval Tang dynasty oversaw trade routes throughout Central Asia as far as northeastern Iran. So there is no conflict between Chinese history and greater decentralization aligned with cultural self-rule: It is the Communist Party that has distorted China's multiethnic past through severe repression of all ecumenical visions of the country. Here is where the ideals of human rights meet the dictates of geography.
.

Read more: China's Basis for Sea Power | Stratfor
Title: Chinese economist follows Hayek
Post by: Crafty_Dog on October 14, 2012, 08:01:50 AM
Zhang Weiying: China's Anti-Keynesian Insurgent Zhang Weiying's warnings that stimulus spending would lead to malinvestment were once ignored. Now official ministries invite the follower of Hayek to speak
By ABHEEK BHATTACHARYA
Beijing

It's a rare afternoon in the Chinese capital when smog hasn't blocked the skies, and one of China's most famous economists is in a sanguine mood. The economy is in trouble as the Communist Party heads for a once-in-a-decade transfer of power while prosecuting its former golden boy, Bo Xilai, on criminal charges. Worried investors want signs that Beijing remains committed to growth—and the sign they'd most like to see is a big Keynesian stimulus.

Zhang Weiying would say that they're wrong to panic. The economic slowdown, he calmly says over tea, is actually good news that "makes the government think we need to change"—toward reform and away from priming the pump. We aren't all Keynesians now in China, he insists.

Three years ago, Keynesianism was official policy. The 2008 financial crisis had Beijing gloating over the failure of the free-market "Washington Consensus" and touting the "China Model" of government intervention. Keynesianism fit the statist zeitgeist and Beijing then suffered an export slump, so the government allocated $3.5 trillion—or about 50% of gross domestic product—in bank loans and direct spending.

Mr. Zhang's academic colleagues were all praise for the "China Model," but in 2009 he was giving speeches entitled "Bury Keynesianism." Then a top administrator at Peking University, where he now teaches economics, he argued that since the financial crisis was caused by easy money, it couldn't be solved by the same. "The current economy is like a drug addict, and the prescription from the doctor is morphine, so the final result will be much worse," he said.


He invoked the ideas of the late Nobel laureate Friedrich Hayek and the Austrian School of Economics to argue that if the economy weren't allowed to adjust on its own, China's minor bust would be followed by a bigger one. He also advocated doing away with existing distortions such as the monopolies enjoyed in many industries by state-owned enterprises.

Those were the days when China was fast becoming the world's second-largest economy (growth in one 2010 quarter crossed 11% on an annual basis), so the establishment was in no mood to listen. "When I criticized the central government's stimulus policy, many senior officials were not happy," Mr. Zhang says. It might not have helped that at last year's World Economic Forum in China he called the government's powerful National Development and Reform Commission "a bunch of smart people doing something really stupid."

Ultimately, Beijing's stimulus fed a false investment boom that stoked asset bubbles—then the morphine wore off while the government tightened. Officials claim the economy grew at 7.6% year-on-year between April and June this year. Skeptics think the real number is closer to 4%. (One London research house says 1%.) Meanwhile, industries dominated or favored by the state, such as steel or solar power, are idling from overcapacity. Countless sheets of copper are reportedly stacked in warehouses, blocking doorways and exemplifying Hayek's notion of "malinvestment."

In other words, the stimulus was a poster child for Mr. Zhang's Austrian theories. And the sheer size of the failure suddenly has people paying attention. "The Keynesian policy didn't deliver what it promised," he says, so "more and more people realize that . . . when the government makes investment [in] something that's useless, recession will come."

Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak. He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai—a fairly high-level apparatchik—told him he liked it.

Could Austrian sympathies be percolating right to the top of Chinese officialdom? Last month, Premier Wen Jiabao called the stimulus a "scientific response" to the crisis and tried to refute the charge that the country "paid an undue price" for it. He sounded like someone forced to defend against internal challengers who had been reading Hayek—or Zhang Weiying.


Mr. Zhang didn't identify with the Austrian school until 2008, when he presented a paper at an economics conference in Chicago and someone told him he sounded like a Hayek acolyte. He says he'd always thought this way.

The 52-year-old was born in rural Shaanxi province in north-central China. In a country where party officials and tiger mothers compete to brainwash youth, he escaped both.

"Rural areas were not so polluted by [party] ideology," he says. "My parents were illiterate," he adds, and once he began his education, they couldn't understand the ideas he brought home from school. "That means they never interfered."

Mr. Zhang has been charting his own way since he was a graduate student in economics in Shaanxi. He wrote a newspaper article in 1983 arguing that money wasn't evil. For that crime, critics from the still-powerful anticapitalist camp tore into him. There was a danger he wouldn't be able to graduate with a degree, but "thankfully, China's political climate changed in a very short time."

In the mid-1980s, under party leader Deng Xiaoping, officials were moving to liberalize the economy. Yet they were sometimes clueless. After decades of a planned economy, says Mr. Zhang, "the price [of everything] was distorted" and the government's solution was to "set up a price research center with a big computer . . . and adjust prices according to this calculation." Of course, "they couldn't get any results."

This gave Mr. Zhang his first break. In his graduate thesis, he considered the possibility of having one price system remain government-controlled and leaving another to the market, with industries moving slowly from the first track to the second. He impressed policy makers with the idea at a 1984 conference, and they adopted it, giving Mr. Zhang a job with the State Commission for Reforming the Economic System. The stint turned him off from policy-making. Bureaucrats rarely "rock the boat," he says. "Making policy is a political process . . . a compromise."

Looking for a world where he didn't have to compromise, he went to Oxford, where he studied for an economics doctorate. On returning to China in 1994, he co-founded the China Center for Economic Research at Peking University, the country's oldest modern institution of higher learning.

Mr. Zhang says he prefers the academic marketplace of ideas rather than policies, but he stands out there too. Unlike the Chinese tribe of reformer-economists who see themselves as technocrats chipping away at statism, Mr. Zhang thinks in stark moral terms. In a speech this year, he invoked Aristotle and Thomas Aquinas to argue that there is such a thing as natural law and that the right to property is "passed prior to sovereignty."

The flip side of this freedom to pursue success is being able to stomach failure, which is where Mr. Zhang's affinity for Hayek ties in. Austrians frown even on central banks trying to manipulate demand because, as Mr. Zhang tells it, "when you make a mistake, you must take responsibility."

"If you suffer today, it's a small suffering. But if you don't have that suffering today," tomorrow "you'll have a big suffering." Letting people know that truth, he says, "is what an economist or scholar should do."

Leaders should do this too, and he talks excitedly about the late 1990s, when the Asian economic crisis spurred the party to privatize state companies, even if it left 20 million unemployed. The crisis had brought Indonesia and others to their knees, says Mr. Zhang, and China's leaders understood at the time that "the lesson was not to have crony capitalism" and a bloated public sector.

Back then, the intellectual tide was going in Mr. Zhang's direction. State-controlled CCTV proclaimed him "Economist of the Year" in 2002, and he remembers that at Peking University "the whole culture was reform-oriented too." He was appointed assistant president of the university that year and later dean of the Guanghua School of Management, where he pushed reform.

The reforms proved successful, but the reformer was crucified. The old guard in the faculty lounges revolted, while accusations impugning Mr. Zhang's loyalty and questioning his credentials swirled over the Internet. He was forced out of his Guanghua post in 2010.

Much of the trouble stemmed from internal campus politics, but he also says that the broader "environment changed." China's universities are a product of a planned economy, so "if the whole country [was] in the good process of reform, people like me won't be treated like that."

What happened? China's leadership team of Hu Jintao and Wen Jiabao, in place since 2002, reversed reforms. Rising inequality was the original excuse for favoring the public sector and, one suspects, high growth soon convinced policy makers to continue on that path. The new mantra in Beijing was "guo jin, min tui"—the state advances, the private sector retreats.

When the financial crisis struck Beijing jumped at the chance to advance the state even further. The poor economic result is now front and center, but Mr. Zhang says the past decade has also seen dramatic social problems that help alter the climate of opinion. The Chinese people have watched bureaucrats distribute resources to state companies and their friends, and popular perceptions of corruption and inequality have grown. Far from a crisis of markets, he says, Beijing is facing a crisis of state.

That is why Mr. Zhang is hopeful for reforms. He proposes restarting privatization, which he says is easier to do now because "some of these companies are listed on exchanges." Overhauling the financial system is next, since state companies use the banks as ATMs and deprive entrepreneurs of formal loans.

Can we expect such a liberalization right after the new crop of leaders is anointed in mid-November? He says that Guangdong Party Secretary Wang Yang, a contender for the top decision-making body, is a "real reformer." But otherwise he admits that Chinese politics is a black box.


Is there a possibility that Beijing will turn to another stimulus to goose GDP? "Certainly things could go worse. But there could also be good opportunity," he says. What he does know is that people's way of thinking has changed. It's just that the "impact is implicit, not explicit" in China's nondemocracy.

Mr. Zhang is optimistic because he thinks 30 years of openness have altered expectations. "We have a lot of trust in" markets today, which is why the last decade's anti-market turn has exasperated people. Mass protests against land grabs and other government bullying now number 180,000 a year, according to government data compiled at Beijing's Tsinghua University. These protests are hard for the party to ignore—and powerfully make the moral case for free markets.

"We human beings always seek happiness," says Mr. Zhang. "Now there are two ways. You make yourself happy by making other people unhappy—I call that the logic of robbery. The other way, you make yourself happy by making other people happy—that's the logic of the market. Which way do you prefer?"

Mr. Bhattacharya is an editorial page writer for The Wall Street Journal Asia
Title: Re: Chinese economist follows Hayek
Post by: G M on October 14, 2012, 02:30:27 PM
Remeber when China was lead by communists and we were lead by captialists? Ah, those were the days....

The danger here is that China really becomes a capitalist economy and we get another term of Buraq.

Zhang Weiying: China's Anti-Keynesian Insurgent Zhang Weiying's warnings that stimulus spending would lead to malinvestment were once ignored. Now official ministries invite the follower of Hayek to speak
By ABHEEK BHATTACHARYA
Beijing

It's a rare afternoon in the Chinese capital when smog hasn't blocked the skies, and one of China's most famous economists is in a sanguine mood. The economy is in trouble as the Communist Party heads for a once-in-a-decade transfer of power while prosecuting its former golden boy, Bo Xilai, on criminal charges. Worried investors want signs that Beijing remains committed to growth—and the sign they'd most like to see is a big Keynesian stimulus.

Zhang Weiying would say that they're wrong to panic. The economic slowdown, he calmly says over tea, is actually good news that "makes the government think we need to change"—toward reform and away from priming the pump. We aren't all Keynesians now in China, he insists.

Three years ago, Keynesianism was official policy. The 2008 financial crisis had Beijing gloating over the failure of the free-market "Washington Consensus" and touting the "China Model" of government intervention. Keynesianism fit the statist zeitgeist and Beijing then suffered an export slump, so the government allocated $3.5 trillion—or about 50% of gross domestic product—in bank loans and direct spending.

Mr. Zhang's academic colleagues were all praise for the "China Model," but in 2009 he was giving speeches entitled "Bury Keynesianism." Then a top administrator at Peking University, where he now teaches economics, he argued that since the financial crisis was caused by easy money, it couldn't be solved by the same. "The current economy is like a drug addict, and the prescription from the doctor is morphine, so the final result will be much worse," he said.


He invoked the ideas of the late Nobel laureate Friedrich Hayek and the Austrian School of Economics to argue that if the economy weren't allowed to adjust on its own, China's minor bust would be followed by a bigger one. He also advocated doing away with existing distortions such as the monopolies enjoyed in many industries by state-owned enterprises.

Those were the days when China was fast becoming the world's second-largest economy (growth in one 2010 quarter crossed 11% on an annual basis), so the establishment was in no mood to listen. "When I criticized the central government's stimulus policy, many senior officials were not happy," Mr. Zhang says. It might not have helped that at last year's World Economic Forum in China he called the government's powerful National Development and Reform Commission "a bunch of smart people doing something really stupid."

Ultimately, Beijing's stimulus fed a false investment boom that stoked asset bubbles—then the morphine wore off while the government tightened. Officials claim the economy grew at 7.6% year-on-year between April and June this year. Skeptics think the real number is closer to 4%. (One London research house says 1%.) Meanwhile, industries dominated or favored by the state, such as steel or solar power, are idling from overcapacity. Countless sheets of copper are reportedly stacked in warehouses, blocking doorways and exemplifying Hayek's notion of "malinvestment."

In other words, the stimulus was a poster child for Mr. Zhang's Austrian theories. And the sheer size of the failure suddenly has people paying attention. "The Keynesian policy didn't deliver what it promised," he says, so "more and more people realize that . . . when the government makes investment [in] something that's useless, recession will come."

Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak. He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai—a fairly high-level apparatchik—told him he liked it.

Could Austrian sympathies be percolating right to the top of Chinese officialdom? Last month, Premier Wen Jiabao called the stimulus a "scientific response" to the crisis and tried to refute the charge that the country "paid an undue price" for it. He sounded like someone forced to defend against internal challengers who had been reading Hayek—or Zhang Weiying.


Mr. Zhang didn't identify with the Austrian school until 2008, when he presented a paper at an economics conference in Chicago and someone told him he sounded like a Hayek acolyte. He says he'd always thought this way.

The 52-year-old was born in rural Shaanxi province in north-central China. In a country where party officials and tiger mothers compete to brainwash youth, he escaped both.

"Rural areas were not so polluted by [party] ideology," he says. "My parents were illiterate," he adds, and once he began his education, they couldn't understand the ideas he brought home from school. "That means they never interfered."

Mr. Zhang has been charting his own way since he was a graduate student in economics in Shaanxi. He wrote a newspaper article in 1983 arguing that money wasn't evil. For that crime, critics from the still-powerful anticapitalist camp tore into him. There was a danger he wouldn't be able to graduate with a degree, but "thankfully, China's political climate changed in a very short time."

In the mid-1980s, under party leader Deng Xiaoping, officials were moving to liberalize the economy. Yet they were sometimes clueless. After decades of a planned economy, says Mr. Zhang, "the price [of everything] was distorted" and the government's solution was to "set up a price research center with a big computer . . . and adjust prices according to this calculation." Of course, "they couldn't get any results."

This gave Mr. Zhang his first break. In his graduate thesis, he considered the possibility of having one price system remain government-controlled and leaving another to the market, with industries moving slowly from the first track to the second. He impressed policy makers with the idea at a 1984 conference, and they adopted it, giving Mr. Zhang a job with the State Commission for Reforming the Economic System. The stint turned him off from policy-making. Bureaucrats rarely "rock the boat," he says. "Making policy is a political process . . . a compromise."

Looking for a world where he didn't have to compromise, he went to Oxford, where he studied for an economics doctorate. On returning to China in 1994, he co-founded the China Center for Economic Research at Peking University, the country's oldest modern institution of higher learning.

Mr. Zhang says he prefers the academic marketplace of ideas rather than policies, but he stands out there too. Unlike the Chinese tribe of reformer-economists who see themselves as technocrats chipping away at statism, Mr. Zhang thinks in stark moral terms. In a speech this year, he invoked Aristotle and Thomas Aquinas to argue that there is such a thing as natural law and that the right to property is "passed prior to sovereignty."

The flip side of this freedom to pursue success is being able to stomach failure, which is where Mr. Zhang's affinity for Hayek ties in. Austrians frown even on central banks trying to manipulate demand because, as Mr. Zhang tells it, "when you make a mistake, you must take responsibility."

"If you suffer today, it's a small suffering. But if you don't have that suffering today," tomorrow "you'll have a big suffering." Letting people know that truth, he says, "is what an economist or scholar should do."

Leaders should do this too, and he talks excitedly about the late 1990s, when the Asian economic crisis spurred the party to privatize state companies, even if it left 20 million unemployed. The crisis had brought Indonesia and others to their knees, says Mr. Zhang, and China's leaders understood at the time that "the lesson was not to have crony capitalism" and a bloated public sector.

Back then, the intellectual tide was going in Mr. Zhang's direction. State-controlled CCTV proclaimed him "Economist of the Year" in 2002, and he remembers that at Peking University "the whole culture was reform-oriented too." He was appointed assistant president of the university that year and later dean of the Guanghua School of Management, where he pushed reform.

The reforms proved successful, but the reformer was crucified. The old guard in the faculty lounges revolted, while accusations impugning Mr. Zhang's loyalty and questioning his credentials swirled over the Internet. He was forced out of his Guanghua post in 2010.

Much of the trouble stemmed from internal campus politics, but he also says that the broader "environment changed." China's universities are a product of a planned economy, so "if the whole country [was] in the good process of reform, people like me won't be treated like that."

What happened? China's leadership team of Hu Jintao and Wen Jiabao, in place since 2002, reversed reforms. Rising inequality was the original excuse for favoring the public sector and, one suspects, high growth soon convinced policy makers to continue on that path. The new mantra in Beijing was "guo jin, min tui"—the state advances, the private sector retreats.

When the financial crisis struck Beijing jumped at the chance to advance the state even further. The poor economic result is now front and center, but Mr. Zhang says the past decade has also seen dramatic social problems that help alter the climate of opinion. The Chinese people have watched bureaucrats distribute resources to state companies and their friends, and popular perceptions of corruption and inequality have grown. Far from a crisis of markets, he says, Beijing is facing a crisis of state.

That is why Mr. Zhang is hopeful for reforms. He proposes restarting privatization, which he says is easier to do now because "some of these companies are listed on exchanges." Overhauling the financial system is next, since state companies use the banks as ATMs and deprive entrepreneurs of formal loans.

Can we expect such a liberalization right after the new crop of leaders is anointed in mid-November? He says that Guangdong Party Secretary Wang Yang, a contender for the top decision-making body, is a "real reformer." But otherwise he admits that Chinese politics is a black box.


Is there a possibility that Beijing will turn to another stimulus to goose GDP? "Certainly things could go worse. But there could also be good opportunity," he says. What he does know is that people's way of thinking has changed. It's just that the "impact is implicit, not explicit" in China's nondemocracy.

Mr. Zhang is optimistic because he thinks 30 years of openness have altered expectations. "We have a lot of trust in" markets today, which is why the last decade's anti-market turn has exasperated people. Mass protests against land grabs and other government bullying now number 180,000 a year, according to government data compiled at Beijing's Tsinghua University. These protests are hard for the party to ignore—and powerfully make the moral case for free markets.

"We human beings always seek happiness," says Mr. Zhang. "Now there are two ways. You make yourself happy by making other people unhappy—I call that the logic of robbery. The other way, you make yourself happy by making other people happy—that's the logic of the market. Which way do you prefer?"

Mr. Bhattacharya is an editorial page writer for The Wall Street Journal Asia

Title: Chicago Style
Post by: G M on October 27, 2012, 03:09:44 PM
The New York Times
Thursday, October 25, 2012 -- 4:51 PM EDT
-----

Family of Prime Minister Holds a Hidden Fortune in China

Many relatives of Wen Jiabao, China’s prime minister, including his son,
daughter, younger brother and brother-in-law, have become extraordinarily
wealthy during his leadership, an investigation by The New York Times shows. A
review of corporate and regulatory records indicates that the prime minister’s
relatives, some of whom have a knack for aggressive deal-making, including his
wife, have controlled assets worth at least $2.7 billion.

In many cases, the names of the relatives have been hidden behind layers of
partnerships and investment vehicles involving friends, work colleagues and
business partners. Untangling their financial holdings provides an unusually
detailed look at how politically connected people have profited from being at
the intersection of government and business as state influence and private
wealth converge in China’s fast-growing economy.

Read More:
http://www.nytimes.com/2012/10/26/business/global/family-of-wen-jiabao-holds-a-hidden-fortune-in-china.html?emc=na
Title: China #1 in foreign investment
Post by: Crafty_Dog on November 04, 2012, 01:26:30 PM
http://www.forbes.com/sites/kenrapoza/2012/10/26/and-the-number-one-country-in-the-world-for-investment-is/?utm_campaign=forbestwittersf&utm_source=twitter&utm_medium=social
Title: TDL: China debt data
Post by: Crafty_Dog on December 01, 2012, 05:07:56 PM
The Dines Letter (not a mainstream investment newsletter, but one on which I have kept my eye over recent years) reports that:

China’s corporate debt rose from 108% of GDP last
year to 122% in 2012, which Bloomberg calls "one of the
most debt-laden in the world." Include corporate, public and
household debts and the total is 206% of GDP! TDL might
"look wrong" in its pessimism toward China’s economy, but
we stand our ground that China is at risk of a crash even if
we are the only member of the world’s press to predict that.

Actually, if we count me  :lol: they are the second source to so predict.
Title: Paris on the Yangtze
Post by: bigdog on December 04, 2012, 02:22:28 PM
http://www.foreignpolicy.com/articles/2012/11/27/paris_on_the_yangtze#0
Title: The Geopolitics of the Yangtze River
Post by: Crafty_Dog on April 01, 2013, 11:37:50 AM
The Geopolitics of the Yangtze River: Developing the Interior
 
stratfor
 
Editor's Note: This is the first piece in a three-part series on the geopolitical implications of China's move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing's push to develop the Yangtze River corridor.
 
As the competitive advantage of low-cost, export-oriented manufacturing in China's coastal industrial hubs wanes, Beijing will rely more heavily on the cities along the western and central stretches of the Yangtze River to drive the development of a supplemental industrial base throughout the country's interior. Managing the migration of industrial activity from the coast to the interior -- and the social, political and economic strains that migration will create -- is a necessary precondition for the Communist Party's long-term goal of rebalancing toward a more stable and sustainable growth model based on higher domestic consumption. In other words, it is critical to ensuring long-term regime security.
 
The concept of developing the interior is rooted in the dynastic struggle to establish and maintain China as a unified power against internal forces of regional competition and disintegration. Those forces arise from and reflect a simple fact: China is in many ways as geographically, culturally, ethnically and economically diverse as Europe. That regional diversity, which breeds inequality and in turn competition, makes unified China an inherently fragile entity. It must constantly balance between the interests of the center and those of regions with distinct and often contradictory economic and political interests.
 
Currently, the Party's stated intent is eventually to achieve greater socio-economic parity between coastal and inland regions, as well as between cities and the rural hinterland. But Beijing also recognizes that underlying broad categories like "inland," "central" and "western" China is a complex patchwork of regional differences and inequality. Mitigating these differences will require more varied and nuanced policies.
 
Against this backdrop, the central government has targeted the Yangtze River economic corridor -- the urban industrial zones lining the Yangtze River from Chongqing to Shanghai -- as a key area for investment, development and urbanization in the coming years. Ultimately, the Party hopes to transform the Yangtze's main 2,800-kilometer-long (1,700-mile-long) navigable channel into a central superhighway for goods and people, better connecting China's less developed interior provinces to the coast and to each other by way of water -- a significantly cheaper form of transport than road or railway. By positioning this "second coastline" to become one of the nation's new economic cores, Beijing seeks to build what no previous dynasty could: a truly unified Chinese economy.
 
The Yangtze as a Core
 
The Yangtze River is the key geographic, ecological, cultural and economic feature of China. Stretching 6,418 kilometers from its source in the Tibetan Plateau to its terminus in the East China Sea, the river both divides and connects the country. To its north lie the wheat fields and coal mines of the North China Plain and Loess Plateau, unified China's traditional political cores. Along its banks and to the south are the riverine wetlands and terraced mountain faces that historically supplied China with rice, tea, cotton and timber. The river passes through the highlands of the Yunnan-Guizhou Plateau, the fertile Sichuan Basin, the lakes and marshes of the Middle Yangtze and on to the trade hubs of the Yangtze River Delta. Its watershed touches 19 provinces and is central to the economic life of more people than the populations of Russia and the United States combined. The river's dozens of tributaries reach from Xian, in the southern Shaanxi province, to northern Guangdong -- a complex of capillaries without which China likely would never have coalesced into a single political entity.
 








VIDEO: The Strategic Importance of the Yangtze River
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The Yangtze, even more than the Yellow River, dictates the internal constraints on and strategic imperatives of China's rulers. The Yellow River may be the origin of the Han Chinese civilization, but on its own it is far too weak to support the economic life of a great power. The Yellow River is China's Hudson or Delaware. By contrast, the Yangtze is China's Mississippi -- the river that enabled China to become an empire.
 
Just as the Mississippi splits the United States into east and west, the Yangtze divides China into its two most basic geopolitical units: north and south. This division, more than any other, forms the basis of Chinese political history and provides China's rulers with their most fundamental strategic imperative: unity of the lands above and below the river. Without both north and south, there is no China, only regional powers. Only after the Qin captured the Yangtze's three primary regions -- the Upper, Middle and Lower stretches -- in 221 B.C., thereby gaining access to the southeast coast, did "China" as a single unit come into being. In the two millennia since, the Yangtze has continued to mark the boundary between kingdom and empire. The constant cycle between periods of unity (when one power takes the lands north and south of the Yangtze) and disunity (when that power breaks into its constituent regional parts) constitutes Chinese political history.
 
If the Yangtze did not exist, or if its route had veered downward into South and Southeast Asia (like most of the rivers that begin on the Tibetan Plateau), China would be an altogether different and much less significant place. Its population would be much smaller, isolated to the southeast coast, Loess Plateau and North China Plain -- the only parts of Han China where economic life does not depend on the Yangtze. The provinces of central China, which today produce more rice than all of India, would be as barren as Central Asia. Regional commercial and political power bases like the Yangtze River Delta or the Sichuan Basin would never have emerged. The entire flow of Chinese history would be different.
 





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Three regions in particular make up the bulk of the Yangtze River Basin: the Upper (encompassing present-day Sichuan and Chongqing), Middle (Hubei, Hunan and Jiangxi) and Lower Yangtze (Jiangsu and Zhejiang provinces, as well as Shanghai and parts of Anhui). Geography and time have made these regions into distinct and relatively autonomous units, each with its own history, culture and language. Each region has its own hubs -- Chengdu and Chongqing for the Upper Yangtze; Wuhan, Changsha and Nanchang for the Middle Yangtze; and Suzhou, Hangzhou and Shanghai for the Lower Yangtze. Each region has its own internal market networks, and each historically is more interested in protecting its autonomy and prosperity than uniting under the north's control. Conquering and integrating them from the outside therefore required not only overwhelming military power -- historically, northern China's advantage -- but also complex bureaucratic and internal security apparatuses. Finally, it required a transport and communications infrastructure comprehensive enough to make the exercise of central authority over vast distances and diverse populations feasible.
 
Between 1949 and 1978, the Communist Party expanded those networks and laid that infrastructure with brutal efficiency. In many ways, China was more deeply united under Mao Zedong than under any emperor since Kangxi in the 18th century. After 1978, the foundations of internal cohesion began to shift and crack as the reform and opening process directed central government attention and investment away from the interior (Mao's power base) and toward the coast. Today, faced with the political and social consequences of that process, the Party is once again working to reintegrate and recentralize -- both in the sense of slowly reconsolidating central government control over key sectors of the economy and, more fundamentally, forcibly shifting the economy's productive core inland. The first phase of this process will be driven in large part by urbanization along the Yangtze River corridor, especially in the provinces that make up China's traditional Upper and Middle Yangtze regions.
 
Politics and Economy of the Yangtze
 
Today, the Yangtze River is by far the world's busiest inland waterway for freight transport. In 2011, more than 1.6 billion metric tons of goods passed through it, representing 40 percent of the nation's total inland waterborne cargo traffic and about 5 percent of all domestic goods transport that year -- up 250 percent from 2004. Over the last decade, dramatic increases in waterway freight traffic have been seen in some provinces along the Yangtze River corridor, such as Anhui (840 percent, to 364 million tons), Chongqing (640 percent, to 117 million tons) and Hunan (500 percent, to 179 million tons). By 2011, the nine provincial capitals that sit along the Yangtze and its major tributaries had a combined gross domestic product of $1 trillion, up from $155 billion in 2001. That gives these cities a total wealth roughly comparable to the gross domestic products of South Korea and Mexico.
 
This growth, since roughly 2003, has been underpinned by a massive expansion in centrally allocated fixed-asset investment into the interior, and specifically to those parts of the interior Beijing considers most viable as potential alternative or supplemental industrial bases to the southeast coast. Unsurprisingly, areas with ready access to the Yangtze River system have been targeted as cores of future inland urbanization. In part, this is because cities like Chongqing and Wuhan already possess well-developed urban industrial infrastructures, the legacy of Mao's intensive focus on inland industrialization. This legacy in turn gives these cities comparatively more influence and leverage than less developed parts of the interior when it comes to extracting central government financial support. Finally, cities along the Yangtze benefit from geography: Transport by road is roughly 30-35 times more expensive than transport by water, and rail is 3-3.5 times as expensive, meaning that cities without direct access to the Yangtze are inherently less viable as manufacturing and trade hubs.
 
Investment in further industrial development along the Yangtze River reflects not only an organic transformation in the structure of the Chinese economy but also the intersection of complex political forces. First, there is a clear shift in central government policy away from intensive focus on coastal manufacturing at the expense of the interior (the dominant approach throughout the 1990s and early 2000s) and toward better integrating China's diverse regions into a coherent national economy. But how that policy shift plays out on regional, provincial and local levels is shaped less by dictates from Beijing than by the political maneuvering of local and provincial governments for central government favor. Access to navigable waterways enables the cities of the western and central stretches of the Yangtze River to lobby more effectively for credit and tax rebates that might otherwise have gone to less competitive, landlocked provinces.
 
Investment in the interior accelerated rapidly in the wake of the 2008-2009 financial crisis, when the sudden evaporation of external demand revealed just how fragile and imbalanced China's economy had become. Thirty years of export-oriented manufacturing centered in a handful of coastal cities generated huge wealth and created hundreds of millions of jobs. But it also created an economy characterized by deep discrepancies in the geographic allocation of resources and by very little internal cohesion. By 2001, the economies of Shanghai and Shenzhen, for instance, were in many ways more connected to those of Tokyo, Seoul and Los Angeles than of the hinterlands of Sichuan and Shaanxi provinces. For most of the 1990s and 2000s, this lack of cohesion was viewed as an unfortunate but necessary and temporary byproduct of an economic model that was otherwise doing its job. After the 2008-2009 financial crisis, internal economic disunity -- like the growth model it embodied -- became a social and political liability.
 
The foundation of this model was an unending supply of cheap labor. In the 1980s, such workers came primarily from the coast. In the 1990s, when coastal labor pools had been largely exhausted, factories welcomed the influx of migrants from the interior. Soon, labor came to replace coal, iron ore and other raw materials as the interior's most important export to coastal industrial hubs. By the mid-2000s, between 250 million and 300 million migrant workers had fled from provinces like Henan, Anhui and Sichuan (where most people still lived on near-subsistence farming) in search of work in coastal cities.
 
This continual supply of cheap labor from the interior kept Chinese manufacturing cost-competitive throughout the 2000s -- far longer than if Chinese factories had only had the existing coastal labor pool to rely on. But in doing so, it kept wages artificially low and, in turn, systematically undermined the development of a domestic consumer base. This was compounded by the fact that very little of the wealth generated by coastal manufacturing went to the workers. Instead, it went to the state in the form of savings deposits into state-owned banks, revenue from taxes and land sales, or profits for the state-owned and state-affiliated enterprises that controlled not only many of the major coastal factories but also the various inputs that made manufacturing possible: roads, rail and port construction; power generation; mining; and oil and natural gas. (Notably, state-owned enterprises continue to dominate heavy industrial manufacturing).
 
This dual process -- accumulation of wealth by the state and systematic wage repression in low-end coastal manufacturing -- significantly hampered the development of China's domestic consumer base. But even more troubling was the effect of labor migration, coupled with the relative lack of central government attention to enhancing inland industry throughout the 1990s and early 2000s, on the economies of interior provinces.
 
Remittances from the coast kept families in the interior alive and paid for children of migrant workers to attend school, but they did little to improve the overall vitality of inland provincial economies. As a result, when the children of the first generation of migrant laborers reached working age, many of them followed their parents to the coast, where employment opportunities were far more abundant. However, unlike their parents, who had families to care for back in Henan and Sichuan, the new generation of migrants had far less incentive to one day return inland, let alone send money back. With the possible exception of a handful of inland cities (Hefei, Wuhan, Changsha and Chongqing, all of which saw marginal to moderate population growth between 2001 and 2011), the interior came to represent poverty and backwardness, a place to abandon rather than to develop.
 
Beijing has long understood that it will have to change that perception -- and the economic and policy realities underlying it -- before it can hope to address the growing structural imbalances of its current economic model. But in China, this is easier said than done. In trying to urbanize and industrialize the interior, Beijing is going against the grain of Chinese history -- a multimillennia saga of failed attempts to overcome the radical constraints of geography, population, food supply and culture through ambitious central government development programs. Though its efforts thus far have yielded notable successes, such as rapid expansion of the country's railway system and soaring economic growth rates among inland provinces, they have not yet addressed a number of pivotal questions. Before it can move forward, Beijing must address the reform of the hukou (or household registration) system and the continued reliance on centrally allocated investment, as opposed to consumption, as a driver of growth.
 
Stratfor provides additional coverage of China beyond the website as part of our Custom Solutions offerings. Recent projects have focused on China's political, economic, infrastructural, energy and mining development. To learn more about these services, please visit http://info.stratfor.com/contact/.
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Read more: The Geopolitics of the Yangtze River: Developing the Interior | Stratfor
Title: Geopolitics of the Yangtze River, part 2
Post by: Crafty_Dog on April 02, 2013, 04:21:33 AM
Editor's Note: This is the second piece in a three-part series on the geopolitical implications of China's move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing's push to develop the Yangtze River corridor.
 
In a sense, Wuhan is the heart of modern China. It is not the country's most important economic or cultural hub, and aside from a brief stint in the 1920s as the Nationalist Party government's capital, it has never been China's official political center. But while Wuhan wields less heft than Beijing, Shanghai or Chongqing, its location at the intersection of the country's most important transport routes gives it a different kind of strategic significance for the Communist Party.
 





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Situated at a bend in the Yangtze River near the geographic center of Han China, Wuhan is a natural transportation crossroads. From west to east, it binds the upper and lower stretches of the Yangtze together, serving as the intermediary for goods passing between the Sichuan Basin -- western China's industrial powerhouse -- and the Yangtze River Delta. From north to south, it anchors the Beijing-Guangzhou railway, a 2,324-kilometer-long (1,444-mile-long) trunk line that gives China's traditional political core, the North China Plain, direct access to the prosperous but historically restive Guangdong province.
 
Just as important as these national-level axes are the numerous interprovincial infrastructure linkages that converge on Wuhan. These roads, waterways and highways bring goods and people from inland provincial capitals such as Xian, Changsha, Kunming and Zhengzhou down to Wuhan's ports and, from there, on to Shanghai. The city serves to integrate China's disparate geographic and economic macro-regions into one coherent economic system and helps enable the central government to enforce political control and social management over these regions.
 
Wuhan's Growing Significance
 
Beijing increasingly recognizes Wuhan's importance in the evolving system of infrastructure linkages and as a core from which to gradually expand urbanization and industrial activity out into the rural hinterlands.
 
As a result, Beijing has launched state-level policy initiatives such as the "Rise of Central China" plan inaugurated in 2004 and the Hubei-Jiangxi-Hunan "Central Triangle" development program, which seeks to transform Wuhan, Changsha and Nanchang into one contiguous urban conglomerate to complement the Yangtze River Delta. Through these programs, Beijing has sought to build on Wuhan's inherent advantages -- its location roughly equidistant from both Chongqing and Shanghai; its physical, historical and economic ties to nearby urban centers such as Changsha and Jiujiang; an extremely high per capita distribution of top-level universities and research institutes; and well-established and influential steel and automaking industries, among others -- to frame the city as both a driver and a model for future inland development. These efforts are most obviously manifested in Wuhan's substantial economic growth over the last decade.
 
Between 2001 and 2011, fixed asset investment into Wuhan (much of it centrally allocated) rose nearly eightfold. Gross industrial output grew by 760 percent over the same period, while local government revenue grew by 680 percent and the city's gross regional product more than quadrupled. In 2011, 418 million tons of goods passed through Wuhan, an increase of more than 255 million tons from a decade before. More freight passed through Wuhan last year than any other inland city besides Chongqing. (Notably, because Wuhan's population is one-third the size of Chongqing's, its per capita freight traffic is actually almost 70 percent higher.) Its economy is now larger than those of Bangladesh, Angola and Morocco. Alone, it contributes almost 35 percent of Hubei's provincial gross domestic product despite housing only 17 percent of the province's population.
 
Wuhan's story over the past decade is one of unimpeded growth, rapid infrastructure development (on Dec. 12, 2012, the city opened the nation's first cross-Yangtze River subway, and it plans to have eight metro lines in operation by 2017) and rising living standards (reported per capita income in 2011 was 4.5 times greater than a decade before). But this was not always the case. In fact, over the last half century, the city has seen its fortunes rise and fall in lockstep with changes in the national political and economic climate. For much of the past three decades, as Deng Xiaoping's Reform and Opening process got under way, local Party leaders in Wuhan have struggled against not only the natural disadvantages facing all inland cities relative to coastal metropolises but also against the direct and indirect burdens imposed by central policies and provincial-level politicking.
 
A closer look at Wuhan's history, ancient and modern, helps explain both the particular dynamics of Wuhan's current "rise" as well as broader elements in Chinese political and economic organization. Wuhan's many iterations over the years reflect the extremely tight relationship between politics and economy in China, and the ways in which policy -- whether at the central or provincial level -- has shaped and guided the development of the Chinese economy throughout the Reform and Opening period.
 
Wuhan and the Evolution of the Middle Yangtze Region
 





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The three cities that together constitute present-day Wuhan have existed in some form for more than 3,500 years and have served as important trading centers in central China since at least the sixth century B.C., when Hanyang (named, like its sister city, Hankou, after the Han River, a major tributary that flows into the Yangtze at Wuhan) emerged as a commercial hub in the prosperous and culturally sophisticated state of Chu. By the third century, the area around Wuhan had become the region's most important trading center. As the core of the Middle Yangtze region, this area was highly sought after by the competing states of Shu, Wu and Wei, which in 208-209 fought one of the most famous battles in Chinese history, the Battle of Red Cliffs, in the hills outside present-day Wuhan.
 
Over the next 16 centuries, the Middle Yangtze geographic region -- bound to the west by the outer wall of the Sichuan Basin, and to the south, east and north by a patchwork of mountain ranges -- further coalesced into a distinct and relatively independent political, economic and cultural unit. In times of dynastic unity, the Middle Yangtze was loosely subsumed under the center's control through bureaucratic and trade links. In times of disunity, it broke off into its own would-be state. Throughout, Wuhan remained the core around which the region's economic life revolved. Though the Middle Yangtze at times served as a supplier of raw materials (timber, cotton and grain) to the more advanced Yangtze Delta region, it relied far more heavily on its own internal commercial networks than on inter-regional trade. Like most parts of China before the mid-20th century, the Middle Yangtze had far more to do with itself -- economically and culturally -- than with other parts of the Chinese Empire.
 
It is critical to remember the degree to which geography imbued the inhabitants and rulers of China's regions with a strong sense of historical, cultural and political autonomy. As with the Middle Yangtze region, that autonomy was often undergirded by economic reality. Until recently, China has never had a truly unified economic system. Even today, these deep-seated regional differences manifest in strong competition between provinces for Beijing's "favor" -- government investment and preferential tax policies -- and low levels of interprovincial trade. In fact, though Beijing ultimately desires to build a genuinely integrated national economy, it often utilizes its ability, as the center, to exacerbate regional rivalries to solidify its own political and economic influence. Wuhan's experience over the last half century illustrates this strategy.
 
When Mao Zedong came to power, he sought to reassert central control over the economy by closing China to foreign trade. This entailed transferring much of the budding industrial plant around China's major international ports -- Shanghai and Guangzhou -- to inland provinces, Mao's primary power base. Some of that industrial plant went northeast in order to reinforce the region's role as a buffer against invasion via the Korean Peninsula. Much of the rest went to central China, and especially to Wuhan, which Mao quickly transformed into one of the country's most important industrial bases (founding, in the process, some of contemporary China's most powerful state-owned enterprises, such as Wuhan Iron and Steel Co.). When Mao died, Wuhan ranked fourth among Chinese cities in terms of fixed asset investment, industrial profits, tax revenue contributions to the central government and gross industrial output.
 





.
 
With the onset of Deng Xiaoping's Reform and Opening process in the 1980s, Wuhan's fortunes changed rapidly. By 1992, the city's gross regional product had fallen to 11th out of 35 cities surveyed by the State Statistical Bureau. Its gross industrial output fell to 13th over the same period, and its average annual growth rate dropped to 8 percent, below the national average of 8.7 percent and well under the 15-20 percent annual growth enjoyed by new coastal economic zones. In part, Wuhan's relative decline reflects the natural disadvantages of China's interior in a newly market-oriented system based on trade with the outside world. Distance and geography made export-oriented manufacturing in much of inland China economically unfeasible, especially given the region's poor infrastructure links to the coast at the time.
 
But in fact, Wuhan's shift in fortunes was affected, directly and indirectly, by the central government's decision to open coastal Special Economic Zones such as Shenzhen. These zones received enormous government investment in transport and power infrastructure, retained 100 percent of their foreign exchange revenues (compared to 25 percent for the rest of the country) and received significantly higher tax remittances from Beijing. In turn, the extra tax burden was shifted to cities like Wuhan, depressing local government revenue even as the central government dramatically reduced fixed-asset investment into interior China, thereby giving foreign investors even less incentive to look inland. And while Beijing in 1985 did officially grant Wuhan the economic powers of a province (meaning that Wuhan no longer paid taxes to the Hubei government, but only to Beijing), it did so without also implementing policies designed to attract foreign investment. In the end, this hindered Wuhan more than it helped. Not only was the city still unable to attract outside investment, but even its own provincial government came to view Wuhan as a competitor. Because it no longer drew tax revenue from Wuhan, Hubei worked instead to redirect resources and trade that normally would have ended up in the city elsewhere.
 
New Imperatives, New Policy Outlook
 
Beijing's policies in the 1950s grew from a strong need to reassert central control and move industrial activity away from the vulnerable coastline. As a result, cities such as Wuhan were prioritized and grew accordingly. By contrast, the central government's policies in the 1980s and 1990s grew from a need to attract the initial wave of foreign capital that would eventually give the central government the means to develop the rest of the country, even if it required temporarily retarding economic growth in -- and in many ways actively undermining the competitiveness of -- inland provinces. This need went hand in hand with the economic model now widely associated with China: high growth rates built on low-cost, export-oriented manufacturing clustered along the coast. In turn, the interior suffered.
 
As that model becomes economically, socially and politically untenable at a time of rising wages and input costs and weak external demand, Beijing is again working to reprioritize growth and investment into the interior. As a result, cities such as Wuhan, Chongqing and Hefei (the capital of Anhui province) have become sites for new Special Economic Zones (such as Chongqing's Liangjiang New Area), high-tech and industrial development zones (Wuhan's East Lake Zone and Anhui's "861 Plan" to develop eight new industries, including manufacturing) and large-scale transport and port development. Between 2011 and 2020, the central government plans to invest $28.6 billion to revamp Wuhan's port network, giving it a throughput of 200 million metric tons and 2 million 20-foot equivalent units by 2015 -- up from 100 million metric tons and 650,000 20-foot equivalent units in 2012 -- and adding a further 40 million metric tons and 3 million 20-foot equivalent units of capacity by 2020. In just the last two years, favorable central government policies have helped Wuhan attract investment from firms such as Honeywell ($60 million for a turbocharger factory), Ikea ($794 million for a shopping center), Lenovo ($790 million for research and development) and Shanghai General Motors ($1.1 billion).
 
The story these new investments help tell is not only or primarily one of natural economic cycles. Rather, Wuhan's ebbs and flows are a reflection of broad shifts in the balance of political power within the Communist Party, shifts in China's wider geopolitical environment and, ultimately, Beijing's evolving efforts to cope with fundamental constraints and achieve its strategic imperatives. Industrialization and urbanization of the Yangtze River corridor, of which Wuhan is just one node, is not simply an economic process, but rather one driven by a network of needs and interests.


Read more: The Geopolitics of the Yangtze River: Wuhan's Rise | Stratfor
Title: Geopolitics of the Yangtze River, part 3
Post by: Crafty_Dog on April 03, 2013, 08:23:21 AM
The Geopolitics of the Yangtze River: Conflicting Imperatives
April 3, 2013 | 1045 GMT
Stratfor
 
Editor's Note: This is the third piece in a three-part series on the geopolitical implications of China's move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing's push to develop the Yangtze River corridor.
 
Beijing pursues far-reaching development programs such as the industrialization of the Yangtze River region not always because they make economic sense -- often they do not -- but because it must do so to sustain the basic social and economic structures that secure the regime. In the case of Yangtze development, an official from China's National Development and Reform Commission noted in May 2011 a shift in the focus of central government port development policy from the coast to the interior, adding that most of the opportunities for future port-related investment would be in cities along the Yangtze River. According to a statement earlier that year from the Ministry of Transport, as much as 200 billion yuan ($32 billion) would be invested in inland waterway port expansion during the 12th Five Year Plan (2011-2015), roughly double the amount set aside between 2006 and 2010. Wuhan's 10-year port redevelopment program is set to consume a large percentage of that investment -- at $28.6 billion, the program accounts for around 70 percent of the country's total ongoing and planned port construction -- though another $4 billion to $5 billion has been set aside for dredging and port expansion everywhere from Chongqing municipality in southwest China to Wuhu in Anhui province.
 
The central government's heightened emphasis on inland waterway port expansion is incongruous with port throughput trends during the previous five-year period, 2007-2011. Not surprisingly, China's coastal ports dwarf inland ports in terms of both overall throughput and throughput growth. But more telling is that of the major Yangtze ports for which the National Bureau of Statistics provides freight traffic data, only three (at Chongqing, Yueyang and Wuhu) showed significant growth in throughput between 2007 and 2011. Wuhan, the flagship of new port investment on the Yangtze as well as nationally, actually saw declines in both the number of berths and freight throughput during that period.
 
The apparent gap between central government policy prerogatives and the reality of port traffic growth trends exemplifies the way economic development policy under the Communist Party not only responds to present needs but also in many ways actively shapes future realities. In the case of Yangtze River port development, and especially the massive expansion of Wuhan's port networks, it is difficult to differentiate investment and construction to meet growing real demand from investment to direct future attention and activity where it otherwise may not have gone.
 
The distinction is subtle but important because it points to the fundamentally political nature of Yangtze River development efforts (and, more generally, development of the Chinese interior). The politics of inland development plays out on multiple levels, from granular politicking among cities and provinces for central government favor to the underlying forces and constraints that make processes like Yangtze River economic development a social and political necessity for Beijing.
 
Going forward, the question for Beijing will be whether and to what extent it is able to realize its ambitious plans for the Yangtze River corridor and inland China as a whole. Even then, it is not clear that expanding and industrializing a handful of inland cities will reduce mounting economic imbalances or social tensions unless combined with significant changes to a range of other policies, including the hukou (or household registration) system and the fiscal and financial relationship between city, provincial and national governments. Significant changes to these policies will, in turn, meet steep resistance from entrenched bureaucratic interests. More fundamentally, such changes would likely unleash the social unrest that Beijing's entire political economic system is intended to manage.
 
To the extent that inland port development is important for China's social and economic structures, port development in Wuhan is similar to projects like the Three Gorges Dam or the ongoing South-North Water Transfer Project, which seeks to divert up to 10 percent of the Yangtze River's flow to water-starved provinces in northern China. All three are attempts to reconcile immense geographic and environmental constraints with the ballooning demands (both consumer and industrial) of an enormous population and an ever-expanding economy -- all while providing enough jobs to maintain a degree of stability.
 
The problem, then, is not simply that the Chinese government's approach to economic development is inconsistent with the needs of the economy and population as a whole (though, depending on how those needs are defined, it may be). Rather, it is that the needs of the economy -- growth with stability, and energy security despite energy demands that far outstrip domestic resources -- are themselves inconsistent and contradictory. This by no means guarantees that Beijing's continual intervention in and efforts to directly manage Chinese economy and society will succeed, but it does help explain why the Communist Party -- and arguably, any government that attempts to rule China today -- intervenes in the first place.
.

Read more: The Geopolitics of the Yangtze River: Conflicting Imperatives | Stratfor
Title: POTH: Breathing can kill you
Post by: Crafty_Dog on April 23, 2013, 08:41:14 AM



BEIJING — The boy’s chronic cough and stuffy nose began last year at the age of 3. His symptoms worsened this winter, when smog across northern China surged to record levels. Now he needs his sinuses cleared every night with saltwater piped through a machine’s tubes.



Related
 
Air Pollution Linked to 1.2 Million Premature Deaths in China (April 2, 2013)
Cost of Environmental Damage in China Growing Rapidly Amid Industrialization (March 30, 2013)
As Pollution Worsens in China, Solutions Succumb to Infighting (March 22, 2013)
Students at the International School of Beijing playing in one of two domes with air-filtration systems for when smog is severe.


The boy’s mother, Zhang Zixuan, said she almost never lets him go outside, and when she does she usually makes him wear a face mask. The difference between Britain, where she once studied, and China is “heaven and hell,” she said.

Levels of deadly pollutants up to 40 times the recommended exposure limit in Beijing and other cities have struck fear into parents and led them to take steps that are radically altering the nature of urban life for their children.

Parents are confining sons and daughters to their homes, even if it means keeping them away from friends. Schools are canceling outdoor activities and field trips. Parents with means are choosing schools based on air-filtration systems, and some international schools have built gigantic, futuristic-looking domes over sports fields to ensure healthy breathing.

“I hope in the future we’ll move to a foreign country,” Ms. Zhang, a lawyer, said as her ailing son, Wu Xiaotian, played on a mat in their apartment, near a new air purifier. “Otherwise we’ll choke to death.”

She is not alone in looking to leave. Some middle- and upper-class Chinese parents and expatriates have already begun leaving China, a trend that executives say could result in a huge loss of talent and experience. Foreign parents are also turning down prestigious jobs or negotiating for hardship pay from their employers, citing the pollution.

There are no statistics for the flight, and many people are still eager to come work in Beijing, but talk of leaving is gaining urgency around the capital and on Chinese microblogs and parenting forums. Chinese are also discussing holidays to what they call the “clean-air destinations” of Tibet, Hainan and Fujian.

“I’ve been here for six years and I’ve never seen anxiety levels the way they are now,” said Dr. Richard Saint Cyr, a new father and a family health doctor at Beijing United Family Hospital, whose patients are half Chinese and half foreigners. “Even for me, I’ve never been as anxious as I am now. It has been extraordinarily bad.”

He added: “Many mothers, especially, have been second-guessing their living in Beijing. I think many mothers are fed up with keeping their children inside.”

Few developments have eroded trust in the Communist Party as quickly as the realization that the leaders have failed to rein in threats to children’s health and safety. There was national outrage in 2008 after more than 5,000 children were killed when their schools collapsed in an earthquake, and hundreds of thousands were sickened and six infants died in a tainted-formula scandal. Officials tried to suppress angry parents, sometimes by force or with payoffs.

But the fury over air pollution is much more widespread and is just beginning to gain momentum.

“I don’t trust the pollution measurements of the Beijing government,” said Ms. Zhang’s father, Zhang Xiaochuan, a retired newspaper administrator.

Scientific studies justify fears of long-term damage to children and fetuses. A study published by The New England Journal of Medicine showed that children exposed to high levels of air pollution can suffer permanent lung damage. The research was done in the 1990s in Los Angeles, where levels of pollution were much lower than those in Chinese cities today.

A study by California researchers published last month suggested a link between autism in children and the exposure of pregnant women to traffic-related air pollution. Columbia University researchers, in a study done in New York, found that prenatal exposure to air pollutants could result in children with anxiety, depression and attention-span problems. Some of the same researchers found in an earlier study that children in Chongqing, China, who had prenatal exposure to high levels of air pollutants from a coal-fired plant were born with smaller head circumferences, showed slower growth and performed less well on cognitive development tests at age 2. The shutdown of the plant resulted in children born with fewer difficulties.

Analyses show little relief ahead if China does not change growth policies and strengthen environmental regulation. A Deutsche Bank report released in February said the current trends of coal use and automobile emissions meant air pollution was expected to worsen by an additional 70 percent by 2025.

Some children’s hospitals in northern China reported a large number of patients with respiratory illnesses this winter, when the air pollution soared. During one bad week in January, Beijing Children’s Hospital admitted up to 9,000 patients a day for emergency visits, half of them for respiratory problems, according to a report by Xinhua, the state news agency.

Parents have scrambled to buy air purifiers. IQAir, a Swiss company, makes purifiers that cost up to $3,000 here and are displayed in shiny showrooms. Mike Murphy, the chief executive of IQAir China, said sales had tripled in the first three months of 2013 over the same period last year.
================


Face masks are now part of the urban dress code. Ms. Zhang laid out half a dozen masks on her dining room table and held up one with a picture of a teddy bear that fits Xiaotian. Schools are adopting emergency measures. Xiaotian’s private kindergarten used to take the children on a field trip once a week, but it has canceled most of those this year.



Xu Xiaotian, in his Beijing apartment, has his sinuses cleared every night by a machine that pumps saltwater up his nose.
Air Pollution Linked to 1.2 Million Premature Deaths in China (April 2, 2013)
 

At the prestigious Beijing No. 4 High School, which has long trained Chinese leaders and their children, outdoor physical education classes are now canceled when the pollution index is high.

“The days with blue sky and seemingly clean air are treasured, and I usually go out and do exercise,” said Dong Yifu, a senior there who was just accepted to Yale University.

Elite schools are investing in infrastructure to keep children active. Among them are Dulwich College Beijing and the International School of Beijing, which in January completed two large white sports domes of synthetic fabric that cover athletic fields and tennis courts.

The construction of the domes and an accompanying building began a year ago, to give the 1,900 students a place to exercise in both bad weather and high pollution, said Jeff Johanson, director of student activities. The project cost $5.7 million and includes hospital-grade air-filtration systems.

Teachers check the hourly air ratings from the United States Embassy to determine whether children should play outside or beneath the domes. “The elementary schoolchildren don’t miss recess anymore,” Mr. Johanson said.

One American mother, Tara Duffy, said she had chosen a prekindergarten school for her daughter in part because the school had air filters in the classrooms. The school, called the 3e International School, also brings in doctors to talk about pollution and bars the children from playing outdoors during increases in smog levels. “In the past six months, there have been a lot more ‘red flag’ days, and they keep the kids inside,” said Ms. Duffy, a writer and former foundation consultant.

Ms. Duffy said she also checked the daily air quality index to decide whether to take her daughter to an outdoor picnic or an indoor play space.

Now, after nine years here, Ms. Duffy is leaving China, and she cites the pollution and traffic as major factors.

That calculus is playing out with expatriates across Beijing, and even with foreigners outside China. One American couple with a young child discussed the pollution when considering a prestigious foundation job in Beijing, and it was among the reasons they turned down the offer.

James McGregor, a senior counselor in the Beijing office of APCO Worldwide, a consulting company, said he had heard of an American diplomat with young children who had turned down a posting here. That was despite the fact that the State Department provides a 15 percent salary bonus for Beijing that exists partly because of the pollution. The hardship bonus for other Chinese cities, which also suffer from awful air, ranges from 20 percent to 30 percent, except for Shanghai, where it is 10 percent.

“I’ve lived in Beijing 23 years, and my children were brought up here, but if I had young children I’d have to leave,” Mr. McGregor said. “A lot of people have started exit plans.”
Title: Re: China
Post by: DougMacG on April 23, 2013, 10:02:01 AM
We may question the dangers of CO2, the gas that plants breathe, but filth in the air is another matter.  There is a quite a difference between a 'clean coal' plant and just burning coal.  Likewise for cars.  Maybe dissatisfaction with air quality will lead to a weakening or undoing of the regime.  Breathing is a pretty important human right, even if freedom of speech, assembly and consent of the governed are not.
Title: Re: China
Post by: Crafty_Dog on April 23, 2013, 10:07:30 AM
For quite some time, I have been making this point here about China having some seriously weak links in the chain of the story of how it is going to take over the world such as its inverted demographic profile, seriously dishonest bookkeeeping, and the fact that it is a worsening toxic dump.
Title: Re: China
Post by: DougMacG on April 23, 2013, 10:43:46 AM
For quite some time, I have been making this point here about China having some seriously weak links in the chain of the story of how it is going to take over the world such as its inverted demographic profile, seriously dishonest bookkeeping, and the fact that it is a worsening toxic dump.

I agree 100%.  If China challenges us to be the number one economy in the world in our lifetime under their current regime, it can only be because of catastrophic policy failure in the U.S.
Title: 2013 report on PRC
Post by: bigdog on May 06, 2013, 08:13:24 PM
http://www.defense.gov/pubs/2013_China_Report_FINAL.pdf
Title: China: Bret Stephens, WSJ, Yang Jisheng - Reading Hayek in Beijing
Post by: DougMacG on May 25, 2013, 02:49:01 PM
Current Pulitzer Prize winner WSJ/Brret Stephens:
Reading Hayek in Beijing       May 24, 2013
A chronicler of Mao's depredations finds much to worry about in modern China.

Yang Jisheng By BRET STEPHENS

In the spring of 1959, Yang Jisheng, then an 18-year-old scholarship student at a boarding school in China's Hubei Province, got an unexpected visit from a childhood friend. "Your father is starving to death!" the friend told him. "Hurry back, and take some rice if you can."

Granted leave from his school, Mr. Yang rushed to his family farm. "The elm tree in front of our house had been reduced to a barkless trunk," he recalled, "and even its roots had been dug up." Entering his home, he found his father "half-reclined on his bed, his eyes sunken and lifeless, his face gaunt, the skin creased and flaccid . . . I was shocked with the realization that the term skin and bones referred to something so horrible and cruel."

Mr. Yang's father would die within three days. Yet it would take years before Mr. Yang learned that what happened to his father was not an isolated incident. He was one of the 36 million Chinese who succumbed to famine between 1958 and 1962.

It would take years more for him to realize that the source of all the suffering was not nature: There were no major droughts or floods in China in the famine years. Rather, the cause was man, and one man in particular: Mao Zedong, the Great Helmsman, whose visage still stares down on Beijing's Tiananmen Square from atop the gates of the Forbidden City.

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Zina Saunders

Yang Jisheng

Mr. Yang went on to make his career, first as a journalist and senior editor with the Xinhua News Agency, then as a historian whose unflinching scholarship has brought him into increasing conflict with the Communist Party—of which he nonetheless remains a member. Now 72 and a resident of Beijing, he's in New York this month to receive the Manhattan Institute's Hayek Prize for "Tombstone," his painstakingly researched, definitive history of the famine. On a visit to the Journal's headquarters, his affinity for the prize's namesake becomes clear.

"This book had a huge impact on me," he says, holding up his dog-eared Chinese translation of Friedrich Hayek's "The Road to Serfdom." Hayek's book, he explains, was originally translated into Chinese in 1962 as "an 'internal reference' for top leaders," meaning it was forbidden fruit to everyone else. Only in 1997 was a redacted translation made publicly available, complete with an editor's preface denouncing Hayek as "not in line with the facts," and "conceptually mixed up."

Mr. Yang quickly saw that in Hayek's warnings about the dangers of economic centralization lay both the ultimate explanation for the tragedies of his youth—and the predicaments of China's present. "In a country where the sole employer is the state," Hayek had observed, "opposition means death by slow starvation."

So it was in 1958 as Mao initiated his Great Leap Forward, demanding huge increases in grain and steel production. Peasants were forced to work intolerable hours to meet impossible grain quotas, often employing disastrous agricultural methods inspired by the quack Soviet agronomist Trofim Lysenko. The grain that was produced was shipped to the cities, and even exported abroad, with no allowances made to feed the peasants adequately. Starving peasants were prevented from fleeing their districts to find food. Cannibalism, including parents eating their own children, became commonplace.

"Mao's powers expanded from the people's minds to their stomachs," Mr. Yang says. "Whatever the Chinese people's brains were thinking and what their stomachs were receiving were all under the control of Mao. . . . His powers extended to every inch of the field, and every factory, every workroom of a factory, every family in China."

All the while, sympathetic Western journalists—America's Edgar Snow and Britain's Felix Greene in particular—were invited on carefully orchestrated tours so they could "refute" rumors of mass starvation. To this day, few people realize that Mao's forced famine was the single greatest atrocity of the 20th century, exceeding by orders of magnitude the Rwandan genocide, the Cambodian Killing Fields and the Holocaust.

The power of Mr. Yang's book lies in its hauntingly precise descriptions of the cruelty of party officials, the suffering of the peasants, the pervasive dread of being called "a right deviationist" for telling the truth that quotas weren't being met and that millions were being starved to death, and the toadyism of Mao lieutenants.

Yet the book is more than a history of a uniquely cruel regime at a receding moment in time. It is also a warning of what lies at the end of the road for nations that substitute individualism with any form of collectivism, no matter what the motives. Which brings Mr. Yang to the present day.

"China's economy is not what [Party leaders] claim as the 'socialist-market economy,' " he says. "It's a 'power-market' economy."

What does that mean?

"It means the market is controlled by the power. . . . For example, the land: Any permit to enter any sector, to do any business has to be approved by the government. Even local government, down to the county level. So every county operates like an enterprise, a company. The party secretary of the county is the CEO, the president."

Put another way, the conventional notion that the modern Chinese system combines political authoritarianism with economic liberalism is mistaken: A more accurate description of the recipe is dictatorship and cronyism, with the results showing up in rampant corruption, environmental degradation and wide inequalities between the politically well-connected and everyone else. "There are two major forms of hatred" in China today, Mr. Yang explains. "Hatred toward the rich; hatred toward the powerful, the officials." As often as not they are one and the same.

Yet isn't China a vastly freer place than it was in the days of Mr. Yang's youth? He allows that the party's top priority in the post-Mao era has been to improve the lot of the peasantry, "to deal with how to fill the stomach."

He also acknowledges that there's more intellectual freedom. "I would have been executed if I had this book published 40 years ago," he notes. "I would have been imprisoned if this book was out 30 years ago. Now the result is that I'm not allowed to get any articles published in the mainstream media." The Chinese-language version of "Tombstone" was published in Hong Kong but is banned on the mainland.

There is, of course, a rational reason why the regime tolerates Mr. Yang. To survive, the regime needs to censor vast amounts of information—what Mr. Yang calls "the ruling technique" of Chinese leaders across the centuries. Yet censorship isn't enough: It also needs a certain number of people who understand the full truth about the Maoist system so that the party will never repeat its mistakes, even as it keeps the cult of Mao alive in order to preserve its political legitimacy. That's especially true today as China is being swept by a wave of Maoist nostalgia among people who, Mr. Yang says, "abstract Mao as this symbol of social justice," and then use that abstraction to criticize the current regime.

"Ten million workers get laid off in the state-owned enterprise reforms," he explains. "So many people are dissatisfied with the reforms. Then they become nostalgic and think the Mao era was much better. Because they never experienced the Mao era!" One of the leaders of that revival, incidentally, was Bo Xilai, the powerful former Chongqing party chief, brought down in a murder scandal last year.

But there's a more sinister reason why Mr. Yang is tolerated. Put simply, the regime needs some people to have a degree of intellectual freedom, in order to more perfectly maintain its dictatorship over everyone else.

"Once I gave a lecture to leaders at a government bureau," Mr. Yang recalls. "I told them it's a dangerous job, you guys, being officials, because you have too much power. I said you guys have to be careful because those who want approval from you to get certain land and projects, who bribe you, these are like bullets, ammunition, coated in sugar, to fire at you. So today you may be a top official, tomorrow you may be a prisoner."

How did the officials react to that one?

"They said, 'Professor Yang, what you said, we should pay attention.' "

So they should. As Hayek wrote in his famous essay on "The Use of Knowledge in a Society," the fundamental problem of any planned system is that "knowledge of circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess."

The Great Leap Forward was an extreme example of what happens when a coercive state, operating on the conceit of perfect knowledge, attempts to achieve some end. Even today the regime seems to think it's possible to know everything—one reason they devote so many resources to monitoring domestic websites and hacking into the servers of Western companies. But the problem of incomplete knowledge can't be solved in an authoritarian system that refuses to cede power to the separate people who possess that knowledge.

"For the last 20 years, the Chinese government has been saying they have to change the growth mode of the economy," Mr. Yang notes. "So they've been saying, rather than just merely expanding the economy they should do internal changes, meaning more value-added services and high tech. They've been shouting such slogans for 20 years, and not many results. Why haven't we seen many changes? Because it's the problem that lies in the very system, because it's a power-market economy. . . . If the politics isn't changed, the growth mode cannot be changed."

That suggests China will never become a mature power until it becomes a democratic one. As to whether that will happen anytime soon, Mr. Yang seems doubtful: The one opinion widely shared by rulers and ruled alike in China is that without the Communist Party's leadership, "China will be thrown into chaos."

Still, Mr. Yang hardly seems to have given up hope that he can play a role in raising his country's prospects. In particular, he's keen to reclaim two ideas at risk of being lost in today's China.

The first is the meaning of rights. A saying attributed to the philosopher Lao Tzu, he says, has it that a ruler should fill the people's stomachs and empty their heads. The gambit of China's current rulers is that they can stay in power forever by applying that maxim. Mr. Yang hopes they're wrong.

"People have more needs than just eating!" he insists. "In China, human rights means the right to survive, and I argue with these people. This is not human rights, it's animal rights. People have all sorts of needs. Spiritual needs, the need to be free, the freedoms."

The second is the obligation of memory. China today is a country galloping into a century many people believe it will define, one way or the other. Yet the past, Mr. Yang insists, also has its claims.

"If a people cannot face their history, these people won't have a future. That was one of the purposes for me to write this book. I wrote a lot of hard facts, tragedies. I wanted people to learn a lesson, so we can be far away from the darkness, far away from tragedies, and won't repeat them."

Hayek would have understood both points well.

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Title: China Daily: China must be prepared for capital exit
Post by: DougMacG on May 27, 2013, 08:26:58 AM
China facing a bubble?  Who knew? 

http://www.chinadaily.com.cn/opinion/2013-05/27/content_16534227.htm

China must be prepared for capital exit
2013-05-27
By Hong Liang  China Daily


At the G20 meeting in Washington last month, the International Monetary Fund sounded a warning about the problems that could be caused by a sudden massive outflow of capital from emerging markets when the major developed economies, notably the United States, terminate their quantitative easing programs.

Since the US Federal Reserve started its quantitative easing program some two years ago, there has been a large flow of capital into emerging markets in search of higher returns. This flood of money has, in turn, inflated asset prices in these markets and pushed up the value of their respective currencies.

These aggressive monetary policies adopted by some developed economies to stimulate their economic growth cannot be sustained for too long as they can create their own problems with too much cheap money floating around. It's widely expected that governments will stop printing money as soon as their economies show definite signs of a sustainable recovery.

That may come sooner than expected, and a more optimistic economic outlook in developed countries could trigger a reversal in capital flows out of emerging markets. A sudden capital outflow could burst the asset bubbles in some emerging markets, sparking a financial crisis as many enterprises have greatly increased their foreign currency borrowings at low interest rates to fund their domestic investments.

Acknowledging the "crucial" role of "accommodative monetary policy" in stimulating economic growth, the IMF cautioned in a statement issued at the conference that there is a need to monitor the potential impacts of monetary easing on capital flows and exchange rates. "Eventual exit from monetary expansion will need to be carefully managed and clearly communicated," the statement said.

At the conference, IMF Managing Director Christine Lagarde warned that "unconventional" monetary policy has raised international concern about currency valuations and competitive depreciation. She added that the IMF will probe further into the consequences of unconventional monetary policy and "what will be the consequences of the variety of exit and what will be good exits as opposed to the more unpleasant exits" for all IMF member countries.

At that time, the US economy was still mired in a sputtering recovery hamstrung by persistently high unemployment and tepid consumer demand. In Japan, the monetary easing program, though large in scale, was too new to have produced any results, although some neighboring economies were already seeing a marked increase in the influx of capital. Under these circumstances, the IMF warnings about exit policy seemed premature and economic planners in most countries didn't take them seriously.

Not anymore. The marked improvement in the US' employment figures has raised expectations that the Fed will consider moderating the pace of its monthly bond purchases. The Fed is schedule to debate policy on June 18 and 19.

With a balance sheet swollen to some $3.3 trillion, the Fed must weigh the risks of igniting future inflation or blowing up asset bubbles against printing more money to pump up the economy. Fed Chairman Ben Bernanke and other Fed officials have said that any reduction in bond purchases would not indicate a withdrawal of monetary stimulus. But to many emerging market observers, preparation by the Fed for an exit is on the way.

In a recent speech, the text of which was published last week, Liu Yuhui, a financial researcher at the Chinese Academy of Social Sciences, said that the normalization of US monetary policy is expected to rapidly gather pace, causing a severe contraction in the international flow of the US dollar, which would, in turn, exert tremendous pressure on asset markets across the Asia-Pacific region.

Liu said that Chinese banks need to strengthen their financial structures to face the threats coming from abroad, warning that assets, mainly properties, were already valued at levels considered too high.
Title: Re: China
Post by: Crafty_Dog on May 27, 2013, 07:37:47 PM
"China facing a bubble?  Who knew?"

Ummm , , , as posted here for a few years now, I did  :-D though not for the reasons here based upon Keynesian drivel , , ,
Title: Re: China
Post by: G M on May 28, 2013, 05:24:20 AM
Will their bubble pop before ours does? They have a few advantages over us, such as a leadership that knows that marxism doesn't work.....
Title: Re: China, Asian economy
Post by: DougMacG on May 28, 2013, 08:04:34 AM
"China facing a bubble?  Who knew?"
Ummm , , , as posted here for a few years now, I did  :-D though not for the reasons here based upon Keynesian drivel , , ,

Yes, I agree on the first part.  On the second point I'm not sure if I follow you.  When QE ends, some of the artificial effects of it end with it, with consequences.  I am all for QE ending, just saying what seems to be widely ignored, it won't be pretty if and when it happens.  This was one of 3 posts on 3 separate threads but taken together, if they each have validity, the slightly negative economic news coming out of India, Korea and China, (and Japan and elsewhere) poses risks for global companies and investors everywhere.

Will their bubble pop before ours does? They have a few advantages over us, such as a leadership that knows that marxism doesn't work.....

Good point.  My point is not which goes first but of the interconnectedness.  Either burst would have a major, adverse effect on the other.  To take one local Dow listed example, how does 3M's sales performance and outlook look without rapidly growing Asia sales and operations?  Not nearly as good as it does now.
Title: Re: China
Post by: Crafty_Dog on May 28, 2013, 03:53:19 PM
"When QE ends, some of the artificial effects of it end with it, with consequences.  I am all for QE ending, just saying what seems to be widely ignored, it won't be pretty if and when it happens."

Maybe QE-X has been a BAD thing, i.e. holding the economy back?  Maybe it has been as Scott Grannis has said, simply ineffective because money growth has been constant and the QE simply showing up in bank reserves, not money supply?

But this is all tangential to this thread , , , :-)
Title: Stratfor: China's banking troubles
Post by: Crafty_Dog on June 19, 2013, 07:48:01 AM
I have been warning of this coming for a few years now , , ,


Summary

A cash crunch over the past three weeks has caused rates on loans between banks to spike to the highest levels since mid-2011, drawing attention back to China's financial instability. Rates have since subsided, but conditions exist for them to remain elevated over the next month or beyond. Unlike two years ago, at least one bank has already defaulted on a loan and there are rumors that other defaults have occurred. The emergence of bank defaults poses a serious challenge to the central government's efforts to clamp down on credit growth as part of its broader attempt to reform the country's economy.
Analysis

The recent spike in interbank lending rates began in late May after a combination of factors caused a liquidity shortage. The monthly average overnight rate stood at 2.9 percent for April but rose to 6.4 percent for May. In particular, companies sought to pay taxes at the end of May and banks rushed to meet regulators' reserve requirements, leaving them with less cash on hand. Meanwhile, the lead-up to the Dragon Boat Festival, a national holiday that closed markets from June 10-12, spurred consumers to withdraw deposits, further squeezing banks.
Shanghai Interbank Offered Rate, Monthly Average

In addition to these seasonal factors, the central government's attempts to rein in the high rate of credit expansion also contributed. In February, the People's Bank of China started reducing liquidity injections, and as rates rose in early June it mostly refrained from softening this stance. Meanwhile, in early May, the State Administration of Foreign Exchange issued new measures against falsifying trade data in order to import funds illegally, a move that brought down reported export volumes and foreign exchange inflows.
Shanghai Interbank Offered Rate, Daily Average

A similar confluence of factors led to a spike in interbank rates during roughly the same period in 2011. But this time around the consequences have raised greater fears. On June 6, China Everbright Bank, the country's 11th-largest lender, defaulted on a 6 billion-yuan ($980 million) loan repayment to Industrial Bank Co. The default allegedly caused Industrial Bank Co. to default in turn, and various news reports have suggested that other banks also may have defaulted on loans, though this is unconfirmed. On June 7, the central bank allowed more cash to flow into the interbank market as previously scheduled, providing some relief for strained banks, though it did not take any additional actions. The cash crunch manifested elsewhere when the Ministry of Finance and state-owned Agricultural Development Bank failed to sell all the bonds offered in recent auctions, occurrences that, though not unprecedented, are rare and reflect the liquidity shortage. The Agricultural Development Bank has scaled back upcoming bond sales as a result.

These recent events point to the rising financial trouble in China, where debt levels have rapidly grown as a result of the investment-driven economic model and the post-financial crisis drop in export growth. Bank failures are rare in China, where state entities step in quietly to prevent panic and ensure stability. For examples one must look to the last banking crisis in the late 1990s, though the failure of a rural credit cooperative in Jiangsu in 2012 points to the recent rise in risk. Recently, for instance, China Securities Journal claimed that the total credit in China's system may add up to 221 percent of gross domestic product, far above officially reported figures.

The size and rapid growth of China's credit expansion is coupled with the murkiness of the details about the lending -- the well-documented explosion in shadow banking and the huge growth in financial instruments such as wealth management products that deliver high returns but that regulators say are based on unclear or illiquid assets. Financial analysts have recently raised alarms about the dangers of this informal lending spree -- Fitch Ratings, Societe Generale and others, including Stratfor sources, have all warned of these recent signs that the debt buildup may finally have reached a point at which growth rates cannot sustain it. The Chinese central government's attempts to clamp down on lending channels reveal it is aware of the risks.

It is too early to tell whether the latest cash crunch is the harbinger of an immediate descent into financial turmoil. First, at the moment there does not appear to be contagion from the Everbright default or other rumored defaults. Second, the fact that the recent liquidity shortages resulted from central government tightening policies suggests that easing those policies can alleviate the problem for a time. The central bank has large reserves with which to fight fires (about $3.44 trillion in foreign exchange reserves), though clearly it fears that the speed, size and opaqueness of recent years' credit expansion could lead to an unmanageable chain reaction. Third, Everbright itself is a chronically troubled bank -- one that received a bailout as recently as 2007 and is mostly owned by an arm of the Ministry of Finance, Central Huijin, which is increasing its stake -- and therefore its default does not seem to have created the kind of shock that the default of a supposedly healthy bank would have done. Nevertheless, its failure to repay is just the beginning -- there are numerous other small- and medium-sized banks that are more highly leveraged than Everbright and more heavily exposed to innovative products with unknown risks.

The cash squeeze is expected to continue at least through June and July as a result of accounting practices at the end of the first half of the year and expectations that the central government will maintain tight policies on credit, not to mention other factors that could encourage capital outflows, such as the U.S. Federal Reserve reportedly considering halting its quantitative easing policies. Given the underlying factors of high leverage, slowing growth and tight government policy in a new administration that must prove its resolve in executing tough reforms, the conditions are ripe for further troubles among poorly managed banks.

At the moment, China's cash crunch resembles that of 2011 and seems mostly policy-driven. But the situation merits close attention. Stratfor has long called attention to the hidden debt eating away at the core of China's economic model, the debt surge after the global financial crisis and the constraints on Beijing's attempts to transition to something more sustainable. If more bank defaults occur and the central bank refuses to provide support, or if the central bank eases policy and bank troubles continue unabated, then authorities could soon find themselves overwhelmed. China's poor financial fundamentals point to increasing turmoil sooner or later.

Read more: China's Banking Troubles | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook
Title: Re: Stratfor: China's banking troubles
Post by: DougMacG on June 19, 2013, 08:54:03 AM
I have been warning of this coming for a few years now , , ,

...China's poor financial fundamentals point to increasing turmoil sooner or later.

Agree.  Rapid growth covered up a multitude of sins.  A slowing of growth exposes weaknesses.  There will be an economic reckoning.  Oddly, if Europe and the US (China's biggest customers) could get their own economic acts together, that would help China stay on track.

I don't think the political apparatus of China can withstand an economic meltdown.  Or as Wesbury might call it when 50% of loans fail, workhorse banking?
Title: WSJ: China's credit crunch; Stratfor too
Post by: Crafty_Dog on June 25, 2013, 02:22:28 PM
Over the past two weeks China's interbank lending rates have spiked, bond auctions have failed and one large bank briefly defaulted. The Shanghai stock market fell 5.3% Monday, on top of big losses last week. This is all evidence that China's leaders have decided to call time on one of the greatest credit expansions in history.

Shortages of liquidity are not unusual in China, especially before the end of a quarter when the banks shuffle assets to meet limits on loan-to-deposit ratios. Usually the central bank steps in with some loans and the pain goes away.

This time, however, the People's Bank of China has largely remained on the sidelines and the pain has persisted. A PBOC statement Monday reiterated that banks must reduce risky loans and avoid short-term liabilities to finance long-term assets. Last Thursday, the State Council emphasized the need to contain financial risks and prepare for interest-rate liberalization.

That's great news for China's long-term economic prospects, but there will be widespread pain as banks scale back lending. The worry is that Beijing waited too long and a large number of unviable companies will need to be restructured. Growth would then slow substantially and the banking system could need recapitalization.

Beijing has the means to bail out the banks, but it's critical that the banking system is reformed so any bailout is truly the "last supper." That was the phrase then PBOC Governor Dai Xianglong used to describe capital injections in 2000. Three years later, the bankers were back at the trough.

After the 2003 episode, reforms made us cautiously optimistic that the four huge state-owned banks would operate as commercial entities rather than agents of the government. They modernized their systems and managed to list their shares. But with interest rates still held artificially below the rate of inflation, the seeds of another crisis were sown in the mid-2000s, as a shadow banking system emerged. According to Standard & Poor's, shadow lending has grown at 34% for the last couple of years, so that by the end of 2012 its assets were equivalent to 34% of outstanding bank loans and 44% of GDP.

This is not all bad, as trust companies, credit guarantee firms and other dodges allowed private companies to get access to credit at higher rates. But it has contributed to a massive expansion of corporate debt. According to Fitch, loans from banks and shadow banking institutions totaled 198% of GDP in 2012, up from 125% in 2008.

The real economy has slowed despite continuing double-digit credit growth, with some projections that China might miss this year's government GDP target of 7.5%. This has sent a clear message to China's leaders that credit-driven growth is a dead end. They are evidently serious that future growth will have to be driven by reform, starting with market-based interest rates.

If a reckoning for wasteful lending does come, there will inevitably be political implications. Some observers have attributed new leader Xi Jinping's emphasis on nationalism as preparation for this economic adjustment. Despite the short-term pain, a more market-oriented economy will be more prosperous and fair, and will also better provide public goods like clean air and safe food.
===========================


Summary

Spiking interbank lending rates may be only a temporary flare up, but they reveal the depth of China's banking troubles. Over the past year, the economic slowdown has caused some of the country's massive shadow lending to unravel. If financial instability continues, it will complicate President Xi Jinping and Premier Li Keqiang's attempts to engineer a stable economic slowdown for the purposes of reform and rebalancing.
Analysis

The People's Bank of China released a statement June 24, though it was dated June 17, addressing the liquidity shortage that caused interbank lending rates to spike during most of June. The central bank claimed that the banking system's general liquidity level remained "reasonable" but that changes in financial markets and the need to tidy up books at the end of the first half of the year led to higher requirements, causing the liquidity squeeze. The statement went on to warn commercial banks to better prepare to meet tax payments and reserve requirements. It also warned them to manage credit expansion at a time when the government intends to maintain "prudent" monetary policy and "steady and moderate" monetary and credit growth. Last, it warned against letting deposits fall too low.

The central bank has been heavily scrutinized amid the recent disturbances in interbank markets because the banks, as well as many investors and commentators, have called attention to its hesitancy to inject liquidity into the system to reduce the shortages. When the central bank finally took action last week by acting as lender of last resort past normal working hours and by providing special loans to particularly troubled lenders, interbank rates subsided from last week's record highs. The June 24 statement will reinforce the view that policy will remain tight and interbank rates elevated, but that banks will calm down somewhat in July as the scramble to meet half-year deadlines ends and as a number of central bank bills mature, sending cash back into the system. The People's Bank also says it will play a "stabilizing" role.
Shanghai Interbank Offered Rate, Daily Average - June 24

But even if interbank rates fall during and after July, the showdown between the central bank and the rest of the banking system points to bigger risks and challenges. Rumors surfaced in the Chinese media last week that the central bank provided emergency assistance worth "less than" 400 billion yuan (about $65 billion) to two of the Big Four state-owned commercial banks: Bank of China and Industrial and Commercial Bank of China. If accurate, these rumors show that the cash shortage is by no means limited to medium-sized lenders like Everbright Bank, whose Shanghai branch defaulted on a 6 billion yuan loan June 6. The Big Four form the backbone of China's financial system. A bailout for two of them illustrates the central bank's willingness and ability to intervene to prevent widespread contagion. However, it also suggests that the entire system is severely strained.

Moreover, focusing on matters within the central bank's control, such as liquidity injection, directs attention away from smaller signs across the country over the past year that businesses in various sectors, along with the shadow loans tied to investment projects, have been failing:

    October 2012: Jiayue Co., a leading real estate company in Zhanjiang, Guangdong province, and dozens of connected firms went bankrupt, leaving about 6.1 billion yuan in debts unpaid.
    October 2012: Chenyang Rural Credit Cooperative in Sheyang County, Jiangsu province, suffered a rush on deposits after a credit guarantee company was shut down for illegal lending. The Sheyang County government forced the company to sell 25 million yuan in assets to pay depositors.
    December 2012: Citic Trust Co., an division of China Citic Group, delayed payment on one of its trust products after a steelmaker, Three Gorges Quantong, missed a 74.6 million yuan payment. Eventually the city government in Yichang, Hubei province, paid 1 billion yuan to support Quantong, which is now said to owe 7 billion yuan to several banks because of a failed wealth management product.
    January 2013: Huaxia Bank in Shanghai failed to make an interest payment on a 140 million yuan wealth management product, according to a high-profile report by Caixin. The chief borrower collapsed after embezzling the funds lent, but the company that guaranteed the product, Zhongfa Investment Guarantee, paid back investors.
    Various other defaults on loans or wealth management products have occurred. Jilin Trust defaulted on a 150 million yuan trust product, as did unnamed companies in Ordos, Inner Mongolia, where excessive housing construction has led to overcapacity. China Communication Bank also saw the failure of a wealth management product.
    Reports in Chinese media suggest that privileged state-owned enterprises have increasingly begun defaulting on payments owed to small- and medium-sized companies, which have little recourse.

From these incidents -- and several other rumored events, including the most recent troubles among large banks -- it appears that the rapid and vast expansion of shadow lending is unraveling, at least to some extent, under the pressure of China's economic slowdown and rebalancing reforms. The highest risk areas are joint-stock banks and other banks most exposed to wealth management products (13 trillion yuan total) and trust products (more than 5 trillion yuan total), plus the credit guarantee companies and banks that remain liable when such products fail and the hierarchy of local governments that are forced to bail out failed companies and banks. Ultimately, these risks even threaten the central government, since large banks can be affected and local governments themselves, which are often struggling with debt levels well above 100 percent of revenues, may prove incapable of handling local crises.

The central government has extensive resources and plenty of room to lower reserve requirements or take other actions to ease policy. It could moderate its recent attempts to crack down on high-risk financial products and illegal capital inflows, though it will not want to backtrack unless circumstances force it to do so. Nevertheless, the emergence of problems among core institutions raises substantial fears that the sheer magnitude of China's credit boom since 2009 has produced systemic risks that could spiral out of control for even the best prepared and best equipped governments. Even in a less precarious scenario, the new pressure on banks to reduce risky lending, shore up their reserves and plan for the longer term will translate into less credit for the non-financial economy. Already Chinese reports suggest that small- and medium-sized banks have begun to scale back some preferential low interest rates for buyers of real estate, portending a broader impact.

The State Council, which controls the central bank and is responsible for the government's general drive to tighten controls on the economy for the purposes of reform, will be challenged by the risk that a combination of its actions and weakening international growth could spoil too many investment projects, causing more defaults on unconventional loans tied to underlying assets of unclear value. Thus, even if interbank rates fall back to more normal levels in July or August, the gradual enervation of China's financial system could well continue, greatly complicating the new administration's bold reform efforts by necessitating more financial intervention

Read more: In China's Banking Problems, a Challenge for Reform | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook
Title: Chinese banking: a Wild West in the Far East?
Post by: DougMacG on July 08, 2013, 12:56:35 PM
Chinese banking problems, often mentioned on the forum, are covered in depth here today:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10164580/Chinese-banking-a-Wild-West-in-the-Far-East.html

“We believe that the domestic Chinese banking system is a mess, with an enormous amount of bad loans, or loans waiting to go bad. The problems of China’s lenders are greater than those of Western banks on the eve of the financial crisis,”
...
"it seems likely that today’s highpoint will be seen in hindsight as the ultimate warning signal of a coming crash."
Title: UK Telegraph: China's Great Leap Forward Hits the Wall
Post by: DougMacG on July 13, 2013, 07:12:16 AM
Readers of the forum saw this coming.

http://www.telegraph.co.uk/news/worldnews/asia/china/10173773/Chinas-great-economic-leap-forward-hits-the-wall.html

China’s great economic leap forward hits the wall
This was supposed to be the Asian century, but the Eastern boom is dying of exhaustion

(http://i.telegraph.co.uk/multimedia/archive/02615/108192279_2615410b.jpg)

 So here’s how it looks. Years of unsustainable, credit-fuelled growth are brought to a halt by a crushing financial crisis which exposes deep structural flaws at the heart of the economy. Rarely has the assumption of ever-rising living standards looked so vulnerable, with younger generations forced to pay not just for the crippling legacy of debt their parents leave behind, but for the mounting costs of an ageing population and the consequences of decades-long environmental degradation. Economic decline, austerity and inter-generational recrimination seem to beckon as populations adjust to the true mediocrity of their circumstances.

I’m referring to the tired old “developed” economies of the West, right? Actually, no: it’s China where these observations seem more appropriate, and perhaps other emerging market economies said to be about to eclipse the hegemony of the old world, with its lazy ways and sense of entitlement.

Western “declinism” of the sort described by Dambisa Moyo in her book How the West was Lost, and more recently by Stephen King, chief economist at HSBC, in When the Money Runs Out, is still the narrative of our times. But sometimes a sense of perspective is demanded; compared with the challenges faced by China and the rest of the developing world, the relatively minor adjustment to expectations that needs to be made in the West is a stroll in the park.

Forecasts that China will overtake the US as the world’s largest economy over the coming years already look like yesterday’s story as once-explosive development in the East slows to a stall amid growing fears of a Chinese credit crunch. The Asian boom is dying of exhaustion.

As ever, public perceptions trail the reality. For the first time in more than a decade, international investors and business leaders are regularly heard referring to the US as a more attractive proposition than China. Investment flows are going into reverse, and while the US banking system is reviving fast, China’s is heading in the other direction after a period of credit expansion that makes our own look positively pedestrian.

Nor is it just the economics of unbridled, politically directed development that are beginning to fracture; for many Chinese the promise of industrialisation and prosperity is turning into a nightmare of ill health and curtailed life expectancy. The social deprivations of China’s one-child policy meanwhile threaten a demographic time-bomb of far worse proportions than that of the supposedly bankrupt West. There is now every likelihood that China will indeed grow old before it gets rich. One shocking story from the past week vividly demonstrates the massive costs that China’s centrally directed dash for growth is fermenting for the future. According to a study in The Proceedings of the National Academy of Sciences, air pollution has caused an average five-and-a-half year reduction in life expectancy for the 500 million people living north of the Huai River, where use of coal in the home and for electricity generation is most prevalent.

The latest study, pretty much undisputed by the Chinese authorities, adds to mounting evidence of industrial poisoning on a hitherto unimaginable scale. The 2010 Global Burden of Disease Study found that outdoor air pollution caused 1.2 million premature Chinese deaths in 2010, or nearly half the global total.

The fumes are so bad that a growing number of Chinese emigrate, setting in train a potentially devastating brain drain. In a recent interview in the New York Times, the mother of a child made sick by the smog refers to the difference between Britain, where she had studied as a student, and China as heaven and hell.

All industrialisation exacts a heavy human toll in its early years. The miseries of Britain’s industrial revolution are well chronicled. But the speed and scope of China’s attempted catch-up are in a league of their own.

There is also a world of difference between the market-determined development that drove the British and American economic miracles and the state-directed variety of China’s great leap forward.

Politically sponsored advancement rarely occurs without gross misallocation of capital, and in China it seems to be happening on an epic scale. The latest example of China’s capacity overhang is Rongsheng Heavy Industries, the world’s largest private shipbuilder. The collapse in the market for new ships has forced Rongsheng to go cap in hand to the government for a bail-out. It’s said to be an important test of China’s resolve to move from the old, unsustainable, investment-led model of economic development to a more balanced form of advancement, but it is almost certainly one that China will fail. Political connections will ensure Rongsheng survives, and the resulting capacity glut will, in time-honoured fashion, simply be dumped on the rest of the world.

On a global scale, the resulting imbalances require that the deficit nations of the West keep spending to absorb the Chinese surpluses, even though they can no longer afford it. The tragedy for China is that when countries and individuals spend beyond their means, it is always the creditor, and not the debtor, that ends up paying. China’s vast, accumulated surplus of foreign exchange reserves will simply be devalued to oblivion.

By relentlessly pursuing the goal of industrial supremacy, China has made itself into the world’s environmental waste dump, and a hostage to back-door default by Western debtors to boot. Once admired for its dynamism, state-directed capitalism is turning out to be a monstrous anomaly. Chances are that this will be another American century, not the much-predicted Asian one.
Title: Krugman catches up with me
Post by: Crafty_Dog on July 19, 2013, 07:08:11 AM
Hitting China’s Wall
By PAUL KRUGMAN
Published: July 18, 2013 176 Comments



All economic data are best viewed as a peculiarly boring genre of science fiction, but Chinese data are even more fictional than most. Add a secretive government, a controlled press, and the sheer size of the country, and it’s harder to figure out what’s really happening in China than it is in any other major economy.


Yet the signs are now unmistakable: China is in big trouble. We’re not talking about some minor setback along the way, but something more fundamental. The country’s whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.

Start with the data, unreliable as they may be. What immediately jumps out at you when you compare China with almost any other economy, aside from its rapid growth, is the lopsided balance between consumption and investment. All successful economies devote part of their current income to investment rather than consumption, so as to expand their future ability to consume. China, however, seems to invest only to expand its future ability to invest even more. America, admittedly on the high side, devotes 70 percent of its gross domestic product to consumption; for China, the number is only half that high, while almost half of G.D.P. is invested.

How is that even possible? What keeps consumption so low, and how have the Chinese been able to invest so much without (until now) running into sharply diminishing returns? The answers are the subject of intense controversy. The story that makes the most sense to me, however, rests on an old insight by the economist W. Arthur Lewis, who argued that countries in the early stages of economic development typically have a small modern sector alongside a large traditional sector containing huge amounts of “surplus labor” — underemployed peasants making at best a marginal contribution to overall economic output.

The existence of this surplus labor, in turn, has two effects. First, for a while such countries can invest heavily in new factories, construction, and so on without running into diminishing returns, because they can keep drawing in new labor from the countryside. Second, competition from this reserve army of surplus labor keeps wages low even as the economy grows richer. Indeed, the main thing holding down Chinese consumption seems to be that Chinese families never see much of the income being generated by the country’s economic growth. Some of that income flows to a politically connected elite; but much of it simply stays bottled up in businesses, many of them state-owned enterprises.

It’s all very peculiar by our standards, but it worked for several decades. Now, however, China has hit the “Lewis point” — to put it crudely, it’s running out of surplus peasants.

That should be a good thing. Wages are rising; finally, ordinary Chinese are starting to share in the fruits of growth. But it also means that the Chinese economy is suddenly faced with the need for drastic “rebalancing” — the jargon phrase of the moment. Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does; consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump.

And the answer, increasingly, seems to be no. The need for rebalancing has been obvious for years, but China just kept putting off the necessary changes, instead boosting the economy by keeping the currency undervalued and flooding it with cheap credit. (Since someone is going to raise this issue: no, this bears very little resemblance to the Federal Reserve’s policies here.) These measures postponed the day of reckoning, but also ensured that this day would be even harder when it finally came. And now it has arrived.

How big a deal is this for the rest of us? At market values — which is what matters for the global outlook — China’s economy is still only modestly bigger than Japan’s; it’s around half the size of either the U.S. or the European Union. So it’s big but not huge, and, in ordinary times, the world could probably take China’s troubles in stride.

Unfortunately, these aren’t ordinary times: China is hitting its Lewis point at the same time that Western economies are going through their “Minsky moment,” the point when overextended private borrowers all try to pull back at the same time, and in so doing provoke a general slump. China’s new woes are the last thing the rest of us needed.

No doubt many readers are feeling some intellectual whiplash. Just the other day we were afraid of the Chinese. Now we’re afraid for them. But our situation has not improved.
Title: Re: China
Post by: G M on July 19, 2013, 06:45:48 PM
China has two things going for it.

Their leadership knows Marxism doesn't work, and it has a greater tolerance for political dissent than ours.
Title: Re: China
Post by: Crafty_Dog on July 19, 2013, 06:52:36 PM
I get the attitude behind the second half of what you say, but I really would not want to be posting this forum in China.   You and I would never be seen again.
Title: Re: China
Post by: DougMacG on July 21, 2013, 01:11:55 PM
"China has two things going for it.
Their leadership knows Marxism doesn't work, and it has a greater tolerance for political dissent than ours."
   
"I get the attitude behind the second half of what you say, but I really would not want to be posting this forum in China.   You and I would never be seen again."
----------------------

True, but the differences between the country pursuing Marxism while shutting down political dissent and China are subtle.
Title: Re: China
Post by: G M on July 21, 2013, 04:04:13 PM
"China has two things going for it.
Their leadership knows Marxism doesn't work, and it has a greater tolerance for political dissent than ours."
   
"I get the attitude behind the second half of what you say, but I really would not want to be posting this forum in China.   You and I would never be seen again."
----------------------

True, but the differences between the country pursuing Marxism while shutting down political dissent and China are subtle.


I think the key difference is that the final vestiges of the constitution and the rule of law have Buraq only using the IRS (for the most part) rather than the full power of the state, as seen in China. Although Zimmerman is probably at the leading edge of what comes next.
Title: the Watermelon Revolution?
Post by: Crafty_Dog on July 22, 2013, 07:46:47 AM
China: The Watermelon Revolution
Posted: 21 Jul 2013 10:55 AM PDT

We've seen two events over the last couple of days that could trigger mass (open source) protest in China.

The first is a watermelon street vendor that was beaten to death with his own scale by a city militia. 

The second is a wheelchair bound man that was blew himself up (after warning people to back away), at the Beijing airport.  He was crippled by an urban militia for running an informal taxi service with his scooter.

Both incidents have been accelerated by social media -- blogs and a short message service like Twitter -- due to widespread public disatisfaction with the militia system called Chengguan.

Chengguan militias were set up in Chinese cities in 2001 to enforce urban codes (a Chinese variant of "broken windows" in US cities).  They are run by local officials with little central oversight.   They mainly harrass the informal economy in Chinese cities and are known for corruption ("confliscation") and brutal enforcement.   
That corrupt brutality is widely resented, particularly now.  Why now? 

Chinese economic growth is slowing and people are turning to the informal economy in desperation only to run into a brutal, corrupt local militia armed with batons.
So, will these two incidents serve to ignite an open source protest that will sweep China -- a watermelon revolution? 

Millions of people hitting the streets and blogs under one simple banner:  no more corruption!

Perhaps.  From afar, these protests look like excellent triggers. 

If it doesn't happen now, it will.   Remember, China is operating on borrowed time.  It's run by a government without any basis for legitimacy other than fast economic growth.  To maintain power, that needs to be true, and it's not true anymore. 
Title: The End of the Chinese Economic Miracle By George Friedman Stratfor
Post by: DougMacG on July 23, 2013, 09:38:53 AM
About a minute ago we were discussing when the Chinese currency would take over the dollar and euro and the global standard.  The answer is no time soon.  China's problems are well covered in the forum.  George Friedman does a nice job of putting them in historical and global context.

http://www.realclearworld.com/articles/2013/07/23/the_end_of_the_chinese_economic_miracle.html
http://www.stratfor.com/weekly/recognizing-end-chinese-economic-miracle

 "Many have asked when China would find itself in an economic crisis, to which we have answered that China has been there for awhile..."

"the vast majority of Chinese cannot afford the products produced in China, and therefore, stimulus will not increase consumption of those products.  ...Stimulating demand so that inefficient factories can sell products is not only inflationary, it is suicidal. The task is to increase consumption, not to subsidize inefficiency."

"The Chinese are thus in a trap. If they continue aggressive lending to failing businesses, they get inflation. That increases costs and makes the Chinese less competitive in exports, which are also falling due to the recession in Europe and weakness in the United States. Allowing businesses to fail brings unemployment, a massive social and political problem. The Chinese have zigzagged from cracking down on lending by regulating informal lending and raising interbank rates to loosening restrictions on lending by removing the floor on the benchmark lending rate and by increasing lending to small- and medium-sized businesses. Both policies are problematic."
...
"[China will] no longer be the low-wage, high-growth center of the world. Like Japan before it, it will play a different role."
Title: Re: China
Post by: G M on July 23, 2013, 10:38:28 AM
Don't underestimate China, especially in a world where America isn't but a fading shadow of it's former self.

Watch for them to make bold moves, especially on the economic front. Like a gold backed yuan for international trade.
Title: Re: China
Post by: Crafty_Dog on July 23, 2013, 12:30:52 PM
GM's point has considerable merit in our mix.  War is a common solution for fascist regimes to their problems and the reality and perception of American military decline makes for mighty temptations, e.g. as has been well-covered in this forum, in the South China Sea.
Title: Re: China
Post by: DougMacG on July 23, 2013, 01:39:41 PM
GM's point [Don't underestimate China] has considerable merit in our mix.  War is a common solution for fascist regimes to their problems and the reality and perception of American military decline makes for mighty temptations, e.g. as has been well-covered in this forum, in the South China Sea.

Absolutely.  My interest in the fall of China, as a human and a libertarian, is that I would like to see the people freed from the regime.  I receive no pleasure or benefit from having them remain a poor, smoggy, polluted third world country.
Title: Re: China
Post by: G M on July 23, 2013, 01:51:01 PM
Part of China is 3rd. world, part of it is first world, kind of like California.
Title: Re: China
Post by: DougMacG on July 23, 2013, 02:27:21 PM
Part of China is 3rd. world, part of it is first world, kind of like California.

You are right of course, but the number of people living a third world existence there is astounding. 

From the Stratfor link, "more than a billion people live in deep poverty"

"the overwhelming poverty of China, where 900 million people have an annual per capita income around the same level as Guatemala, Georgia, Indonesia or Mongolia ($3,000-$3,500 a year), while around 500 million of those have an annual per capita income around the same level as India, Nicaragua, Ghana, Uzbekistan or Nigeria ($1,500-$1,700). China's overall per capita GDP is around the same level as the Dominican Republic, Serbia, Thailand or Jamaica.
http://www.stratfor.com/weekly/recognizing-end-chinese-economic-miracle

Median household income in the US, pre-Obama, was $55,438.
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/29/chart-median-household-incomes-have-collapsed-during-the-recession/
Title: Krugman, Pravda on the Hudson, Barron's, G-Sachs, and G. Friedman lurking here?
Post by: Crafty_Dog on July 24, 2013, 08:13:05 AM

Recognizing the End of the Chinese Economic Miracle
Geopolitical Weekly
Tuesday, July 23, 2013 - 04:08 Print Text Size
Stratfor

By George Friedman

Major shifts underway in the Chinese economy that Stratfor has forecast and discussed for years have now drawn the attention of the mainstream media. Many have asked when China would find itself in an economic crisis, to which we have answered that China has been there for awhile -- something not widely recognized outside China, and particularly not in the United States. A crisis can exist before it is recognized. The admission that a crisis exists is a critical moment, because this is when most others start to change their behavior in reaction to the crisis. The question we had been asking was when the Chinese economic crisis would finally become an accepted fact, thus changing the global dynamic.

Last week, the crisis was announced with a flourish. First, The New York Times columnist and Nobel Prize-recipient Paul Krugman penned a piece titled "Hitting China's Wall." He wrote, "The signs are now unmistakable: China is in big trouble. We're not talking about some minor setback along the way, but something more fundamental. The country's whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be."

Later in the week, Ben Levisohn authored a column in Barron's called "Smoke Signals from China." He wrote, "In the classic disaster flick 'The Towering Inferno' partygoers ignored a fire in a storage room because they assumed it has been contained. Are investors making the same mistake with China?" He goes on to answer his question, saying, "Unlike three months ago, when investors were placing big bets that China's policymakers would pump cash into the economy to spur growth, the markets seem to have accepted the fact that sluggish growth for the world's second largest economy is its new normal."

Meanwhile, Goldman Sachs -- where in November 2001 Jim O'Neil coined the term BRICs and forecast that China might surpass the United States economically by 2028 -- cut its forecast of Chinese growth to 7.4 percent.

The New York Times, Barron's and Goldman Sachs are all both a seismograph of the conventional wisdom and the creators of the conventional wisdom. Therefore, when all three announce within a few weeks that China's economic condition ranges from disappointing to verging on a crash, it transforms the way people think of China. Now the conversation is moving from forecasts of how quickly China will overtake the United States to considerations of what the consequences of a Chinese crash would be.
Doubting China

Suddenly finding Stratfor amid the conventional wisdom regarding China does feel odd, I must admit. Having first noted the underlying contradictions in China's economic growth years ago, when most viewed China as the miracle Japan wasn't, and having been scorned for not understanding the shift in global power underway, it is gratifying to now have a lot of company. Over the past couple of years, the ranks of the China doubters had grown. But the past few months have seen a sea change. We have gone from China the omnipotent, the belief that there was nothing the Chinese couldn't work out, to the realization that China no longer works.

It has not been working for some time. One of the things masking China's weakening has been Chinese statistics, which Krugman referred to as "even more fictional than most." China is a vast country in territory and population. Gathering information on how it is doing would be a daunting task, even were China inclined to do so. Instead, China understands that in the West, there is an assumption that government statistics bear at least a limited relationship to truth. Beijing accordingly uses its numbers to shape perceptions inside and outside China of how it is doing. The Chinese release their annual gross domestic product numbers in the third week of January (and only revise them the following year). They can't possibly know how they did that fast, and they don't. But they do know what they want the world to believe about their growth, and the world has believed them -- hence, the fantastic tales of economic growth.

China in fact has had an extraordinary period of growth. The last 30 years have been remarkable, marred only by the fact that the Chinese started at such a low point due to the policies of the Maoist period. Growth at first was relatively easy; it was hard for China to do worse. But make no mistake: China surged. Still, basing economic performance on consumption, Krugman notes that China is barely larger economically than Japan. Given the compounding effects of China's guesses at GDP, we would guess it remains behind Japan, but how can you tell? We can say without a doubt that China's economy has grown dramatically in the past 30 years but that it is no longer growing nearly as quickly as it once did.

China's growth surge was built on a very unglamorous fact: Chinese wages were far below Western wages, and therefore the Chinese were able to produce a certain class of products at lower cost than possible in the West. The Chinese built businesses around this, and Western companies built factories in China to take advantage of the differential. Since Chinese workers were unable to purchase many of the products they produced given their wages, China built its growth on exports.

For this to continue, China had to maintain its wage differential indefinitely. But China had another essential policy: Beijing was terrified of unemployment and the social consequences that flow from it. This was a rational fear, but one that contradicted China's main strength, its wage advantage. Because the Chinese feared unemployment, Chinese policy, manifested in bank lending policies, stressed preventing unemployment by keeping businesses going even when they were inefficient. China also used bank lending to build massive infrastructure and commercial and residential property. Over time, this policy created huge inefficiencies in the Chinese economy. Without recessions, inefficiencies develop. Growing the economy is possible, but not growing profitability. Eventually, the economy will be dragged down by its inefficiency.
Inflation vs. Unemployment

As businesses become inefficient, production costs rise. And that leads to inflation. As money is lent to keep inefficient businesses going, inflation increases even more markedly. The increase in inefficiency is compounded by the growth of the money supply prompted by aggressive lending to keep the economy going. As this persisted over many years, the inefficiencies built into the Chinese economy have become staggering.

The second thing to bear in mind is the overwhelming poverty of China, where 900 million people have an annual per capita income around the same level as Guatemala, Georgia, Indonesia or Mongolia ($3,000-$3,500 a year), while around 500 million of those have an annual per capita income around the same level as India, Nicaragua, Ghana, Uzbekistan or Nigeria ($1,500-$1,700). China's overall per capita GDP is around the same level as the Dominican Republic, Serbia, Thailand or Jamaica. Stimulating an economy where more than a billion people live in deep poverty is impossible. Economic stimulus makes sense when products can be sold to the public. But the vast majority of Chinese cannot afford the products produced in China, and therefore, stimulus will not increase consumption of those products. As important, stimulating demand so that inefficient factories can sell products is not only inflationary, it is suicidal. The task is to increase consumption, not to subsidize inefficiency.

The Chinese are thus in a trap. If they continue aggressive lending to failing businesses, they get inflation. That increases costs and makes the Chinese less competitive in exports, which are also falling due to the recession in Europe and weakness in the United States. Allowing businesses to fail brings unemployment, a massive social and political problem. The Chinese have zigzagged from cracking down on lending by regulating informal lending and raising interbank rates to loosening restrictions on lending by removing the floor on the benchmark lending rate and by increasing lending to small- and medium-sized businesses. Both policies are problematic.

The Chinese have maintained a strategy of depending on exports without taking into account the operation of the business cycle in the West, which means that periodic and substantial contractions of demand will occur. China's industrial plant is geared to Western demand. When Western demand contracted, the result was the mess you see now.

The Chinese economy could perhaps be growing at 7.4 percent, but I doubt the number is anywhere near that. Some estimates place growth at closer to 5 percent. Regardless of growth, the ability to maintain profit margins is rarely considered. Producing and selling at or even below cost will boost GDP numbers but undermines the financial system. This happened to Japan in the early 1990s. And it is happening in China now.

The Chinese can prevent the kind of crash that struck East Asia in 1997. Their currency isn't convertible, so there can't be a run on it. They continue to have a command economy; they are still communist, after all. But they cannot avoid the consequences of their economic reality, and the longer they put off the day of reckoning, the harder it will become to recover from it. They have already postponed the reckoning far longer than they should have. They would postpone it further if they could by continuing to support failing businesses with loans. They can do that for a very long time -- provided they are prepared to emulate the Soviet model's demise. The Chinese don't want that, but what they do want is a miraculous resolution to their problem. There are no solutions that don't involve agony, so they put off the day of reckoning and slowly decline.
China's Transformation

The Chinese are not going to completely collapse economically any more than the Japanese or South Koreans did. What will happen is that China will behave differently than before. With no choices that don't frighten them, the Chinese will focus on containing the social and political fallout, both by trying to target benefits to politically sensitive groups and by using their excellent security apparatus to suppress and deter unrest. The Chinese economic performance will degrade, but crisis will be avoided and political interests protected. Since much of China never benefited from the boom, there is a massive force that has felt marginalized and victimized by coastal elites. That is not a bad foundation for the Communist Party to rely on.

The key is understanding that if China cannot solve its problems without unacceptable political consequences, it will try to stretch out the decline. Japan had a lost decade only in the minds of Western investors, who implicitly value aggregate GDP growth over other measures of success such as per capita GDP growth or full employment. China could very well face an extended period of intense inwardness and low economic performance. The past 30 years is a tough act to follow.

The obvious economic impact on the rest of the world will fall on the producers of industrial commodities such as iron ore. The extravagant expectations for Chinese growth will not be met, and therefore expectations for commodity prices won't be met. Since the Chinese economic failure has been underway for quite awhile, the degradation in prices has already happened. Australia in particular has been badly hit by the Chinese situation, just as it was by the Japanese situation a generation ago.

The Chinese are, of course, keeping a great deal of money in U.S. government instruments and other markets. Contrary to fears, that money will not be withdrawn. The Chinese problem isn't a lack of capital, and repatriating that money would simply increase inflation. Had the Chinese been able to put that money to good use, it would have never been invested in the United States in the first place. The outflow of money from China was a symptom of the disease: Lacking the structure to invest in China, the government and private funds went overseas. In so doing, Beijing sought to limit destabilization in China, while private Chinese funds looked for a haven against the storm that was already blowing.

Rather than the feared repatriation of funds, the United States will continue to be the target of major Chinese cash inflows. In a world where Europe is still reeling, only the United States is both secure and large enough to contain Chinese appetites for safety. Just as Japanese investment in the 1990s represented capital flight rather than a healthy investment appetite, so the behavior we have seen from Chinese investors in recent years is capital flight: money searching for secure havens regardless of return. This money has underpinned American markets; it is not going away, and in fact more is on the way.

The major shift in the international order will be the decline of China's role in the region. China's ability to project military power in Asia has been substantially overestimated. Its geography limits its ability to project power in Eurasia, an endeavor that would require logistics far beyond China's capacity. Its naval capacity is still limited compared with the United States. The idea that it will compensate for internal economic problems by genuine (as opposed to rhetorical) military action is therefore unlikely. China has a genuine internal security problem that will suck the military, which remains a domestic security force, into actions of little value. In our view, the most important shift will be the re-emergence of Japan as the dominant economic and political power in East Asia in a slow process neither will really want.

China will continue to be a major power, and it will continue to matter a great deal economically. Being troubled is not the same as ceasing to exist. China will always exist. It will, however, no longer be the low-wage, high-growth center of the world. Like Japan before it, it will play a different role.

In the global system, there are always low-wage, high-growth countries because the advanced industrial powers' consumers want to absorb goods at low wages. Becoming a supplier of those goods is a major opportunity for, and disruptor to, those countries. No one country can replace China, but China will be replaced. The next step in this process is identifying China's successors.

Read more: Recognizing the End of the Chinese Economic Miracle | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook
Title: Re: China
Post by: G M on July 24, 2013, 08:31:03 AM
Seeing Krugman's take on China must be a big relief to the Chinese leadership. The fact that GF treats Krugman with anything but contempt makes me question GF.

Good thing the stuff below no way applies to us:


"Because the Chinese feared unemployment, Chinese policy, manifested in bank lending policies, stressed preventing unemployment by keeping businesses going even when they were inefficient. China also used bank lending to build massive infrastructure and commercial and residential property. Over time, this policy created huge inefficiencies in the Chinese economy. Without recessions, inefficiencies develop. Growing the economy is possible, but not growing profitability. Eventually, the economy will be dragged down by its inefficiency.
Inflation vs. Unemployment

As businesses become inefficient, production costs rise. And that leads to inflation. As money is lent to keep inefficient businesses going, inflation increases even more markedly. The increase in inefficiency is compounded by the growth of the money supply prompted by aggressive lending to keep the economy going. As this persisted over many years, the inefficiencies built into the Chinese economy have become staggering."
Title: Re: China
Post by: Crafty_Dog on July 24, 2013, 09:36:41 AM
As good/great as Stratfor often is on geo-politics in equal measure it can be quite the Keynesian mediocrity on economics.
Title: Re: China
Post by: G M on July 24, 2013, 09:41:45 AM
It's really stange that Krugman would condemn China, given his love for command economies and massive gov't spending. Is China's problem like ours, that they just didn't spend enough?
Title: Re: China
Post by: DougMacG on July 24, 2013, 12:35:11 PM
"Seeing Krugman's take on China must be a big relief to the Chinese leadership. The fact that GF treats Krugman with anything but contempt makes me question GF."

"As good/great as Stratfor often is on geo-politics in equal measure it can be quite the Keynesian mediocrity on economics."
-----------------

That was my reaction too.  I assume there is a serious, Princeton economist / Nobel Laureate residing somewhere in Krugman's brain, not just the partisan shill, caricature of a columnist that he plays over at the NYTimes.  I just haven't seen any evidence of it.  It detracts from the piece to quote Krugman but what Friedman is saying - Crafty had it in his title - is that even these people are now admitting what we have been saying for quite a while.
Title: POTH: China and Baby Formula
Post by: Crafty_Dog on July 27, 2013, 10:07:50 AM
The Baby Formula Barometer
By JOE NOCERA
Published: July 26, 2013 78 Comments

   

Edward Wong’s terrific front-page article in The New York Times on Friday is as good an encapsulation of the issues currently facing China and its economy as anything you’re likely to read on the subject. As it tries to move from a fast-growing, export-oriented, developing economy to a more mature economy, it keeps bumping up against problems that could prevent it from becoming the kind of economic power it so clearly longs to be. These problems are almost entirely self-inflicted.



Wong’s article was about, of all things, infant formula. Specifically, it was about how Chinese parents with connections and money scramble to buy formula abroad, even though there is plenty available in China. They hire people who will go into stores in Britain and elsewhere and buy formula for them. Or they buy formula that has been smuggled in from Hong Kong — where smuggling infant formula is now a serious crime. Mainly, Chinese parents want to ensure that the formula they are feeding their babies has never been touched by a Chinese company.

The reason is obvious. In 2008, six babies died and some 300,000 became ill after their mothers fed them baby milk products that were tainted with the chemical melamine. Ever since, Chinese mothers haven’t trusted domestically made baby milk products — starting with formula.

In fact, as I learned during my recent visit to China, Chinese consumers don’t trust a lot of Chinese-made goods. In recent years, there have been food scandals surrounding cooking oil, eggs and meat, for starters. A few months ago, according to Time magazine, three people were caught processing pigs that had died of infectious diseases. A few years ago, contamination of Chinese-produced heparin, the blood-thinner, was linked to 81 deaths. Chinese consumers don’t even favor Chinese cars — foreign models dominate the market — because they fear that someone may have taken a shortcut (or worse) that will cause the car to die.

So problem No. 1: At a time when China is trying to build a domestic economy to match its export economy, there is a complete lack of faith in Chinese companies. “It is not about branding,” an American businessman living in Shanghai told me (he feared consequences to his business if he let me use his name). Rather, he said, there is a sense among consumers that no matter what the industry, too many Chinese businesspeople are willing to scam their own customers to make a buck.

With corner-cutting deeply ingrained as a Chinese business practice, it’s really up to the government to change that ethos through regulation and enforcement. But while the central government is more than happy to pass nice-sounding laws, there is virtually no enforcement, and no real culture of regulation either. That’s problem No. 2. Provincial governments that are supposed to oversee, say, the food supply, are often either in on the scam, or look the other way because they fear that a crackdown might impede economic growth. And officials are evaluated almost exclusively on the basis of growth. Problem No. 3: bad incentives.

And if your car does break down in six months because a supplier sold faulty parts — or your child dies from tainted infant formula? There’s not a thing you can do. Yes, when a big scandal breaks, some crooks go to prison, but even the biggest scandals don’t lead to systematic change. Nor is there any way to seek recompense in the courts; in the West, that has long served to help keep companies on the straight and narrow. The lack of a real rule of law is problem No. 4.

As Wong notes in his article, the government is now investigating foreign companies selling infant formula in China for price-fixing. (Since the scandal, the price of a can of foreign formula has risen by 30 percent.) Whether there is price-fixing or not — market forces are a more likely culprit — this response is exactly the problem: instead of enforcing regulations that would give consumers confidence in their own country’s products, the government instead is finding ways to make life more difficult for those who make products its citizens want.

In the United States, of course, it has become religion among conservatives to denounce regulation, saying it stifles business and hinders economic growth. But consider: At the turn of the last century, America was as riddled with scam artists as China is today. Snake oil salesmen — literally — abounded. Food safety was a huge issue. In 1906, however, Upton Sinclair published “The Jungle,” his exposé-novel about the meatpacking industry. That book, pointed out Stanley Lubman, a longtime expert in Chinese law, in a recent blog post in The Wall Street Journal, is what propelled Theodore Roosevelt to propose the Food and Drug Administration. Which, in turn, reformed meat-processing — among many other things — and gave consumers confidence in the food they ate and the products they bought.

That’s what China needs now. Infant formula just scratches the surface.
Title: Chinese government lurking here too
Post by: Crafty_Dog on July 28, 2013, 10:04:31 PM
http://www.bbc.co.uk/news/business-23486466
Title: WSJ: China's 1+ child policy
Post by: Crafty_Dog on August 04, 2013, 02:38:48 PM
China: Measures to 'Improve' One-Child Policy Are Under Review
Beijing Faces Calls for More Personal Freedom


BEIJING—China's authorities are studying measures to "improve the one-child policy" by allowing some families to have a second child, the official Xinhua News Agency reported late Friday, citing an official with the national family planning agency.

"Our commission is organizing research on the size, quality, structure and distribution of the population so that we can propose plans to improve the [one-child] policy," Mao Qun'an, director of the propaganda office at the National Health and Family Planning Commission, told Xinhua.

"We'll have to move cautiously and coordinate between current situations and long-term objectives," said Mr. Mao, without elaborating.

Beijing is under pressure to ease its grip on child birth in response to calls for more personal freedom in an increasingly affluent society. Such a move is also aimed at offsetting the financial effects of an aging society and addressing potential labor shortages in the years ahead. The nation's working population declined for the first time in decades last year due to the nation's tight controls on child birth.

Despite Mr. Mao's cautious rhetoric, expectations are building for Beijing to loosen controls on the nation's decadeslong one-child policy.

The 21st Century Business Herald on Friday cited unnamed sources with the national family planning agency as saying such moves could be expected either late this year or next year.

Some economists agree. The window for population-policy reform could be around the Communist Party's annual meeting in the fourth quarter of this year or around the National People's Congress meeting early next year, Bank of America Merrill Lynch economist Lu Ting said in a note released Saturday.

An estimated 9.5 million "incremental babies" will be born if such a move takes place as expected, Mr. Lu said.

China limits couples to only one child. Violators can face financial penalties. Minority groups are exempt, and anyone with enough money can get around penalties for having a second child. Rural families whose first child is a girl may have a second child, as can married couples who are both themselves only children.

In many rural areas, the restrictions are routinely ignored, though policies in the cities have been more tightly enforced.
Title: WSJ: Chinese banks feeling stress
Post by: Crafty_Dog on August 15, 2013, 10:06:48 AM


http://online.wsj.com/article/SB10001424127887323446404579010781178659564.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsThird

When I post just the URL for a WSJ article can you guys see it?
Title: China's risky interbank lending markets
Post by: Crafty_Dog on August 15, 2013, 07:48:43 PM

stratfor

Summary

The rapid rise of interbank lending markets since 2011 shows that Chinese banks and other financial institutions, especially local and provincial ones, continue to struggle to boost liquidity and cash flow as economic growth slows. Though interbank markets are not a nationwide phenomenon, their continued expansion and growing sophistication could create systemic risks for China's financial system.
Analysis

Interbank loan and bond markets have been staples of the Chinese financial system since the 1990s. Until recently, however, they accounted for a comparatively small portion of total assets held by listed Chinese banks -- roughly 1.6 trillion yuan ($261 billion), or 3.6 percent of total banking sector assets, in 2006. For most of the 2000s, interbank markets in China, like those in other countries, provided short-term, targeted relief for cash-strapped banks. But because interbank loans were available only to commercial banks, and because commercial banks in China are required to maintain high levels of liquid reserves at all times, demand for interbank loans remained relatively low. Moreover, high reserve requirements for commercial banks minimized the risks of interbank loans. 

This began to change after the 2008-2009 financial crisis, particularly after the central government's clampdown in late 2011 on speculative real estate markets and the local government financing vehicles behind them. Suddenly, with residential property markets increasingly squeezed, the Chinese banks that were still capital-rich scrambled to find new investment outlets that could deliver similarly high rates of return.

The pressure was especially high for small- to medium-sized local and provincial banks. They enjoyed neither the enormous depositor bases of the largest commercial banks, such as the Bank of China and China Construction Bank, nor these banks' privileged position as lenders of choice to key state-owned enterprises. Smaller banks' close connection to and heavy reliance on demand from local governments throughout the post-2008 boom only aggravated their pain when, on Beijing's orders, demand suddenly dried up. Banks and their wealthy investors were forced to look for other conduits for their capital.

The years following Beijing's crackdown on local government financing vehicles saw a spike in the number and size of non-traditional lending institutions, such as trust companies, mutual funds, peer-to-peer lenders and "wealth management products" distributed mostly by small- and medium-sized banks -- not to mention local branches of larger banks. These informal investment products came about to meet a simple need: spending money.

Indeed, after four years of government-directed credit creation, China's banking system was flush with capital that had to be put somewhere. When capital could no longer flow into property markets through traditional channels, investment had to go through non-traditional channels. Anecdotal reports suggest that by late 2012 much of the capital generated by sales of wealth management products was redirected back into those same non-traditional products. As a result, assets in informal lending markets inflated rapidly. 

By mid-2012, the line blurred between formal and informal lenders at the local level. What remained was a network of local and provincial financial actors -- not only banks but also trust companies and mutual funds -- all working with and through one another in search of higher returns. In this context, local interbank loan markets emerged as a key if temporary buffer to help cash-strapped and increasingly intertwined local lenders avoid short-term liquidity crunches. When non-bank lenders and investors entered interbank markets, the demand for short-term loans multiplied, especially as slowing economic activity gave way to defaults on trust and wealth management products in late 2012. By March 2013 the total value of assets held in interbank markets reached 11.6 trillion yuan, nearly 10 times their value in 2006 and about 12 percent of China's total banking sector assets.

As more and more diverse actors began borrowing and lending on interbank markets, a new kind of player emerged: the intermediary. Industrial Bank, a midsized lender based in Fujian province and known colloquially as China's "Interbank King," best exemplifies this kind of intermediary. More than 36 percent of the bank's total assets are tied to interbank markets (the most of any Chinese bank), and in the first half of 2013 interbank operations accounted for some 50 percent of its profits -- which, notably, grew by 26.52 percent in the same time frame, more than double most profit expectations for China's largest commercial banks.

The key to Industrial Bank's success was not that it bought or sold loans or bonds on interbank markets; rather, it was that it brought together other banks looking to borrow and lend. All the while it profited from the transaction fees. This makes Industrial Bank's profit growth one of the clearest indicators of strongly rising demand for interbank loans currently, despite Beijing's attempt to crack down on excessive interbank activity. Such crackdowns have taken a variety of forms, from the People's Bank's reticence to inject liquidity into interbank markets in June to the more recent decision by the central bank to ban Baoshang Bank Co., a local lender in Inner Mongolia, from participating in interbank bond transactions for two years.
Local Problems

A defining feature of interbank lending markets is that they are localized. Certainly, China's biggest state-owned commercial banks with nationwide reach are exposed to interbank operations. But comparatively, these activities constitute a small portion of their lending and purchases. Moreover, given banks' large depositor bases and high reserves requirement ratio of 20 percent (the United States' is 10 percent), the largest commercial firms run little risk of an outright cash crunch due to tight liquidity conditions on the interbank markets.

In addition to their comparative disadvantage to the "Big Four" centrally administered state banks, the smaller banks that are most active in interbank lending markets are far less receptive to central government directives. These banks include informal offshoots and local branches of larger banks, and they are all especially resilient to directives aimed at curbing credit and investment growth. Instead, their interests are closely aligned with those of local governments and local economies -- namely, growth regardless of wider market trends. Major state-owned banks with large balance sheets may tolerate stagnating investment income, but smaller banks, which require cash flow simply to stay afloat, cannot.

Their position is made worse by the overwhelming concentration of nonperforming loans at the local level. All of these loans were given out on credit during the post-2008 boom to local governments with little capacity to repay. For these banks, the ability to get a small, short-term loan on interbank markets is therefore critical in meeting reserve requirements and making basic payments to investors.

On the one hand, the concentration of interbank operations among smaller banks helps Beijing. It reduces the risk of systemwide collapse by isolating the riskiest elements of the banking sector far from the more important Big Four state-owned commercial banks. However, it makes effective central management and coordination of interbank operations nationwide virtually impossible. The most Beijing can do is pre-emptively punish irresponsible local banks as it did with Baoshang. Otherwise, it can do little but wait until seasonal liquidity crunches create an opportunity for it to warn banks that are overly exposed to interbank markets, such as Industrial Bank or China Everbright, a Shanghai-based lender that defaulted on a wealth management product earlier this year. Both measures fall far short of addressing the underlying problem of small- and medium-sized banks' need for higher returns on their investment than the economy can now provide.

The key risk for Beijing is that as demand for interbank loans and bonds grows, more companies will adopt the business model of Industrial Bank, and the matchmaking operations of Industrial Bank and its midsized peers will, in turn, become more far-reaching and sophisticated. For Beijing, localized defaults on one or two lending products, or even countywide crises in disparate regions, are manageable precisely because they are isolated and localized.

But banning individual banks in distant provinces does nothing to redress the rising demand for interbank operations, which gives way to increasingly interconnected networks of interbank lending tied together by fast-growing intermediaries such as Industrial Bank. In the coming months, Beijing's task will be to stem the tide of demand that companies like Industrial Bank are both riding and propelling forward.


Title: Re: WSJ: Chinese banks feeling stress
Post by: G M on August 16, 2013, 06:46:03 PM


http://online.wsj.com/article/SB10001424127887323446404579010781178659564.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsThird

When I post just the URL for a WSJ article can you guys see it?


Yes.
Title: China begins to curb coal, cars, and air pollution
Post by: Crafty_Dog on September 13, 2013, 06:36:32 AM
I have posted here many times about China being less than it seems due to dishonest bookkeeping, unsound demographics, and the fact that the country has become a toxic dump.  According to this POTH piece, the Chinese government begins to grapple with the last of these:


China’s Plan to Curb Air Pollution Sets Limits on Coal Use and Vehicles
By EDWARD WONG
Published: September 12, 2013


BEIJING — The Chinese government announced an ambitious plan on Thursday to curb air pollution across the nation, including setting some limits on burning coal and taking high-polluting vehicles off the roads to ensure a drop in the concentration of particulate matter in cities.


The government is responding to criticism over the abysmal condition of the country’s air, soil and water.




The plan, released by the State Council, China’s cabinet, filled in a broad outline that the government had issued this year. It represents the most concrete response yet by the Communist Party and the government to growing criticism over allowing the country’s air, soil and water to degrade to abysmal levels because of corruption and unchecked economic growth.

The criticism has been especially pronounced in some of China’s largest cities, where anxious residents grapple with choking smog that can persist for days and even weeks. In January, the concentration of fine particulate matter in Beijing reached 40 times the exposure limit recommended by the World Health Organization.

Environmental advocates, including some at Greenpeace East Asia, said the plan did not go far enough, while others praised it for at least acknowledging some of the basic causes of the country’s chronic air pollution. But there was wide agreement that the ultimate test would come in how it is carried out and enforced.

Chinese cities suffer from some of the worst air pollution in the world, with outdoor pollution having accounted for 1.2 million premature deaths in China in 2010, according to the 2010 Global Burden of Disease Study. Increasingly, air pollution is changing everyday life. Face masks are becoming more ubiquitous in the cities, and some affluent parents increasingly choose schools more for their air filtration systems than for their academics. The environment is emerging as a potent political issue.

For years China has had an array of strict environmental standards on paper, and its leaders talk constantly about the need to improve the environment. But enforcement has been lax, and the environment has continued to deteriorate at an alarming rate.

“The plan successfully identifies the root cause of air pollution in China: China’s industrial structure,” said Ma Jun, a prominent environmental advocate. “Industrialization determines the structure of energy consumption. If China does not upgrade its coal-dependent industries, coal consumption can never be curbed.” he said. “The key to preventing air pollution is to curb coal burning — China burns half of all the coal consumed in the world.”

Under the new plan, concentrations of fine particulate matter must be reduced by 25 percent in the Beijing-Tianjian-Hebei area in the north, 20 percent in the Yangtze River Delta in the east and 15 percent in the Pearl River Delta in the south, compared with 2012 levels.

All other cities must reduce the levels of larger particulate matter, known as PM 10, by 10 percent. It is unclear why the plan calls for a looser standard for other cities, since the fine particulate matter, known as PM 2.5, is considered deadlier than PM 10 because it can penetrate deep into the lungs and enter the bloodstream

The plan said Beijing must also bring its average concentration of PM 2.5 down to 60 micrograms per cubic meter or less. That would be two and a half times the recommended exposure limit set by the World Health Organization.

For years, Chinese officials kept measurements of PM 2.5 from the public. But many Chinese in Beijing turned to a Twitter feed from the United States Embassy to see the hourly PM 2.5 reading from a monitoring machine on the embassy rooftop. That, in turn, put pressure on the government to have cities start releasing their PM 2.5 measurements. Beijing began reporting PM 2.5 levels in January 2012, and the official Xinhua news agency has reported that 74 cities are supposed to be releasing their PM 2.5 data this year.

On Thursday, pollution climbed to levels that the embassy rated “very unhealthy,” with a PM 2.5 concentration at 10 p.m. at 213 micrograms per cubic meter. Much of the city’s downtown skyline was obscured by a thick haze.

Coal consumption has grown rapidly in China, and the plan places only modest limits on consumption, with coal to account for no more than 65 percent of energy use in 2017, compared with around 67 percent last year. Some of the plan’s critics said they were disappointed that there were no specific limits on coal consumption by region. The plan allows local governments to set those limits on their own.

“Instead of setting a goal to reduce coal burning for each province, the action plan gives each province the power to set goals for themselves, which leads to the goals being very conservative,” said Huang Wei, who works on climate and energy advocacy at Greenpeace East Asia.

The plan addressed vehicle emissions by removing all high-polluting “yellow label” vehicles that were registered before the end of 2005 from the roads by the end of 2015. In the three regions with heavy industry, all such vehicles are to be taken off the roads by 2015, and the same for all of China by 2017.

In those three regions, gasoline and diesel of a high standard, China V, will be provided in certain cities. But the plan did not set targets for new vehicle emissions standards, which some environmental advocates say is a major omission. “We had been waiting for months for the new action plan,” Ms. Huang said. “We thought it might be a pivot point in history. Now it’s here, and we think it has very much fallen short of our expectations.”

Chris Buckley contributed reporting from Hong Kong, and Mia Li contributed research from Beijing.



Title: Taiwan
Post by: Crafty_Dog on September 16, 2013, 06:20:03 AM
The background context described herein was interesting to me.


Summary

A recent power struggle within Taiwan's ruling Kuomintang corresponds with the country's deep-seated political and ethnic disparities. Like the island itself, the party is roughly divided between early generations of Taiwanese residents, who consider themselves natives, and immigrants who came to Taiwan from China in the 1940s, often referred to as "mainlanders." This explains why Taiwanese President Ma Ying-jeou's recent move against a rival underscores the island's inherent political issues. On Sept. 11, Ma -- a mainlander -- revoked the party membership of Wang Jin-pyng, the country's powerful indigenous parliamentary speaker.

It is unclear what long-term consequences will come about from Wang's removal. Certainly it will further aggravate tensions within the Kuomintang, but given Wang's popularity and influence, it could also lead to the creation of a viable third party that could threaten the Kuomintang's political dominance. Otherwise, Wang could align himself with the political opposition. Any political realignment will concern Beijing, which considers the Kuomintang's aversion to independence critical for easing cross-strait tensions.
Analysis

The current spat began over allegations that Wang misused political power. He stood accused of interfering in a court case and of lobbying a former justice minister to appeal the acquittal of a lawmaker for the opposition Democratic Progressive Party. As a result, Wang lost his party membership, albeit temporarily. (He later appealed the dismissal in court successfully and has since been reinstated.) Nonetheless, his expulsion will likely end his 14-year stint as the head of the parliament.
Removing an Obstacle

In some sense, the scandal was merely an extension of a long-standing power struggle between Ma and Wang and their respective bases of support. The struggle became public in 2005, when the two officials each contended for the Kuomintang chairmanship. Ma won with 72.4 percent of the votes. However, Wang remained very influential, due in part to nearly four decades of experience and to extensive political networks both inside and outside the Kuomintang. He has used his position and influence to challenge the Ma presidency for years. For example, he supposedly has obstructed the passage of several important presidential proposals -- even though he and Ma share allegiance to the same party.

The timing of the dismissal is notable. Ma's support is currently dwindling, so he is promoting several policies that he hopes will salvage his career as elections approach. In this context, Wang's expulsion is widely seen as an effort to consolidate power and remove an obstacle that could block some of these policy proposals in the legislature. Among the proposals are a nuclear plant bill and a cross-strait service trade agreement, a key follow-up to the milestone cross-strait Economic Cooperation Framework Agreement signed in 2010.

Ma has tried to portray Wang's dismissal as an effort to protect the integrity of the justice system, but the public is unconvinced. A recent survey showed that only 11 percent of Taiwanese citizens support Ma. By comparison, Wang's support rate is a little higher than 60 percent. Lackluster support may prevent Ma from implementing his policy proposals.
Polarization

These challenges become more pronounced in Taiwan's polarized political atmosphere. An overarching theme in contemporary Taiwanese politics and society, this polarization stems from the island's geopolitical environment and divided ethnicity -- namely, the mainlanders who fled China in the mid-20th century and the native populations that have resided on the island for a much longer period. The former group is a minority, comprising only 15 percent of the population. Consequently, the country broadly boasts two predominant identities -- a Taiwanese national identity and an ethnic Chinese identity -- and this duality has shaped the debate over Taiwanese independence for years.

Taiwan: A Party Dismissal Bodes Ill for the Kuomintang

In Taiwan, there are several political parties, but only two dominate politics. The Kuomintang is generally regarded as the party of the mainlanders, and the Democratic Progressive Party, with its Taiwanese nationalist and pro-independence agenda, is regarded as the party of the indigenous Taiwanese. The Kuomintang ruled in a single-party system until the 1980s, when it faced accusations of over-dominance and corruption. Unsurprisingly, indigenous parties began to grow more popular, so Kuomintang politicians were forced to widen their appeal to the indigenous to secure their rule. In fact, Lee Teng-hui, the president who oversaw Taiwan's democratic transition at the end of the 20th century, was an indigenous Kuomintang politician.

Thus, ethnic and political divisions between mainlanders and natives also exist within the Kuomintang. This is why Wang's dismissal bodes ill for intra-Kuomintang politics. Wang is among the most prominent members of the indigenous camp, and he helped secure support for the party in southern Taiwan, an indigenous political stronghold. But what could hurt the Kuomintang even more is if Wang, given his influence and networks, creates his own party ahead of the 2014 and 2016 elections as some observers have suggested. This actually happened in the early 2000s, when James Soong broke off from the Kuomintang and ran for the presidency on the People First Party ticket. He poached votes from the Kuomintang, effectively giving the presidency to the Democratic Progressive Party's Chen Shui-bian.

Even if he does not form his own party, Wang could still align with the opposition. As an indigenous politician, he and the Democratic Progressive Party have similar agendas and a shared power base.
Beijing's Concern

China would be concerned by a political realignment in Taiwan. Although Beijing has little influence in Taipei, it has long considered Taiwan's mainlanders a proxy group through which it could confer some degree of political and economic influence. China's ultimate goal, of course, is eventual reunification, and Beijing believes it has a much better chance, albeit a remote one, of achieving this goal with the Kuomintang in power. At the very least, the Kuomintang would prevent the island from distancing itself further from Chinese interests. To that end, Beijing has attempted to cultivate mainlander politicians, catering to their power bases through political or economic incentives.

Since 2008, the Kuomintang has made several proposals to integrate economically with mainland China. And yet its strategy is to benefit from China's economic success while carving out enough space to maintain its autonomy. Beijing understands that as long as the possibility for reunification exists, there is little reason to force the issue. Still, the Kuomintang's dissonance and its declining popularity represent a serious challenge to the Chinese leadership. Beijing does not want to see its cross-strait strategy complicated by political tensions and unpredictability in Taiwan.

Read more: Taiwan: A Party Dismissal Bodes Ill for the Kuomintang | Stratfor
Title: While we choose the Euro model China chooses greater econ freedom
Post by: Crafty_Dog on October 05, 2013, 06:37:36 AM
Note who is the author.

China’s Economy, Back on Track
By HENRY M. PAULSON Jr.
Published: October 4, 2013 32 Comments

 
CHICAGO — NEXT month, President Xi Jinping and Prime Minister Li Keqiang will use an important meeting — the so-called Third Plenum of the Communist Party’s 18th National Congress — to unveil China’s priorities for reforming economic policy for the next decade.


Yet because it will probably decide only general policies, leaving the specifics for later, some cynics have already begun to dismiss the reforms as too little, too timid and too late. They note that a decade ago, a previous generation of leaders failed to reduce the influence of state-owned enterprises and to complete the economic reforms of the 1990s.

But I believe the prospects for restructuring China’s economy — bolstering the role of the market, expanding opportunities for small and medium-size businesses, allocating capital more efficiently and improving the balance between consumption and investment — are better than at any point since the 1990s. At a time when global growth remains sluggish, reinvigorating such reforms is more important than ever to the world economy.

There are four reasons for my optimism.

First, China’s leaders clearly understand that their growth model needs to change.

In speech after speech, Mr. Xi and Mr. Li have put their political capital on the line by promoting economic reform. They have drawn up blueprints and adopted pilot programs — like a free-trade zone in Shanghai — that will bolster the market and rationalize the allocation of capital, for instance by permitting more foreign competition and greater fluctuation of interest rates.

Other reforms, including liberalizing deposit rates, still need to be put in place, but an experiment to liberalize lending rates is a very positive step. So is Beijing’s signal that it might open more sectors of its economy to competition through a bilateral investment treaty with the United States.

Second, China’s new leaders are strong enough to press for change. The history of Chinese economic reform suggests that vigorous central leadership is essential. Deng Xiaoping was the determined architect behind China’s initial reforms in 1978 and their reinvigoration in 1992. Zhu Rongji, the prime minister under President Jiang Zemin, pushed through reforms of the taxation system and state-controlled industries that paved the way for China’s joining the World Trade Organization in 2001.

But in the decade or so since then, reforms stalled, and a major cause was the evaporation of political commitment in Beijing. The new leaders have signaled that they are prepared to move. An anti-corruption campaign begun by Mr. Xi demonstrates a willingness to take on even the most politically sensitive pillars of the state-led economy.

Third, China no longer has the luxury to delay needed reforms. China’s economic output expanded nearly sixfold between 2002 and 2012, from $1.5 trillion to $8.3 trillion, but that growth fostered complacency. True, it weathered the financial crisis through giant spending on public works, but that only put off the day of reckoning. The presumption that China can simply grow its way out of any problems no longer holds. Growth is slowing, inequality has widened, provincial and local government debts have climbed. China’s export-oriented sectors face harsh headwinds, from sluggish consumer demand in advanced markets to rising labor costs at home.

Fourth, public expectations for change are higher than ever. When the new leaders were appointed last year, they were compared favorably to their immediate predecessors, President Hu Jintao and Prime Minister Wen Jiabao. But the honeymoon for Mr. Xi and Mr. Li, who took over last November, is over.

Increasingly, they are being measured against the bold Mr. Jiang, the Communist Party leader from 1989 to 2002, and Mr. Zhu, the prime minister from 1998 to 2003. And so the necessity for action is greater.

Momentum is building for reforms that would introduce market prices for oil, gas and other natural resources so that prices better reflect supply and demand, rather than official fiat. Distorted pricing has been one cause of China’s energy inefficiency and environmental degradation. Like the new steps toward liberalizing energy prices, Shanghai’s new free-trade zone is another positive indicator. More is needed — broader access to capital, greater investment options and protections from the risk of haphazard capital flows — if Shanghai is to become a global financial center.

A new round of fiscal reforms is also likely, leading to more rational allocation of resources between the central and local governments, which are struggling to rebuild weakened rural pension and health care systems and manage the largest urbanization in human history in a sustainable way, while paying for unfunded mandates from Beijing and maintaining job growth.

This vast array of specific reforms can’t be achieved at a stroke, and certainly not at a single party gathering. But the decisions likely to be taken in November will set China’s economy in a positive — and lasting — new direction. Advanced economies, like the United States and the European Union, depend on it as much as China does.

Henry M. Paulson Jr., the secretary of the Treasury from 2006 to 2009 and a former chairman and chief executive of Goldman Sachs, is chairman of the Paulson Institute, which promotes sustainable growth and a cleaner environment in the United States and China.
Title: WSJ reading our forum
Post by: Crafty_Dog on October 31, 2013, 05:34:12 AM
I have been making this point consistently for several years now:

Ruchir Sharma: China's Illusory Growth Numbers
Huge new flows of credit and public investment are delaying needed reforms and inflating a real estate bubble.
By Ruchir Sharma
Oct. 30, 2013 7:09 p.m. ET

Beijing appears to be on track, yet again, to hit its official growth target. According to China's National Bureau of Statistics, gross domestic product rose 7.8% in the third quarter of 2013, well on its way toward hitting the official target of 7.5% GDP growth for the year.

But can these numbers be trusted? Beijing has a long tradition of setting and then claiming to exceed high growth targets, which makes growth appear both rapid and stable. For years, China reported much less volatile economic growth than other developing nations, but lately volatility has all but disappeared. Since the start of 2012, China has reported a GDP growth rate within a few decimal points of the official target—every quarter.

Another reason to question these numbers is that China's second most powerful official has. In a 2007 cable revealed by WikiLeaks in late 2010, Chinese Premier Li Keqiang was quoted acknowledging that official GDP numbers are "man-made." Mr. Li, who was head of the Communist Party in northeastern Liaoning province at the time, told then-U.S. Ambassador to China Clark Randt that he looked to more reliable numbers—on bank loans, rail cargo and electricity consumption—to get a fix on the actual growth rate.

Some economists now call these economic indicators the "LKQ Index." That index shows that China's economic growth was a lot weaker than officially claimed in the first half of 2013 and picked up in the third quarter only on a new round of stimulus to meet the annual GDP target of 7.5%.


Pressure to hit the official target has reached new highs as China's Communist Party leaders prepare for a critical Central Committee meeting next month. With a per capita income of about $7,000, China has reached the stage of development when even the previous "miracle economies" of East Asia—Japan, Korea and Taiwan—began to slow, from a GDP growth rate near double digits to around 5% to 6%.

The Central Committee is expected to address key issues facing China in this middle-income phase, including the need to reduce the role of state-owned enterprises, promote fiscal reform and reorient the economy away from an overreliance on exports toward a stronger consumer sector. Though widely praised for the market reforms that got China this far, the Communist leadership seems fixated on a growth target that is no longer realistic for a middle-income country. This obsession will make the next stage of reforms difficult, if not impossible, to achieve.

At the start of this year, there had been signs that Beijing was ready to dial back on the huge new flows of credit and public investment that it unleashed to keep China growing at its target rate after the 2008 global downturn. But that course correction was short-lived. By July, the leadership was ordering up a fresh wave of credit and investment to reach its inflated target.

This approach is not going to produce genuinely sustainable growth. In recent years, China has pumped out new credit faster than any other country, and much of it is going to increasingly shaky investments, not new manufacturing muscle. Five years ago, it took just over a dollar of debt to generate a dollar of economic growth in China, but now it takes four dollars of debt to generate the same growth.

Much of today's lending is going to real-estate speculation and local government vanity projects. Investment is growing at a 20% annual pace this year, much faster than consumption. This is the opposite of what China needs to create a stronger consumer sector and to reform other excesses—including property-market speculation, corruption and pollution—now threatening its old industrial model.

Why did Beijing return to this outdated path? China's leaders may believe they need a GDP growth rate of at least 7% to avoid joblessness and social unrest, but this concern is misplaced. Every percentage point of growth in China's maturing economy now produces 1.6 million to 1.7 million new jobs, up from 1.2 million 10 years ago. So even at a GDP growth rate of 5% to 6%, China would generate enough new jobs for its aging population and maturing economy, which has fewer young people entering the workforce.

China's leaders may also believe they need high growth to ensure that the recent credit binge does not lead to a wave of bankruptcies. But a new wave of low-quality loans only puts millions more borrowers at risk. Loosening credit conditions have pushed up home prices by 17% this year in major cities, raising fears that this latest real-estate boom will end in a burst bubble.

China grew rapidly for three decades by relying on a huge base of low-income workers that no longer exists, and by building the manufacturing export industries that are essential to high productivity growth. This model has reached its limits. Japan and Germany followed a similar path in the postwar years, and their share of global exports eventually hit a peak of 12%—exactly the level at which China has flatlined in the past two years.

The manufacturing share of China's economy is now 30%—the same as Japan at its 1970 peak. Consumption in China is already growing at 7% to 8%, the maximum rate any miracle economy has achieved. If consumption cannot grow faster, and the current rate of investment is dangerously high, then slower GDP growth is unavoidable.

Beijing's devotion to hitting a 7.5% growth target is at the heart of China's problems. That target comes from a rough estimate of the growth rate China needs to double its GDP by the end of this decade. This is a purely political ambition with no basis in economics, reminiscent of the man-made targets that guided the Soviet Union's effort to catch up to the West. The lesson of that failed Communist experiment is that it would have been better to arrive late than never.

Mr. Sharma is head of emerging markets at Morgan Stanley Investment Management and author of "Breakout Nations: In Pursuit of the Next Economic Miracles" (Norton, 2012).
Title: More free market coming
Post by: Crafty_Dog on November 12, 2013, 08:53:16 AM
http://online.wsj.com/news/articles/SB10001424052702304644104579193202337104802?mod=WSJ_hps_LEFTTopStories
Title: Re: More free market coming
Post by: G M on November 12, 2013, 09:19:42 AM
http://online.wsj.com/news/articles/SB10001424052702304644104579193202337104802?mod=WSJ_hps_LEFTTopStories

Funny how free markets work. Too bad we aren't allowed to use them.
Title: An interesting TED talk
Post by: Crafty_Dog on November 12, 2013, 09:22:21 AM


http://www.youtube.com/watch?v=ebXA1lRqDfM&desktop_uri=%2Fwatch%3Fv%3DebXA1lRqDfM&app=desktop
Title: WSJ: China to ease one-child policy, other changes too
Post by: Crafty_Dog on November 15, 2013, 06:26:18 AM
China to Ease One-Child Policy
Leaders Will Also Abolish Re-Education Through Labor
By Carlos Tejada
Updated Nov. 15, 2013 7:43 a.m. ET

BEIJING—China's leaders agreed to loosen the nation's one-child policy and to give market forces a greater role in the world's No. 2 economy, according to new details of a blueprint for reform released on Friday.

The proposals follow the end on Tuesday of a four-day meeting of top Chinese Communist Party leaders, and they represent the first comprehensive road map for reform under new Chinese President Xi Jinping.

China's One-Child Policy

While a preliminary summary of the meeting released on Tuesday was vague, the more-detailed document released on Friday sketches an ambitious reform program designed to address problems that China faces: maturing growth, rising worries about a wide wealth gap and endemic pollution, and increasingly vocal criticism of Beijing's handling of a number of social issues.

"More attention also needs to be paid to employment, income levels, social security and people's health," the document said.

The test now for Mr. Xi and China's leaders will be how to implement many of its goals, including whether they will be introduced in coming months or will be introduced more gradually. The leadership is likely to face resistance ranging from state enterprises and the bureaucracies that oversee them to local governments, which have been frustrated by attempts at piecemeal reforms in recent years. A special leadership committee to oversee reform, which was announced previously, is supposed to address possible resistance, though the document provides few details on how it will do so.

The document said China would significantly ease its one-child policy, allowing couples to have two children if one of the parents is an only child. Currently, Chinese couples are restricted to one child except under some circumstances, such as rural dwellers, pilot programs in a number of areas and among ethnic minorities.

Enacted in 1980, the policy has been lauded by officials for taming a surging population from a years-earlier baby boom. But economists say it risks eroding China's competitive advantage, draining its labor pool of future workers as the population ages and puts a greater strain on China's emerging social safety net.
Related Reading: Third Plenum


The policy has also come under fire for local-level abuses such as forced abortions and sterilizations—practices that are illegal in China but are sometimes used by local officials to meet their family-planning quotas.

On economic matters, Chinese leaders said they would establish a system for insuring bank deposits, prepare a mechanism for financial bankruptcy and ease controls on prices for energy, water, telecommunications and other services. They will also increase the amount of profits that China's vast state-owned enterprises pay to the government.

It also said it would ease curbs on offshore securities investments and mergers and acquisitions, without providing details.

The moves follow calls by economists for Beijing to loosen its grip on capital controls and allow private capital to have a greater role in China's economy. Economists say China's traditional reliance on government investment and exports to fuel its economic growth is unsustainable, and China's leaders have called for a greater role for China's growing consumer class in powering growth.

The document set few firm deadlines. One of them raises the proportion of profits state companies must return to the treasury, increasing that rate to 30% by 2020, from a current range of 5% to 15%.

China also plans to abolish a controversial labor camp system in what Xinhua described as "part of efforts to improve human rights and judicial practices." Under the system, which has been in place since 1957, police are allowed to imprison people in labor camps for up to four years without formal arrest or trial.

Public outrage over the system swelled earlier this year, after a woman named Tang Hui was sent to a labor camp after petitioning authorities for tougher penalties for the men convicted of abducting and raping her daughter. Ostensibly set up to as a way to keep petty crimes from clogging the courts, in practice it is used to imprison petitioners and other politically disruptive people.

Officials had signaled intentions to either reform or abolish the system, known as re-education through labor, as early as January, but this marks the first time the government has mentioned abolishing it in a formal document.

The document stressed resource conservation to combat severe environmental degradation, which has emerged in recent years as a major point of social instability. It added that further liberalization of resource pricing would play an important part in that effort.

Perhaps most notably, the document said in certain parts of China, local governments wouldn't be judged on economic performance alone, and that environmental protection would play an increasingly important role in evaluations. Environmental scholars have long said cadres in China had a disincentive to protect the environment because their promotions were tied too closely to economic growth and other factors.

The government also said it would step up health-care reform, accelerating an overhaul of its public hospital system to create more community hospitals and relieve overrun facilities in big cities.

Authorities will also change the way that doctors are paid to try to address the low wages that have contributed to bribery and corruption in hospitals. It also said catastrophic health insurance would be offered for the first time as part of the health insurance system.
Title: WSJ been reading our forum again
Post by: Crafty_Dog on November 27, 2013, 10:41:54 AM
Nicholas Eberstadt: China's Coming One-Child Crisis
A minor tweak in Beijing's population controls will not prevent a demographic crash.
By Nicholas Eberstadt
Nov. 26, 2013 7:19 p.m. ET

Vladimir Lenin, the founder of the Soviet state and godfather of modern totalitarian politics, once explained the totalitarian worldview this way: "We recognize nothing private." By that criterion, no totalitarian project in our era has been more ambitious than the Chinese government's policy of forcible population control. Since the institution of the so-called One Child Policy in 1980, China's Communist Party has demanded mastery over that final and most intimate of all private spheres, the family.

Forced sterilizations, involuntary abortions, female infanticide and untold other family tragedies have been ruthlessly routine aspects of the national plan to drive down childbearing to meet the state's birth targets. Despite recent news reports trumpeting an official easing of the policy, the changes were inconsequential—and China's demographic future remains dire, not just because of the One Child Policy's ill effects.


What Mao might have termed the "contradictions" of this population-control policy have markedly intensified over the past three decades as China's market-oriented reforms increased autonomy and personal control over other aspects of life. While China today is awash with a general social anger over government corruption and the lawlessness of the nation's rulers, no single state policy is so widely and deeply hated.

Meanwhile, Chinese scholars, demographers and economists have grown increasingly outspoken about what they describe as the irrational and counterproductive consequences of the population policy. Even the government's top think tank, the Development Research Center of the State Council, has publicly issued such criticisms.

The Communist Party's "open letter" that announced the One Child Policy in 1980 also proclaimed: "After 30 years, the currently very intense population growth problem will be eased, and different population policies can be adopted"—a seeming pledge that the program would only be temporary.

All this gave rise to hope that a major change in China's population-control project was imminent—and might be announced by President Xi Jinping at the Nov. 9-12 Third Plenum of the Communist Party's Central Committee. What the regime promulgated, however, was a relatively minor adjustment. Couples would be allowed to have two children if just one spouse is an only child, instead of both spouses as the policy was previously. No time frame was given for the rollout of this adjustment, which reportedly will be introduced in selective "phases" in different regions of the country.

Beijing's population planners expect the revision to have only a limited demographic impact. According to a widely quoted official estimate, about a million extra births a year are expected. In the context of the current 16 million or so annual births, that would amount to a paltry fertility increase of maybe around 6% for China. (No one knows the precise current birth figure, in part because so many parents still try to conceal out-of-quota babies.)

The day after the new birth directives were announced, the Chinese state news agency Xinhua ran the headline "Birth policy changes are no big deal." Beijing did not significantly "reform" population control. Rather, it just reaffirmed its coercive program with one minor and relatively insignificant change.

But why? China today faces staggering demographic problems, including a shrinking pool of working-age men and women and a rapidly aging population that will slow economic growth, perhaps severely. The traditional family structure will be tested by, among other things, a growing army of unmarriageable men, a consequence of rampant sex-selective abortion in the One Child era. To the extent that the policy has "succeeded," it has made each of these demographic problems more acute.

Yet even if Beijing repudiated all forms of population control tomorrow, these problems would persist for the generation to come. Practically everyone who will be in the Chinese workforce in 2030, or the Chinese marriage market in 2035, has already been born under the current restrictions. No variations in population policy today can change this part of the country's future.

The question that should be keeping Communist Party leaders awake at night is: Can Chinese fertility levels recover if and when the controls are abandoned? Alas, the answer to that existential question is not at all clear.

Demographers at the United Nations Population Division (UNPD) and the U.S. Census Bureau calculate that Chinese fertility levels today are far below the level necessary for population replacement. By their reckonings, current childbearing patterns, if continued, would mean each successive generation would shrink by 25% (UNPD) or 27% (Census Bureau). Official Chinese estimates, and the work of some independent Chinese demographers, suggest an even steeper drop.

These fertility estimates are nationwide averages. In China's cities, birthrates are far lower. In Beijing and Shanghai, for instance, official estimates suggest that women are having far fewer than one birth per lifetime (around 0.7 on average). In such settings, scrapping the One Child Policy will make no demographic difference whatsoever: People aren't even using their given birth-quota permits now.

Yet even in rural areas the desire for children may now be more attenuated than is commonly supposed. A major study conducted in 2007-10 by Chinese and American demographers found that the eastern province of Jiangsu only a third of rural families would favor having a second child.

Perhaps this shouldn't be so surprising. In Taiwan and Hong Kong—places that share the greater Chinese culture but have never implemented population-control policies—fertility rates have been fluctuating around one birth per woman for two decades. Levels are only slightly higher in South Korea and Japan.

These more developed East Asian economies have witnessed a "flight from marriage" by growing numbers of young women who choose to postpone or forgo their weddings. The trend now seems to be reaching mainland China, starting as it did elsewhere with the educated urban elite. It would be another factor lowering birthrates no matter what the Chinese government does.

So let us ask once again: Why, apart from its totalitarian impulse, does the Communist Party cling to its abhorrent and manifestly impractical One Child Policy? The most intriguing answer I've heard came from one of China's leading demographers a few years ago. When I asked him this question (couched a bit more politely), he said he could only guess that the leadership in Beijing actually believes that Chinese women will start having five children again if they end the policy.

His guess may or may not be correct. But if his reading of China's leaders is right, or even approximately correct, the Communist rulers in Beijing would be further out of touch with their subjects than almost anyone suspects.

Mr. Eberstadt is a resident scholar at the American Enterprise Institute and a visiting researcher at the Asan Institute in Seoul.
Title: China: Interest rates jump
Post by: Crafty_Dog on December 20, 2013, 09:00:40 AM
http://online.wsj.com/news/articles/SB10001424052702304773104579269211799066166?mod=WSJ_hp_LEFTWhatsNewsCollection

China Money Market Interest Rates Jump
Interbank Rates Hit Highest Since the Summer Despite Central Bank's Cash Injection
Updated Dec. 20, 2013 10:54 a.m. ET

A cash squeeze is rippling through the Chinese financial system despite three days of liquidity injections by the country's central bank, as borrowers scramble to secure funds before the end of the year.

The situation worsened Friday as the interest rate banks charge each other for short-term loans jumped to 8.2%, the highest level since a crippling liquidity shortage in the summer. The stress in the banking system is starting to spread: Stocks in Shanghai fell for a ninth consecutive day to the weakest level in four months, while government bonds dropped, pushing the 10-yield near to its highest level in eight years.

The People's Bank of China issued its second statement about the developments in two days, saying it had injected a total of 300 billion yuan ($49.4 billion) into the financial system over the previous three days.

The statement, released on the central bank's official account on Weibo, China's Twitter-like microblogging service, said the cash injection was aimed at coping with changes in the money market at year-end. It didn't elaborate.

The turmoil has been sparked by a scramble for funds by banks and other borrowers in the world's second-largest economy as they near the end of the year, when they typically need extra cash to meet regulatory requirements and funding demands from companies.

This year many of China's banks are already under stress. Investors have pushed their stock prices below book value because of concerns about rising defaults on loans and the slowest domestic economic growth in 20 years.

CONTINUES
Title: The Toxic Dump that is China; debt levels surging
Post by: Crafty_Dog on December 31, 2013, 09:21:27 AM
Yet another piece confirming my long time comments here about China becoming a toxic dump

http://www.nytimes.com/2013/12/31/world/asia/good-earth-no-more-soil-pollution-plagues-chinese-countryside.html?nl=todaysheadlines&emc=edit_th_20131231&_r=0

Wonder what Thomas Friedman has to say about this?  :roll:

Yet another piece confirming my long time comments here about China being a bubble-- this one about municipal debt levels surging:

http://www.nytimes.com/2013/12/31/business/international/chinese-local-government-debt-up-13-in-6-months.html?nl=todaysheadlines&emc=edit_th_20131231


Title: Re: China
Post by: G M on December 31, 2013, 09:30:22 AM
How's our debt situation going?
Title: Stratfor: China's demand for natural gas
Post by: Crafty_Dog on January 03, 2014, 08:09:52 PM
 China's Efforts to Meet its Growing Natural Gas Demand
Analysis
January 2, 2014 | 0544 Print Text Size
China's Efforts to Meet its Growing Natural Gas Demand
A Chinese worker checks the valve of a gas pipe at a natural gas plant in Suining, in southwest China's Sichuan province. (STR/AFP/Getty Images)

Summary

China's demand for natural gas is expected to increase dramatically over the next decade -- perhaps rivaling Russia as second only to the United States. China's differences from places like South Korea and Japan, such as its domestic production potential and access to pipelines from the former Soviet Union, will limit Chinese demand for liquefied natural gas, but that demand will grow nonetheless. Thus, China and other Asian countries will continue working together to find ways to drive down liquefied natural gas prices in Asia. In the longer term, the natural gas distribution and consumption infrastructure built up over the next decade could be used to metabolize the country's massive shale gas deposits once China masters the technology to extract them, thus massively shifting Beijing's energy security away from foreign sources.
Analysis

China's natural gas sector is in the midst of a transition that could alter Asian natural gas markets for better or for worse, depending largely on how much the country's demand increases and how much shale gas it produces. Beijing knows that it must move away from using coal for almost all of its energy needs, as the environmental costs have begun to offset the strategic and economic benefits. Natural gas is an integral component of solving this problem, but how much demand this will amount to -- and where the supplies will come from -- is an important issue, particularly for other Asian countries that must import large volumes of liquefied natural gas. Even if China shifts just a small percentage of its energy mix from coal to natural gas, this would mean a gigantic change in the volume of natural gas demand because of the amount of energy China consumes.

China's vast resources of coal have underpinned the country's unprecedented growth the last four decades. Historically, China's domestic coal supplies have also been relatively cheap. This, coupled with the sheer size of its coal resources, has led China to use coal in large volumes not only in traditional coal sectors, such as power generation, but also in numerous unconventional ways.

While using coal for power plants obviously offsets some natural gas demand, China's atypical applications of coal also tend to push down the demand for other energy sources used for energy consumption or transformed into non-energy products. For instance, methanol derived from coal now represents nearly 10 percent of China's transportation fuel pool -- and the country is contemplating adopting a requirement that gasoline contain 15 percent methanol (some provinces already have similar regulations). Additionally, most of the world's production of nitrogen-based fertilizers uses natural gas as a feedstock, whereas China typically uses coal.

For China, coal's low cost is only one part of the rationale behind its heavy use. China ceased being an exporter of oil in the early 1990s and is now the world's largest oil importer. China had never been a relatively significant consumer or producer of natural gas until the late 2000s, but today it imports roughly a third of its natural gas. Not wanting to outsource its energy security to international markets, China prioritized using coal over natural gas.

However, there was a marked shift in China's energy strategy, particularly for natural gas, beginning around 2005 that has accelerated in the last three years. China's natural gas demand has exploded. Although Chinese demand for oil and coal also grew during that period, its astronomical growth predated the surge in natural gas demand, which doubled between 2007 and 2012. Clearly, something had changed. This was first reflected in China's 12th Five-Year Plan, which outlined a shift toward natural gas as part of more environmentally friendly initiatives.

The shift is due to a number of factors, but there are three main drivers. First, in the past five years coal has become the focus of growing public anger regarding China's deteriorating environmental conditions. Beijing has begun viewing continued coal emissions, especially in wealthier coastal urban areas, as a potential risk to social and political stability, one of China's geopolitical imperatives. As a response, some cities, such as Beijing, are switching from coal-fired power plants to natural gas-fired power plants, which give off fewer emissions. Second, China's quality of life is gradually increasing, and domestic consumption of natural gas -- either for cooking or heating -- is on the rise. Finally, China has realized that it possesses massive natural gas resources in the form of shale gas -- which means that China's natural gas security could be realized eventually, even if in the interim China must rely heavily on imports.
Estimating China's Potential Natural Gas Demand

China's potential demand is staggering, though estimates of it vary considerably. Officially, the State Council of China anticipates that demand could increase from 2012's level of about 150 billion cubic meters to 200 billion to 250 billion cubic meters by 2020. The 12th Five-Year Plan has it reaching 230 billion cubic meters by 2015 alone. The Ministry of Land and Resources has said it could be 350 billion to 380 billion cubic meters by 2020 and 550 billion to 600 billion cubic meters by 2030. UBS has estimated it could be as much as 400 billion cubic meters by 2020, and Barclays has estimated that demand could reach 450 billion cubic meters by 2020. To put these numbers in perspective, if China's demand increases to 400 billion cubic meters, the increase would be larger than the entire current Asia-Pacific liquefied natural gas market. Thus, other Asian liquefied natural gas consumers are looking at China quite nervously.

Of course, the liquefied natural gas market will not satisfy all of China's demand. China has been securing supplies from Central Asia and Russia through pipelines. China has signed a deal to import 40 billion cubic meters from Turkmenistan that could increase to 65 billion cubic meters by 2020. In September, China signed a deal with Russia for another 60 billion cubic meters, although the deal has not been finalized due to disputes over pricing. (China also has a smaller deal with Myanmar.)

Outside of China's domestic shale resources, Beijing is targeting 80 billion cubic meters of tight gas production and 30 billion cubic meters of coal regasification, and China National Offshore Oil Corp. is hoping to push further offshore for natural gas production. Collectively, these other unconventional sources coupled with conventional natural gas could reach 150 billion to 160 billion cubic meters, up from the 2012 level of 110 billion cubic meters. However, several of its supply deals with Russia and Central Asian countries will not come to fruition until as late as 2020. This means that in the interim there could be a larger reliance on liquefied natural gas, but after 2020 this demand could subside as volumes of shale and piped gas begin to increase.

Thus, sources other than shale and liquefied natural gas imports could supply about 250 billion cubic meters or a bit more, which would only satisfy the most conservative estimates for the growth in China's natural gas demand. While more piped natural gas deals could be signed, those plans likely would not be completed until well after 2020, leaving shale and liquefied natural gas to make up the difference. 
Chinese Shale Basins
Click to Enlarge
Shale Production's Effect on Liquefied Natural Gas Demand

China's potential in shale gas production is nearly as staggering as its potential growth in demand. The U.S. Energy Information Administration estimates that China possesses by far the world's largest reserves of technically recoverable shale gas. Although China's shale gas industry is not as advanced as the United States', it could be the most advanced outside of North America.

China's target is to produce 60 billion to 100 billion cubic meters of shale gas by 2020, but there are severe limitations to hitting the target. China is more likely to produce somewhere around 25 billion cubic meters of shale gas by then. In the longer term, as Chinese oil and gas companies master shale gas extraction techniques, production will reach loftier goals. However, this process is likely to take two decades, not one.

This means that China will realistically be able to access 275 billion cubic meters to perhaps 300 billion cubic meters of natural gas from land-based (both piped and domestic) sources by 2020. It remains unclear as to whether or not this will be able to satisfy most of China's demand. Should China's demand reach higher estimates, such as Barclay's 450 billion cubic meters by 2020 or the Chinese Ministry of Land and Resources' 380 billion cubic meters, China could be forced to import as much as 150 billion cubic meters of liquefied natural gas by 2020.

That kind of demand could very easily overwhelm liquefied natural gas markets internationally, ensuring that liquefied natural gas supply diversification will not lead to lower prices. However, this is unlikely, because there will remain an intrinsic link between China's domestic supply and domestic demand. While China has been pushing for natural gas to offset coal and oil, Beijing still must critically balance two competing needs: the need for natural gas to replace those other sources and the strategic risks of overreliance on foreign sources of natural gas (as opposed to coal, which it can largely produce domestically). As a result, China's overall demand for imported natural gas -- including liquefied natural gas -- will be related to the success and pace of its shale gas development.

Additionally, the most likely scenario in which China's liquefied natural gas demand would increase dramatically is one in which liquefied natural gas prices do not skyrocket but are low enough that it would be worth importing large volumes of natural gas despite the strategic losses. Either way, China would still be importing small volumes of liquefied natural gas and has every interest in working with Japan, South Korea and other liquefied natural gas importers in order to manage prices. However, China's potential demand spikes leave those other liquefied natural gas importers worried -- especially those, such as Japan, that have few options other than importing liquefied natural gas.

Title: WSJ: China vs. Freedom: Xu Zhiyong
Post by: Crafty_Dog on January 27, 2014, 04:30:11 AM
Citizen Xu Zhiyong
A call for Chinese to be more than feudal subjects.
Updated Jan. 26, 2014 10:03 p.m. ET

In China's latest show trial, a Beijing court on Sunday sentenced New Citizens Movement leader Xu Zhiyong to four years in prison for "disturbing public order" via peaceful protests over official corruption and public access to education. His real crime was to be a brave, patriotic and measured critic of the Chinese government's abuses and hypocrisies—as demonstrated again in the closing statement he tried to read at trial last week.

Addressing the judge and prosecutors—who barred members of the press or public from attending the one-day proceeding— Mr. Xu said that his ordeal "is actually an issue of fears you all carry within: fear of a public trial, fear of a citizen's freedom to observe a trial, fear of my name appearing online, and fear of the free society nearly upon us."

"What the New Citizens Movement advocates," he said, "is for each and every Chinese national to act and behave as a citizen, to accept our roles as citizens and masters of our country—and not to act as feudal subjects, remain complacent, accept mob rule or a position as an underclass. To take seriously the rights which come with citizenship, those written into the Universal Declaration of Human Rights and China's Constitution: to treat these sacred rights—to vote, to freedom of speech and religion—as more than an everlasting IOU."

According to Mr. Xu's lawyer, the judge silenced the 40-year-old activist after 10 minutes, calling his words "irrelevant." But the lawyer, Zhang Qingfang, was able to circulate Mr. Xu's prepared text to journalists before being detained on Sunday himself.
Enlarge Image

Chinese rights advocate Xu Zhiyong Reuters

"Our mission is not to gain power but to restrict power," Mr. Xu planned to tell the court. One of his movement's priorities was pushing Chinese leaders to disclose their financial assets to the public. "More than 137 countries and territories around the world currently have systems in place for officials to declare assets, so why can't China?" his statement asks. "What exactly is it these 'public servants' fear so much?" On the very day of his trial, the U.S.-based International Consortium of Investigative Journalists released a report detailing offshore bank accounts held by relatives of Chinese President Xi Jinping, former Premier Wen Jiabao, former Party supremo Deng Xiaoping and dozens of others.

At trial Mr. Xu also planned to tell his persecutors that "under true democracy and rule of law," China would have free and fair multiparty elections, an independent judiciary, a military that answers to the people (not to one political party), free speech and freedom of belief. "These modern democratic values and measurements are rooted in common humanity. They should not be Eastern or Western, socialist or capitalist, but universal to all human societies."

Facing trial two days after the birth of his first child, Mr. Xu stated: "Some people have to make sacrifices, and I for one am willing to pay any and all price for my belief in freedom, justice, love, and for a better future of China." Such is the heroic thinking of China's dissidents—figures like Nobel Peace laureate Liu Xiaobo, detained Uighur scholar Ilham Tohti and longtime activist Hu Jia, who was summoned again by Beijing police on Sunday afternoon. Their names should be on the lips of diplomats and citizens world-wide.
Title: Re: China
Post by: ccp on February 19, 2014, 07:29:54 PM
Jane Goodall alarmed China plundering Africa, but admits destructive habits changing
(02-18 11:30)
China is exploiting Africa's resources just like European colonizers did, with disastrous effects for the environment, acclaimed primatologist Dr Jane Goodall told AFP.
 On the eve of her 80th birthday, the fiery British wildlife campaigner is traveling to world capitals lecturing on the threats to our planet.
 During the past decade China has been investing heavily in African natural resources, developing mines, oil wells and running related construction companies.
 Activists accuse Chinese companies of paying little attention to the environmental impact of their race for resources.
“In Africa, China is merely doing what the colonialist did. They want raw materials for their economic growth, just as the colonialists were going into Africa and taking the natural resources, leaving people poorer,'' she told AFP in an interview in Johannesburg in South Africa.
 The stakes for the environment may even be larger this time round, she warns.
“China is bigger, and the technology has improved... It is a disaster.''
 Other than massive investment in Africa's mines, China is also a big market for elephant tusks and rhino horn, which has driven poaching of these animals to alarming heights.
 But Goodall, who rose to fame through her ground-breaking research on chimpanzees in Tanzania, is optimistic.
“I do believe China is changing,'' she said, citing as one example Beijing's recent destruction of illegal ivory stockpiles.
“I think 10 years ago, even with international pressure, we would never have had an ivory crush. But they have,'' she added.
“I think 10 years ago the government would never have banned shark fin soup on official occasions. But they have.''
 Her organization Roots and Shoots, founded over two decades ago to instil conservation values in children, has also become involved in China.
“We work with hundreds of Chinese children, and they are not different from children we work with here. They all love nature, they love animals, they want to help, there's no difference because they're Chinese,'' she said.
 Young people's enthusiasm to change the world gives her hope.
“These young people will become the next parents, the next teachers, the next lawyers, the next business people and the next politicians, some of them.''
“The biggest problem is that people understand but don't know what to do,'' she said.
“If you have one thousand, one million or eventually several million people all making the right choice, all thinking about the consequence of their behavior, then we're going to see big change.''
 Another glimmer of hope is “this amazing resilience of nature,'' she continued, citing as an example the China's Loess Plateau on the Yellow River bouncing back after massive soil erosion.
“It was set to be the biggest totally destroyed ecosystem in the world,'' she said.
 A US$400-million project funded by the Chinese government and international donors introduced better farming methods in the area, which greatly reduced erosion and lifted 2.5 million people out of poverty, according to the World Bank.
“That took a lot of money, but if you look at it now, it's all green, lush and farmland, and children have come back from the cities. It's even got a whole area for wildlife,'' said Goodall.
“We still have a small window of time to change things.''


 
 

   

 
 
   
 
       

 

 
     
 
 
   
 
   

 

   

     

   

   

 
 
Title: Re: China
Post by: ccp on February 19, 2014, 08:07:20 PM
while speaking of Jane goodall one must watch this video and as noted anyone who watches should bring their hanky along;

It is the window video in the third picture box 3 minutes long:

bahttp://www.care2.com/causes/the-heartfelt-hug-that-said-it-all-chimp-thanks-jane-goodall-for-rescue.htmlck in the wild   
Title: Richard Young; Marc Faber:Bankruptcies coming and it won't be pretty
Post by: Crafty_Dog on March 20, 2014, 12:43:46 PM


SHOCK: Wave of Bankruptcies Set to Hit China
March 17, 2014 by Young Research
Print This Post   

In a shocking admission Chinese Premier Li Keqiang warned lenders in the country to prepare for a wave of defaults on debt in the coming year. China had so far been able to prevent embarrassing defaults among its corporations, even by presumably bailing out the world’s largest bank earlier this year (no one knows exactly what happened here but common sense would point to a hidden government bailout). But the government couldn’t, or wouldn’t, act fast enough to save Shanghai Chaori Solar Energy last week. It’s a signal from the Communist Party that Beijing is getting out of the bailout business. Borrowers, lenders and investors should take heed. Phillip Inman reports that the Middle Kingdom is facing serious challenges.

    Li’s warning followed the failure of Shanghai Chaori Solar Energy to make a payment on a 1bn yuan (£118m) bond last week. The default was the first of its kind for China and widely seen as pointing to the end of 11th-hour government bailouts for troubled enterprises.

    Some analysts said the decision to let some indebted firms collapse was a sign the authorities had learned from the Japanese boom and bust experience of the late 1980s and early 1990s. Tokyo was plunged into two “lost” decades of stagnation after it prevented zombie companies from declaring bankruptcy – even blocking petitions from bondholders in the courts – when a property collapse exposed debts many times the value of their businesses.

    However, figures this week revealed that Beijing is copying the Japanese tactic of ramping up public infrastructure spending to replace the steep slowdown in private sector investment. Fixed asset investment, a measure of government spending on infrastructure, expanded 17.9% during the first two months of 2014, the National Bureau of Statistics said.

If China’s economic troubles force it to reduce purchases of U.S. treasury securities, and the Fed continues to taper its own purchases, there’s no telling what could happen to interest rates. There could be serious risks to America’s ability to fund itself. You can find our advice on profiting from the risks and opportunities of such shocks in our premium strategy reports, Richard C. Young’s Intelligence Report and Young Research’s Global Investment Strategy.

=======================

http://www.youngresearch.com/videos/video-faber-chinas-unwind-will-disaster/?awt_l=PWy8k&awt_m=3fT95PEyuzzlu1V&utm_source=rss&utm_medium=rss&utm_campaign=video-faber-chinas-unwind-will-disaster
Title: Re: China
Post by: DougMacG on March 21, 2014, 08:36:05 PM
"If China’s economic troubles force it to reduce purchases of U.S. treasury securities, and the Fed continues to taper its own purchases, there’s no telling what could happen to interest rates. There could be serious risks to America’s ability to fund itself. "

I think they mean there could be serious risks to our continuing ability to not fund ourselves.
Title: China Property Collapse Has Begun
Post by: DougMacG on April 14, 2014, 12:39:23 PM
As predicted here...

China Property Collapse Has Begun
http://www.forbes.com/sites/gordonchang/2014/04/13/china-property-collapse-has-begun/

Nothing is going right for Hangzhou at this moment.  Walmart will be closing its Zhaohui store in that city on April 23 as a part of its overall plan to dump marginal locations—about 9% of the total—in China.

Thanks to the world’s largest retailer, another large block of space in Hangzhou, the capital of Zhejiang province, will go on the market at a time when there is generally too much supply.  The problem is especially pronounced in the city’s premium office market.  Hangzhou’s Grade A office buildings at the end of 2013 had, according to Jones Lang LaSalle, an average occupancy rate of 30%.

The real weakness, however, is Hangzhou’s residential sector.  The cause is simple: massive overbuilding.  Sara Hsu of the State University of New York at New Paltz writes that Hangzhou faces “burgeoning swaths of empty apartment units.”

Hangzhou’s market has not yet collapsed.  There are still secondary sales, for instance.  Singapore’s Straits Times reports Allen Zhao, a businessman, has been looking to sell his two-bedroom flat in Hangzhou for 2 million yuan.  His neighbor just let go a similar unit for 1.7 million.  If Zhao also sells for that amount, he will make a profit, but he will be disappointed.  “That is not much more than the price I paid in 2012,” Zhao told the paper.  “Now I’m regretting not selling earlier—more bad news about the property market keeps coming in every day.”

New homes also face price pressure.  Developers in Hangzhou are now offering deep discounts, and investors and owners are noticing.  And not just in that city.  “It seems that the 30% price cut in Hangzhou really changed the way Chinese people think about real estate,” writes Anne Stevenson-Yang of J Capital Research, “and I doubt there is any turning back from here.”  (more at link)
Title: China housing bubble about to burst 2.0?
Post by: Crafty_Dog on April 15, 2014, 10:02:43 AM
http://online.wsj.com/news/articles/SB10001424052702303456104579487790125203828?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond&mg=reno64-wsj
Title: WSJ: China's growth struggles
Post by: Crafty_Dog on April 21, 2014, 05:19:12 AM
Addresses themes I have discussed here for years, but comes to a more optimistic sense of things.  I can't this this is wrong though , , ,

China's Growth Struggles
Market reform is crucial to avoiding the middle-income trap.
Updated April 20, 2014 5:16 p.m. ET

China's first quarter growth of 7.4% beat expectations last week, but it was a six-quarter low and below Beijing's 2014 target of 7.5%. Some analysts worry the country is vulnerable to a property market collapse and explosion of bad bank loans. So is the main engine of global growth about to stall?

One thing most everyone agrees on: China is in transition from a go-go phase driven by abundant capital and labor (think of the U.S. in the late 19th century) to a more mature development track in which growth depends on productivity gains. At this point other countries such as Brazil and Malaysia fell into the "middle-income trap" and stagnated, while South Korea and Taiwan powered through to become wealthy, although not without crises along the way.

Through the 2000s, Beijing struggled to rein in growth to avoid inflation, and any time the economy looked to be slowing it simply eased restrictions on investment and was off to the races again. Now gross capital formation, which averaged 15% from 2000-10, is around 10% as costs rise and profits are squeezed. The economy is overleveraged, with total debt (government and private) exceeding 200% of GDP. Negative purchaser managers index (PMI) indicators reflect the realization that companies can't rely on high GDP growth to repay loans.

Beijing's new leaders seem to recognize that financial reform and a period of deleveraging are needed to meet this challenge. Since slower growth is a necessary part of this program, the current slowdown could be read as a positive sign that the days of growth at any cost are over. The announcement last month that deposit rates will be liberalized over the next two years signals an end to financial repression, by which interest paid on savings was kept low to make borrowing cheaper. That suppressed consumption and led to the most lopsided economy the world has ever seen, with investment accounting for about 50% of GDP.

Like many of China's past reforms, de facto deposit-rate liberalization started well before the official announcement, in the form of what's been called the shadow banking system. While dangerous risks may be hidden here, there is a considerable upside: The state banks created entities to attract deposits at market rates of interest.

This "reform" came about because banks found that profit margins were shrinking on traditional loans to state-owned companies and local governments. So they sold high-return "wealth-management products" (WMPs) to investors and used the money to lend at still higher rates to private companies. By pricing risk, WMPs make the allocation of capital more efficient.

Another piece of good news is that access by private companies to bank loans has grown dramatically, surpassing the loans to state enterprises in 2012. This would have happened even faster if Beijing's post-2008 stimulus hadn't given a big boost to state firms. Private firms now account for two-thirds of investment, up from 40% a decade ago.

Over the last decade, demographic trends have pushed wages up faster than productivity growth. You wouldn't know it with all the angst about high inequality, but this trend has put pressure on managers to find efficiency gains. And it will help force Beijing to sell off state-owned enterprises that can't keep up. All of this suggests that China may follow South Korea and Taiwan and avoid the middle-income trap.

But it doesn't say whether a crisis is brewing in the next few years. Most crisis scenarios concern the property market, which accounts for almost a quarter of the economy. The problem is not so much high prices, since the average cost of an apartment has tracked rising urban incomes. Nor is it leverage, since regulations restrict mortgages and many buyers pay with cash. It is simply volume.

A side-effect of China's low bank-deposit rates and dysfunctional stock market is that many households have put their savings into empty apartments, which are so numerous they have spawned "ghost cities." When prices begin to fall, most owners will likely hold on and wait for a rebound. That means a long period of stagnation as the excess supply gradually comes onto the market.

The loss of such a big driver of growth will be painful, but by itself it shouldn't trigger the kind of financial crisis the U.S. saw in 2008. Chinese firms, ever flexible, will seek out new opportunities, and that could pay some surprising dividends. One reason China has been slow to produce innovative firms or global brands is that much of the country's talent and capital have been sucked into the production of empty buildings.
***

China's economic slowdown recalls Adam Smith's remark, often quoted by Milton Friedman : "There is much ruin in a nation." It is a reminder that even though many things go wrong, market forces, if allowed to operate, generally bring about a positive outcome. We can't rule out that there is so much malinvestment on balance sheets that a crisis is coming. But the fact that China's leaders still have the courage to expand the market's role gives hope that this slowdown doesn't herald the end of its growth story.
Title: WSJ: China RE buble bursting
Post by: Crafty_Dog on May 05, 2014, 09:24:15 AM
http://blogs.wsj.com/chinarealtime/2014/05/05/chinas-property-bubble-has-officially-popped-report-says/?mod=WSJBlog&mod=chinablog
Title: PoTH: Chinese economy looking shaky
Post by: Crafty_Dog on July 17, 2014, 08:52:08 AM


http://www.nytimes.com/2014/07/17/business/international/chinas-gdp-expands-but-businesses-arent-feeling-the-effect.html?emc=edit_th_20140717&nl=todaysheadlines&nlid=49641193&_r=0 
Title: Gertz: China making intercontinental hypersonic missles.
Post by: ccp on July 19, 2014, 10:32:02 PM
"A line drawing of the scramjet-powered vehicle shows that the concept being studied for eventual construction is nearly identical to an experimental National Aeronautics and Space Administration (NASA) scramjet vehicle called the X-43."

Duh how'd that happen?  :cry: Anyway the article:

****Report Reveals Chinese Military Developing New Scramjet-Powered Hypersonic Missile

BY:  Bill Gertz   
July 9, 2014 5:00 am

China’s military is working on a jet-powered hypersonic cruise missile in addition to an advanced high-speed glide warhead that was tested earlier this year.

A Chinese technical journal disclosed new details of research on what China’s defense researchers are calling a hypersonic cruise vehicle.

A line drawing of the scramjet-powered vehicle shows that the concept being studied for eventual construction is nearly identical to an experimental National Aeronautics and Space Administration (NASA) scramjet vehicle called the X-43.

Publication of details of work on the powered hypersonic cruise vehicle indicates China is pursuing a second type of ultra-fast maneuvering missile capable of traveling at speeds of up to Mach 10—nearly 8,000 miles per hour. Such speeds create huge technical challenges for weapons designers because of the strain on materials and the difficulty of control at high velocities.

Large numbers of Chinese military writings in recent years have focused on hypersonic flight. However, few have addressed scramjet powered hypersonic flight.

The Washington Free Beacon first disclosed Jan. 13 that China has conducted the first test of an unpowered hypersonic glide vehicle that U.S. intelligence agencies believe will be used to deliver strategic nuclear warheads through U.S. missile defenses.

The January test of the Wu-14 hypersonic vehicle signaled the beginning of what analysts say is the start of a new high-technology arms race to build high speed maneuvering strike vehicles.

The United States is developing both scramjet-powered and glide-hypersonic missiles. Russia’s government has made development of hypersonic missiles a priority.

The Chinese report outlines in technical detail how a scramjet-powered cruise vehicle operates at speeds greater than Mach 5 and discusses how to integrate airframe design with scramjet propulsion.

A scramjet is an engine that uses supersonic airflow to compress and combust fuel, creating a highly efficient propulsion system with few parts.

The report analyzed “preliminary design methods for airframe/engine integrative configuration.”

The analysis “may serve as a basis for quick preliminary design and performance evaluation of airframe/engine integrative configuration” for a future Chinese hypersonic cruise vehicle, the report said.

The scramjet cruise vehicle was described in a technical military journal called Command Control & Simulation. The article was published by the 716 Research Institute of the state-run China Shipbuilding Industry Corp., China’s largest maker of warships, submarines, and torpedoes.

Chinese drawing of hypersonic cruise missile Command Control & Simulation
Chinese drawing of hypersonic cruise missile / Command Control & Simulation

The study by China’s major naval weapons builder is a sign the PLA may be considering the strike vehicle for use against U.S. aircraft carriers and warships as part of what the Pentagon calls “anti-access, area denial” weapons.

China’s hypersonic weapons are among the most secret programs within the Chinese military, along with anti-satellite weapons and cyber warfare tools. However, China’s Defense Ministry confirmed the test asserting that it was “normal” scientific experiment and not aimed at any foreign state.

Military experts said the disclosure of the scramjet cruise missile is unusual and part of China’s large-scale high-technology arms buildup.

“China long ago identified hypersonics as a critical future military technology and has invested heavily in its development for future weapons,” said Rick Fisher, with the International Assessment and Strategy Center. “The old Bush administration concept of Prompt Global Strike using hypersonic non-nuclear warheads may be dormant in Washington, but it is very much alive and flourishing in Beijing.”

Fisher said a scramjet vehicle would have advantages over the Wu-14 glide vehicle, including better-sustained speeds, some maneuvering, and a depressed trajectory that would complicate efforts by U.S. missile defenses to intercept the ultra-fast maneuvering strike missile.

China’s Chengdu Aircraft Corporation has been leading the development of a hypersonic scramjet engine test platform similar to the decade-old Pentagon-NASA X-43, Fisher said.

Pentagon-NASA X-43 hypersonic scramjet powered vehicle NASA
Pentagon-NASA X-43 hypersonic scramjet powered vehicle / NASA

Fisher said the Chinese report does not make clear whether China is concentrating on scramjet power for future weapons. However, it could signal that researchers have made advances in such engines and materials.

Larry Wortzel, a former China-based military intelligence officer, said Chinese hypersonic arms are what Beijing calls “assassins’ mace” weapons that will give China a strategic edge in any future conflict with the United States.

“China is continuing with a number of programs to develop what Beijing considers to be ‘assassins’ mace’ weapons that defeat conventional defenses, including these hypersonic strike vehicles,” Wortzel said in an email. “The United States must move forward with its airborne and ship-borne laser programs and electromagnetic guns if we are to be able to counter China’s new weapons.”

U.S. hypersonic missile programs have been limited by the federal defense spending crisis that has constrained advanced weapons research.

Congress approved $70.7 million for an Army hypersonic missile program—an amount that is considered far less than what both China and Russia are investing in hypersonic arms.

Alan R. Shaffer, principal deputy assistant defense secretary for research and engineering, told a defense industry conference that a U.S. scramjet-powered hypersonic prototype, the X-51, is a leading choice for a military system of conventional rapid precision strike.

“We, the U.S., do not want to be the second country to understand how to have controlled scramjet hypersonics,” Shaffer said.

The Air Force Research Laboratory announced July 3 it will set up a new High Speed Experimentation Branch to study hypersonics at Arnold Air Force Base.

Russian Deputy Prime Minister Dmitry Rogozin said July 3 that Russian missile manufacturers must master the technology for both precision-guided and hypersonic weapons. Moscow has set a goal of 2020 to build its first hypersonic missile prototype.

The People’s Liberation Army (PLA), in a strategic review published last year, stated that new U.S. hypersonic weapons and other nations’ development of hypersonic arms pose a major threat to China’s national security.

The review said new weapons capable of striking land from space will have a “serious impact on national security.”

Among the weapons being developed by foreign powers, the Chinese military said, are “near space craft, spacecraft, and transatmospheric vehicles.”

It was the first time China mentioned the threat posed by the new generation of hypersonic threats in a public document. The report, “Strategic Review 2013,” was published by the PLA think tank Center for National Defense Policy.

It warned that “the role of space power is changing from information support, to space command operations and space-to-ground attacks.”

“The United States is intensifying the construction of its space confrontation capabilities and building a rapid responsive space system,” the report said, adding that the shift has begun from using space for support to ground attacks.

The report noted the U.S. development of near-space strike vehicles, including the X-51, a scramjet powered hypersonic vehicle developed by Boeing, the HTV-2, a glide strike vehicle, and the X-37 space plane launched atop a rocket. The PLA review called these weapons “new measures of power” and stated that they were “a bid to eliminate the boundary between air and space.”

Lee Fuell, a technical intelligence specialist at the Air Force National Air and Space Intelligence Center, told a congressional hearing in January that China’s hypersonic glide vehicle was a ballistic missile-launched system that glides and maneuvers to its target at speeds up to Mach 10 (about 7,611 mph).

Fuell said U.S. intelligence agencies believe that the glide vehicle is “associated with [China’s] nuclear deterrent forces.” Hypersonic strike vehicles also could be used for conventional precision-guided strikes, he said.

A Chinese-language version of article is available from the Canada-based Oriprobe information services.

This entry was posted in National Security and tagged China. Bookmark the permalink.
Title: Re: China
Post by: Crafty_Dog on July 20, 2014, 07:17:28 AM
Scary.

Please post in the Military Science thread as well.
Title: Stratfor: The End of Consensu Politics in China
Post by: Crafty_Dog on August 09, 2014, 10:35:53 AM
 The End of Consensus Politics in China
Geopolitical Weekly
Tuesday, August 5, 2014 - 03:02 Print Text Size
Stratfor

By John Minnich

Chinese President Xi Jinping's anti-corruption campaign is the broadest and deepest effort to purge, reorganize and rectify the Communist Party leadership since the death of Mao Zedong in 1976 and the rise of Deng Xiaoping two years later. It has already probed more than 182,000 officials across numerous regions and at all levels of government. It has ensnared low-level cadres, mid-level functionaries and chiefs of major state-owned enterprises and ministries. It has deposed top military officials and even a former member of the hitherto immune Politburo Standing Committee, China's highest governing body. More than a year after its formal commencement and more than two years since its unofficial start with the downfall of Chongqing Party Secretary Bo Xilai, the campaign shows no sign of relenting.

It is becoming clear that this campaign is unlike anything seen under Presidents Jiang Zemin and Hu Jintao. Both carried out anti-corruption drives during their first year in office and periodically throughout their tenures as a means to strengthen their position within the Party and bureaucracy and to remind the public, however impotently, that Beijing still cared about its well being. But that was housekeeping. This appears to be different: longer, stronger, more comprehensive and more effective.

With this in mind, we ask: What is the fundamental purpose of Xi's anti-corruption campaign? An attempt to answer this question will not tell us China's political future, but it will tell us something about Xi's strategy -- not only for consolidating his personal influence within the Party, government and military apparatuses, but also and more important, for managing the immense social, economic, political and international pressures that are likely to come to a head in China during his tenure. Getting to the heart of the anti-corruption campaign -- and therefore understanding its inner logic and direction -- provides insights on the organization and deployment of political power in China and how those things are changing as the Party attempts to remake itself into an entity capable of ushering China safely through the transformation and crises to come.

The Campaign Continues

The announcement July 29 of a formal investigation into retired Politburo Standing Committee member Zhou Yongkang marked something of an end to the first major phase of Xi's anti-corruption campaign. By all accounts, Zhou was one of the most powerful men in China throughout the 2000s. During his tenure on the Standing Committee, Zhou controlled the country's domestic security apparatus, a pillar of the Chinese government's power. Prior to that, he had served as Party secretary of Sichuan province, an important inland industrial center and breadbasket with historically strong regionalist tendencies. And before Sichuan, Zhou chaired state-owned China National Petroleum Corp., the country's most powerful energy firm and the direct descendent of the Ministry of Petroleum. Zhou was known to sit at the apex of at least these three power bases, and his influence likely extended deep into many more, making him not only a formidable power broker but also, at least in the case of his oil industry ties, a major potential obstacle to reform. Certainly, Zhou and his vast networks of influence and patronage were not the sole targets of the Xi administration's crackdown, but he and his associates, including former Chongqing Party Secretary Bo Xilai, widely seen as an early competitor of Xi, formed its central axis.

Now begins another phase. There are indications that it will center on the military. There are other signs that it will target Shanghai, the primary power base of Jiang Zemin and the locus of financial sector reform in China. Further neutralization of Zhou's allies in energy and public security will likely be necessary, too, as the Xi administration seeks to accelerate market-oriented reforms in the oil and natural gas sectors and to reinforce its internal security footprint in peripheral regions like Xinjiang as well as the Han Core. But ultimately, it is unclear which individuals and networks will anchor the next phase. The possibilities are as numerous as the Xi administration's myriad near- and medium-term policy goals.

The question of who or what will be targeted next is subordinate to that of why. Not why, specifically, they will be targeted, but why the campaign must and will continue. This brings us back to our question regarding the fundamental purpose of the anti-corruption campaign. It may be impossible to divine, beyond mere speculation, its future on a tactical level -- that is, what will come in three, five or eight months' time. But the direction of the campaign so far, combined with other actions by Xi, such as the formation of a unified National Security Council chaired by Xi himself and his apparent wresting of the reins of economic and social reform from Premier Li Keqiang, suggest that some other and deeper shift is underway, one for which the anti-corruption campaign is at once a vehicle and a symptom. Stratfor believes this shift involves nothing less than an attempt to rework not only the way the Communist Party operates but also the foundations of its political legitimacy.

To understand why, we look first not at Xi and what he has done thus far but at China and what it will undergo over the next decade. This will give us a sense of the external constraints and pressures of which Xi's administration is no doubt aware and to which it has no option but to respond. These constraints and pressures, more than any other factor, will shape Xi's actions and the Communist Party's evolution in the years to come.
A World Constrained

Over the next decade, the defining constraints on China will emanate from within. They are fundamentally economic in nature, but they cannot be disassociated from politics and society.

China is in the midst of an economic transformation that is in many ways unprecedented. The core of this transformation is the shift from a growth model heavily reliant on low-cost, low value-added exports and state-led investment into construction to one grounded in a much greater dependence on high value-added industries, services and above all, domestic consumption. China is not the first country to attempt this. Others, including the United States, achieved it long ago. But China has unique constraints: its size, its political system and imperatives, and its profound regional geographic and social and economic imbalances. These constraints are exacerbated by a final and perhaps greatest limit: time. China is attempting to make this transition, one which took smaller and more geographically, socially and politically cohesive countries many decades to achieve, in less than 20 years.

The bulk of this work will take place over the next 10 years at most, and more likely sooner, not because the Xi administration wants it to, but because it must. The global financial crisis in 2007-08 brought China's decadeslong export boom cycle to a premature close. For the past six years, the Chinese government has kept the economy on life support in the form of massively expanded credit creation, government-directed investment into urban and transport infrastructure development and, most important, real estate construction. In the process, local governments, banks and businesses across China have amassed extraordinary levels of debt. Outstanding credit in China is now equivalent to 251 percent of the country's gross domestic product, up from 147 percent in 2008. Local governments alone owe more than $3 trillion. It is unknown -- deliberately so, most likely -- what portion of outstanding debts are nonperforming, but it is likely far higher than the official rate of 1 percent.

Despite claims that China's investment drive was and is irresponsible -- and certainly there are myriad anecdotal cases of gross misallocation of capital -- it nonetheless fulfills the essential role of jumpstarting the country's effort to "rebalance" to a new, more urban and more consumption-based economic model. But the problem, again, is time. China's real estate sector is slowing. Sales, home prices and market sentiment are falling, even in the face of continued expansion of the overall credit supply. The days of high growth in the housing construction sector are numbered and prices, along with overall activity, are on a downward trend -- one that can and will be hedged by continued high levels of investment and credit expansion, but not one that can be stopped for long. Real estate and related construction activity will remain the crucial component of China's economy for the foreseeable future, but they will no longer be the national economic growth engines they were between 2009 and 2011.

This means that in the next few years, China faces inexorable and potentially very rapid decline in the two sectors that have underpinned economic growth and social and political stability for the past two or more decades: exports and construction. And it does so in an environment of rapidly mounting local government and corporate debt, rising wages and input costs, rising cost of capital and falling return on investment (exacerbated by new environmental controls and efforts to combat corruption) and more. Add to these a surge in the number of workers entering the workforce and beginning to build careers between the late 2010s and early 2020s, the last of China's great population boom generations, and the contours emerge of an economic correction and employment crisis on a scale not seen in China since Deng came to power.

The solution, it would seem, lies in the Chinese urban consumer class. But here, once more, time is China's enemy. Chinese household consumption is extraordinarily weak. In 2013, it was equivalent to only 34 percent of gross domestic product, compared to 69-70 percent in the United States, 61 percent in Japan, 57 percent in Germany and 52 percent in South Korea. In fact, it has fallen by two percentage points since 2011, possibly on the back of the anti-corruption campaign, which has curbed spending by officials that appears to have been erroneously counted as private consumption. There is reason to believe that household consumption is somewhat stronger than the statistics let on, but it is not nearly strong enough to pick up the slack from China's depressed export sector and depressive construction industries. China's low rates of urbanization relative to advanced industrial economies underscore this fundamental incapacity.

Whatever the Chinese government's stated reform goals, it is very difficult to see how economic rebalancing toward a consumption- and services-based economy succeeds within the decade. It is very difficult to see how exports recover. And it is very difficult, but slightly less so, to see how the government maintains stable growth through continued investment into housing and infrastructure construction, especially as the real estate market inevitably cools. This leaves us with a central government that either accepts economic recession or persists in keeping the economy alive for the sake of providing jobs but at risk of peril to its reform initiatives, banks and local governments. The latter is ugly and very likely untenable under the current political model, which for three decades has staked its claim to legitimacy in the promise of stable employment, growth and rising material prosperity. The former is absolutely untenable under the current political model.

The pressures stemming from China's economy -- and emanating upward through Chinese society and politics -- will remain paramount over the next 5-10 years. The above has described only a very small selection of the internal social and economic constraints facing China's government today. It completely neglects public anger over pollution, the myriad economic and industrial constraints posed by both pollution and pervasive low-level corruption, the impact of changes in Chinese labor flows and dynamics, rising education levels and much more. It completely neglects the ambivalence with which many ordinary Chinese regard the Communist Party government.

It also neglects external pressures and risks, whether economic or military. What would another global economic crisis and recession do to China's already hobbled export sector? What would a prolonged spike in oil prices -- the result, perhaps, of deepening crises in Russia or Iraq -- mean for Chinese industry and its change to China's growing army of car drivers? What impact will structural changes in the East Asian and world systems, such as Japan's attempt at a national economic and military revival, have on China's overseas economic and maritime interests, or on Chinese society's confidence in the strength of its military and government? The potential risks, many of them of moderate to high probability, are legion. It takes only one to materialize to dramatically reduce the likelihood that the Communist Party, as currently constituted, survives China's transformation.
The Old Model Breaks Down

Xi knows this. He and his advisers know China's virtually insurmountable challenges better than anyone. They know how little time China has, how fragile the Party's political legitimacy -- its claim to the Mandate of Heaven -- has become over the past three decades and how great the consequences of inaction will be. But they also know how much potentially greater are the consequences of failure. Knowing all these things, they are acting to reconstitute the Party one cautious step at a time.

The anti-corruption campaign is one of those steps. It serves many overlapping functions: to clear out potential opponents, ideological or otherwise; to consolidate executive power and reduce bureaucratic red tape so as to ease the implementation of reform; to remind the Chinese people that the Communist Party has their best interests at heart; and to make it easier to make tough decisions.

Underlying and encompassing these, we see the specter of something else. The consensus-based model of politics that Deng built in order to regularize decision-making and bolster political stability during times of high growth and that effectively guided China throughout the post-Deng era is breaking down. It can no longer hold in the face of China's transformation and the crises this will bring. Simply put, now that its post-1978 contract with Chinese society -- a social contract grounded in the exchange of growth for stability -- is up, the Party risks losing the public support and political legitimacy that this contract undergirded. A new and more adaptive but potentially much less stable model is being erected, or resurrected, from within the old. This model is grounded more firmly in the personality and prestige of the president and more capable, or so Chinese leaders seem to hope, of harnessing and managing the Chinese nation through what could well be a period of turmoil.

This does not necessarily mean a return to Imperial China, nor does it mean a return to the days and methods of the Great Helmsman, Mao. It doesn't even mean the new model will succeed, even remotely. What it means will be decided only by the specific interplay of structure and contingency in the unfolding of history. But it is this transformation that serves as the fundamental, if latent, purpose for Xi's anti-corruption campaign.

Editor's Note: Writing in George Friedman's stead this week is Stratfor Asia-Pacific Analyst John Minnich.

Read more: The End of Consensus Politics in China | Stratfor

Title: Centripetal and Centrifugal Forces
Post by: Crafty_Dog on September 26, 2014, 02:41:38 PM
 Centripetal and Centrifugal Forces at Work in the Nation-State
Geopolitical Weekly
Tuesday, September 23, 2014 - 03:00 Print Text Size
Stratfor

By Zhixing Zhang

"Here begins our tale: The empire, long divided, must unite; long united, must divide. Thus it has ever been." This opening adage of Romance of the Three Kingdoms, China's classic novel of war and strategy, best captures the essential dynamism of Chinese geopolitics. At its heart is the millennia-long struggle by China's would-be rulers to unite and govern the all-but-ungovernable geographic mass of China. It is a story of centrifugal forces and of insurmountable divisions rooted in geography and history — but also, and perhaps more fundamentally, of centripetal forces toward eventual unity.

This dynamism is not limited to China. The Scottish referendum and waves of secession movements — from Spain's Catalonia to Turkey and Iraq's ethnic Kurds — are working in different directions. More than half a century after World War II triggered a wave of post-colonial nationalism that changed the map of the world, buried nationalism and ethnic identity movements of various forms are challenging the modern idea of the inviolable unity of the nation-state.

Centripetal and Centrifugal Forces at Work in the Nation-State

Yet even as these sentiments pull on the loose threads of nations, in China, one of the most intractable issues in the struggle for unity — the status of Tibet — is poised for a possible reversal, or at least a major adjustment. The long-running but frequently unnoticed negotiations have raised the possibility that the Dalai Lama, Tibet's spiritual leader, may be nearing a deal that would enable him to return to his Tibetan homeland. If it happens, it would end the Dalai Lama's exile in Dharamsala, India — an exile that began after the Tibetan uprising in 1959, nine years after the People's Republic of China annexed Tibet. More important, a settlement between Beijing and the Dalai Lama could be a major step in lessening the physical and psychological estrangement between the Chinese heartland and the Tibetan Plateau.
Tibet, the Dalai Lama and Self-Determination

The very existence of the Tibetan issue bespeaks several overlapping themes of Chinese geopolitics. Most fundamentally, it must be understood in the context of China's struggle to integrate and extend control over the often impassable but strategically significant borderlands militarily and demographically. These borderlands, stretching from northeast to the southwest — Manchuria, Mongolian Plateau, Xinjiang, Tibet and the Yunnan Plateau — form a shield, both containing and protecting a unified Han core from overland invasion. In attempting to integrate these regions, however, China confronts the very nature of geographic disintegration and the ethnic identities in these restive borderlands, which have sought to resist, separate or drift away from China at times when weak central power has diminished the coherence of China's interior.

Tibet in many ways represents the extreme edge of this pattern. Indeed, while the formidable geography of the Tibetan Plateau (its altitude averages 4.5 kilometers, or almost 2.8 miles, above sea level) largely inured it from most frontier threats to the Han core compared with the more accessible Manchuria, Mongolian Plateau or Xinjiang. Perhaps no borderland is as fraught with as much consequence as Tibet under China's contemporary geopolitical circumstances. The Tibetan Plateau and its environs constitute roughly one-quarter of the Chinese landmass and are a major source of freshwater for China, the Indian subcontinent and mainland Southeast Asia. The high mountains of the Himalayas make a natural buffer for the Chinese heartland and shape the complex geopolitical relationship between China and India.

Historically, China's engagement with the Tibetan Plateau has been lacking and not characterized by national unity. Starting in the 7th century, China made sporadic attempts to extend its reach into the Tibetan Plateau, but it wasn't until the Qing dynasty that the empire made a substantial effort to gain authority over Tibetan cultural and social structures through control of Tibetan Buddhist institutions. The weakening of China after the Qing dynasty led peripheral states, including Tibet, to slip from Chinese central rule.

Since the People's Republic of China began ruling over Tibet in 1950, the perennial struggle manifested as political, religious and psychological estrangement between political power in Beijing and the Dalai Lama, the charismatic political and spiritual symbol of the Tibetan self-determination movement, who consistently has resisted China's full domination over Tibet. Here, the nominally impersonal process of geopolitics confronts the rare individual who has a lasting impact. The Dalai Lama has concentrated the Tibetan cause into himself and his image. It is the Dalai Lama who represents the Tibetan identity in foreign capitals and holds a fractious Tibetan movement together, holding sway over both indigenous Tibetans in the homeland and the old and new generations of Tibetan exiles.
Perennial Struggle and Contemporary Moves

Under the People's Republic, China has some of the clearest physical control and central authority over one of the largest and most secure states in China's dynastic history. However, the ancient compulsion to secure the Chinese periphery did not go unaddressed by China's Communist leadership.

Over the years, the central government has pushed aggressively to bolster Han Chinese economic and demographic dominance over the borderland while attempting to overcome the physical barriers of distance through grandiose infrastructure projects, including road and rail links. And yet, the estrangement with the Dalai Lama has left Beijing dealing with the perception that its control over the Tibetan Plateau is partial and of questionable legitimacy. Meanwhile, the Dalai Lama's international prestige exposed the central power in Beijing to numerous international critics. Moreover, it offered New Delhi an opportunity to exploit Beijing's concerns by hosting the Dalai Lama and the Tibetan government-in-exile.

Beijing sees no space to allow the autonomy demanded by the Tibetan exile movement; it is a short path from robust autonomy to direct challenge. Beijing's strategy has been to try to undermine the Dalai Lama's international prestige, constrain interaction between the exile community and Tibetans at home and hope that when the spiritual leader dies, the absence of his strong personality will leave the Tibetan movement without a center and without someone who can draw the international attention the Dalai Lama does. Central to Beijing's calculation is interference in the succession process whereby Beijing claims the right to designate the Dalai Lama's religious successor and, in doing so, exploit sectarian and factional divisions within Tibetan Buddhism. Beijing insists the reincarnation process must follow the Tibetan religious tradition since the Qing dynasty, meaning that it must occur within Tibetan territory and with the central government's endorsement, a process that highlights Tibet's position as a part of China, not an independent entity.

Beijing's plan could work, but the cost would be high. Without recognition from the Dalai Lama, Beijing's appointed successor — and by extension, Beijing's authority in Tibet — can hardly be accepted by the wider Tibetan community. To resist Beijing's attempt at interference, the Dalai Lama has in recent years made various statements signaling that the ancient traditions of the succession process could break. In particular, the Dalai Lama has discussed the potential for succession through emanation rather than reincarnation. This would place his knowledge and authority in several individuals, each with a part of his spiritual legacy, but none as the single heir. Emanation can occur while the Dalai Lama is alive, thus giving him the ability to manage a transition. He has also mentioned the possibility that no successor will be named — that the reincarnation of the Dalai Lama will end, leaving his legacy as the lasting focus for Tibetans.

More concretely, the Dalai Lama has split the role of spiritual and political leadership of the Tibetan movement, nominally giving up the latter while retaining the former. In doing so, he is attempting to create a sense of continuity to the Tibetan movement even though his spiritual successor has not been identified. However, it also separates the Dalai Lama from any Tibetan political movement, theoretically making it easier for the spiritual leader and Beijing to come to an accord about his possible return as a spiritual — but not political — leader. But the maneuvering by the Dalai Lama reflects a deeper reality. The Tibetan movement is not homogenous. Tibetan Buddhism has several schools that remain in fragile coordination out of respect for the Dalai Lama. The Tibetan political movement is also fragmented, with the younger foreign-born Tibetans often more strongly pressing for independence for Tibet, while the older exiles take a more moderate tone and call for more autonomy. The peaceful path promoted by the Dalai Lama is respected, but not guaranteed forever, by the younger and more radical elements of the Tibetan movement, which have only temporarily renounced the use of violence to achieve their political goals.

The future of the Tibetan movement after the Dalai Lama's death is uncertain. At a minimum, the spiritual leader's fame means no successor will be able to exercise the same degree of influence or maintain internal coherence as he has done. Just as the Dalai Lama was concerned that an extremist wing of the new Tibetan generation would undermine his moderate ideology and dilute the movement's legitimacy, Beijing fears that the post-Dalai Lama era would enable multiple radical, separatist or even militant movements to proliferate, leaving Beijing in a much more difficult position and potentially facing a greater security threat.

Beijing and the Dalai Lama have shown a willingness to reach a political settlement in the past, but their attempts failed. As uncertainties loom for both sides amid concerns about the spiritual leader's age and the changing domestic dynamics facing China's new president, Xi Jinping, both sides could see a departure from previous hostilities as a reasonable step toward a low-cost settlement. In other words, both Beijing and the Dalai Lama — and by extension his mainstream followers — understand how little time they have and how, without a resolution, the uncertainties surrounding the Tibet issue could become permanent after the spiritual leader's death.
Optimism Now, but Caution Ahead

The report of the Dalai Lama's possible return to Tibet comes as Beijing has resumed talks with representatives of the spiritual leader. This round of negotiations comes after nine rounds of failed talks over the past decade and four years after the last attempt. Nonetheless, the mood appears at least somewhat optimistic on both sides. In recent weeks, the Dalai Lama has offered conciliatory comments about Xi and intimated that he could be open to returning to Tibet, a longstanding desire of the 79-year-old spiritual leader. For its part, Beijing has released some Tibetan political prisoners and reportedly allowed the Dalai Lama's image and words to be used in certain Tibetan regions after years of prohibition.

Of course, many uncertainties surround the return of the Dalai Lama; it is even uncertain whether it could happen at all. Indeed, overcoming 55 years of hostile relations takes enormous effort, and even if the Dalai Lama is allowed to return to Tibet, it is only one of several steps in much broader negotiations between Beijing and the Tibetan exile community over how to reach a resolution, including the possible resettlement of 200,000 Tibetans in exile, the status of the government-in-exile, the authority of the Dalai Lama and, ultimately, the succession process for the spiritual leader.

Over the years, the Dalai Lama repeatedly has expressed a strong desire to return to the Tibetan homeland, seeing it as an end goal in his longstanding efforts to gain Tibetan autonomy. Although Beijing had always left the option open, it repeatedly emphasized that any dialogue with the Dalai Lama would be confined to the scope of an arrangement for the spiritual leader and would carry no political implications. In other words, any agreement will be based on the premise that expanded Tibetan autonomy is not an option and that Beijing's authority over Tibetan regions — and by extension, the borderland in Xinjiang and Inner Mongolia — will remain intact. Similarly, the Dalai Lama will not accept a weakening of his spiritual authority among the Tibetan community or of his role in choosing successors. Nonetheless, with Beijing's concern over the proliferation of radical wings of the Tibetan movement abroad, allowing the Dalai Lama to return to Tibet could mitigate some of the tension and give Beijing a way to divide and weaken the Tibetan movement.

In moving toward an agreement, both sides would have to prepare for some political risk. For Beijing, the foremost concern would be managing the enormous religious influence of the Dalai Lama at home, where he is seen as a challenger to the Communist Party's political leadership. For the Dalai Lama, the main concerns would be managing the role of the Tibetan political leadership overseas and the potential repercussions within the exile movement from the developing settlement's contrast with their goal for Tibetan autonomy.

Perhaps more important, even if there were signs of a resolution developing, the succession issue is likely to be a roadblock. Beijing is unlikely to give any concession in its authority to appoint a reincarnated spiritual leader, and the Dalai Lama shows little intention of allowing Beijing's unilateral move.

Confronting a Geopolitical Curse

Despite various uncertainties, questions and risks, the potential ramifications of even the slim possibility of rapprochement illustrate China's ancient geopolitical dynamism at work.


Again illustrating how an individual can play a role in geopolitics, the potential for reconciliation between Beijing and the Dalai Lama could affect the balance between China and India. China has long viewed India's decision to host the Tibetan government-in-exile as a hostile gesture. However, India's ability to exploit China's concerns about Tibet has diminished along with the government-in-exile's influence and claim to represent Tibet as a legitimate entity. Already, New Delhi has shown waning enthusiasm for accepting Tibetan refugees and greater concern that the internal fragmentation of the Tibetan community will make hosting the exile community more of a liability than a benefit. However, a settlement would not eliminate the underlying geopolitical rivalry between India and China on other fronts — from their 4,000-kilometer land border to the maritime competitions in the Indian Ocean and South China Sea and their competition for energy and other resources.

Even if a settlement on the Tibet issue emerges in the distant future, it does not mean the end of the China-Tibet struggle. Indeed, since 2009 there have been many Tibetan self-immolations, and Beijing's economic developments in many parts of the ethnic borderlands widely are perceived as flawed or incomplete. Quite likely, a detente with the Dalai Lama will result in radicalized and more extremist elements emerging overseas, seeking self-determination and, like many of their counterparts around the world — from Scotland to the Kurds in the Middle East — challenging the centripetal forces of nation-states.

Historically, when Han China is strong, so is its control over these buffer regions. Control of the buffer regions, in turn, is a key precondition for a strong and secure Han China. This arrangement will become crucial as Beijing grapples with the potential challenges in the social, economic and political transformation in the Han core in the coming years. Therefore, despite the flux mentioned in the aphorism from Romance of the Three Kingdoms, for Beijing the ultimate goal is to confront an ancient geopolitical curse by cementing its control over its borderlands and uniting China permanently and irreversibly, however unrealistic this goal might be.

Editor's Note: Writing in George Friedman's stead this week is Stratfor Asia-Pacific Analyst Zhixing Zhang.

Read more: Centripetal and Centrifugal Forces at Work in the Nation-State | Stratfor
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Title: Similar to noises I have made
Post by: Crafty_Dog on January 08, 2015, 01:46:36 PM
http://www.youngresearch.com/researchandanalysis/commodities-researchandanalysis/china/?awt_l=PWy8k&awt_m=3Z.aLq_6Izzlu1V
Title: Re: China
Post by: ccp on January 25, 2015, 06:23:29 PM
Are these leaks being done with "inside" help?   Must be:

http://freebeacon.com/national-security/nsa-details-chinese-cyber-theft-of-f-35-military-secrets/
Title: Re: China
Post by: Crafty_Dog on March 10, 2015, 10:28:39 AM
I have often spoken of Chinese demographic issues , , ,


http://blogs.wsj.com/chinarealtime/2015/03/10/china-sets-timeline-for-first-change-to-retirement-age-since-1950s/?mod=WSJBlog&mod=chinablog
Title: WSJ: China Deflation
Post by: Crafty_Dog on March 10, 2015, 01:25:37 PM


A modest pickup in China’s consumer inflation in February has failed to ease concerns among economists over China’s deflation risks. On the factory side, China now has seen industrial deflation for three full years, meaning manufacturers can’t raise prices and will have a difficult time justifying hiring and investment. Policy makers still need to further ease policy to head off deflation risks, many economists say.

The consumer price index, a major gauge of inflation, was up 1.4% from a year ago in February compared with January’s 0.8% increase, a five-year low. The rebound in February’s CPI was mainly due to a faster increase in food prices during the Lunar New Year holiday.

The producer price index, which measures prices at the factory gate, slid 4.8% from a year ago, worsening from January’s 4.3% drop and marking three full years of declines. It was also the biggest fall in the PPI since October 2009.
Title: China's edebt crisis: addressing the problem but missing the mark
Post by: Crafty_Dog on May 16, 2015, 08:51:42 PM
 China's Debt Crisis: Addressing the Problem but Missing the Mark
Analysis
May 15, 2015 | 09:15 GMT
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A Chinese commuter rides past the CCTV office in the Central Business District in Beijing. (AFP PHOTO/Mark RALSTON)
Analysis
Forecast

    China is granting local governments greater autonomy by allowing them to swap up to $160 billion in outstanding loans for lower-interest, slow-maturing government bonds.
    The program will provide a crucial buffer against local government debt crises in 2015 and beyond.
    The initiative may reduce economic stress in the near term but fails to address the largest contributor to China's crisis: corporate debt.

A significant evolution is underway in how China manages its rising levels of local government debt. On May 14, the Chinese government announced that by September, it would complete the first phase of a new plan that allows local governments to swap outstanding loans for low-yield, slow-maturing local bonds. Under the plan, localities would have a steady and stable repayment path for the more than $3 trillion in local government debt accumulated during the past six years of rapid, post-financial crisis spending. It will also have the added benefit, Beijing hopes, of lowering local government debt-servicing costs, thus freeing up tens of billions of yuan in liquidity in the short run. For now, local governments will be able to exchange only a small portion of outstanding loans (about $160 billion) for local bonds, but if successful, the program will likely expand substantially in the years to come.

The debt swap plan comes at a crucial time for China's economy. In recent years, the country's slowing growth rate has steadily eroded the local governments' abilities to service outstanding debts, much less sustain the level of investment needed to keep the economy humming. By allowing localities to swap 50 percent or more of maturing outstanding debts this year, the new plan will provide a much-needed buffer against local government debt crises in the near term — and beyond, if the program expands as Beijing intends. Although the plan is a welcome departure from the Chinese government's previous ad hoc methods of managing local government debt maturation, it fails to address the most pressing problem: outstanding corporate debt.

At the end of 2014, Chinese businesses owed more than $16 trillion, accounting for 61 percent of China's total outstanding debt and equal to nearly 180 percent of the country's gross domestic product. That compares with $3.38 trillion owed by local government financing vehicles (LGFVs), the means through which local governments raise virtually all of their cash.

Local Bonds

The idea of allowing local governments to issue their own bonds is not new to China. Until recently, central government leaders consistently rejected the idea of granting localities greater autonomy. For most of the 2000s, the central government opted to keep virtually all financing under the control of a handful of major state-owned commercial banks and their local affiliates. When the global financial crisis forced Beijing to rapidly ramp up spending and investment after 2008, the central government refused to allow localities to issue their own debt and created a legal framework for LGFVs to operate and draw capital from state-owned banks, ultimately falling under the central government's control.

In 2008, when the country was facing a potentially destabilizing economic crisis, the decision to bind local government finances to the state-owned banking system via LGFVs was reasonable. Beijing was worried that economic imbalances between coastal and inland provinces could fuel political instability and fragmentation. From the vantage of 2008, LGFVs seemed to provide the central government a means to dramatically expand local governments' spending capacity — local governments cover 85-90 percent of all government expenditures, including for infrastructure development and social services — while retaining a degree of control over how and when that money was spent.

This state-controlled strategy, however, began to break down after 2010, when Beijing attempted to ease lending to LGFVs. The decrease in loans from state-owned banks resulted in the creation of "shadow lending" tools thanks to a persistent demand from businesses and LGFVs. By 2013-2014, shadow lending — some of it in the form of off-balance sheet lending by state-owned banks themselves — accounted for an uncomfortably large share of China's total outstanding debt and new credit creation. The new economic reality forced the central government to clamp down and correct the growing reliance on shadow lending, a process that partly explains the timing of the start of China's real estate and broader economic slowdowns in early 2014.

Even in the face of declining economic growth, Beijing is loath to reverse the trend. For one, the slowdown — and the reform and restructuring it implies — is a crucial step on the path to rebalancing China toward an economic growth model grounded in private consumption, high value-added manufacturing and services. More to the point, the sheer scale of outstanding credit and industrial overcapacity, combined with the rapid deterioration in credit's return on investment, means that reversing the current decline would require unsustainable levels of new spending. With little option but to allow the economy to falter, the Chinese government has instead turned its focus to managing the slowdown. Enabling local governments to repay their old debts while maintaining a baseline of spending is central to this effort.

Enter the new debt swap program. By exchanging higher-interest, fast-maturing loans for low-interest, slow-maturing bonds, Beijing aims to prolong but soften the pain of repaying those debts and free more cash for local governments to spend in the near term. In short, Beijing hopes that this new process of gradually granting autonomy to the local governments will cut down on a number of entrenched problems and force the localities to think more carefully about how they spend their money going forward. The simple fact that Beijing is proceeding with the creation of local bond markets suggests that the central government understands it no longer has any choice but to allow greater local fiscal autonomy. It is no coincidence that this process coincides with a sharp consolidation of the central leadership's powers in other spheres of Chinese political and economic life. China's leaders are aware that the country is moving toward a consumption-driven economic growth model. To mitigate future challenges posed by this transition, the government is moving rapidly to ensure maximum control over central party, government and security apparatuses.
The Elephant in the Room

The debt swap program has gotten off to a somewhat choppy start. In late April, Jiangsu province delayed an 81 billion-yuan ($13 billion) bond issuance, likely because of a lack of interest among commercial banks in purchasing the low-yield, slow-maturing securities. In response, the central government allowed commercial banks to use bonds bought from local governments as collateral for low-cost loans from the central bank, thus offsetting the impact of swapping higher-interest loans for low-interest local bonds on commercial banks' balance sheets. As the program expands, bonds will become an increasingly viable alternative financing route, and the room for error will grow. In the near term, local government debt defaults remain a real risk, especially in areas where growth is slowing the most and LGFV reliance on shadow lending is highest. But the debt swap program provides a viable and likely stable blueprint for metabolizing the debts accumulated by local governments over the past decade or so.

However, this plan does not address the larger and more pressing issue of corporate debt, and no comparable plan for managing corporate debt exists. The corporate debt is more than four times the size of local government debt and is also that which sustains the vast majority of employment in China. For the time being, Beijing seems to be counting on the ability of service industries and agriculture, with financial help from the banking sector, to absorb the employment leftover from industrial consolidation — both government-driven and economically induced — and corporate closures. As the slowdown continues, the rate and scale of corporate debt crises is likely to grow substantially. Unemployment among manual laborers and manufacturing is also expected to grow. Although a plan to improve local government solvency and boost local governments' liquidity could provide a buffer against social and political instability in the near term, the corporate debt must be addressed and eased to ensure China's long-term prosperity.
Title: Re: China
Post by: G M on May 17, 2015, 12:12:29 AM
If only our debt crisis were so manageable.
Title: China: Lawsuit seeks damage for pollution
Post by: Crafty_Dog on May 18, 2015, 10:48:45 AM

By
Te-Ping Chen
May 18, 2015 4:54 a.m. ET
WSJ

BEIJING—An environmental dispute involving a stone quarry in southeastern China marks the first test of a new Beijing effort to use the courts to help clean up the country’s massive pollution problems.

In a lawsuit that began trial on Friday in a court in China’s southeastern Fujian province, environmental groups accused four mine operators of stripping a mountainous area of trees and causing about two hectares’ worth of damage. They are suing the defendants to either restore the area themselves or pay 1.1 million yuan ($177,000) for a third party to do so. For their part, the defendants have said that the group doesn’t have the right to sue and disputed the sum requested, saying that the way it was calculated was flawed. They also said the damage caused wasn’t intentional.

Experts say the case, brought by environmental groups Friends of the Earth and Fujian Green Home, is the country’s first public-interest suit lodged under its new environmental law. Revised for the first time since 1989, the revamped environmental law came into effect in January and gave nonprofit groups greater ability to sue on behalf of the public for environmental damages.

While Chinese official statistics show that regulators have pursued more criminal cases against alleged polluters, experts say private lawsuits haven’t yet caught up. To help private citizens, separate new rules that went into effect in May have made filing private lawsuits easier. Already, a Chinese court earlier this month accepted a series of suits from tourism groups seeking 40 million yuan in damages from ConocoPhillips over alleged damages from the 2011 Bohai Bay oil spill in the waters off northeastern China. ConocoPhillips didn’t respond to a request for comment.

The test in the case in Fujian is whether more nonprofit groups will be encouraged to make use of the new rules enacted in January despite remaining hurdles that include high fees and lack of experienced legal personnel. “Just because a group is qualified to sue doesn’t mean they have the ability to bring a suit, much less that they have that aspiration,” said environmental lawyer Xia Jun. “The law can’t force people to sue.”

In 2014, the number of criminal actions related to the environment totaled about 16,000 cases, according to a government judicial work report released in March. The official news agency Xinhua said that marked a rise of more than eight times from 2013. The number of civil cases involving damages from pollution rose by 51% to 3,331, the agency said, though Zhang Bao of the Central South University School of Law said that the numbers have fluctuated in recent years without an obvious increase.

Prior to the new environmental law, courts rarely accepted environmental suits brought by nonprofits. Even when government-backed groups such as the All-China Environment Federation brought suits, they faced serious barriers. In 2013, the federation attempted to lodge eight cases, and all were rejected by the courts, it said.

Since the new law went into effect in January, the number of cases accepted by the courts on environmental issues has remained in the single digits, environmentalists say. In part, that is because few nonprofits have been trying, said Wang Canfa, founder of the Center for Legal Assistance to Pollution Victims. “Before, some expected that there’d be a great surge in cases. In fact, that didn’t happen,” he said.

The new law requires nonprofits to have worked in the environmental sector for five years and to be registered with the government. According to the government, several hundred nonprofits are eligible to bring suits under the new law.

Bringing a case can rack up thousands of dollars in legal bills—a challenge in a climate in which nonprofits’ ability to fundraise is already strictly curtailed. Courts often require plaintiffs to hire independent bodies to help appraise the monetary value of the environmental damage claimed, compounding the expense. The number of nonprofits with the interest and ability to bring such suits, said Mr. Xia, the environmental lawyer, is “pitifully small.”

A traditional Chinese reluctance to bring lawsuits is also a factor, says Ge Feng of Friends of Nature. The group recently set up a 300,000 yuan legal fund backed by the Alibaba Foundation, which was founded by e-commerce giant Alibaba Group Holding Ltd. , to help support lawsuits.

Lawyers said they were cautiously optimistic about the outcome of the case in Fujian, saying that several of the individuals being sued had already been sentenced to prison stints of about a year.

In addition to empowering nonprofits to sue polluters, the government has also set up hundreds of environmental courts specializing in the issue across the country in recent years. Many environmental courts have languished, though, with some judges even transferred to assist with regular cases due to their low caseload, lawyers say.

—Lilian Lin contributed to this article.

Write to Te-Ping Chen at te-ping.chen@wsj.com
Title: Stratfor: The Grand Design of China's new trade routes
Post by: Crafty_Dog on June 28, 2015, 10:50:33 PM

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The Grand Design of China's New Trade Routes
Analysis
June 24, 2015 | 09:15 GMT

    Over the next several years, China will devote significant resources to the construction of Eurasian trade routes under its Belt and Road Initiative.
    As transit routes come online, the proportion of Chinese maritime trade passing through South China Sea chokepoints will shrink.
    The new infrastructure built as part of the Belt and Road Initiative will support China's economic rebalancing by opening new markets, generating demand for higher value-added Chinese goods and helping China build globally competitive industries.
    Improving transit routes will lead to new security and political risks, and China's efforts to mitigate these threats could create frictions in the very areas where Beijing is trying to diversify its trade routes.

In 2013, China's President Xi Jinping proposed a plan to stimulate development in Eurasia by constructing what he called the Silk Road Economic Belt and the 21st Century Maritime Silk Road — revivals of the overland and maritime trade routes that once connected China and Europe. Since then, the "Belt and Road Initiative" has become a fixture in official Chinese discussions on both foreign and domestic policy. Nonetheless, the initiative is still loosely defined. Beijing claims there are about 60 Belt and Road countries, but there is no public listing of these countries. Although the initiative clearly centers on infrastructure investment, Chinese media coverage offers no straightforward definition of what projects count as part of the program. A pledge to install signs and information kiosks in Armenia is said to be under the banner of the Belt and Road Initiative, as is a $46 billion infrastructure investment package that Xi promised to Pakistan in April.

This lack of clarity makes it difficult to see what is special about the Belt and Road Initiative. After all, China has long been involved in infrastructure construction across Eurasia. However, with the Belt and Road Initiative, China has for the first time explicitly unified all of its infrastructure investments in Eurasia under a single coordinated plan. The initiative should not be understood as merely as the sum of its infrastructure projects. Rather, it should be seen as a strategy with a clear set of ends, ways and means, to be evaluated on its ability to support China's geopolitical objectives.

The strategy behind the Belt and Road Initiative is to diversify transit lines, thereby mitigating China's vulnerability to external economic disruption and reinvigorating China's slowing economy. China's ideal would be to link its inland cities to global markets with a diversified network of transit routes and energy pipelines, many of which would take inland routes and serve as alternatives to existing sea-lanes. The name of the initiative, "One Belt and One Road," is slightly misleading; this will not be a single overland road coupled with a single maritime route. The initiative envisions six corridors across Eurasia, many of which will mix land and maritime components.

Every project built along these corridors under the Belt and Road Initiative will serve both strategic and economic purposes, though some will prioritize one set of goals over the other. However, the overall orientation of the Belt and Road Initiative will be toward strategic objectives.

Strategic Logic

China's economy is dependent on foreign trade, 90 percent of which travels by sea. China's near seas — the Yellow Sea, the East China Sea and the South China Sea — are bounded by what Chinese strategists call the "First Island Chain," a series of islands (many of which are controlled by U.S. allies) that stretches from Japan to the Philippines to Indonesia. To reach ports on China's eastern coast, seaborne trade from the west must pass through maritime chokepoints such as the Strait of Malacca (through which 82 percent of China's crude oil imports passed in 2013). Passage through these maritime chokepoints is secured by another country: the United States, the world's dominant naval power.

The geographic enclosure of China's near seas would make it relatively easy for an adversary to disrupt or interdict Chinese trade. China faces many challenges in developing the ability to project sufficient naval power to safeguard seaborne trade as it passes through distant chokepoints. Instead, China must rely on the United States to provide security of the sea-lanes. Although maritime security is ostensibly a public good, China worries that, as a potential peer competitor to the United States, it will not always be able to rely on the United States to protect its shipping.

U.S. war planners have certainly not ignored China's geographic vulnerability. A 2015 Department of Defense report to Congress on China mapped out chokepoints for Chinese energy imports, a move unlikely to have gone unnoticed in Beijing. In the case of a war between the United States and China, many U.S. strategists favor imposing a distant blockade of Chinese waters. Although the U.S. Navy has unchallenged supremacy over the open ocean, resource constraints — and the risks posed by China's anti-ship capabilities in its near seas — suggest that U.S. forces would concentrate on blocking the chokepoints.

The Belt and Road Initiative aims to mitigate the risk of maritime interdiction by constructing transit routes along six economic corridors:

    The China-Mongolia-Russia corridor, anchored by the Trans-Siberian railway
    The New Eurasian Land Bridge, anchored by a set of railways running from central China (Wuhan, Chongqing and Chengdu) to Europe via Kazakhstan, Russia and Belarus
    The China-Central Asia-Western Asia Corridor, speculated to follow the overland Silk Road Economic Belt as depicted in maps released last year by the state-owned Xinhua News Agency, passing through Central Asia, Iran and Turkey to reach Europe
    The China-Pakistan Corridor, which would extend the Karakoram Highway, which already crosses the mountains between China and Pakistan, and build highway and rail links all the way through Pakistan to the port of Gwadar
    The Indochina Peninsula Corridor
    The Bangladesh-China-India-Myanmar Corridor

In these corridors, China will enhance existing transportation networks, construct new roadways and build intermodal transport hubs and energy pipelines. Alongside these projects will come investment in attendant infrastructure, including power plants and communications technology such as fiber-optic cables. China will not be starting from scratch — it has already built up a patchwork of infrastructure across Eurasia, and much of the Belt and Road work will simply link existing segments of road and railway.

Two of these corridors, the China-Mongolia-Russia corridor and the New Eurasian Land Bridge, will be entirely overland. They center on existing transcontinental rail lines and mainly focus on delivering relatively high value-added goods, such as electronics, which are sensitive to rapid changes in demand. China will shift a small fraction of its total trade to these routes, providing an outlet for industries in China's interior and giving the country a measure of insurance against naval interdiction.

Recognizing that it can only shift a small amount to inland trade routes, China will continue investing in port infrastructure along other corridors in the Belt and Road Initiative, particularly in the Indian Ocean region. However, China will find ways to link land and maritime routes, aiming to bypass the South China Sea chokepoints and minimize the distance of any single maritime leg of Chinese shipping. For example, the China-Pakistan Corridor could allow some Chinese goods to travel overland to Pakistan before embarking for Europe at the Chinese-constructed port at Gwadar.

The Belt and Road investments will also serve to build political support for China. Many countries along the proposed transportation corridors face huge budget shortfalls in the area of infrastructure development, together totaling trillions of dollars between 2010 and 2020. With its large financial resources, China is well poised to fill some of these gaps. In fact, some of the planned infrastructure projects will have no obvious connection to the development of transit routes. For example, China signed an agreement with Georgia in May to construct 30 greenhouses as well as provide additional agricultural assistance. However, China will be happy to meet these seemingly unrelated demands, both to bring in business for its construction industries and to secure the political support necessary to ensure the safe conduct of Chinese commerce through neighboring countries.
Economic Logic

The strategic value of these corridors will be realized in the long term as the routes become fully linked. Aside from its long-term value as a contingency plan for Chinese trade, the Belt and Road strategy serves China's goal of alleviating its economic slowdown and correcting its internal geographic disparities. By official figures, China's economy is expected to grow at about 7 percent a year, though in reality, growth is likely to become substantially slower. To handle the slowdown, China aims to shift its industry away from the coast to the relatively underdeveloped inland provinces. Meanwhile, it seeks to produce higher value-added goods in coastal regions and expand coastal consumer bases to absorb manufactured goods from the newly industrialized interior.

The Belt and Road Initiative will aid in this process by constructing physical links between China's inland industry and new markets. Belt and Road infrastructure projects may give China a way to offload some of its growing surpluses in construction materials and rural labor. Although it may not be economically or politically feasible to tap into these surpluses for every project, overall the initiative will help alleviate some of China's overcapacity problems.

In addition to building up the "hardware" of infrastructure, China will try to streamline trade by pushing for new customs agreements and unified technical standards. These trade facilitation measures will complement the development of special economic zones and industrial parks along the Belt and Road corridors. Improved transit infrastructure and the elimination of trade barriers could make it cost-effective for China's inland industry to access new markets.

The construction of new roads may stimulate foreign demand for higher value Chinese manufactured goods, such as locomotives and train cars. As China builds up its construction companies, Belt and Road projects will create opportunities for them to gain more international exposure and experience. A higher international profile will enable Chinese industry to build proficiency and compete globally in sectors traditionally dominated by competitors such as Japan's Kawasaki Heavy Industries, South Korea's Samsung Heavy Industries and Germany's Siemens.
Carrying Out the Initiative

The tools China is using to implement Belt and Road expose the political objectives at the very heart of the program. To carry out this vast construction initiative, Beijing is relying on its panoply of state-owned enterprises, which reflects the Belt and Road strategy's orientation toward strategic, rather than solely financial, gain. Although state-owned entities sometimes sacrifice efficiency, they will enable Beijing to exert tighter central control over its projects.

These state-owned enterprises will receive financial backing either directly from Chinese policy banks, such as China Development Bank (which has pledged $890 billion for Belt and Road projects, most likely over the course of several years) and the Export-Import Bank of China, or from infrastructure investment funds such as the Silk Road Fund, which holds $40 billion. Additional money for these investment funds will come from China's foreign exchange reserves and China's sovereign wealth fund, which have $3.7 trillion and $220 billion available respectively. In addition, China will enlist other countries to finance these efforts through multilateral banks such as the Asia Infrastructure Investment Bank, which is scheduled to come online later this year with an initial capital base of $100 billion. China will not be able to devote all of this money to the Belt and Road strategy because of multiple competing demands, but the relative abundance of its financial assets suggests that China can afford to be generous. More Belt and Road-related deals in the $20 billion to $50 billion range will not be unusual or unduly taxing of Chinese resources.
Risks and Challenges Ahead

Although China has ample resources for building up infrastructure in the Belt and Road corridors, serious security and political challenges are likely to arise. Many of the Belt and Road projects, by their very nature of expanding transport links into underdeveloped or conflict-ridden regions, will generate additional security concerns. Construction teams and the infrastructure itself will need protection. To safeguard its interests, China will negotiate for improved host nation security for its projects. For example, Beijing and Islamabad appear to have secured an agreement under which Pakistan will allocate an army division composed of 10,000 troops specifically to protect Chinese workers, many of whom will be working on infrastructure projects in the restive province of Balochistan.

Improved transit links would provide new routes for the illicit movement of goods and people into China itself. China is especially sensitive to these transnational threats because of longstanding problems with separatist militants in its westernmost territory, Xinjiang, a critical node that is also where three of the six Belt and Road corridors exit China. To combat these transnational risks, China will provide assistance for domestic security organizations in countries along the Belt and Road networks. An indication of China's plans is Politburo member and chief of Chinese security Meng Jianzhu's prominent role in promoting law enforcement exchanges under the rubric of the Belt and Road. These exchanges most likely will include enhanced intelligence sharing and could lead to China conducting more joint law enforcement training with its Belt and Road partners. However, powerful regional stakeholders may worry that the expansion in Chinese security cooperation will come at the expense of their interests, especially in Central Asia, where Russia is wary of attempts to challenge its dominant role in regional security. China will need to engage in very active diplomacy to allay fears of displacement, but this will most likely be an uphill battle.

In addition to security hazards, considerable political risks could create difficulties for China's construction projects. Chinese aid could become politicized and draw criticism domestically. In Sri Lanka, Chinese construction on Colombo Port City, a $1.4 billion artificial island, was suspended in January after the election of President Maithripala Sirisena, who accused his predecessor of offering too many concessions to China. Chinese firms involved on the project lost $380,000 per day, and construction was only cleared to resume three months later. Similar localized headaches are likely to occur frequently. More seriously, regional tensions in areas such as Central Asia's Fergana Valley, which crosses the borders of countries that line the China-Central Asia-Western Asia corridor, and political instability within countries like Kazakhstan could present long-term perils for Chinese efforts to implement the Belt and Road strategy.

Ultimately, the geographic scale of the Belt and Road strategy and the complex geopolitics involved mean that China's success in building the six Belt and Road corridors will be highly uneven. Yet, although the Belt and Road strategy will be expensive and face formidable hurdles, the mitigation of trade insecurity will make the project well worth the cost in the eyes of China's leaders. As the transit routes come online, this network will provide several alternatives to the vulnerable sea-lanes through the South China Sea, giving China's economy some insurance against any single point of failure. In an instance of war, the Belt and Road infrastructure would greatly complicate potential U.S. plans to impose a distant blockade. Inland transit routes would naturally be insulated against naval interdiction, and the proliferation of short maritime transit legs would force the U.S. Navy to spread its assets over a large expanse rather than concentrate on a small number of chokepoints. In peacetime, these options would enhance China's political leverage by preventing any individual country from threatening to disrupt China's economic lifelines.
Title: China: Stock Market Bubble Bursting?
Post by: Crafty_Dog on June 30, 2015, 08:27:30 AM
My prediction of several years now may now be coming to pass:


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Has China's Stock Market Bubble Burst?
Analysis
June 30, 2015 | 09:00 GMT

Analysis

Forecast:

    In the coming months, the stark disjunction between China's stock market boom and its slowing economy will weigh more heavily on stock performance.
    As the stock market boom inevitably winds down, authorities will struggle to contain financial fires caused by the sharp increase in reliance on margin financing (both formal and "shadow") by stock market investors. The volume of outstanding margin loans is too small to trigger a systemic crisis, but temporary liquidity crunches cannot be ruled out.  The eventual decline of the stock market, combined with the continued slowdown of property markets across China, will leave ordinary Chinese with fewer options for investing their savings.

The Shanghai Composite Index, which tracks the performance of stocks on China's largest exchange, fell 3.3 percent on June 29, compounding a 7.4 percent drop June 26 — the largest single-day decline since 2008, when Chinese stocks were in the midst of a global financial crisis-induced collapse. Days of sustained falls, even as the country's central bank further cut reserve requirement ratios and interest rates, have reduced the Shanghai exchange more than 21 percent from its June 12 peak, officially making it a bear market. It is unclear whether the fall will continue or, as has happened several times in recent months, whether it will stabilize or even reverse itself in the weeks ahead. But the sharp declines over past weeks cast a spotlight on the increasingly glaring gap between China's buoyant equities and the reality of its continued, and in many ways deepening, economic slowdown.

There was an extraordinary boom in Chinese stocks over the past year. In the 12 months since June 2014, when the boom began, the combined market capitalization of the Shanghai and Shenzhen exchanges rose more than 140 percent. Since early May alone, more than 5 million new investors, most of them ordinary Chinese, have entered the market, bringing the total number of investors to 90 million. Over the past five months, total assets under management at China's mutual funds have nearly doubled, from $720 billion to over $1.2 trillion. In November 2014, China overtook Japan as the world's second largest stock market, with a market capitalization of $4.5 trillion. Today, its stocks have an estimated value of around $9 trillion, roughly equivalent to the country's gross domestic product.

Strikingly, however, this dramatic growth has taken place against a backdrop of steady declines across most major indicators in the economy at large. Industrial profits fell 1.4 percent in the first four months of the year, while those across the state-owned sector — which enjoys disproportionately high representation on China's largest stock exchange, in Shanghai — collapsed by nearly 25 percent. Profits are rising among private sector businesses, but at 6.1 percent in the January-April period, their annual growth pales in comparison to concurrent gains in the Shenzhen index, on which private enterprises are better represented. At the same time, growth in fixed-asset investments, which account for nearly 50 percent of China's GDP, has fallen to its slowest pace since the global financial crisis, and housing construction-related spending — by far the largest component of fixed asset investment — is growing at roughly one-third the pace of a year ago. To be sure, home prices and sales have seen a modest rebound in top-tier markets in recent weeks. And services, high-tech and consumption-related industries continue to grow at a stable rate. But these gains are far from sufficient to support nationwide GDP growth at the government's 7 percent annual target, let alone to explain the stupendous performance of China's equity markets in recent months.

A confluence of factors accounts for the sharp growth in Chinese equity markets over the past 12 months. Excitement over China's nascent high-tech sector, along with strong growth in consumption and services industries, has undoubtedly contributed to the boom. But these factors alone do not fully account for the rapidity and scale of gains made across the board on both of China's leading exchanges, nor for its coincidence with slower growth across most of the country's industrial sector. Rather, the current stock market boom must be understood in relation to two other factors: China's regime of strict capital controls and the decline, starting in March 2014, of the real estate sector.

Expansion in China's Stock Markets

A defining feature of China's financial and economic development over the past three decades has been the government's tight control over the flow of capital in and out of the country. For most of the Reform and Opening period, individual Chinese were prohibited from investing overseas. This has changed somewhat in recent years, in part in an effort to better regulate cross-border capital flows and to combat illicit capital flight. But even today, the vast majority of overseas Chinese investment comes from state-owned enterprises and high net-worth individuals, many of them Party officials or affiliates. Ordinary Chinese by and large are barred from parking their capital and seeking returns beyond China's borders.

Domestically, partially by design and partially because of a lack of financial depth (a legacy of the Mao era, during which securities were outlawed), ordinary Chinese have traditionally had few avenues for investing their savings. Until the late 1980s, they had two options: to deposit savings in state-owned banks, where returns consistently trailed inflation, or to keep them under their mattresses, where returns were even worse. The reason for this arrangement was simple: decades of self-isolation from global trade and financial markets made China in the 1980s an extremely capital-poor economy. And since the government owned the economy, and thus bore sole responsibility for raising and investing funds, it had to ensure it could capture as much of the population's wealth as possible. The easiest way to do this was to give ordinary Chinese no choice but to put their savings in state-owned banks.

China's earliest stock exchanges emerged organically in the late 1980s in cities like Shenzhen and Chengdu in an environment of extraordinary (and short-lived) political openness, rapid growth in private sector industry (which for the most part lacked access to state-controlled funds), and rising demand for higher returns from a population getting its first taste of capitalism in decades. By the early 1990s, however, these earlier exchanges had largely been co-opted by the state and transformed into a nationwide platform — with the newly created Shanghai exchange at its center — for raising capital for the state sector. Ordinary Chinese seeking new places to invest their savings cared little whether the exchanges targeted smaller private firms (as the original Shenzhen exchange did) or larger state-owned firms (as Shanghai, which became the model for other markets nationwide, did), so long as the returns were potentially greater than what might be earned on a commercial bank deposit.

This process coincided with the creation and expansion of commercial urban real estate markets in the mid-1990s, which provided another opportunity for ordinary Chinese to invest their savings. For a combination of social, cultural and policy reasons, and in part because of the lack of transparency and high volatility in China's increasingly state-centric stock markets, the development of the commercial real estate sector vastly outpaced that of stock markets in the 1990s and early 2000s. Stocks were a useful additional means of channeling the population's wealth into state entities, but they were not critical to the state's financing efforts. Indeed, in some ways the development of the stock market threatened Beijing's interests because the more deposits that were redirected to stocks, the less that went to banks' coffers. State-owned enterprises continued to rely primarily on banks for funding, and banks relied on consumer deposits.

The current expansion in China's stock markets is by no means the first, nor even the biggest, since official exchanges were opened in 1990, but it is in many ways the most significant. It comes amid the slowdown of China's decade-plus real estate boom and at a time when ever more Chinese seek means to protect and grow their savings. For the past 10-15 years, and especially since 2008, real estate has been not only the single most important industry in China but also by far the leading investment destination for ordinary Chinese seeking high returns on their savings. This speculative investment activity, much of it fueled by state-backed credit, sustained the extraordinary proliferation of housing markets across the country, and in doing so played a crucial role in maintaining high rates of employment and social stability in the wake of the global financial crisis.


While China's property sector was booming, ordinary Chinese had comparatively little incentive to invest in the stock market. In the 2000s, China's exchanges became notorious for their dysfunction and volatility because of lack of transparency and poor oversight of the initial public offering process. By 2006-2007, the last major boom period, they had come to be viewed by most ordinary Chinese as akin to the lottery — a far cry from property, which generated seemingly never-ending profits and had the benefit of being a fixed asset. Over the past several years, however, the government has gradually introduced a number of reforms aimed at professionalizing the country's biggest exchanges, including reforming the initial public offering process, strengthening the national securities regulator, and slowly opening Chinese stocks to Hong Kong and international investors.

The redevelopment of China's stock markets coincided with the slowing of China's housing market, and this convergence — combined with the proliferation of communications technologies that allow far more people to connect to markets than ever before — has underpinned the rapid growth of the Shanghai and Shenzhen exchanges over the past 12 months. In short, with real estate no longer capable of providing the returns it once did, ordinary Chinese have turned to stocks. For Beijing, this is in many ways a welcome development. As long as the market remains buoyant, it is providing a much-needed source of financing to thousands of Chinese companies, both state-owned and private, at a time when the government is working desperately to curb the economy's dependence on state-backed credit. At the same time, insofar as it allows ordinary Chinese to expand their wealth, it can be a useful tool of social management at a time of slowing growth, heightened concern over local government and corporate debt risks, and increased political uncertainty.
Growing Risks

But as has become clear in recent weeks, China's stock markets are increasingly vulnerable to the sort of debt-fueled speculative activity that drove the country's housing boom into bubble territory and that has made the process of deflating that bubble so treacherous both economically and politically. One key difference between the ongoing boom and that of 2006-2007 is the emergence of margin financing, or loans used to invest in stocks. Before 2010, China had no formal channels for individual investors to take out loans for investment in the stock market. Certainly margin loan-like tools existed, but on a highly informal and ad hoc basis, disconnected from the state-owned banking sector and thus posing little threat to national financial stability. When the market crashed in 2008, it wiped out the personal savings of many millions of investors, but the lack of leverage minimized the risk of financial contagion.

There has been a remarkable surge in margin financing over the past five months, both formal and informal. Since January, the value of outstanding margin loans has doubled to roughly $350 billion. Informal margin financing has an estimated value of between $80 billion and $160 billion. Though small compared to the total value of China's stock market or assets in the state-owned banking sector, the surge in margin financing both formal and shadow raises the risk of a liquidity crunch — and possibly wider financial contagion — if and when the market does enter into terminal decline. In recent weeks, the government has moved to limit banks' exposure to margin loans by raising the minimum assets required to qualify for margin financing and creating a program to facilitate the rollover of margin loans. But these measures, like policies intended to cool China's housing market by tightening the flow of bank credit in years past, could have the side effect of driving up demand for informal sources of margin financing.

One outstanding question raised by the fall in stock prices during the week leading up to June 26 is what new investment avenues may emerge if and when the current stock market boom does come to an end. The massive oversupply in China's housing sector makes a significant, sustained recovery in real estate markets beyond a handful of top-tier cities highly unlikely in the next 6-12 months and possibly for years to come. But with capital controls still largely in place and with the government likely to proceed slowly with efforts to liberalize interest rates on bank deposits, it is unclear what other high-return options exist for ordinary and wealthy Chinese alike, not to mention for China's growing industry of institutional investors such as mutual funds. China's population is increasingly attuned to the benefits of investing, and as the economic slowdown begins leading to unemployment in many regions over the coming months, it will be increasingly dependent on it. But Beijing will struggle to provide its populace with new investment opportunities.
Title: China's scientific ethical divide
Post by: Crafty_Dog on June 30, 2015, 08:35:50 AM
second post

A Scientific Ethical Divide Between China and West

By DIDI KIRSTEN TATLOWJUNE 29, 2015
Photo
Huso Yi, the director of research at the Chinese University of Hong Kong Center for Bioethics, said of China’s gene modification work, “The consensus among the scientific community is, ‘not for now.’ ” Credit Billy H.C. Kwok for The New York Times


BEIJING — China is spending hundreds of billions of dollars annually in an effort to become a leader in biomedical research, building scores of laboratories and training thousands of scientists.

But the rush to the front ranks of science may come at a price: Some experts worry that medical researchers in China are stepping over ethical boundaries long accepted in the West.

Scientists around the world were shocked in April when a team led by Huang Junjiu, 34, at Sun Yat-sen University in Guangzhou, published the results of an experiment in editing the genes of human embryos.

The technology, called Crispr-Cas9, may one day be used to eradicate inheritable illnesses. But in theory, it also could be used to change such traits as eye color or intelligence, and to ensure that the changes are passed on to future generations.


Dr. Huang and his colleagues tried to modify a gene that causes a blood disorder called beta-thalassemia. The experiment failed in 85 embryos. Even so, to many in global science, it was a line that should not have been crossed.

Scientists in the West generally abjure this sort of research on the grounds that it amounts to genetic engineering of humans. In any event, the technology is still in the earliest stages of development.

“The consensus among the scientific community is, ‘not for now,’ ” said Huso Yi, the director of research at the Chinese University of Hong Kong Center for Bioethics.

Yet Chinese scientists seem in no mood to wait.

“I don’t think China wants to take a moratorium,” Mr. Yi said. “People are saying they can’t stop the train of mainland Chinese genetics because it’s going too fast.”

China is quickly building infrastructure for scientific research.

In 2013, the last year for which statistics are available, the state invested more than 1.18 trillion renminbi, or $190 billion, which is more than 2 percent of its gross domestic product, in “the development of scientific research and experimentation,” according to China’s National Bureau of Statistics.

In 2011, the state invested about $140 billion, or 1.84 percent of its G.D.P., the bureau said.

“The gap between China’s new bioscience technologies and that of the West is closing,” said Zhai Xiaomei, a member of the country’s National Medical Ethical Committee and a professor at Peking Union Medical College.

But the research juggernaut is gathering momentum in a country where training in ethics for scientists was introduced, under pressure from the West, only a dozen years ago.

“The ‘red line’ in the West and in China are not too similar,” Deng Rui, a medical ethicist at Shanxi Medical University, said in a telephone interview. “Ethics are a question of culture, and that is about tradition, especially where it touches on human life.”

“Confucian thinking says that someone becomes a person after they are born. That is different from the United States or other countries with a Christian influence, where because of religion they may feel research on embryos is not O.K.”

The state does set limits, Ms. Deng said: “Our ‘red line’ here is that you can only experiment on embryos that are younger than 14 days old.”

The proscription is contained in a document issued by the health and science ministries in 2003. It now urgently needs updating, she said.  Chinese scientists adhere to globally accepted ethical and scientific norms, said Ms. Zhai, the medical ethics committee member.  But many scientists experience pressure not to do so, she acknowledged.

“Inside China, there are people who are opposed to international standards, citing cultural differences,” Ms. Zhai said. “This force is actually quite powerful sometimes.”


In the case of Dr. Huang’s experiment, the national committee decided that it was ethically acceptable because it “was not for reproductive purposes,” Ms. Zhai said, a stance that surprised some overseas scientists.

“They chose to use embryos that would soon be destroyed. So far, we have been regarding it as a very fundamental research, instead of interventions in or editing of germ cells,” Ms. Zhai said.

But she struck a warning note: “If you want to edit genes in germ cells with the intention of using this right away, it’s absolutely not O.K., because the technology has yet to become mature.”

Disturbed by the recent study, Rao Yi, a professor of biology and director of the four-year-old Center of Life Sciences at Peking University, run jointly with Tsinghua University, warned that scientific research in China urgently needed more effective ethical oversight.

“The more technology we have, the more dangerous we are to ourselves and entire humankind,” Dr. Rao said.

Chinese scientists are generally poorly paid, he said, but may receive a bonus of up to $32,000 per article from the state for publishing in international scientific journals, providing financial incentives for pushing the boundaries.

“Do first, talk later” is the attitude of many, Dr. Rao and two colleagues wrote recently on iScientist, an online community for Chinese researchers.

A global medical ethics body run by the World Health Organization or the United Nations should be set up to regulate scientific experimentation, Dr. Rao said.

More unpleasant scientific surprises are looming, several scientists said. “Right now, human gene editing is the main thing,” Mr. Yi said. Geneticists in China “don’t want to be guided by Western people.”

The mind-set among Chinese researchers, according to Mr. Yi: “ ‘We’re going to do it, then see what’s wrong, then fix it. But the conceptual discussion may be missing.’ ”
Correction: June 30, 2015
Title: WSJ: Chinese market support moves are doomed to fail
Post by: Crafty_Dog on July 10, 2015, 08:30:44 AM
Memo to China: Your Market Moves Are Doomed to Fail
By Jason Zweig

In your heart, you probably hope the Chinese government will succeed in its stunning interventions this past week to stay the panic on China’s stock exchanges.

In your head, you should suspect it will fail.

There’s something poignantly human about every attempt to make markets behave as we all wish they would: always rising and making us richer, never falling and inflicting pain upon us.

Governments have been trying—and failing—to control markets for centuries. If the Chinese government succeeds, it will be the exception to that rule. If it fails, the results could be dire.

The Chinese authorities made a rising stock market such a priority that they encouraged local investors to buy stocks on margin, or with borrowed money, until total margin loans exceeded $320 billion. That was nearly 9% of the total value of Chinese stocks—and 10% greater than the gross domestic product of Hong Kong.

“Not only were Chinese investors not familiar with the downside risks of [trading on margin], neither were the regulators and policy makers,” says Zhiwu Chen, a finance professor at the Yale School of Management who studies the Chinese capital markets. “As a result of this recent experience, I do think China will go through much rethinking and slow down its efforts to open up its financial markets.”

Other governments have blazed, or bumbled along, the same trail.

After the bursting of the speculative South Sea Bubble in 1720, the British Parliament instituted Sir John Barnard’s Act, which, starting in 1734, banned trading in futures and options. Traders shrugged and kept on speculating; the law remained on the books, bereft and ignored, until it was finally repealed in 1860.

After Wall Street’s first crash, in 1792, the state of New York banned futures trading and short selling; speculators paid no heed. As populism swept the U.S. in the late 19th century after several market panics, state after state banned trading in options. But speculators traded anyway—even in crooked “bucket shops” if they had to.

Even the Code of Hammurabi (ca. 1750 B.C.) stipulated that traders who didn’t use the sales contracts mandated by the king “shall be put to death.” Speculators probably pulled their braided beards and found ways to evade the heavy hand of that government, too.

After the Japanese stock market collapsed in 1990, the government introduced “price-keeping operations,” buying billions of dollars’ worth of shares toward the end of the fiscal year. That swelled up the balance sheets of Japan’s biggest banks, which had enormous stockholdings—but it prevented the banks from cleaning up their bad loans. Even now, after a recent binge of stock buying by the Bank of Japan, the Nikkei 225 index lurks 49% below its record level, in 1989, of more than 38900.

In China, too, debt is the problem. “When a bubble pops, it’s leverage that almost always proves so corrosive and destabilizing on the way down,” says Lawrence White, professor at New York University’s Stern School of Business who specializes in financial regulation.

By leaving regulations on margin debt loose, the Chinese government is encouraging further speculation in stocks that may still be overpriced.

“If stocks remain above their fundamental value, then all [the Chinese government] is doing with these kinds of interventions is trapping capital rather than letting investors reallocate it to a higher use,” says Eugene White, an economist at Rutgers University who studies the history of financial booms and busts.

And, if that’s the case, this round of interventions may only end up necessitating more.

As of this Friday, stocks on the Shenzhen Stock Exchange traded at an average of 45 times their earnings. That price/earnings ratio is down from its high of 68.9 in June. But it’s still more than double the average P/E of 18.5 for stocks world-wide, according to the investment firm MSCI.

“There is a possibility that [Chinese policy makers] have overestimated their ability to manage this situation,” says Thomas Rawski, an economist at the University of Pittsburgh who has been analyzing the Chinese economy for more than 40 years. “The outcome depends on the psychology of the investors in these markets.”

And that can be fiendishly hard to control. Financial historian Larry Neal of the University of Illinois likens the Chinese authorities to John Law, the brilliant 18th-century financier who, serving the French government, simultaneously pumped up the value of that nation’s currency, national debt and stock market.

In late 1719, after investors turned euphoric and then panicked, Law stepped in to support market prices. As soon as he stopped propping them up, prices fell again. Then Law “decreed a markdown,” says Prof. Neal, “and that just destabilized everything.” The collapse of Law’s plan, now known as the Mississippi Bubble, wiped out his company’s stockholders and effectively stifled the financial markets of France for at least a century.

The economist Friedrich Hayek wrote that markets are a “marvel” at aggregating small insights from large numbers of people. The data or power to outsmart markets isn’t given to governments, he warned, “and can never be so given.”

The Chinese government regards markets as clay that can be molded. Instead, markets are like water: They always find their own level, no matter who or what tries to control them.

Roughly 1,000 years ago, King Canute demonstrated that not even the most powerful monarch can command the waters. Sooner or later, the Chinese government will learn the same lesson.


Title: Re: China
Post by: G M on July 10, 2015, 09:44:12 AM
Yup
Title: Stratfor: China's Crisis; the price of change
Post by: Crafty_Dog on August 18, 2015, 06:17:46 AM
 China's Crisis: The Price of Change
Geopolitical Weekly
August 18, 2015 | 08:08 GMT
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By Rodger Baker

Last week was an eventful one for China. First, the People's Bank of China shocked the financial world when it cut the yuan's reference rate against the U.S. dollar by nearly 2 percent, leading to a greater than 2 percent drop in the value of the yuan in offshore trading. The decline triggered a frenzy of speculation, including some expectations that the Chinese move would trigger a race to the bottom for Asian currencies. Beijing said the adjustment was designed to fix distortions between the trading rate of the yuan and the rate it should have been at according to speculation, and that subsequent large shifts were unlikely. The International Monetary Fund, however, noted that the move could lead to a freer floating yuan — something the IMF has asked of Beijing before the organization considers including the yuan in its Special Drawing Rights basket of currencies. In comments made on the sidelines of its annual report on the Chinese economy, released later in the week, the IMF also noted that the yuan was not undervalued, despite the decline.

Also last week, Chinese state media issued a warning to retired officials to stay out of politics and not misuse their former networks and prestige. The warning followed reports in state media suggesting that the annual unofficial gathering of current and former Party officials at Beidaihe was canceled and would not serve as a policy-making venue in the future. The reports noted that Party officials had already held several additional sessions in Beijing and that decisions were being made in the open, not in some secretive gathering of Party elders. Other reports circulating in Chinese media warned that former Party and military officials were involved in real estate speculation along with other economic mismanagement and needed to stop.

Finally, last week China dealt with one of its worst industrial accidents in years — a series of explosions at a chemical short-term storage facility in the busy port city of Tianjin. More than 100 people were killed in the explosions and aftermath, prompting the government to launch an investigation into illegal storage and improper safety procedures at that and other facilities around the country. Citizens have begun small-scale demonstrations in Tianjin to demand government reparations for damages as a result of the blast. In response, Beijing stepped up its media campaign against rumors, using state media to remind the public that the government publicly charged a Politburo standing committee member with corruption, so the public can trust the government to be open and not hide a conspiracy surrounding the Tianjin blast.

If there is a common theme running through these events, it is the way Beijing is emphasizing its openness in decision-making, in reporting and in explaining its actions. This is not the China of the past that tried to hide the truths of major natural or man-made disasters from its citizens. It is not the China that operated by secret agreements made only after a consensus of Party elders, or the China that tried to protect Party officials at the expense of the public. Nor is it the China of tight currency controls, amid fears that the vagaries of global markets could affect China's economic regulation. Or at least that is the message Beijing is trying to send. It is a message perhaps meant more for domestic than international consumption, but one that recognizes that neither abroad nor at home is there a lot of trust in the Chinese Communist Party or the government to pursue a transparent policy. The taint of corruption, collusion and nepotism remains strong and is perhaps even reinforced by the breadth and depth of the ongoing anti-corruption campaign.
Old Systems Become Obsolete

The reality is that China is in the midst of what may be its most serious crisis since the days of Deng Xiaoping. And the model of government and economy Deng put in place is no longer effective at managing China, much less shifting it in a new direction.

As China emerged from the chaos of the Maoist era, Deng initiated three basic policies for China's future growth and development, starting around the early 1980s. First, allow the economy more localized freedom, accepting that some areas would grow faster than others but that in the long run the rising tide would lift all boats. Second, prevent any single individual from truly dominating the Chinese political system. No longer could a figure like Mao Zedong exert so much personal influence that the entire country could be thrown into economic and social upheaval. Instead, China's leaders would be locked into a consensus-driven model that limited any individual source of power and eliminated factions in favor of widespread networks of influence that overlapped so much they could not be truly divisive. And finally, walk softly internationally, be ruthless in the appearance of a non-interference policy and avoid showing any military strength abroad. This latter point was intended to give China time to solidify internal economic and social cohesion and strength while avoiding distraction or inviting undue military attention from its neighbors or the United States.

In retrospect, Deng's model worked exceptionally well for China, at least on the surface. While the Soviet Union collapsed, the Communist Party of China held together, even after Beijing's mismanagement of Tiananmen Square. Although at times slow to respond or initiate proactive change, China's leaders managed the country's rapid economic growth in a way that avoided extreme social or political destabilization. The Party managed not only the leadership transitions set in motion by Deng, but also, amid intra-Party scandal, the latest transition to Xi Jinping. China's leaders even managed the impact of the global economic slowdown and appear capable of maintaining order even as economic growth rates slow considerably.

But the relative calmness on the surface belies disturbing deeper currents. The dark secret of consensus rule was that, while appearing to provide stability, by the late 2000s it was doing more to perpetuate underlying structural problems that could delay or even derail actual reforms or economic evolution. The lack of radical shifts and turns, the avoidance of major recessions and the ability to defer significant but potentially destabilizing reforms made China look like an unstoppable juggernaut. China's economy climbed past Japan's and seemed destined to surpass the U.S. economy. And if economic strength translated into total national strength, then China was emerging as a significant global power. Beijing even began breaking from Deng's cautions on overt military power and started a more assertive foray into the East and South China seas, both because of a perceived need to protect its increasingly important sea lanes carrying natural resources and exports and because it was feeling more powerful and capable and wanted to act on those strengths.

However, all economies are cyclical. As they grow through different stages, the deadwood needs to be trimmed and funding provided for the new shoots. Recessions, slowdowns, bankruptcies and sectorial collapses are all part of the natural economic process, even if they are disruptive in the short term. As China claims to be climbing the value chain in manufacturing and exports, it is not simultaneously trimming away older components of the economy or effectively weaning itself from the stability of large state companies that are disproportionately locking up available capital compared with total employment. Parochial interests by local and provincial governments — themselves keen to avoid any sense of instability — have left massive redundancies intact across China's manufacturing sectors, particularly in heavy industries, the backbone of early Chinese economic growth. Consensus politics allowed China to grow, but not in a healthy manner — and the global economy is no longer giving China the freedom to just keep pouring on the fertilizer and hope no one notices the rot spreading through the trunk and branches.
Xi's Crisis Management

The leadership transition to Xi in 2012 was also not nearly as smooth as it first appeared. It occurred amid the Bo Xilai scandal, in which it appeared the former Chongqing Party Secretary was making a bid not only to reshape the direction of Chinese politics but also to usurp Xi's rise to central Party and state leadership. What has emerged amid the ongoing anti-corruption campaign is that the challenge was much more serious than it may have appeared, including an alleged assassination plot against Xi.

The recent pronouncements regarding former Party leaders and officials staying out of politics suggests that challenges to Xi's position are still emerging. Xi's decision to build a national security council and economic affairs advisory body, to which he belongs, has aroused opposition from former officials used to playing a role in shaping policy. Publicly canceling the unofficial Beidaihe summit was an overt strike against former officials. The consolidation campaign continues.

While China faces some of its toughest economic challenges, and after it has stepped out into the South China Sea and international military affairs in a way it cannot easily pull back on, it is also contending with internal dissent and intra-Party fighting. Xi's consolidation drive, closely linked to the anti-corruption campaign, is all about tightening the reins of control to allow more rapid policy adjustments, force macro-policies on localities and accelerate the Party and state's response time to changing circumstances. But that challenges decades of tradition and entrenched power and interests. It also creates a contradiction: The economic policies are moving toward liberalization, but the political and social policies are moving toward autocracy.

To manage the next phase of China's economic opening and reform — something that changes in the global economy and decades of internal ossification are forcing upon Beijing — Xi is simultaneously cracking down on media, information, social freedoms and the Party itself. The fear is that significant economic reform without tight political control would lead to a repeat of the Soviet experience: the collapse of the Party and perhaps even the state.

Each event, each headline, should be assessed in the context of this internal crisis. The currency dip — an important step in liberalizing yuan trading, gaining a role in the Special Drawing Rights basket and continuing China's path toward yuan globalization (freeing the country at least a little from the dominance of the U.S. dollar) — has auxiliary risks, not least of which is that a freer currency can move in directions far from those the government would like to see. The explosion in Tianjin is reinforcing the fears of rampant mismanagement and corruption. It has sparked a new round of conspiracy speculation and is placing the government in a position where it must deal with protesters in a major city as well as foreign investors and traders — again raising uncomfortable questions about safety and security in China. The warnings against retired officials interfering in politics may be more than just public relations attempts to highlight some newfound transparency.

This is not to say China is on the verge of collapse, that the government and Party is about to fracture along internecine battle lines, or that economic reform is simply impossible in the face of entrenched interests. But none of these are out of the question. China has entered a stage of the uncertain. The transition to an internal demand-driven economy will not happen smoothly, nor will it happen overnight. The reduction in exports and the drain on investment is already under way. And with all of these issues sitting squarely on his shoulders, Xi is preparing for his September visit to the United States, where the litany of concerns about China expands daily.

The transitory period is the most chaotic, the most fragile, and that is where China sits right now.
Title: China to cut 300,000 from military?
Post by: Crafty_Dog on September 03, 2015, 09:12:34 AM
a)
http://www.wsj.com/articles/china-to-slim-down-military-1441252819

b)  Stratfor

Summary

China's already formidable military may be about to get an overhaul. With Chinese President Xi Jinping reportedly set to unveil what the media is calling the most sweeping set of military reforms since the mid-1980s, one of the most powerful forces in the world may get a reshuffling that makes it more flexible and effective. The reforms will be officially announced in the wake of a Sept. 3 military parade to commemorate the 70th anniversary of the end of World War II. One potential plan leaked to the Hong Kong-based South China Morning Post offers some insight into Beijing's intentions. Though the final reforms will likely be more conservative, the leaked proposal suggests China is generally aiming to centralize command, increase cooperation between services and look beyond hard geographic boundaries. In the end, China may be successful at improving its military effectiveness, but its reforms will fall short of loosening the Communist Party's tight grip over the country's armed forces.
Analysis

According to the South China Morning Post, it was several "reform-minded officers" who leaked a version of the reform plan to the media. The leaked proposal includes large personnel cuts and several structural changes. First, the seven existing military regions would be consolidated into four, each of which would be open to command by officers from other services. A new national guard, responsible solely to the Central Military Commission, would replace the People's Armed Police. And three of the People's Liberation Army's four general departments would merge into one — the General Staff Department. The Ministry of Defense, now a figurehead, would be empowered to conduct mobilization and recruitment activities.

The plan is probably one of the more radical options on the table, and Beijing is certainly weighing more conservative approaches. The high level of detail in the report, however, suggests that the leaked proposal survived to a late stage in the deliberation process, meaning parts of it may actually make it into the final plan — especially the long-discussed consolidation of military regions and the promotion of joint commands.

The leaked details of the reforms largely conform with those Stratfor outlined in January 2014, soon after plans were announced. At the time, China was making moves to cut its military regions down to five as well as open up positions of military leadership — previously an option for only ground force officers — to officers in the navy, air force and possibly even Second Artillery Corps. The change to a four-region structure likely came late in the discussion; as recently as April, a U.S. Department of Defense report to Congress on Chinese military and security developments still predicted five regions. But if Beijing has in fact pared it down to four, they will likely consist of a Northeast Command, charged with protecting Beijing and the border with Russia and Korea; a Southeast Command, responsible for operations in the Pacific and Indian oceans; a Northwestern Command to stabilize Xinjiang and protect Gansu and Qinghai; and a Southwestern Command to secure Sichuan and Tibet. Even with the slight change in details, Stratfor's projections for the overall reform trends still hold: increasing centralization, increased cooperation between services and the erosion of hard geographic boundaries.

The People's Liberation Army's current operational structure is centered on land-based warfare to be conducted within the framework of seven military regions. This is an artifact of the military's primary Cold War mission: to conduct a "people's war" against an invader, most likely the Soviet Union, by mobilizing the entire population to draw enemy forces into the interior and wear them down. However, the times — and the strategic situation in East Asia — have changed a great deal. Beijing now needs to build capabilities that will allow it to carry out missions along the Chinese periphery in areas that include the East China Sea, South China Sea and Taiwan. This will mean moving beyond a model centered on ground forces. Missions in distant waters are also growing in importance. These could include counterpiracy operations in the Gulf of Aden, evacuations of Chinese citizens in the Middle East and Africa as well as joint air and naval exercises beyond the first island chain. The projected reforms would free the military from its territorial focus and help to integrate other branches of the services more closely.

China's leaders have understood for decades that the existing military structure is inadequate to meet the nation's changing needs. But Beijing is just now overcoming the structural constraints that have barred reform. These included limitations in terms of capability, such as poorly trained personnel, outdated equipment, and primitive command and control. More important, however, were the political obstacles: military corruption as well as powerful entrenched interests in both top brass and the retired officer pool. The Chinese government has worked for years to overcome these limitations, not only making broad investments in modern equipment and weaponry research and development but also raising education requirements for new recruits, trimming redundant personnel and stepping up joint as well as transregional exercises. Military exercises in particular have laid the groundwork for the smooth and frequent cooperation between branches of the military.

Of course, the upcoming reforms will almost certainly reduce high-level staff positions and eliminate some patronage networks, prompting opposition among government and military officials — and especially among the People's Liberation Army ground forces. It was to overcome this resistance that President Xi Jinping in 2013 launched a far-reaching and ongoing military anticorruption probe, which has helped purge over 30 generals this year alone. It also brought down two retired vice chairmen of the Central Military Commission, Xu Caihou and Guo Boxiong, who had been the highest-ranking generals in the People's Liberation Army under Hu Jintao. Yet in spite of progress, resistance will persist or even worsen as reforms continue. Surveillance over military officers and intense anticorruption investigations are likely to intensify, as are moves to bar retired officers from influencing policy, which is part of an overall trend in all parts of the Communist Party.

The Chinese military will certainly become more professional as a result of these reforms, but only in a very specific sense of the word. The People's Liberation Army will develop the organization and skills necessary to prevail in modern warfare. This, however, will in no way loosen the Communist Party's hold over China's armed forces. The interests of the Party will continue to dominate the military. And though the leaked plan would elevate the role of the Ministry of Defense — a government and not a Party organ — Beijing will most likely opt to reject that and other elements that reduce the influence of the Communist Party. Indeed, Chinese state media have continued to caution against calls to nationalize or depoliticize the People's Liberation Army. Wary that reforms empowering the military could also erode Party control, the Party will be quick to slow and even reverse reforms if the careful balance between Party control and military effectiveness tips too far away from the Party. Whatever impact the reforms may have on the military's capabilities, the People's Liberation Army will remain the Party's gun.
Title: Re: China
Post by: Crafty_Dog on September 22, 2015, 12:59:46 PM
Dear President Xi,

Welcome back! The last time you were stateside—at the Sunnylands estate in California a couple of years ago—you seemed to be at the top of your game. China’s GDP was about to overtake America’s. You were cracking down on corruption, liberalizing markets, setting the pace for what you called “the great rejuvenation of the Chinese nation.” Upper East Siders competed to place their toddlers in Mandarin immersion programs. Newspaper columnists fantasized about the U.S. becoming “China for one day.”

Now your stock market has fizzled, your economy is sinking under the weight of unsustainable debts and zombie companies, your neighbors despise you, and every affluent Chinese is getting a second passport and snapping up a foreign home. Even in Beijing, word is out that behind that enigmatic smile you’re a man overmatched by your job. And out of your depth.

Maybe you’re even thinking: Wouldn’t it be nice to be America for one day?

Yes, America, perhaps the only country on earth that can be serially led by second- or third-rate presidents—and somehow always manage to come up trumps (so to speak). America, where half of the college-age population can’t find New York state on a map—even as those same young Americans lead the world in innovation. America, where Cornel West is celebrated as an intellectual, Miley Cyrus as an artist, Jonathan Franzen as a novelist and Kim Kardashian as a beauty—and yet remains the cultural dynamo of the world.

America, in short, which defies every ethic of excellence—all the discipline and cunning and delicacy and Confucian wisdom that are the ways by which status and power are gained in China—yet manages to produce excellence the way a salmon spawns eggs. Naturally. By way of a deeper form of knowing.

This is indeed the kind of country it would be good to be, at least for a while. In Beijing, the smartest people at the top are working harder than ever to produce increasingly mediocre results. In Washington, the dumbest people ever keep lollygagging their way to glory. When a man, or a country, gets lucky every time, it’s not luck. There’s a secret. Would you like to know it?

Start with the basics, President Xi. The United States solved the problem of political legitimacy through its foundational acts. You still haven’t. We have no umbrella revolutions here, as you just did in Hong Kong. We don’t run the risk of peasant revolts, either, because (the Jim Crow South aside) we never had peasants. They were always citizens, and largely freeholders.

In other words, limited government, a check on your personal power, is the best guarantee that your institutions will outlast your person. And it solves the ancillary dilemmas of unlimited power: the dilemma whereby disagreement becomes subversion, and information becomes dangerous, and in which the inner life of every citizen is a potential threat to the state. You cannot run a 21st-century economy by limiting, for political reasons, the quantity of available information to something less than the quantity of necessary information.

Limited government has another advantage, Mr. President. It means limited responsibility. Even George W. Bush’s or Barack Obama’s angriest critics can’t quite blame them for everything (though the Bush critics try). U.S. presidents don’t have the mandate of heaven, so they don’t have the burden of it, either.

Yet when China’s stock market tumbled this summer, you got blamed. Rightly so. It was your government that urged small investors to pile into stocks, your government that encouraged margin lending, your government that tried to fix the market through political force majeure. Such was the public’s faith in the completeness of your control that investors were surprised when the Shanghai Composite fell on your birthday.

Now that faith has been fractured, and what’s fractured easily shatters. That’s the risk you run when you’re running China, and it tends to bring out your worst instincts: the need to exude authority, the paranoid fear of losing control. Just when you need to learn the virtues of flexibility and adaptation, you become rigid. It compounds the problems you are trying to solve.

As for Americans, we’re the failure experts. We expect it, forgive it, often celebrate it. We do this partly because we’re soft, but also out of hardheadedness. If tolerance of failure is a prerequisite for success, then you need to love your failures as much as you do your successes.

Do you?

President Xi, we sympathize. A few years ago, it seemed that you had the happy task of steering a country in its ascent. Now the question is whether you can reverse decline by trading power for reform. Given what we know of your upbringing as a Communist Party princeling, that can’t be easy.

Then again, it can be no comfort to live with the fear that you may be the last of your political line. Try being America for a day. And the day after that, too.

Write bstephens@wsj.com.
Title: China's Looming Depression
Post by: Body-by-Guinness on October 01, 2015, 10:45:06 PM
http://thefederalist.com/2015/09/28/chinas-coming-great-depression/
Title: Re: China
Post by: Crafty_Dog on October 02, 2015, 07:58:15 AM
Very interesting; so in accord with what I have been saying here for several years now that I wonder if the author is yet another secret lurker here  :lol:

That said on a quick read of this long article I find his references to "supply side" to be utterly incoherent.
Title: Re: China's Looming Depression
Post by: G M on October 02, 2015, 07:59:04 AM
http://thefederalist.com/2015/09/28/chinas-coming-great-depression/

Their's and/or ours?

Something else to consider:

http://www.internationalman.com/articles/how-the-chinese-will-establish-a-new-financial-order
Title: The country with more billionaires than the US is....
Post by: G M on October 16, 2015, 10:56:06 AM
http://fortune.com/2015/10/15/china-billionaires/

Title: FT: China's New Silk Road
Post by: Crafty_Dog on October 25, 2015, 09:48:31 AM
http://www.ft.com/cms/s/2/6e098274-587a-11e5-a28b-50226830d644.html?ftcamp=traffic/social_promo/Chinas_great_games_14Oct/facebook_US_Core/essence_comment/auddev&utm_source=facebook_US_Core&utm_medium=social_promo&utm_term=Chinas_great_games_14Oct&utm_campaign=essence_comment#axzz3pbCT8B8o
Title: Pay No Attention to the Disappearing Economic Indicators
Post by: Body-by-Guinness on December 21, 2015, 07:21:10 PM
Hmm, Chinese economic indicator reports are suddenly not being issued:

http://www.bloomberg.com/news/articles/2015-12-21/china-loses-another-economic-indicator-as-minxin-suspends-pmi

Perhaps vestiges of a command economy remain and, if so, what does this signal censorship bode?
Title: Re: Pay No Attention to the Disappearing Economic Indicators
Post by: G M on December 21, 2015, 10:08:36 PM
Hmm, Chinese economic indicator reports are suddenly not being issued:

http://www.bloomberg.com/news/articles/2015-12-21/china-loses-another-economic-indicator-as-minxin-suspends-pmi

Perhaps vestiges of a command economy remain and, if so, what does this signal censorship bode?

More or less crooked than the stats our government feeds us?
Title: Re: Pay No Attention to the Disappearing Economic Indicators
Post by: DougMacG on December 22, 2015, 06:46:22 AM
Hmm, Chinese economic indicator reports are suddenly not being issued:
http://www.bloomberg.com/news/articles/2015-12-21/china-loses-another-economic-indicator-as-minxin-suspends-pmi
Perhaps vestiges of a command economy remain and, if so, what does this signal censorship bode?
More or less crooked than the stats our government feeds us?

We keep calculating and reporting indicators known to be false and they censor indicators that might reveal truth.

In retaliation for Chinese hacking and patent violations maybe we can set up broadcast stations on the disputed islands and send out information the Chinese government is censoring from the Chinese people.
Title: My predictions begin to coalesce
Post by: Crafty_Dog on January 08, 2016, 10:10:06 PM
WSJ

EIJING—China has pulled hundreds of millions of people from poverty, supercharged its economy and burnished the pride of a nation that stood weak and isolated only decades ago.

But swelling levels of debt, bloated state companies and an overall aversion to market forces are swamping the world’s second-largest economy, threatening to derail China’s ascent to the ranks of rich countries.

As Beijing battles another bout of stock-market turmoil—and global markets shudder in response—the risks of doing nothing about these deep-seated problems are rising, economists said. Without a change in course, they said, China faces a period of low growth, crimped worker productivity and stagnating household wealth. It’s a condition known as “the middle-income trap.”

“The era of easy growth is over,” said Victor Shih, professor at the University of California-San Diego. “It’s increasingly about difficult choices.”

Some economists don’t rule out an abrupt drop in growth, a hard landing that would see bad debts soar, consumer confidence tank, the Chinese yuan plunge, unemployment spiral and growth crater.


More likely is that Beijing will continue to prop up growth, steering more capital to money-losing companies, unneeded infrastructure and debt servicing, depriving the economy of productive investment and leading to the sort of protracted malaise seen in Japan in recent decades. But China is less prosperous than Japan.

An anemic China would weaken global growth at a time of low demand and prolong the downturn for big commodity producers like Brazil that have been dependent on the Asian economic giant.

“They don’t want to take the pain,” said Alicia Garcia Herrero, economist with investment bank Natixis SA. “But the longer they wait, the more difficult it becomes.”
Workers made shoes for export at a factory in Putian, located in southeast China's Fujian province, on Thursday. ENLARGE
Workers made shoes for export at a factory in Putian, located in southeast China's Fujian province, on Thursday. Photo: Lin Jianbing/Zuma Press

Chinese leaders are aware of the risks. On Tuesday, Premier Li Keqiang called for a greater focus on innovation to spur new sources of economic growth and to revitalize traditional sectors, according to the Xinhua News Agency.

A far-reaching economic blueprint laid out in 2013 after President Xi Jinping came to power vowed to let markets take a “decisive” role and build out a legal framework to restructure the economy and benefit consumers and small businesses, rather than industry.

Progress to date, economists said, has been disappointing. Political objectives stand in the way. Mr. Xi has committed the government to meeting a goal of doubling income per person between 2010 and 2020, the eve of the 100th anniversary of the ruling Communist Party. That means, in Mr. Xi’s eyes, that growth must reach 6.5% annually.

With global demand slipping and fewer Chinese entering the workforce, Beijing will need to resort to stimulus spending to get there, analysts said, delaying the reckoning with restructuring.

“It’s very costly and inefficient to reach these growth targets,” Mr. Shih said. “The political leaders want all these good outcomes, growth, some degree of reform and a high degree of stability,” without recognizing the tough trade-offs these entail, he said.

One such trade-off is that between pollution and growth. By letting steel and other heavy industries in northern Hebei province ramp up to meet their year-end production targets last year, the government left the capital bathed in toxic pollution, angering the city’s residents, according to Mr. Shih. If Beijing shutters them, growth will fall, leading to more unemployment, which is another potential source of unrest.

Among the most nettlesome issues is what to do about the state companies that dominate heavy industry and strategic sectors of the economy and wield great political influence.

Some state firms remain in business despite massive debt, several years of loss-making operations and a weak business model—Chinese officials have dubbed them “zombie” companies. Earlier this month, during a visit to the northern industrial city of Taiyuan, Mr. Li railed at the drag of “zombie” companies, according to a government account. He said they should be denied loans to reduce excess supply in the steel and coal industries.

State companies suck up 80% of the country’s bank loans, while delivering a return that’s a third below that of private Chinese firms and half that of foreign companies, according to estimates by Spanish financial institution Banco Bilbao Vizcaya Argentaria SA.

Reducing the footprint of these state behemoths, let alone getting rid of them, poses a huge challenge. Société Générale CIB calculates that a 20% reduction in excess capacity among state companies in the most distressed sectors of iron and coal could lead to 1 trillion yuan ($151.7 billion) in bad loans—equivalent to 2% of the nation’s bank loans—and 1.7 million laid-off workers, or 0.3% of the urban workforce.

Labor protests have already increased in a slowing economy as the number of demonstrations hit a record in December, according to a Hong Kong-based monitoring group, and the government has in the past chosen to boost growth to keep employment high and forestall the risk of social unrest.

Getting a handle on the mounting pile of debt is becoming a critical task in the eyes of some economists. While debt levels are manageable by global standards, their rate of increase has set off alarm bells. Fitch Ratings estimates that China’s total debt was equivalent to 242% of its gross domestic product by the end of 2014, up from 217% a year earlier.

Servicing that debt now costs households and companies some 20% of GDP, according to the Bank for International Settlements. That level, said research firm Gavekal Dragonomics, puts China on a par with Korea and higher than the U.S., Japan and the U.K.

Rising debt also threatens to crowd out the innovators and entrepreneurs that China is counting on to reboot growth.

China stands to reap a huge dividend if it weeds out the economy’s many inefficiencies and vast amount of misallocated capital, said Eswar Prasad, economics professor at Cornell University and former China head for the International Monetary Fund.

“My view is that reforms and rebalancing are compatible with high growth,” he said. “Of course, high growth built on a shaky foundation of rapid credit expansion without reforms and rebalancing would be undesirable and risky.”

Write to Mark Magnier at mark.magnier@wsj.com
Title: Stratfor: China's market the symptom, not the cause
Post by: Crafty_Dog on January 11, 2016, 08:20:37 AM


The start of 2016 has been rough for China. Monday saw the introduction of a new mechanism in the Chinese stock market: a circuit breaker that automatically shuts the market down if prices go into free fall. Within four days, the circuit breaker went into action twice, halting trading on two different days in an attempt to stop the decline. Though this might be worrying for the Chinese government, it is not new; a study shows that if such a circuit breaker had existed last summer, it would have been triggered at least 20 times.

In truth, this activity in the stock market pales in significance to the other major development of the week: Thursday's announcement that China's foreign exchange reserves dropped by a record amount in December, from $3.4 trillion to $3.3 trillion. That brings last year's total decline in foreign exchange reserves to $513 billion.

If the stock market woes are evidence that investors are losing faith in the Chinese economy, the foreign exchange reserve depletions are direr, because they signify the Chinese government's diminishing ability to cope with its problems. Beijing's inability to control its economy has global implications — such as contributing to an extended period of low demand, and thus low prices, for oil and other commodities — but it also highlights China's struggle in balancing some of its short-term financial market concerns against its long-term and much more important overall political and economic reforms.

Worrying about the level of foreign exchange reserves is relatively new for China. As China kept its low peg to the dollar and exported vast quantities of goods, foreign currency gushed into the country for much of the past two decades. From the perspective of international financial markets, high levels of foreign exchange reserves are a source of comfort. They give a country the power to defend its currency, and any government that allows its reserves to run too low runs the risk of becoming victim to speculators. China has thus spent much of the past two decades creating for itself a seemingly invincible position, building its reserves from $142 billion (18 percent of gross domestic product) in 1997 to $4 trillion (43 percent of GDP) in 2014. However, this invincibility — both in foreign exchange reserves and, more broadly, the health of the Chinese economy — is now coming into question as a result of both internal and external forces.

The United States began tightening its monetary policy with the Federal Reserve's interest rate hike last month. This caused the dollar to appreciate, meaning that the yuan, which was de facto pegged to the dollar, rose along with it. Meanwhile, the investment capital that China was pumping into its own economy as part of its post-2008 model found its way into the domestic stock market, blowing a massive speculative bubble that peaked in summer 2015. The bubble deflated somewhat in August, when the People's Bank of China announced a shift in its currency peg that the market took as a signal that the yuan was set to depreciate. As a result, in the second half of 2015, China introduced measures to sustain stock prices, including both capital injections and enforced freezes on selling stock, while trying to maintain its currency peg in order not to spook the markets even more. All of these things cost money, and the funds came from the foreign exchange reserves.

The loose monetary policy that keeps funds flowing into stocks also costs money because it applies a depreciatory force on the yuan as capital flows out of the country (defying capital controls in the process). The currency must then be propped up with foreign exchange reserves. Thus, since mid-2015, China's foreign exchange reserves have been depreciating rapidly. In October, the drop broke a quarterly record, and the December figures set a new monthly record.

Although the stock market is getting a lot of attention, China's macro-economic picture also offers little cheer. The continued slowdown in industry — such as hints of sluggishness in the service sector — is one of several larger underlying problems China is struggling to deal with. China's difficulty in managing its stock market, foreign exchange reserves and currency regime is merely a reflection of those core issues.

China's is a structural problem, and the fix requires a long time and a lot of disruption. Many of the major reforms needed to solve these problems quickly become points of political friction. For example, reforming the country's household registration system (known as hukou) is an integral part of creating an urban consumer class. However, the conversion of rural migrants to city dwellers would force cities to expand social services. Hukou reform then becomes a key political issue between central and local governments over the costs of expanded social services for new urban migrants.

So, as we saw in Europe, economic and financial issues are growing into political issues in China. In Europe, it was the revival of nationalism and national self-interest. In China, similar issues of regionalism will arise. But this all occurs under a single central party, so it is a twofold crisis — one of central macro-control versus local interests, and one of the very purpose and strength of the single-party system. China will continue to have short-term market effects on matters such as the demand for commodities, but there is a larger and more significant issue.

That issue is whether China can make the transition in its structure, how long it takes, whether it is managed or chaotic, and whether the current political structure holds together or breaks apart. This is a long story — one that unfolds over a couple of years, that will have peaks and troughs, moments of chaos and moments of seeming success. But it is a holistic story more than a story of discrete events or discrete numbers. It is a story about whether China emerges as the next major power, whether China remains a second-tier power that can manipulate variable coalitions to exert influence, or whether China finds its relevance waning.
Title: As predicted by me
Post by: Crafty_Dog on January 18, 2016, 03:45:15 PM
http://www.nytimes.com/2016/01/18/business/dealbook/indebted-chinese-companies-increase-pressures-on-government.html?emc=edit_th_20160118&nl=todaysheadlines&nlid=49641193&_r=0
Title: Extraterritorial kidnappings of opponents of regime
Post by: Crafty_Dog on January 19, 2016, 11:44:49 AM
http://www.wsj.com/articles/beijings-overseas-kidnapping-1453142407
Title: POTH: Fading factories weigh an already slowing economy
Post by: Crafty_Dog on January 20, 2016, 11:26:12 AM
http://www.nytimes.com/2016/01/20/business/international/china-economy-slowdown.html?emc=edit_th_20160120&nl=todaysheadlines&nlid=49641193&_r=0
Title: Stratfor: China'r military reorganization
Post by: Crafty_Dog on January 25, 2016, 01:00:18 PM

China: The Power of Military Organization
Analysis
January 25, 2016 | 09:30 GMT Print
Text Size
Chinese soldiers ride in tanks during a military parade Sept. 3 in Beijing's Tiananmen Square. (Kevin Frayer/Getty Images)
Forecast

    Organizational reforms will improve China's ability to conduct joint military operations.
    China will model its reorganization after the U.S. military, but, as U.S. history proves, the process will be long and difficult.
    China's ground forces, currently the service branch with the most power and authority, will be the biggest impediment to any reforms.

Analysis

China's People's Liberation Army has long known it needs to adapt if it hopes to compete with the world's most advanced militaries. Over the past several decades, China has risen to become a prominent player on the world stage with global operations and interests far from its shores. As the People's Liberation Army reorients itself toward China's evolving priorities, weapons acquisitions have garnered the most international attention. But Beijing knows that its success will depend on seemingly banal organizational reforms. Originally, China's military was organized at a time when Beijing's interests were mostly limited to internal security, meaning that the navy and air force were sidelined. Today, growing maritime competition in the Pacific with both the United States and its ally Japan means that it is urgent for China to increase its military's ability to conduct seamless joint operations.

Technological networking is at the forefront of modern warfare and is the trend driving innovation. Networking has enabled almost instantaneous command and control, enhanced situational awareness and precision kinetic effects. To be competitive in this networked environment, however, countries must design military structures that can coordinate combined arms on the battlefield. Militaries must also accept broad cooperation between their branches for the purpose of training, supporting and equipping combat elements. Inability to effectively meet these requirements promises tremendous inefficiency at best and military disaster at worst.

The latest round of China's military reforms were launched at the start of 2016 and are intended to prevent such a disaster. Although Stratfor has covered the more granular aspects of the reforms at the general staff and service headquarter levels, we would like to take this opportunity to step back and look at the larger implications: the transformation of the People's Liberation Army (PLA) into an organization structured to conduct modern operations and to protect Chinese interests in distant parts of the globe. Notably, in early January, the Central Military Commission, China's highest command authority, released a new military reform guideline. This prescribed a new command structure in which the Central Military Commission handles overall administration of the military, while battle zone commands focus on combat operations, and the services focus on force development.

The changes bear a striking resemblance to those made by the U.S. military after the passage of the Goldwater-Nichols Act in 1986. Goldwater-Nichols was one of the most sweeping reorganizations of the U.S. military ever undertaken, and it greatly improved the United States' ability to conduct joint operations. Although it is important to recognize the differences between the modern day PLA and the pre-1986 U.S. military, a review of the landmark piece of U.S. legislation sheds light on China's coming challenges.

Goldwater-Nichols: The Breakdown

As early as World War II, the United States found it extremely difficult to coordinate between the Army and Navy when planning, conducting operations or acquiring materiel. The challenge was that each branch of the military answered to different Cabinet-level secretaries. Despite combining the Army, Navy and newly created Air Force under a single secretary of defense in 1947, vicious interservice rivalries continued to disrupt coordination well into the Cold War. Air Force Gen. Curtis LeMay, the most famous commander of the U.S. Strategic Air Command, explained the problem: "The Soviets are our adversary. Our enemy is the Navy."

Worse, the powerful service branches usurped much of the legal operational authority of the commanders-in-chief of the unified combatant commands. It was common for commanders-in-chief to find forces moved into or out of their areas of responsibility at the behest of the service headquarters in Washington, sometimes even without the knowledge of the region's commander-in-chief. The Vietnam War in particular was made significantly more complex because of unclear lines of command and lack of unity. These issues also contributed to the catastrophic failure of Operation Eagle Claw, the 1980 attempt to rescue American hostages in Iran.

Motivated by the magnitude of the problem, Congress began again in 1982 to craft legislation to reorganize the military. This effort would eventually result in the Goldwater-Nichols Act. The new legislation completely overhauled the military's operational chain of command and reduced the powers of the services. Naturally, the services bitterly resisted throughout the nearly five-year process. The act, however, succeeded in strengthening the power of the secretary of defense over every branch of the military. It also clarified that operational chain of command from the secretary of state to the combatant commands did not run through the service headquarters. The joint chiefs of staff, for their part, lost their direct operational roles. Instead they were given the role of advising the president, as well as facilitating planning and coordination among the services. The service branches themselves were relegated to support roles tasked with organizing, training and equipping the forces needed to carry out the plans of the combatant commands.

The bitter struggle to reform the U.S. military has produced clear rewards, evident as early as the Gulf War, during which Central Command commander Gen. Norman Schwarzkopf attributed much of the effectiveness of his forces to the clear lines of authority established by Goldwater-Nichols. The 2002 invasion of Afghanistan and the 2003 invasion of Iraq further cemented the United States' reputation as the world's leader in joint warfare.
China Takes Notice

China, like the rest of the world, took notice of the increased effectiveness of the U.S. military. The Gulf War and the 1995-1996 Third Taiwan Strait Crisis, in which the U.S. sailed two carriers into the vicinity of Taiwan, demonstrated critical deficiencies in the PLA's capabilities. At the same time, China's growing wealth spread its interests across the globe. These factors drove more than 20 years of rapid military modernization. The PLA upgraded its hardware and devoted an increasing share of resources to the navy, air force and second artillery, since renamed the Rocket Force.

However, as in the United States, sweeping organizational reform has lagged behind the modernization of equipment. These reforms are crucial if the PLA hopes to become a truly effective modern military — a fact that the Chinese fully recognize. Modernized equipment without modern structure, training and experience does not make a modern military. China has learned this from bitter experience, particularly when the Japanese navy sunk an Imperial Chinese fleet that far outgunned it on paper during the First Sino-Japanese War (1894-1895).

Through 2015, the Chinese military faced an increasingly complex mission set and threat environment with an archaic organizational structure. The Central Military Commission left implementation of policy to what were known as the Four General Departments — four separate headquarters that collectively functioned as a joint staff over the entire PLA but also as the de facto ground force headquarters. A central focus on the army also pervaded the lower levels of command. During times of peace, military region commanders, who were exclusively from ground force backgrounds, were in charge of ground forces; during war or heightened states of alert such as the Third Taiwan Strait Crisis, military commanders assumed command over the navy, air force and second artillery troops in their area. This structure was inefficient and ill-suited to carrying out the joint operations demanded by the rigors of modern warfare.
The PLA Plays Catch-Up

The current wave of reform, pushed through by Chinese President Xi Jinping, much like the Goldwater-Nichols Act delineates a very clear division of labor. The Central Military Commission will be in charge of setting and executing the overall policies of the military, the commanders of unified battle zones will be charged with combat, and the service headquarters will step back from any operational role to focus on force development. This could significantly improve the PLA's ability to function as a joint force and eliminate much of the confusion caused by the convoluted command chain.

Despite the potential benefits of reform, the U.S. experience with Goldwater-Nichols also shows that such reforms will not go unchallenged. Reform efforts in China have often been foiled by the central government's unwillingness to see them through to implementation or by opposition from vested interests. Xi and the PLA will have to delegate significant authority to the commanders of the reformed battle zones if they are to be effective, but this runs counter to the Communist Party's tendency to concentrate power at the top, a trend on the rise under Xi.

Resistance to the reforms is certain to be strong. It took the United States decades of difficulty in conducting joint operations to make Goldwater-Nichols politically feasible; then it took another five tense years for the United States to pass the reforms. For a country like China, in which the size of the bureaucracy imbues the system with a strong conservative bias, the challenge will be even more pronounced. Even as Xi pushes through this first round of reforms, the measures are undoubtedly encountering tremendous resistance behind the scenes. There have been indications that, despite a massive anti-corruption campaign to eliminate and intimidate the opposition, Xi has cut deals in order to move forward on his planned reforms. This of course is a risky move: It may be the easiest way to pass reforms, but it also could significantly reduce their efficacy. While more officers from other branches may assume senior level positions at the 19th Party Congress in 2017, it appears that the ground forces have been able to protect some of their interests and partially subvert the spirit of the reforms. 

If successful, improvements would allow the PLA to become a force truly capable of meeting the challenges of modern warfare. Still, organizational reform alone will not be sufficient to fully meet the PLA's goals. The last time the PLA conducted joint combat operations, by its own admission, was in a 1955 campaign against Nationalist-held islands off the mainland coast. Although the PLA has carried out increasingly large joint training exercises over the course of the past decade, there is no substitute for real experience.
Title: space plane
Post by: ccp on January 31, 2016, 08:16:23 AM
Gee, does this look familiar to anyone?    How is it that China keeps coming out with military stuff that looks so familiar?

http://freebeacon.com/national-security/asia-times-chinas-shenlong-space-plane-is-part-of-growing-space-warfare-program/
Title: Chinese students coming home Christian from studies in America
Post by: Crafty_Dog on February 11, 2016, 05:42:51 PM
http://foreignpolicy.com/2016/02/11/leave-china-study-in-america-find-jesus-chinese-christian-converts-at-american-universities/?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=*Editors%20Picks
Title: Re: Chinese students coming home Christian from studies in America
Post by: G M on February 11, 2016, 09:10:14 PM
http://foreignpolicy.com/2016/02/11/leave-china-study-in-america-find-jesus-chinese-christian-converts-at-american-universities/?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=*Editors%20Picks

Even without this, China has one of the fastest growing Christian populations in the world.
Title: Trump is right about China
Post by: ccp on March 11, 2016, 06:32:17 AM
people I have spoken to about China who have first hand knowledge tell me the Chinese are laughing at us and think we are stupid. Only Trump points this out:

http://www.cnbc.com/2016/03/11/trump-may-be-proven-right-on-china-tariffs-chang.html
Title: Re: Trump is right about China
Post by: DougMacG on March 11, 2016, 07:58:37 PM
people I have spoken to about China who have first hand knowledge tell me the Chinese are laughing at us and think we are stupid. Only Trump points this out:

http://www.cnbc.com/2016/03/11/trump-may-be-proven-right-on-china-tariffs-chang.html

If so, then he is like Perot, good at pointing out the problem and lacking in solutions.

'All we do is lose, lose, lose... All they do is win against us...'

They are 'getting rich' by devaluing their country via its currency.  That worked where?  When?

Never?
Title: Re: China
Post by: G M on March 12, 2016, 12:28:07 AM
China is struggling to run as fast as it can, just to stay in place. It's hardly winning. Everyone in China who can, is trying to get the fcuk out.
Title: Re: China
Post by: ccp on March 12, 2016, 07:04:28 AM
Don't let your hatred for Trump cloud the fact we allow China to take advantage of us.

They are clearly catching up to us in every area.

I don't agree with one George Gilder who once shrugged it off and said something to the effect that stopping 1 billion Chinese is a fantasy. 

Ok fine but we don't have to make it easier for them at out expense.
We don't have to be stupid while they rip us off left and right.

Title: Re: China
Post by: Crafty_Dog on March 12, 2016, 07:10:29 AM
They steal intellectual property on a massive basis via hacking.
Title: Re: China
Post by: ccp on March 12, 2016, 07:45:03 AM
Yes we spend hundreds of billions and probably trillions in R & D and they  just "march" in and steal the blueprints for comparatively nothing. 

So Gilder says 'big deal'?

He lost me on that one going back 16 yrs or thereabouts.
Title: Re: China
Post by: G M on March 12, 2016, 07:47:22 AM
Yes we spend hundreds of billions and probably trillions in R & D and they  just "march" in and steal the blueprints for comparatively nothing. 

So Gilder says 'big deal'?

He lost me on that one going back 16 yrs or thereabouts.

It is a big deal, and not enough is being done.
Title: Re: China
Post by: DougMacG on March 12, 2016, 01:45:59 PM
They steal intellectual property on a massive basis via hacking.

That's right.   We need enforcement,  not a trade war.
Title: China expanding military might in South China Sea
Post by: ccp on March 13, 2016, 04:16:11 AM
My question is 'why'?  Why is China increasing military power in the South China Sea?  No one is threatening them.  The sea lanes are open.  What do they hope to achieve?  It could only mean some sort of expansion.  ? Is this against Japan.  Taiwan?   Indonesia?  What?  It would be like us building up atolls with military offensive capability in the Caribbean.

http://www.breitbart.com/national-security/2016/03/11/intelligence-chief-china-will-have-substantial-military-power-in-south-china-sea-by-2017/
Title: Re: China expanding military might in South China Sea
Post by: G M on March 13, 2016, 05:43:21 AM
My question is 'why'?  Why is China increasing military power in the South China Sea?  No one is threatening them.  The sea lanes are open.  What do they hope to achieve?  It could only mean some sort of expansion.  ? Is this against Japan.  Taiwan?   Indonesia?  What?  It would be like us building up atolls with military offensive capability in the Caribbean.

http://www.breitbart.com/national-security/2016/03/11/intelligence-chief-china-will-have-substantial-military-power-in-south-china-sea-by-2017/

China is the "Middle Kingdom", as in between heaven and earth. They see themselves as ascending to first a regional superpower and eventually a global superpower. They see it as a position wrongfully deprived of them in the past by imperialist powers that they will now claim.
Title: WSJ: Yuan about to tumble?
Post by: Crafty_Dog on March 15, 2016, 06:02:17 PM
Someone around here has been predicting this for quite some time  :evil:

by Anne Stevenson-Yang and
Kevin Dougherty
March 14, 2016 12:17 p.m. ET
12 COMMENTS

After initial declines in the Chinese market to start the year, the past few weeks have seen signs of what some would call a rebound. Lending in China rose by 67% in January, iron-ore prices initially rallied by 64% and housing sales in the top four markets surged. The yuan gained back half of the nearly 7% it had lost against the dollar since November, sending hedge funds that had shorted on the currency running for cover. And yet there remains no sign of life in the underlying Chinese economy.

More than $800 billion in credit that had been pushed into the economy in January failed to boost production or increase sales. Producer prices remained negative, dropping 5.1% in January-February, while the manufacturing PMI fell to 48 in February from 48.4 in January, indicating worsening contraction. That’s because the rally was the result of a coordinated government effort to restore confidence in the China Dream of limitless growth at home and glory abroad. The market, apparently, isn’t so easily convinced.

From hiding capital outflows to propping up real-estate values, manipulating futures markets and squeezing short-sellers of the yuan, Chinese authorities have been trying to bring back the old, quasisuperstitious belief in Beijing’s omnipotence. But the political desperation behind these efforts betrays a different story: that an impending currency crisis is a signal of the dream’s undoing.

That’s why in China getting money out of the country is now the major preoccupation of both families and corporations. Risk-averse individuals are trading out of the wealth-management products they used to buy for 10% yields and moving their money to safety in the U.S., Australia, Canada and Europe. Chinese companies are making extravagant bids for overseas assets such as General Electric ’s appliance division, the equipment maker Terex Corp. , the near-dead Norwegian web browser Opera, the Swiss pesticides group Syngenta, technology distributor Ingram Micro and even the Chicago Stock Exchange.

In the first six weeks of 2016, Chinese firms committed to spending $82 billion on such acquisitions. Last year saw nearly $1 trillion in capital outflows, including a decline of $512.66 billion in the foreign reserves. Although no one is sure how much of China’s reserves are liquid and available, it’s safe to say that, at this rate, China can’t afford capital flight for more than another year.

One way to stem the crisis would be through depreciation. That would be sound policy for the people of China, but it’s a dreaded last resort for a leadership that wants, more than jobs for its people, to bolster buying power and save political face overseas. Yet history shows that holding the line on the currency is a losing strategy. Tightened liquidity causes more pain to the economy and simply delays the inevitable.

National leaders, when faced with a disorderly adjustment, will inevitably resist markets, promise major structural changes (which are then slow to materialize), inject liquidity into financial markets and insist that everything is under control. But these measures rarely work and in fact have never worked when imbalances are as severe as they are in China today.

In other countries, currency crises usually followed a sudden and irreversible loss of confidence. The Asian Tigers were booming and then fell apart rapidly. Same in Russia. China faces the added difficulty of having little institutional memory and few tools to manage the economy in a time of capital scarcity. And there is no sign that capital-outflow pressure will ease.

And so a painful adjustment will be unavoidable: Property values will decline by an estimated 50% from the current reported average of $142 per square foot in tier-two cities, roughly equivalent to the national average in the U.S., where incomes are much higher. (Current price-to-income ratios in China are generally over 20, while the U.S. averages about three.) Excess industrial capacity will shut down. People will lose their jobs.

But Beijing still has a choice: Either let the yuan take some of the pressure of adjustment, or let all of it fall on the domestic market. Placed in such stark terms, a currency adjustment seems inevitable.

A likely depreciation of at least 15% against the U.S. dollar would take the renminbi back to where it was on the eve of the global financial crisis, before speculative capital inflows flooded into China and drove up the currency’s value. This would be a “reset event” globally. All forecasts for inflation/deflation, interest rates, currency crosses, growth and commodity prices would have to be ripped up and recalculated. It would likely lead to an emerging-markets crash. As a percentage of global gross domestic product, China today is nearly twice the size of Asia (excluding Japan) in 1997.

Commodities, emerging-market equities and multinationals with exposure to China have already started to realize significant losses. Soon major corrections will reach other assets boosted by the Chinese economy, such as property values in Hong Kong and Singapore. When this unfolds, U.S. government bonds may be the world’s only safe haven. The end of the China story is at hand.

Ms. Stevenson-Yang is co-founder of J Capital Research Ltd. Mr. Dougherty is chief investment officer of KDGF Asset Management.
Title: China reopening Silk Road?
Post by: Crafty_Dog on May 26, 2016, 10:15:01 PM
http://www.ft.com/cms/s/2/e99ff7a8-0bd8-11e6-9456-444ab5211a2f.html#axzz49pX8DbnI
Title: Re: China reopening Silk Road?
Post by: DougMacG on May 27, 2016, 05:19:05 AM
http://www.ft.com/cms/s/2/e99ff7a8-0bd8-11e6-9456-444ab5211a2f.html#axzz49pX8DbnI


(subscriber content.)   Another look:
http://www.latimes.com/world/asia/la-fg-pakistan-china-snap-story.html
Title: Re: China
Post by: Crafty_Dog on May 27, 2016, 02:27:26 PM
Good follow up.
Title: Has Stratfor been reading my posts?
Post by: Crafty_Dog on July 25, 2016, 02:34:39 PM
 Dawn for the Dead Companies of China
Analysis
July 25, 2016 | 09:00 GMT Print
Text Size
China is grappling with how to handle unprofitable industries, many of them state-owned, that keep employment numbers up but threaten the nation's macroeconomic stability. (Kevin Frayer/Getty Images)
Summary

China is battling a ghastly economic problem. For months, the country's so-called zombie corporations — failing, mostly state-controlled companies — have been teetering on the brink of bankruptcy, caught among high and rising levels of debt, ballooning debt-servicing costs and slim or nonexistent profits. In response, China's State Council released a statement July 18 describing a possible pilot program to enable indebted corporations to convert some of their outstanding debts to equities held by Chinese banks. On its own, a corporate debt-to-equity swap would do little to reform these companies into productive and profitable businesses, a key requirement if China is to "rebalance" to a more sustainable growth model. Even so, it would help lower the businesses' debt burden in the short term. For Beijing, bound as it is by the need to maintain employment and, in turn, social stability, that may be enough to stave off a crisis for the time being.
Analysis

Zombie corporations have been a serious problem for Chinese economic authorities since at least 2011. But when China's real estate sector entered a prolonged slowdown in 2014, the companies became an even greater risk. A large majority of them are state-controlled (or closely affiliated) enterprises engaged in property-related sectors, including residential and commercial development, infrastructure construction, steelmaking, and iron ore and coal production. Over the past two years, steady declines in real estate activity — which by some measures accounts for over a quarter of China's total economic output — have dragged down income and profits across the thousands of businesses in those sectors. As a result, foundering businesses turned to bank loans and shadow financing to cover the costs of maintaining their workforces, sending corporate debt levels soaring. In all but a few cases, the political imperative to prevent unemployment crises that could fuel broader social unrest — a powerful motivator for China's central and local governments alike — overpowered authorities' desire to reform the economy by letting failing companies fail.
A Staggering Problem

Now corporate debt is the greatest structural threat to Chinese macroeconomic stability. China's ratio of corporate debt to gross domestic product reached 165 percent by December 2015, up from 101.7 percent in 2008, the year before Beijing launched its emergency stimulus drive. By comparison, household and government debt equaled 40 and 22 percent of GDP, respectively, at the end of 2015 (though the government debt figure does not include debt held by local government financing vehicles, private companies responsible for raising money for local government investment since 2008-09). Corporate debt was by far the largest component of China's 247 percent total debt-to-GDP ratio, according to Moody's Investors Service.

Perhaps more concerning is the fact that state-owned enterprises (SOEs) account for 55 percent of total outstanding corporate debt, according to the International Monetary Fund, though they produce only 22 percent of China's total economic output. This imbalance helps explain the state's disproportionate representation among China's zombie corporations. On one hand, SOEs enjoy easy access to bank credit long denied to their private-sector counterparts. On the other, they face enormous pressure from their overseers in local, provincial and central governments to maintain stable output and employment. Combined, these factors give SOEs powerful incentive to keep borrowing and producing regardless of the wider economic costs. While China's private sector has steadily improved its efficiency, productivity and profits, the state sector has, by and large, lagged. In the coal and steel industries, dominated by hundreds of local and provincial state-controlled businesses, the contrast is especially pronounced. In many cases, these companies are too small, and their ties to local officials and banks too tight, for Beijing to control.
A Temporary Solution

The debt-to-equity swap proposal reveals Beijing's efforts to reconcile its growing desire for industrial reform and consolidation with local political and economic conditions. China's central government remains committed to reforming and restructuring Chinese industry, and, in particular, the state sector. At the same time, however, it understands that it can go forward with the measures only as long as the workers affected are taken care of, at least well enough to prevent unrest. Given China's weak economy and slowing industrial profits, that objective will entail finding new ways to temporarily offset borrowing and other costs for deeply indebted enterprises.

To be sure, a debt-to-equity swap program could itself be a means to achieve industrial reform and restructuring. Combined with serious corporate governance reforms and forced consolidations of truly moribund enterprises, the swap could help put struggling but fundamentally sound businesses on surer financial footing going forward. Chinese authorities will certainly try to play up this aspect of the program. Nonetheless, the primary purpose and effect of the swap in the short run will be to reduce borrowing costs for corporations, much as the debt-to-bond swap program for local governments has served mainly to offset localities' borrowing costs. Without corporate governance reforms and industrial restructuring — changes that will depend on deeper adjustments to China's political incentive structure — the swap program would not go far in making Chinese SOEs the pillars of productivity that Beijing envisions.

Like the local government bond program before it, the new swap program will probably come into being slowly. In light of the State Council's announcement, some form of pilot program could well be in place by the end of 2016. But in all likelihood, it will be at least six months and probably longer before a program on a scale sufficient to address China's overall corporate debt exists. In the meantime, China's leaders will struggle to manage the country's corporate bankruptcy risks. If the housing sector falters again in the second half of the year, this will prove an even greater challenge.
Title: WSJ: China's growing credit risk
Post by: Crafty_Dog on September 19, 2016, 09:26:40 PM
The WSJ catches up with my table pounding here  :-D

China’s Growing Credit Risk
The bubble grows as Beijing keeps pushing growth before reform.
Sept. 19, 2016 7:30 p.m. ET


Respectable financial analysts once derided the tiny coterie of “China bears” for warning that the country could face a financial crisis. But over the last year the risk of a bad loan reckoning has become conventional wisdom. While Beijing possesses the resources to shore up the banking system, its continuing efforts to stimulate growth with more lending are complicating China’s economic and political predicament.

The latest alarm comes from the Bank for International Settlements, the clearing house of central banks in Basel. Its latest quarterly review shows that China’s credit-to-GDP gap, which measures credit growth above a country’s long-run trend, is now 30.1%. Anything above 10% is usually considered a red flag.

The idea behind the ratio is that there is no specific debt level that causes problems in all economies, but a sudden borrowing spree is a good predictor of a crisis. It suggests a mania in which loans create the illusion of high returns, which justifies more borrowing. The U.S. credit-to-GDP gap breached the 10% level in 2007 right before the housing bubble burst. As Goldman Sachs warned earlier this year, “Every major country with a rapid increase in debt has experienced either a financial crisis or a prolonged slowdown in GDP growth.”

The speed of China’s borrowing was staggering as Beijing opened the credit taps to stop the effects of the global financial crisis from reaching China. Total debt in the economy zoomed to more than 250% at the end of last year from less than 150% at the end of 2007.

This is especially worrying because the ratio continues to climb despite Beijing’s decision last year to rein in wasteful investment and undertake supply-side reforms. The government promised to stop state banks from evergreening, the practice of making new loans so troubled borrowers can repay old ones. Such zombie companies were supposed to go bankrupt. Instead China has seen few defaults.

Beijing has a good political reason for its caution. Carrying out reform promises would slow growth, and every time that happens social unrest soars. The protests this year in the town of Wukan seem to reprise the violence seen there in 2011, the last time the economy went south.

In the past few months Beijing has encouraged the three policy banks to finance new investments by state-owned enterprises. Banks have also fueled a mortgage boom that has boosted property prices. While the central bank hasn’t cut rates or reserve requirements, it has used open-market operations to give banks more liquidity.

Government statistics show that the banks’ nonperforming-loan ratio is approaching 2%, an 11-year high. But even officials acknowledge that the real number is much higher. Banking analyst Charlene Chu has predicted that it could reach 22%. That would require Beijing to recapitalize the banking system as it did in the early 2000s.

Fixing the financial system could be much messier this time, due to the advent of shadow banking. The state banks have created a complex web of “wealth management products” that attract investors with higher returns than ordinary deposits. According to Ms. Chu, WMPs grew by $1.1 trillion last year, accounting for nearly 40% of total credit growth.

These short-term liabilities fund long-term assets, a mismatch that has exacerbated crises elsewhere. And many of the buyers are other institutions, reminiscent of the U.S. mortgage-backed securities in 2008. Savers don’t understand the risks, and banks have been forced to repay their principal when the WMPs fail. A run on these investments could cause serious unrest and erode middle-class trust in the government.

Beijing faces a daunting challenge of engineering a market-driven deleveraging of an economy that has become dependent on monetary and fiscal stimulus. Managing the inevitable political fallout could be as dangerous as the economic risks.
 
Title: China's demographic contraction
Post by: Crafty_Dog on October 22, 2016, 06:47:55 AM
http://www.breakpoint.org/bpcommentaries/entry/13/30008

I have repeatedly made this point here for many years.
Title: China's foreign exchange reserves
Post by: Crafty_Dog on February 10, 2017, 05:28:43 AM
China’s foreign exchange reserves fell below $3 trillion for the first time in nearly five years in January, according to data released Feb. 7, the Financial Times reported. The $12.3 billion drop, a fall of 0.4 percent over December, marked the seventh consecutive month of foreign exchange declines. The Chinese central bank has been spending reserves on propping up the value of the yuan, as well as imposing capital controls to contain outflows. The yuan remains 4.4 percent weaker than a year earlier. While China's foreign exchange reserves have been dropping relatively swiftly over the past two years, at $3 trillion, they are still at levels most countries would consider incredibly high, and there has been no sense of urgency to taper the drawdown. 
Title: WSJ: The New Silk Road (OBOR)
Post by: Crafty_Dog on May 16, 2017, 07:41:39 AM
China Now Has a Rail Link Into the Heart of Europe

Beijing touts globalization and freight shippers hail revival of Silk Road on eve of ‘One Belt One Road’ summit
Reviving the Silk Road
Under the One Belt, One Road initiative, Chinese President Xi Jinping aims to revive the ancient Silk Road trading routes with an infrastructure network that he hopes will widen Beijing's clout.
By Trefor Moss
May 11, 2017 12:23 p.m. ET
46 COMMENTS

ALASHANKOU, China—The trains chugging along the ancient Silk Road through this gateway city to the West are growing in numbers and freighted with geopolitical significance.

China’s reboot of old trade routes—President Xi Jinping’s signature foreign-policy initiative, known as One Belt, One Road—was designed to link Chinese companies with overseas markets. Four years on, it is emerging as the cornerstone of China’s bid to be the guarantor of globalization at a time when protectionist winds are blowing abroad.

Mr. Xi is likely to tout that theme when he welcomes leaders from about 30 countries to a belt-and-road summit in Beijing that starts on Sunday. Chinese state media have described the project as a “wide and open avenue for all.”

“There aren’t many ambitious international visions on the world stage right now,” said Jonathan Hillman of the Center for Strategic and International Studies, a U.S. think tank. “One Belt, One Road is one of them.”

For all the hype, a relatively modest share of the major infrastructure investments pledged by China have become reality. China’s slowing economy and mounting debt load risk interfering with Beijing’s ability to finance its sweeping effort to cement trade routes with two-thirds of the world’s population—in Asia, the Middle East and Europe.

One solid example of Mr. Xi’s globalist outreach, however, is China’s use of existing Eurasian railways to transport high-value goods between China’s remote northwest and Europe.

After Mr. Xi launched his grand trade plan in 2013, China began consolidating a maze of railroads into three primary routes, coordinated regular timetabled service and simplified customs procedures. Beijing backed the project—the “belt” as opposed to the ocean-shipping “road” portion—with lavish cost-cutting subsidies.

Alashankou, a far-flung outpost in China’s northwest, is the primary exit point for Europe-bound trains and the quintessential belt-and-road boomtown. Its population has tripled to 32,000 in five years and new public projects include a sports complex and an opera center, said Wang Yong, the local deputy Communist Party secretary.

In the vast emptiness of this desert region, long-distance trade is the main lifeline. Mr. Wang said 1,220 Europe-bound trains rumbled through here last year, a small but growing part of the town’s rail traffic.


Trains carrying consumer electronics and auto parts toward European cities like Hamburg, Warsaw and Rotterdam return with sports cars, baby food and Scotch whisky. Authorities recently added routes including Xiamen to Moscow, Yiwu to Tehran, and Xi’an to Budapest. China Railway Corp. signed a deal in April to streamline service with rail operators in six European countries.

In recent years, China has sent about 3,700 trains to Europe, almost half in 2016, as the rate accelerates. It has set an annual target of 5,000 trains by 2020.

“There were doubts about the viability of doing this,” said Michael White, international marketing manager at UPS. But now, he said, the momentum is undeniable.

There are still plenty of challenges, including whether the rail component of Mr. Xi’s vision can thrive if Beijing curbs its subsidies. Another is persuading European companies; about three times as many goods-laden trains leave China as return to it.

“It’s not easy to start a new service, even though it’s all being supported by the [Chinese] government,” said Oscar Lin of U.K.-based OneTwoThree Logistics. The company operated London-to-China train service in April in a publicity coup for Mr. Xi’s globalization drive.

Rail freight will never supplant ocean transport: A container ship can handle 100 times the cargo of a train.

But for quick delivery of high-value goods—such as products from consumer electronics makers HP Inc. and China’s TLC—shipping containers by rail is ideal, logistics companies say.

DHL says it would cost about $5,000 and take three weeks to send a 20-ton container by rail to Hamburg from Chengdu in southwestern China. By air, it costs $30,000 and takes a week; by ocean, $2,000 and seven weeks.

Logistics companies regard the trains as a breakthrough. Several had previously tried China-Europe rail freight but found time-consuming border checks and incompatible rail gauges to be prohibitive obstacles.

For inland Chinese manufacturing cities, the trains allow them to send goods directly west rather than east to coastal piers.

Thanks to China’s subsidies, Chengdu-based car dealer Xiao Lin said he only pays $1,000 to send a container filled with Maserati and Mercedes-Benz cars from the Netherlands by rail via DHL in just three weeks. The 10-week ocean delivery time deterred impatient Chinese buyers, he said. “It’s good for our business model.”

U.S. sports-equipment maker Core Health & Fitness, which has a plant in Xiamen in southeastern China, said the ability to meet rush orders by train has enabled it to win contracts with European gyms.

“The One Belt, One Road initiative changed everything,” said Steve Huang, chief executive for DHL Global Forwarding in China. He said customs checks are now minimal, and containers are quickly hoisted from one train to another where rail gauges are different.

Turloch Mooney, senior editor at IHS Markit said costs may fall as the market matures—which would be vital to the trains’ survival once Chinese subsidies end. Down the line, he said refrigerated containers could make rail attractive for pharmaceutical companies and food producers.

As container trains clanked through Alashankou this week, Mr. Wang, the deputy Communist Party secretary, was upbeat. “More trains will lead to more cargo, and the efficiency of the service will improve,” he said.

—Junya Qian contributed to this article.
Title: Five Maps that explain China's strategy
Post by: Crafty_Dog on July 24, 2017, 06:53:18 AM
http://www.businessinsider.com/5-maps-that-explain-chinas-strategy-2016-1?IR=T%2F%2F/#ethnolinguistic-groups-1
Title: China's Xinjiang Uighur Autonomous Region
Post by: Crafty_Dog on September 17, 2017, 07:13:42 PM
Another Paradise Lost to China's Ambition
A Keriyan senior citizen picks Euphrates poplar tree branches in China's Xinjiang Uighur Autonomous Region.
(China Photos/Getty Images)
Stratfor

The tale of the Silk Road is one of intrigue, war and cities lost. But within this complex and quixotic tableau, it is the story of China's Tarim Basin that best echoes the age-old warning: History is doomed to repeat itself.

The ill-fated river network comprises the Kashgar, Yarkant, Hotan and Aksu rivers, which stream from the glacial and snow melt of surrounding mountaintops to converge at Aral, where they merge into the Tarim River. The waterway then flows through the Taklamakan Desert, a sea of sand in the shadow of the Tianshan Mountains and one of the driest regions in the world. The name Taklamakan means "once you enter, you don't come out" — an accurate description, not just of the experiences of hapless ancient travelers but also of the river system whose waters never escape the desert.

The remains of the lost city of Niya lie deep in the Taklamakan Desert.
(International Dunhuang Project/Wikimedia Commons)

Few of the rivers that feed the Tarim flow year-round, particularly in recent decades as agriculture has strained the limited basin's supplies. But the burden farming has placed on the region's resources is hardly new. The westernmost reach of the Chinese world has long been essential to the country's aspirations of building a buffer against foreign invasion, and at the height of the Silk Road era, it provided the empire with access to lucrative trade networks that stretched across the Eurasian landmass. Sustaining the sizable populations needed to secure and defend the region naturally required funds and food, resulting in the adaptation of intensive agricultural practices and irrigation. From antiquity to modernity, this practice has caused rivers to run dry and lakes to vanish.

Even so, some areas of China have begun to make an effort to restore the vital waters. Nationwide environmental reforms, backed by growing popular support, have only bolstered this local initiative. But sprawling cotton farms, an emerging energy sector and the surrounding Xinjiang province's role as a link in Beijing's crucial Belt and Road Initiative could jeopardize the basin's nascent recovery.

By the Waters of the Taklamakan

Throughout history, the parched lands of the Taklamakan Desert have experienced some brief flashes of relief. Cities and kingdoms thrived near oases, creating stops along the Silk Road's northern branch. And where the Tarim River spilled its waters near the Kuruk-tagh ("dry mountain"), there was once a lake known by some as Lop Nur, and by others as the Puchang Sea. The body of water is estimated to have been somewhere between Lake Ontario and Lake Michigan in size, and it fed the Loulan Kingdom from 200 B.C. to 220 A.D. during the Han dynasty.

By 645, however, the settlement had been abandoned. According to recent sediment studies, its rapid collapse stemmed from the overuse of the region's water resources, which reached a level comparable to the desiccation of the Aral Sea taking place in this century. Lop Nur — and the Tarim Basin that fed it — simply wasn't up to the task of sustaining the needs of an empire. The westward expansion that the Han dynasty oversaw brought an unprecedented number of people to the region to live in fortified cities and trading posts. Large-scale irrigation emerged in the first century A.D., a novelty in a corner of the world where cultivation was confined to lands surrounding natural oases.

A satellite image shows the dried up lake of Lop Nur.
(NASA)
Growing Cotton in the Desert

Over a millennium later, the waters of the Tarim Basin are once again straining to meet the needs of the local population and economy. Already showing increasing levels of salinity — a sign of overuse — the waters began to face worse conditions in the latter half of the 20th century. Between 1959 and 1983, the rate of desert absorption of the Tarim Basin increased from 66 to 81 percent. Lop Nur, which had persisted in a diminished form as a "wandering lake," disappeared completely in 1964.

Many factors led to the unsustainable consumption behind these waterways' decline, but agriculture was undoubtedly the most culpable. The Chinese government has built numerous reservoirs and dams to alter the flow of the region's intermittently supplied rivers, including the Tarim, and today farming accounts for nearly half of Xinjiang's gross domestic product. Lately the region has only gotten thirstier. Throughout most of the past century, 60 to 80 percent of the land has been dedicated to growing grain, but by the 1990s the production of cash crops — primarily cotton — had skyrocketed.


Xinjiang's cotton industry is now caught in the middle of the tug-of-war taking place between China's geopolitical imperatives and the environment's limits. The region contributes more than 50 percent of China's total cotton production and about 10 percent of the world's supply each year — output supported by the Taklamakan Desert's water resources. At the same time, Xinjiang's population is expanding once again, and by some estimates it will maintain its double-digit growth through 2020. As a result, the pressure mounting on the Tarim Basin is unlikely to ease in the years ahead, even as the Chinese government sinks billions of yuan into restoring parts of the river.

Ironically, climate change has granted the Tarim River a temporary reprieve: Warming temperatures have accelerated the runoff from nearby glaciers, adding to its supplies in the short run. Still, this much-needed boost is finite. Current temperature projections indicate that glacial waters, which account for roughly 40 percent of the volume of rivers nearby, could permanently dry up in the long run.

Brimming With Discontent

To make matters even more complicated, the issue of water scarcity is closely intertwined with the fraught minority politics of Xinjiang — a region that China's Han majority shares with the Turkic Uighur minority. The Han control much of the area's cotton production through the Xinjiang Production and Construction Corps, which functions as a blend of paramilitary and business units. Such bingtuan systems have deep roots: In the final centuries B.C., Han troops were responsible for implementing the region's first massive irrigation and land reclamation projects. This "Tuntian" model of military colonization was highly successful, leveraging the power of the state to see through the massive and complicated undertakings needed to ensure that agriculture flourished in Xinjiang.

The Tuntian model still exists today, though it has given rise to a glaring imbalance between large quasi-military operations and small civilian farmers. While local family plots in the region rely on public infrastructure for access to water, subjecting them to usage regulations, bigger farms can afford to install their own pumps, which aren't necessarily beholden to the same laws. Meanwhile, the runoff from agricultural pursuits pollutes what water resources are left. Each of these issues disproportionately affects native Uighurs, an ethnic group that has traditionally relied on oasis-based smallholdings and animal husbandry to survive. Alterations in the water system are deeply disruptive to this way of life, and as water scarcity worsens in Xinjiang, so, too, may the discontent simmering among its Uighur community.

Such discord could certainly throw a wrench in Beijing's plans for Xinjiang. The region is a cornerstone of China's newest Silk Road, the sprawling Belt and Road Initiative. Through Xinjiang, Beijing hopes to connect its lands westward to Europe, by way of Central Asia, and southward to the Indian Ocean, by way of Pakistan. But doing so would require maximizing Xinjiang's output — including in cotton-based textiles — for export along these trade routes.

After nearly two decades of restoration efforts in the Tarim Basin, it is still unclear whether the the region's water resources will be able to shoulder their newest burden. After all, attempts to line canals and improve irrigation efficiency can only go so far when it comes to growing cotton in the desert. If Xinjiang maintains its current level of production, it will likely come at the expense of an ecosystem that boasts one of the highest concentrations of rare vegetative species in the world. And though it won't be the first time a nation's imperatives trump environmental conservation, it could be the last in the Tarim Basin if Beijing stretches the river's resources too far.
Title: 5 take aways from China's 30 yr plan
Post by: ccp on October 26, 2017, 07:47:16 AM
https://www.theguardian.com/world/2017/oct/18/xi-jinping-speech-five-things-you-need-to-know

By contrast what are our 30 yr goals? 

I don't know of any unified vision for this?

I don't recall any from any politician.  We think in 2, 4 yr  cycles.

You carbon energy free by 2050 etc yada yada .......

By then the debt could be 30 trillion and we have 65% not working .

We could have a goal of turning us into a Spanish speaking country by 2050.

Atheism by 2050 the majority?

More females in the military then in law school?

The nation according to big tech far more then even now?

We are like a huge ship just drifting at sea................





Title: Re: China
Post by: Crafty_Dog on October 30, 2017, 09:29:26 PM
It sounds a bit like you are being taken in my the siren's song of central planning there , , ,

Title: Chinese military base
Post by: ccp on November 26, 2017, 09:49:41 AM
In Djibuti :

https://www.yahoo.com/news/china-displays-global-expansion-military-115118157.html

to protect their interests in Africa and of course, for peace keeping

 :-o :-o :-o
Title: Re: Chinese military base
Post by: G M on November 26, 2017, 10:31:15 AM
In Djibuti :

https://www.yahoo.com/news/china-displays-global-expansion-military-115118157.html

to protect their interests in Africa and of course, for peace keeping

 :-o :-o :-o

Expect many more to pop up around the world.

Title: GPF: China's thin, red line
Post by: Crafty_Dog on December 30, 2017, 12:05:58 PM
China’s Thin Red Line
Dec 27, 2017

 
By Jacob L. Shapiro
China declared war last week, though few seem to have noticed. The coming conflict will not be against North Korea, against which battle plans for a later fight are already being drawn. It will not be against the United States, despite the escalating tensions between them. It will not be against India, its adversary in a border dispute earlier this year. Nor will it be against South Korea, which defied Beijing by deploying ballistic missile defense systems. No, war was declared against enemies Beijing considers far more insidious and subversive than any nation-state: financial risk, poverty and pollution.

The Counteroffensive

If it seems as though I’m taking the metaphor too far, it’s worth noting that the declaration of war was, in fact, literal. During the Central Economic Work Conference, held from Dec. 18-20, the government identified 19 missions it would undertake in 2018. But against financial risk, poverty and pollution, Beijing described its future efforts as “effectively prosecuting rigorous war.”

It’s hard to quibble with Beijing’s assessment. Financial risk? China’s debt now stands at roughly 260 percent of GDP. Poverty? For all its wealth, China still has more than 500 million people living on less than $5.50 per day. Pollution? The government itself claims that more than 20 percent of Chinese farmland has been contaminated by pollution.
China has begun its counteroffensive, but as is often the case in war, the results have been mixed. New reform measures have been resisted in important sectors such as banking, energy and real estate. Even the battle cry against financial risk is a confrontation with resistance. On Dec. 19, the Wall Street Journal reported that Beijing decided to downplay its newfound emphasis on lowering debt as early as Dec. 8. Beijing now seems content to merely limit borrowing. Barely a month into his dictatorship, President Xi Jinping is already settling for half measures.

The poverty issue is inseparable from the finance issue. Unless China is prepared to distribute wealth with an iron fist – a last resort that China has not yet had to employ – then Beijing must balance between improving the financial health of the country and encouraging growth, all while making sure the traditionally poor interior provinces benefit from the country’s newfound wealth. Growth, after all, is a potential solution to the poverty problem. But debt is growing faster than growth, and more than half of new bank loans are being taken out to aid real estate speculation, not to form competitive businesses. So even as China makes compromises on reducing debt to stimulate growth, the economy is not growing as fast as it once was. The danger is that any number of the bubbles in the Chinese economy will pop well before the have-nots get a chance to share in its prosperity – and, in their vast numbers, revolt against the government.
 
(click to enlarge)

And then there is pollution, an admittedly overlooked issue at GPF that is affecting the legitimacy of the Communist Party of China. Taking the lead against climate change on the global stage may be good optics for Beijing, but it’s hard to reconcile with the fact that its cities are covered in haze and its food and water supply are so toxic that it is having to transform the way it grows and buys food.

Here, too, the government is taking radical steps toward reform. On Dec. 22, the South China Morning Post reported that in Guizhou province party officials will now base political advancement on environmental progress instead of on economic growth. Local environmental departments will reportedly be empowered to enforce new standards – perhaps they will call them the Green Guards.

Being Combative

Most outside observers viewed Xi’s coronation at the 19th Party Congress as evidence that China is emerging as a global power capable of challenging the United States. Far from it. If China is to go through the transformations Xi laid out in his speech at the Party Congress, the next few years in China are going to be extremely tumultuous. The reforms Xi means to enforce will create enemies to his own rule and factions whose interests are not served by supporting the CPC. Xi must retain the power, then, not only to press his agenda, but to eliminate potential enemies. If Chinese history is any indication, he must also cultivate scapegoats for the inevitable policy failures or just to contain popular discontent. Mao, in whose likeness Xi has fashioned himself to a certain extent, was an expert at this.

Xi has been more cautious than Mao, of course. Mao’s leadership was intentionally chaotic. Where the country’s interests were at stake, no individual was too dear to sacrifice, no number of people too large. If China is indeed reverting to an authoritarian dictatorship, then the purges of the past five years are just a prelude to more to come. If Xi is really following in Mao’s footsteps, then we must keep a close eye on the company Xi keeps.

Wang Qishan is a good example. A top lieutenant and former enforcer of Xi’s corruption purges, Wang was left off the politburo in the 19th Party Congress. It’s possible that, as some have argued, he was excluded because he had reached the age of retirement and that Xi was merely following protocol. But that is unlikely. Xi has bucked convention time and again when it serves his purposes. After all, he didn’t even name his successor, an act more politically taboo than allowing an elderly man to continue working.

It is also notable that Guo Wengui, a Chinese billionaire who fled to the United States, has made Wang one of his key targets, eviscerating him in the American press with allegations of corruption. The Guo riddle has bothered us for a while at GPF. If Xi is so powerful, how could Guo have been allowed to escape? Is Xi less powerful than we think? Did he want Guo to make these allegations for all to hear? Is there another explanation we haven’t considered?

If Xi follows the pattern of previous Chinese authoritarians, eventually he will purge the purgers. This presents a unique problem. He has already created enemies by enacting such controversial reform. If he crushes those enemies, he will invite even more. If he fails to crush them, the government – and therefore the Chinese state itself – could break apart. We expect Xi to crush his opponents, so we will need to look at the relationships with even his oldest confidants in a new light.

If this all sounds combative, that’s because it is. By its own admission, China is at war. It’s just not the war that everyone thinks China is preparing for. China has to win the war at home before it can win wars abroad. But if the early reforms are China’s thin red line, then the results of the first battles don’t look overly promising.

The post China’s Thin Red Line appeared first on Geopolitical Futures.
Title: Global Guerillas: China's socially networked repression
Post by: Crafty_Dog on January 04, 2018, 08:56:12 AM
http://globalguerrillas.typepad.com/globalguerrillas/2018/01/chinas-socially-networked-repression.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+typepad%2FrzYD+%28Global+Guerrillas%29
Title: Stratfor: China a friendlier environment for green initiatives
Post by: Crafty_Dog on January 04, 2018, 01:45:59 PM
second post

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Jan 4, 2018 | 20:32 GMT
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China: A Friendlier Environment for Green Initiatives
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Forecast Update

In our 2018 Annual Forecast, we wrote that China would accelerate its fiscal reforms in 2018, channeling more money toward the regional level and implementing reforms, such as environmental taxes and enforcing existing environmental regulations. As the new calendar year has arrived, that forecast has proven accurate with the implementation of initiatives designed to achieve precisely those goals.
See 2018 Annual Forecast

China is setting its sights on a new growth model, and putting environmental protection as one of the country's top priorities. In 2017, China focused intently on better enforcement of its environmental policies. From increasing inspections and fines throughout the industrial sector to setting new goals for integrating new energy vehicles into the domestic fleet, Beijing has worked to bring environmental protection measures under more national, centralized control. In 2018, China is poised to move full steam ahead in continuing this strategy.

The new year brought the kick-off date for two new initiatives. On Jan. 1, numerous automobile models suspended manufacturing, taking more than 500 versions of different vehicles off the assembly line. The cars targeted included domestic producers as well as joint ventures with major automobile manufacturers, such as Volkswagen. But even with the large number of models leaving production, Chinese officials have noted that the market share of the models being banned is limited. By coupling the new initiative with an extension of tax credits for electric vehicles, Beijing is looking to not only increase the number of electric cars on the road, but to improve their quality and actual environmental benefit as the country looks to eventually ban fossil fuels.

The second new initiative is a tax aimed at environmental protection, which also took effect Jan. 1. An environmental tax — along with several other changes to the country's tax code — is a key component of the ongoing fiscal reform aimed at bringing the country's socio-economic shift in line with its objective for healthier, more balanced growth. Announced in October 2017 and passed in December, the tax will be based on the amount of pollutants emitted by specific operations. Though the tax sets national standards and general guidance, it is similar to many other environmental policies that have taken effect in recent years. Like others, the new policy provides ample room for discretion in enforcement and tax rate, and regions are allowed to tailor their specific regulations to local circumstances. The new policy effectively brings an end to a one-time pollutant discharge fee that China has collected since 1979, and has an estimated potential to collect $7.7 billion annually throughout the country. That revenue will be kept at the local level, both to help incentivize local governments to enforce environmental protection measures, and as part of Beijing's ongoing fiscal rebalance away from solely focusing on economic development.

While the recent past has brought evidence of greater success in the enforcement of environmental policies, this newest environmental tax will be especially difficult to implement from a technical standpoint. The numerous potential hurdles ahead of local governments include inadequate or unclear standards, as well as potential shortages in staff or funding. Ambiguities in how pollutants are tracked and measured increase the risk that compliance and corruption could limit the policy's successful implementation. Regions such as Hebei and the northeast, where pollution is the heaviest, will be key locales to watch. The ability to hold on to the revenue may incentivize local compliance, but local governments will need to strike a careful balance to keep from hurting local industries and employment situations, as well as avoid corruption.
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China: A Friendlier Environment for Green Initiatives

Title: WSJ: Apple betrays Chinese Users
Post by: Crafty_Dog on February 24, 2018, 11:17:35 AM
Apple to Start Putting Sensitive Encryption Keys in China
Codes for Chinese users of iCloud will be kept in a secure location, company says
A man uses his mobile phone near an Apple store in Beijing.
A man uses his mobile phone near an Apple store in Beijing. Photo: Ng Han Guan/Associated Press
By Robert McMillan and
Tripp Mickle
Feb. 24, 2018 1:39 p.m. ET
18 COMMENTS

When Apple Inc. AAPL 1.74% next week begins shifting the iCloud accounts of its China-based customers to a local partner’s servers, it also will take an unprecedented step for the company that alarms some privacy specialists: storing the encryption keys for those accounts in China.

The keys are complex strings of random characters that can unlock the photos, notes and messages that users store in iCloud. Until now, Apple has stored the codes only in the U.S. for all global users, the company said, in keeping with its emphasis on customer privacy and security.

While Apple says it will ensure that the keys are protected in China, some privacy experts and former Apple security employees worry that moving the keys to China makes them more vulnerable to seizure by a government with a record of censorship and political suppression.

“Once the keys are there, they can’t necessarily pull out and take those keys because the server could be seized by the Chinese government,” said Matthew Green, a professor of cryptography at Johns Hopkins University. Ultimately, he says, “It means that Apple can’t say no.”

Apple says it is moving the keys to China as part of its effort to comply with a Chinese law on data storage enacted last year. Apple said it will store the keys in a secure location, retain control over them and hasn’t created any backdoors to access customer data. A spokesman in a statement added that Apple advocated against the new laws, but chose to comply because it “felt that discontinuing the [iCloud] service would result in a bad user experience and less data security and privacy for our Chinese customers.”

Apple’s move reflects the tough choice that has faced all foreign companies that want to continue offering cloud services in China since the new law. Other companies also have complied, including Microsoft Corp. for its Azure and Office 365 services, which are operated by 21Vianet Group , Inc., and Amazon.com Inc., which has cloud operating agreements with Beijing Sinnet Technology Co. and Ningxia Western Cloud Data Technology Co.

Amazon Web Services and Microsoft, which serve businesses in China, declined to say where encryption keys will be stored for businesses using their security tools there.

Privacy specialists are especially interested in Apple because of its enormous customer base and its history of championing customer privacy. Apple in 2016 fought a U.S. government demand to help unlock the iPhone of the gunman in the 2015 San Bernardino terrorist attack. “For many years, we have used encryption to protect our customers’ personal data because we believe it’s the only way to keep their information safe,” Apple Chief Executive Tim Cook said then in a letter to customers explaining its decision.

Apple said it will provide data only in response to requests initiated by Chinese authorities that the company deems lawful and said it won’t respond to bulk data requests. In the first half of 2017, Apple received 1,273 requests for data from Chinese authorities covering more than 10,000 devices, according to its transparency report. Apple said it provided data for all but 14% of those requests.

Greater China is Apple’s second-most-important market after the U.S., with $44.76 billion in revenue in its last fiscal year, a fifth of the total. Some previous steps to comply with Chinese laws have been controversial, including removing apps from its China store for virtual private networks that can circumvent government blocks on websites. Apple has said it follows the law wherever it operates and hopes that the restrictions around communication in China are eventually loosened.

Jingzhou Tao, a Beijing-based attorney at Dechert LLP, said Chinese iPhone users are disappointed by Apple’s changes to iCloud data storage because privacy protection in China is weak. However, he said users there “still consider that iPhone is better than some other pure Chinese-made phones for privacy policy and protection.”

Apple’s cloud partner in China is Guizhou on the Cloud Big Data Industry Co., or Guizhou-Cloud, which is overseen by the government of Guizhou province. Apple plans to shift operational responsibility for all iCloud data for Chinese customers in China to Guizhou-Cloud by Feb. 28. Customer data will migrate to servers based in China over the course of the next two years. The company declined to say when the encryption keys would move to China.

Apple began notifying iCloud users in China last month that Guizhou-Cloud would be responsible for storing their data.

Updated terms and conditions for China users say that Apple and Guizhou-Cloud “will have access to all data” and “the right to share, exchange and disclose all user data, including content, to and between each other under applicable law.”

“Given that Apple’s China operations will be managed by a Chinese company, it seems implausible that the government will not have access to Apple data through the local company,” said Ronald Deibert, a political-science professor at the University of Toronto’s Munk School of Global Affairs who has researched Chinese government hacking operations.

Guizhou-Cloud and the Chinese cybersecurity administration didn’t immediately respond to requests for comment.

Reporters Without Borders has urged journalists in China to change their geographic region or close their accounts before Feb. 28, saying Chinese authorities could gain a backdoor to user data even if Apple says it won’t provide one.

Apple said it has advised Chinese customers that they can opt out of iCloud service to avoid having their data stored in China. Data for China-based users whose settings are configured for another country, or for Hong Kong and Macau, won’t go on Chinese servers, and Apple said it won’t transfer anyone’s data until they accept the new mainland-China terms of service.

Mr. Green and others say Apple should provide more technical details on its steps to secure its encryption keys and internet usage data that might be available on Guizhou-Cloud.

This usage information, called metadata, could tell Chinese authorities the identity of users who download a book or other files of interest to the government, said Joe Gross, a consultant on building data centers.

“You can tell whether people are uploading or downloading things,” he said “You can tell where they are. You may be able to tell whether they’re sharing things.”

Apple said there would need to be a legal request to obtain metadata.

—Yoko Kubota, Jay Greene and Xiao Xiao contributed to this article
Title: China bans Orwell
Post by: Crafty_Dog on March 06, 2018, 09:56:22 PM
http://www.independent.co.uk/news/world/asia/china-animal-farm-ban-censorship-george-orwell-xi-jinping-power-letter-n-a8235071.html
Title: Xi for life
Post by: ccp on March 11, 2018, 08:55:35 AM
https://www.wsj.com/articles/xi-jinping-clear-to-rule-indefinitely-as-china-scraps-presidential-term-limits-1520757321

 :-o

he has got the whole party bribed
Title: GPF: Debt Bubble continues to worsen
Post by: Crafty_Dog on March 16, 2018, 08:44:06 AM
Reality Check


By Xander Snyder


China Struggles With Hidden Debt


Local governments are also susceptible to the growing rot in the Chinese financial system.


The implications of China’s debt burden appear increasingly grim. We have previously discussed the relationship between the real estate market, China’s debt and retail investors who invest in securities of this debt, but local governments are also susceptible to the growing rot in the Chinese financial system. Stuck between a rock and a hard place as one of their primary sources of revenue has been cut back in recent years, local governments have taken on more debt to finance their expenditures. And their financial position appears to be deteriorating as well: On March 14, a Chinese official publicly warned that local governments are at growing risk of default.

Yin Zhongqing, deputy director of the National People’s Congress Financial and Economic Affairs Committee, warned that Beijing’s official figure for local government debt, $2.6 trillion, may be excluding more than $3 trillion of additional debt that is being hidden through a series of complicated public-private partnerships and other complex financial arrangements. Since most local governments in China are not legally allowed to borrow directly, they form arrangements in which companies or special-purpose entities – which are ultimately wholly or in large part owned by those local governments – borrow against future cash flows. That loan is then carried by the affiliated entity rather than by the local government itself, obfuscating the true scale of the local government’s obligations.


 

(click to enlarge)


The Land Sale Boom

What’s driving local governments’ increased borrowing? Although local government debt may at first blush seem distinct from the country’s real estate debt concerns, they are in fact interrelated. The Communist Party technically owns all land in China, but property developers gain the rights to use and build on land by paying taxes to local governments. The taxes from these land sales (technically, the transfer of land usage rights) are a large portion of many local governments’ budgets. Since local governments receive more income the more land sales there are for development, they encourage real estate construction.

This conflicts with Beijing’s national goal of reining in property prices to contain the risk of a major price collapse, which could trigger a broader financial crisis. Beijing has seen some success with its property-related initiatives – over the past several months, property prices have remained stable or even declined slightly in a number of major cities. But disincentives toward new construction put local governments in a tough spot given their dependence on land sales meant for property development to generate tax revenue.

Beijing is aware of this conflict. One solution it has offered is a new property tax framework, presented in late 2017, that would emphasize taxes levied on property owners rather than on developers. This would be somewhat similar to the property tax system in the United States, where a percentage of the assessed value of the property is levied on the owner on an annual or semiannual basis. That said, a proposal and an implemented solution are two vastly different things, and there is a long way to go before a new property tax of that kind could plug the hole created by Beijing’s attempt to curb rising prices. As an example, in 2016, there were only two taxes on existing homes owned by Chinese citizens. They generated approximately $70 billion in revenue compared with the $550 billion raised from taxes levied on property developers.

Clandestine Arrangements

When costs exceed revenues, the gap needs to be plugged somehow, and local governments in China have been doing that by taking on more debt. Yin points out that local governments, recognizing Beijing’s campaign to deleverage its financial system, have been increasingly vigilant in hiding their debt through public-private partnerships or other, murkier arrangements. Yin also notes that the official level of nonperforming loans in China’s financial system – approximately 1.7 percent – is substantially understated, kept artificially low by banks extending or amending underperforming loans to prevent them from being officially categorized as nonperforming.

As in other areas of its financial sector, China is running into the persistent challenge of overcoming the perception of implicit guarantees – the idea that Beijing will bail out any and all struggling local government financing vehicles. The central government could, to a degree, bail out LGFVs that struggle with repayment, but this becomes a far more difficult proposition with dollar-denominated debt. Though the People’s Bank of China can always print more yuan, doing so will put downward pressure on the currency. Inflation is always a risk when increasing money supply, but more money would at least make yuan-denominated debt easier to repay. However, cheaper yuan makes dollar-denominated debt costlier to repay, and according to the Bank for International Settlements, since early 2016 property developers have been issuing more dollar-denominated bonds than yuan-denominated bonds. Since many LGFVs are set up to fund infrastructure and property development projects, this means that local governments, too, are likely facing increased exposure to dollar-denominated debt. There are other policy options available to the central bank and the central government, but there are limits to how much money the government can print, so that is not a long-term solution.

In other words, real estate debt risk permeates all corners of China’s labyrinthine financial system. Perhaps the most salient manifestation of the scale of this problem is that Chinese leaders have become openly vocal about it. Yin is just one recent example. President Xi Jinping and his cadre have also spoken about the severity of financial risk facing the country. China’s leaders know that any such crisis will not be confined strictly to the economic realm and, knowing this, they are trying to mentally prepare the country now so it is not surprised when it happens. The looming question for China’s leadership is not when China will find itself in a crisis, but what exactly that crisis will look like.


Title: China
Post by: ccp on April 27, 2018, 09:29:25 AM
even more debt and age demographic problems then us.

Beware of more aggressive things to come as they try to continue to promote the" illusion" and suppress the reality:

https://www.nationalreview.com/2018/04/xi-jinping-china-distracts-from-massive-debt-rural-poverty/
Title: China getting old fast
Post by: Crafty_Dog on May 08, 2018, 06:17:52 AM
https://www.wsj.com/articles/a-limit-to-chinas-rise-its-getting-old-fast-1525028331?mod=e2fb

BEIJING—China is careening toward a demographic time bomb. In another decade, it will have more people over 60 than the entire population of the U.S. Its workforce is shrinking, and not enough babies are being born.

Yet when Li Yuanyuan, a professor, was expecting her third child last year, her employer in the eastern city of Qingdao pressured her to end the pregnancy or resign. She refused, but the stress gave her nightmares. “How can I not worry about it?” she said during her pregnancy. “We could end up raising three children without any income.”

In the nation with one of the lowest fertility rates in the world, couples are still discouraged from having multiple offspring—children who could help rejuvenate the fast-aging population.

Some experts have argued over the years that slower population growth could help ease the pressure for China to create new jobs as technology increases productivity. Others contend that the aging problem looms over China’s long-term economic health, presenting a vulnerability in its global ambitions over resources, technology and industry amid a deepening trade conflict with the U.S.

Chinese officials have been softening birth restrictions, and say they are reluctant to make sudden, drastic changes to longstanding policy. Some demographers say the moves are too slow to reverse the trend.

While all couples have been able to have two children without penalty since China abandoned its one-child policy in 2016, family-planning law stipulates penalties for those who have more. Local-government agents enforce the law with fines and state employers often pressure women to abide by the birth limits.

Baby Bust
China’s fertility rate, once above India’s, is now among the lowest in the world.






Note: Calculations for 2017-30 are based on forecasts.

Source: United Nations Department of Economic and Social Affairs

China can’t afford such strong-arming, lawmakers, researchers and parents warn. These opponents of birth restrictions hoped 2018 would be the year China dropped limits altogether.

Yet Beijing can’t let go, continuing the reproductive meddling some demographers say was always based on guesswork and unnecessary even four decades ago.

Beijing did signal a notable change in March at the National People’s Congress, declaring it would replace the National Health and Family Planning Commission—the bureaucracy that enforces birth rules—with a new health ministry. But there was no pledge to lift birth restrictions.

That left some parents in limbo, including a 34-year-old businesswoman in southern China who asked to be identified by her surname, Cai. She was excited yet confused by the news from the congress, wondering if she would no longer have to pay a fine of about $12,000 for the birth of her third child last year: “Does that mean third children are legal now?”

Ms. Cai and her husband took a loan to pay the $7,000 fine for having a second child several years ago when the one-child policy was in effect. Faced with the steeper fine from the local family-planning branch for their third child, she sold her clothing shop in Fujian province.

“It is hard enough to raise the kids,” she said. “We don’t know what to do.”

Asked what will happen to the family-planning commission now and whether China has any plans to lift all birth restrictions, the information office of the State Council, China’s cabinet, responded: “We will continue communications and connections with the Health and Family Planning Commission.”

State family planners have cautioned against drastic change in birth policies. “The fundamental reality of the state is that it has a large population,” Wang Peian, who has been deputy director of the family-planning commission, told The Wall Street Journal last year. “The Chinese government has been adjusting and improving family-planning policy in a steady, cautious and realistic manner.”

Mr. Wang said at a press conference last year that technological innovation and health advances will leave China with enough workers.

“China doesn’t have a population shortage,” he said. “Not now, not in 100 years.”

It isn’t clear what Mr. Wang’s position will be after the reorganization. The family-planning commission didn’t respond to a request for comment on its scope in the future or on Mr. Wang’s role.

China’s clinging to birth restrictions defies a clear demographic trend: Its workforce is shrinking and the population is rapidly aging. By 2050, there will be 1.3 workers for each retiree, according to official estimates, compared with 2.8 now.

No matter what the government does now, it is too late to significantly change the overall trend because of social attitudes, say demographers such as Gu Baochang, a professor of demography at Renmin University in Beijing. “They should have lifted all birth restrictions before 2010,” he said. “Whatever steps they take now, China’s low-fertility trend is no longer reversible.”

Aging populations can hurt economies because a shrinking labor pool tends to drive up wages, while a growing elderly population requires more spending on pensions and health care. In a worse-case scenario, slowing growth and a labor shortage could leave China unable to care for hundreds of millions of retirees.

Senior Moment

A third of China’s population is predicted to be over the age of 60 in three decades.



*Forecast

Sources: National Bureau of Statistics of China  (2010); United Nations (2030, 2050)

A rapidly aging population was a major factor in Moody’s Investors Service’s downgrade of China’s sovereign rating in May 2017. Elderly care is expected to erode household savings and government coffers, straining the government’s ability to repay already high debt, Moody’s said. It predicted China’s potential economic growth rate would slow to about 5% over the next five years. China’s 2017 growth was 6.9%.

“China is really interesting and unique,” said Marie Diron, a Moody’s analyst of sovereign risk, “because it is aging so much earlier than anyone else.”

Countries facing shrinking workforces have tried to ease the impact by raising the retirement age or relying on immigration. Singapore, which has liberal immigration policies and which offers a “baby bonus” of up to 10,000 Singapore dollars ($7,500) in cash as well as grants for parents toward health and education, has a growing population despite a low fertility rate of 1.16. Japan has steered healthy retirees back to work, sometimes with the help of technology making up for age-related deficiencies.

Despite one of the lowest retirement ages in the world, at 55 on average, Beijing has been slow to implement a plan to gradually raise the retirement age amid severe opposition. Officials had originally indicated they would present the plan last year. It was left out of measures unveiled at the congress in March, in which Beijing said the new ministry “will actively deal with the aging of the population,” with measures to develop the elderly-care sector and health-care reform.

Past policy changes haven’t fixed the trend—not even ending the one-child policy did. Newborns rose by 1.3 million in 2016, the first year without the policy—less than half the official projection—to 17.86 million, from 2015, according to the National Bureau of Statistics.


In 2017, births slowed to 17.23 million, well below the official forecast of more than 20 million.

In a generation that grew up without siblings, a one-child mind-set is deeply entrenched. Maternity-leave policies have been expanded but some women say taking leave twice is a career impediment. An All-China Women’s Federation survey found 53% of respondents with one child didn’t want a second.

Even without birth limits, China’s economic development would have reduced fertility rates, says Martin Whyte, a Harvard University Chinese-studies expert. That has been the pattern elsewhere in the world: When incomes rise, the sizes of families tend to go down.

If the nation drops birth policies now, Mr. Whyte said, “China will learn what many other countries have learned—that it is much more difficult to get people to have more babies” than the other way around.
Population math

For China’s leaders, population math has never been simple. In Communist rule’s early days, Mao Zedong said: “With many people, strength is great.”

As the Communist Party struggled to build the economy, some officials began calling for population control to help China catch up with the West. In 1980, Deng Xiaoping launched the one-child policy saying “We must do this…Otherwise, our economy cannot be developed well and people’s lives won’t be improved.”

Fertility rates dropped below replacement levels in the early 1990s and have continued falling. Yet Beijing codified the one-child policy in 2001, passing the Population and Family Planning Law that provided a legal framework. It amended the law in December 2015 to allow for two children but kept provisions for birth-limit-violation penalties including fines known as “social-maintenance fees.”

Provinces and townships have local enforcers of the law. A bureaucracy of half a million workers has over the years collected billions of dollars in birth fines, calculates Wu Youshui, a lawyer who obtained disclosures from local governments via open-records requests.

While the government has realized the need to ease controls, it is fearful of drastic moves, said a senior official who has been in charge of implementing family-planning policy. “Any policy change in China has been incremental. The key is to ensure policy continuity.”

Even for “legal” births, there is paperwork required to give birth in many public hospitals. Because a birth registration, which is needed at some public hospitals, requires a marriage certificate, unwed mothers can’t give birth at those hospitals, according to nurses and administrators at public hospitals. Family-planning officials have been able to ask courts to seize savings of birth offenders, court records show. Compliance weighs heavily in officials’ performance reviews, language in government regulations shows.
Local enforcement

When Ms. Li, the Qingdao professor, refused to abort her third child, she said, her university employer accused her of selfishly putting at risk her supervisors’ careers, the school’s future and co-workers’ bonuses. A university spokeswoman didn’t respond to faxed inquiries.

With the help of local church friends, her family moved to the Philippines, where she gave birth in November.

Hu Zhenggao, 42, ran afoul of the limits last year visiting his Yunnan province hometown. A father of four, he was taken away one night by local county officials who forcibly sterilized him, saying he had broken family-planning rules, he said in an account he posted on social media.

His ordeal prompted an outcry online. Yunnan province authorities later put out a statement saying that forced surgeries aren’t allowed and that the officials had been wrong.

Mr. Hu confirmed his social-media post, saying he didn’t want to talk about his treatment and wasn’t seeking compensation. An official at the family planning bureau of Zhaotong, which was responsible for investigating the incident, said there had been an apology to Mr. Hu; she offered no further comment.

Wealthier Chinese have other options. Zou Yue, a blogger based in Guangzhou province, gave birth to her third child at an Irvine, Calif., clinic in 2016. Having a child overseas usually means the fine can be avoided. “I’d rather spend that money in the U.S. than paying a fine,” she said.

Beijing said in March at the National People’s Congress, above, that it would replace the bureaucracy that enforces birth rules with a new health ministry, but there was no pledge to lift birth restrictions.

President Xi Jinping has signaled the demographic dilemma is on his mind. In 2015, he said China needs more births. In October, he omitted a traditional reference to “family planning” in his party-congress report.

Last month’s sidelining of the family-planning commission is the strongest sign yet of his concern. Lifting birth restrictions would likely require a constitutional change.

“I think Xi’s views about demography are clear: He considers population more as a resource than a burden,” said Huang Wenzheng, a researcher at the Center for China and Globalization, a Beijing-based independent think tank, and a co-founder of a hedge-fund firm that invests globally. “But of course he cannot easily abandon the family-planning policy because that would be a sharp turn away from his predecessors’ policies.”

U.S.-based Chinese researcher Yi Fuxian believes China overstates its population numbers and fertility rate—the number of children a woman has over her lifetime, which official data puts at around 1.5. He said a different reading of available data suggests the fertility rate is as low as 1.05.

In China, as elsewhere in the world, the hesitation to have more than one child is strongest in big cities, partly because of higher child-raising costs. Shanghai is especially lopsided, with low fertility rates and about a third of the population over 60, according to the municipal government. In New York City, adults over 65 make up about 13% of the total population, according to the city government.

The fertility rate in Liaoning, a province in China’s northern rust belt, is at 0.74, official data show. Even so, Liaoning punishes those who have a third child, with some couples fined more than 145,000 yuan ($23,000), according to public court records. The Liaoning family-planning commission didn’t respond to faxed questions

The March congress move hasn’t persuaded people such as a mother in Dalian, a Liaoning port city, who said she has been hiding since her third child’s birth to avoid a fine she fears would be five times her family’s annual income.

Even after the congress, she said, she didn’t dare approach local authorities and is putting her hope in birth restrictions being lifted soon. “Then I can take my son out to enjoy the sunshine.”

A high-school teacher in Tangshan in northern China who asked to be identified by her surname, Sun, said she discovered mid-March she was several weeks pregnant. She has two children, 16 and 1½. She called the local family-planning agency to ask if the congress move meant a third child was allowed.

It told her nothing had changed, she said. Aside from triggering a fine, having a third child would probably cost her job, Ms. Sun said, as she is a government worker.

A few days later, she said, she swallowed a pill to terminate the pregnancy. “They are really going to scrap the family-planning controls this year?” she asked. “Who can tell me for sure?”

A spokesman of the Tangshan family-planning agency told the Journal in March, after the congress, that “we are still waiting for any new policies from the central government” and that “third children are still not allowed. The rules are the rules.”

—Liyan Qi and Fanfan Wang
Title: Re: China getting old fast
Post by: DougMacG on May 08, 2018, 08:52:27 AM
"A third of China’s population is predicted to be over the age of 60 in three decades."

It seems to me that the retirement age will need to rise dramatically in nearly all developed countries. 
Title: Chinese Eugenics
Post by: Crafty_Dog on May 08, 2018, 02:58:51 PM
https://www.vice.com/en_us/article/5gw8vn/chinas-taking-over-the-world-with-a-massive-genetic-engineering-program
Title: China's plan to dominate global trade
Post by: Crafty_Dog on May 11, 2018, 12:43:40 PM
https://www.youtube.com/watch?v=EvXROXiIpvQ&feature=youtu.be
Title: Re: China's plan to dominate global trade
Post by: G M on May 11, 2018, 01:46:55 PM
https://www.youtube.com/watch?v=EvXROXiIpvQ&feature=youtu.be

China plans to dominate.
Title: GPF: China debt defaults
Post by: Crafty_Dog on June 02, 2018, 09:29:40 AM
Discussing a theme I have been raising here for years:

China: China’s Ministry of Commerce said the profitability of state-owned enterprises increased nearly 10 percent in April year-over-year, with industrial firms’ profits growing 22 percent. Meanwhile, corporate debt defaults related to China’s deleveraging campaign continue. These items seem contradictory. Can we reconcile them?
•   Finding: The short answer is: SOEs aren’t the ones defaulting. Rather, the wave of defaults is centered on private firms that had grown bloated on cheap credit from shadow banking channels. Beijing’s crackdown on shadow lending, combined with tightening monetary policy from China’s central banks and heavier regulatory pressure, has left many companies facing a cash crunch and struggling to find refinancing. As a result, there have been more than 20 corporate bond defaults already this year in China – and this is expected to continue as additional bond repayments come due and new reforms kick in. This does not necessarily suggest that an unmanageable cascade of defaults is looming. The aggregate size of the recent defaults is still relatively small (around $2.5 billion). Meanwhile, firms have been adjusting to the new reality being imposed by Beijing. Beijing will relax its deleveraging campaign if the threat of contagion becomes too large.
Title: GPF: China taps on the brakes for investment
Post by: Crafty_Dog on June 20, 2018, 06:43:21 AM
China Taps the Brakes on Investment
Jun 20, 2018
By Xander Snyder

For China, keeping economic growth sustainable keeps getting harder and harder. Last week, the Chinese government released a report that showed the annual growth of domestic fixed asset investment hit its lowest point in 22 years during the period from January to May. At almost 45 percent, investment is the largest component of China’s gross domestic product (ahead of consumer spending and exports). China needs to keep building construction and development projects to prevent a cyclical downturn from threatening employment and social stability. A slowdown in investment, therefore, portends a general economic slowdown. It’s important to understand its scale and what caused it.

Fixed asset investment is a broad category that encompasses all sorts of investments, including agriculture, construction and manufacturing, and infrastructure and services, so long as the investment is toward a physical asset. In China’s case, much of the reduced growth is a result of a slowdown in infrastructure investing (to 9.4 percent in the first five months of 2018, compared with 20.9 percent over the same period last year), much of which comes from China’s local governments.
 
(click to enlarge)

China’s local governments are strapped for cash because Beijing is trying to rein in debt in its financial system. China’s happy growth story in the past few decades was made possible to a substantial extent by massive credit growth, which helped provide the capital for development. But that approach has a darker side: It fuels a property bubble that, should it burst, can wreak havoc on the economy.

Among the many financial hazards posed by the complex interconnectedness of financial and non-financial institutions in China and their lending to the real estate industry, local governments are a unique threat to Beijing’s goals. Local governments derive tax revenue from land transactions (technically, from the transfer of land use rights) to property and infrastructure developers. More credit for developers means real estate and construction companies can afford to buy more land at higher prices, and thus local tax revenue rises.

Local governments have tried to line their own pockets by getting more credit into the hands of developers. Technically, local governments cannot take on debt, so they have established so-called local government financing vehicles, whose affiliations to local governments are usually elaborate and hazy. These entities are often development companies, which take on debt and use that money to purchase land and pay local government taxes on the transfer. In essence, local governments are borrowing to fund their own tax income.

This scheme has created some obvious problems for Beijing. For starters, it has resulted in debt that is less transparent, such that the true scale of liabilities has been difficult to discern. Second, it’s a challenge to Beijing’s centralized authority. Local government officials are willing to borrow money now since they can implement more initiatives with the additional tax revenue, with the hope of moving on to a more important official position by the time the debt comes due. But with so much riding on its success with debt alleviation, Beijing cannot afford to have local officials defying its directives on borrowing activity. It makes bureaucrats and local bigwigs too powerful and makes Beijing appear too weak to manage them. The central government has needed to bring what remains of local power under its thumb and stamp out opposition to its national plans. Its deleveraging campaign, which has restricted the amount of credit available to local governments, is one way Beijing is bringing local governments to heel.

But it is not just local governments that are facing tighter credit. Beijing recently rolled out restrictions on wealth management products, a shadow banking security that contributed to the growth in opaque and difficult-to-assess securities. WMPs are often “off-balance-sheet” items, meaning banks do not report them, even if they own affiliated entities that issue the WMPs. This lack of transparency meant that Beijing couldn’t even understand the true scale of its problem. No longer – after forcing greater transparency in this market, Beijing has issued new regulations that are significantly decreasing the issuance of WMPs (by 20 percent in April on a month-over-month basis), and funneling that money toward other types of securities that are more transparent and less risky and are required to be reported by banks (“on-balance-sheet” items). And it’s not just WMPs that are falling. Total social financing – a broad measurement of credit issuance in China’s economy – fell by almost 50 percent from April to May to 761 billion yuan (about $120 billion).

All this said, it’s important to keep in mind that slower fixed asset investment growth doesn’t mean investment is declining. It’s simply growing less quickly. This is clearly not good for China’s growth prospects, but it’s a necessary part of the process.
The post China Taps the Brakes on Investment appeared first on Geopolitical Futures.
Title: Stratfor: China weighs commercial growth against government control
Post by: Crafty_Dog on June 20, 2018, 06:46:41 AM
Second post


Jun 20, 2018 | 09:00 GMT
3 mins read
Bending the Internet: China Weighs Commercial Growth Against Government Control
A demonstrator shows support for the Chinese government at a counterprotest held in response to an Amnesty International demonstration over human rights abuses and online censorship in China.


    China's government will try to drive economic growth with the Internet Plus initiative, a plan to integrate innovations such as automation, big data, artificial intelligence and the internet of things into all aspects of the country's economy.

    In doing so, Beijing will maintain a firm hand over the internet using an array of strict laws and interventions.

    The Chinese state, however, will also try to avoid restricting tech companies to the point of discouraging the innovation it needs to bring Internet Plus to fruition.



From a Western perspective, the internet in China is as locked-down as it gets. The country's massive firewall has been filtering global content for decades, and the Communist Party is as committed as ever to centralizing control of the internet and the information it transmits. To achieve that end, the Chinese government uses every trick in the book, deploying bots on social media platform Weibo — where the automated accounts make up an estimated 40 percent of the user base — devising rules to govern internet use and arresting violators.

The Big Picture

The internet is constantly evolving — and with it, national and global policies to regulate the technology's use. Unfiltered access to and unmonitored movement of information pose a strategic risk for many states. Now that most countries have roughly 25 years of experience honing their strategies to handle the freedoms and cultural changes that the internet unleashed on the world, their tactics for manipulating its use are becoming more sophisticated. This is the third installment of a five-part series examining the policies and tactics Iran, China, Turkey and Russia have devised to mitigate the threats — and exploit the opportunities — of the internet.

Yet Beijing considers the internet an opportunity as much as a threat. The economic incentive to keep it free enough to foster innovation is huge for China. Some of the world's most technologically proficient internet and tech firms, in fact, operate behind the "Great Firewall." The rise of companies such as Baidu, Alibaba and Tencent has helped sustain China's economic growth, and their continued success is a central component in the country's long-term online strategy, dubbed Internet Plus by Chinese Premier Li Keqiang.

Launched in 2015, Internet Plus is a five-year plan to integrate technologies such as automation, big data, artificial intelligence and the internet of things into nearly every aspect of China's economy. The government will maintain a firm hand over the process and is even using its internet monitoring to build a social credit system for evaluating its citizens. Since the internet will be central to China's economic growth from now on, striking the right balance between control and innovation in its internet policy will be crucial for Beijing.

A chart shows the trends for Freedom on the Net scores for Russia, China, Iran, Turkey and the United States.

As President Xi Jinping relies on China's formidable cybersecurity laws in his quest to centralize power and cement the Communist Party's supremacy, he will also have to weigh the effect of Beijing's bureaucracy on innovation. The question won't be so much what freedoms citizens have online, but rather how much the hoops Chinese businesses have to jump through limit the connectivity they need to thrive. So far, the government has left domestic internet companies to grow practically unchecked while ensuring that the Communist Party and its support play a central role in their success. But if the interests of the tech sector diverge from those of the Party, the state will be able to step in as needed, thanks to its control over the internet, and the assortment of tools Beijing has cultivated to enforce it.
Title: GPF: Rumors , , ,
Post by: Crafty_Dog on July 22, 2018, 09:27:27 AM

Rumors continue to swirl of a political uprising in China. We touched on them earlier this week, but we didn’t delve into them because they were unverified and, frankly, hard to believe. And while they remain unsubstantiated, it behooves us to consider exactly what has been said and why.

Last Friday, online reports indicated that gunfire had been heard for roughly 40 minutes in Beijing near the Second Ring Road. The reports claimed it was a violent spasm by groups that sought to overthrow Chinese President Xi Jinping. The following day, French public radio reported it had heard rumors that former Chinese leaders, including Jiang Zemin and Hu Jintao, had allied with other disgruntled Chinese officials in an attempt to force Xi to step down. A Hong Kong tabloid went so far as to suggest that Wang Yang, chairman of the Chinese People’s Political Consultative Conference, might be the compromise leader next in line.

Like we said, these stories are hard to believe. China is good at censoring its media, but it stretches the imagination to think there would be politically motivated violence in the Chinese capital with nothing but a few blips on social media to show for it. What’s not hard to believe is that there is dissent within the Chinese ranks. A recent protest of army veterans had to be put down by force. The U.S.-China trade war is putting pressure on China’s economy – so much so that Xi’s campaign to reduce debt has been deprioritized as Beijing moves to support growth. China has gagged the media over the coverage of the trade war. It likes to project confidence to the world, but the political, economic and cultural transformation it has planned (and has already begun to execute) inevitably leads to dissent. This is why we will at least notice even the most outlandish headlines.

As for the rumors themselves, there are a few possible explanations for them. The first is that they are wholly unfounded, the products of disinformation spread by those who want to make the government look weak. The rumors are specific but are backed up by nothing, so this explanation makes some sense.

Another possibility is that Xi is indeed encountering serious resistance within the Communist Party – he has, after all, eliminated term limits and emphasized deleveraging at the expense of economic growth – and that Xi has been forced to compromise on the goals he laid out for China late last year. If this is true, it suggests Xi will be forced to blink in the trade war earlier than expected. The third possibility is that the rumors were a Chinese government plant designed to flush out opposition to Xi’s rule.

The likeliest explanation, though, is that the rumors are sensationalism. Some went so far as to suggest that Xi hasn’t been seen in weeks – except that he just landed in the United Arab Emirates on Friday. If Xi is under pressure, he is showing no signs of it. China and the UAE released a plan for a comprehensive strategic partnership to wide fanfare in Chinese media. In the past 24 hours alone, moreover, the Chinese government has released a new tax plan meant to increase control over collection, published an op-ed written by Xi in a Senegalese newspaper (and republished by Chinese news agency Xinhua), and announced its intention to invest around $100 million in North Korean infrastructure.

Still, China is under immense pressure as Xi attempts to reform the economy while fighting a trade war and solidifying his position as dictator-in-chief. Even the faintest whisper that a coalition may be forming against the newly appointed emperor deserves the closest possible scrutiny and requires an extremely close watch on all internal Chinese issues – as close a watch as can be affected in a country that has become an expert at projecting nothing but blue skies.
Title: Stratfor: Chinese debt problems
Post by: Crafty_Dog on August 16, 2018, 05:02:25 PM
I have flagged the risk of this sort of thing for several years now.
================
What Happened

On Aug. 15, the Sixth Division of State-Owned Asset Management, a military-affiliated company in western China's Xinjiang region, said that it had made up the repayment of bonds worth 500 million yuan ($73 million), two days after it missed the deadline to repay the loan that could have left the company in default. According to a statement, the local government financing vehicle (LGFV) made the overdue principal and interest payment on the morning of Aug. 15, narrowly escaping the fate of being the first government-linked financing vehicle to default in a decade.
Why It Matters

Despite the turn of events, the incident has increased concern about the growing risk of default on the enormous debts of many local governments and corporations, especially as the economy continues to slow. Corporate defaults are already on the rise this year, due to Beijing's deleveraging efforts, which were in effect until quite recently. And the risk to local government-linked borrowing is sharply growing, because of maturing bonds and declining asset returns — particularly in the property market.

The state-owned firm's late repayment prompts questions about how the company was able to raise so much money; it's unclear whether the firm's parent company, the Xinjiang local government or the state played a role in the repayment, given the implicit Chinese government guarantee on these bonds. With several similar LGFVs now under stress, it bears watching to see how the authorities manage the default and market confidence.

Reining In Debt

China is trying to slowly resolve the massive debt it has accumulated at a local level as a result of the 2008 global financial crisis. Since that time, local financing vehicles have served as the primary way for local governments to raise money and support their economies, especially since they were prohibited from directly borrowing from banks and from raising large bonds. Over the years, these pseudo-corporations continued to proliferate, and their total debt has reached as much as 20 trillion yuan and accounts for about half of local government-related debt (including official local bonds) — or a quarter of China's gross domestic product.

Over the past decade, LGFVs have commonly raised credit through various types of off-balance-sheet loans from banks, insurers or other financial institutions, promising high returns and often an implicit guarantee from local governments or real estate as collateral. However, this method left LGFVs largely unregulated. Over the past two years, Beijing has been working to limit these shadow financial vehicles, and the result is that much of the local government-linked debt is under major stress.

Although Beijing recently turned again to stimulus spending and easier credit, more defaults are still expected from local financing vehicles and other government-related financing platforms. Adding to the challenge is the fact that a lot of debt will be maturing in the coming months and will likely put stress on some central and western regions and provinces that have weaker economic foundations and higher debt burdens.

Given the likely sequential defaults and challenges to government-linked bonds, some financial experts, local governments and investors anticipate that political authorities will ultimately assist in preventing defaults. At this point, Beijing must walk a fine line financially, balancing its policy tools and further refinance challenges to these government-linked debts with the risk of contagion effects. 

What to Watch For

    Did the Xinjiang government or the state play a role in the repayment?
    The Sixth Division of State-Owned Asset Management will have another 500 million yuan bond mature in the coming week. How will it manage that repayment?
    How will other central and western regions manage their local debts, and will defaults spread?
Title: WSJ: China lays the groundwork for becoming #1
Post by: Crafty_Dog on November 05, 2018, 03:16:48 PM
This is a major piece:

https://www.wsj.com/articles/chinas-newest-bid-for-influence-runs-through-the-wests-backyard-1541435003?mod=hp_lead_pos7
Title: Re: China's house of debt cards
Post by: DougMacG on November 13, 2018, 07:22:34 AM
Trump trade War May expose China's economic House of Cards.

https://edition.cnn.com/2018/11/09/economy/china-economy-risks/index.html
Title: GPF: Trade War a side show to Financial Crackdown
Post by: Crafty_Dog on November 21, 2018, 04:39:00 AM
Very interesting!

====================

China’s financial crackdown may be working too well. According to Rong360 data, yields on wealth management products issued by Chinese banks during the second week of November dropped to 4.36 percent, the lowest level in more than a year and a half. The drop is due to regulations issued in April meant to convince investors, once and for all, that the government will not rescue the risky funds should they go belly up. Meanwhile, according to China’s banking regulator, growth in bank assets continued to slow in the third quarter to 6.96 percent, compared with 8.68 percent a year ago. These are just the latest signs that Beijing’s war on reckless lending and speculative investment are working as intended. But the measures, which officials said Tuesday will continue, have produced unintended consequences. The banking sector, for example, is still struggling to get liquidity to the private sector, which receives just around 25 percent of bank loans, even though it makes up more than 60 percent of the Chinese economy. Short of reinstituting massive the stimulus measures that followed the 2008 financial crisis, Beijing is unsure how to proceed, so it’s experimenting to see what works. On Monday, Beijing announced new measures to support private sector bond issuances, and state media reported that more than 300 billion yuan in new bailout funds have entered the market. As we’ve said before, Beijing’s financial crackdown is a far bigger drag on growth than U.S. tariffs. The trade war is a side show next to China’s war on its internal dysfunction.
Title: Re: GPF: Trade War a side show to Financial Crackdown
Post by: DougMacG on November 21, 2018, 06:40:21 AM
Very interesting!

====================

China’s financial crackdown may be working too well. According to Rong360 data, yields on wealth management products issued by Chinese banks during the second week of November dropped to 4.36 percent, the lowest level in more than a year and a half. The drop is due to regulations issued in April meant to convince investors, once and for all, that the government will not rescue the risky funds should they go belly up. Meanwhile, according to China’s banking regulator, growth in bank assets continued to slow in the third quarter to 6.96 percent, compared with 8.68 percent a year ago. These are just the latest signs that Beijing’s war on reckless lending and speculative investment are working as intended. But the measures, which officials said Tuesday will continue, have produced unintended consequences. The banking sector, for example, is still struggling to get liquidity to the private sector, which receives just around 25 percent of bank loans, even though it makes up more than 60 percent of the Chinese economy. Short of reinstituting massive the stimulus measures that followed the 2008 financial crisis, Beijing is unsure how to proceed, so it’s experimenting to see what works. On Monday, Beijing announced new measures to support private sector bond issuances, and state media reported that more than 300 billion yuan in new bailout funds have entered the market. As we’ve said before, Beijing’s financial crackdown is a far bigger drag on growth than U.S. tariffs. The trade war is a side show next to China’s war on its internal dysfunction.

Interesting that they compare the financial issues with the trade war as if they are unrelated. 

In the US, the trade war is testing the resilience of the economy, the markets and the people.  China's economy is 6 times(?) more reliant on the trade and an unknown multiple less resilient and more vulnerable to their debt issues.

Forbes looks from another angle:  "175.6% of China’s overall trade surplus last year related to sales to the United States.  That’s up from full-year figures for the three preceding years: 149.2% for 2010, 115.7% for 2009, and 90.1% for 2008."

From the GPF article:  "the private sector, which receives just around 25 percent of bank loans, even though it makes up more than 60 percent of the Chinese economy".

I would say they are tinkering with, not declaring "war on  internal dysfunction."  75% of bank loans go to the unproductive, state owned sector.  What could go wrong with that?

Economic inflections happen at the margin.  How does their debt solvency go if sales fall 1%, 3%, 10% or if trade is cut off altogether with their largest export market?

https://www.reuters.com/article/us-china-markets-goodwill/china-investors-dump-once-acquisitive-firms-on-write-down-fears-idUSKCN1NO0P2
https://www.scmp.com/business/china-business/article/2173881/chinas-tougher-delisting-rules-send-stocks-problematic-and

Debt over-reliance and other house of cards financial issues are reasons for Xi to cut a deal with Trump, sooner rather than later.  The last thing an oppressive totalitarian dictator of 1.4 billion people needs is financial and economic unrest.
Title: The Chinese Goolag
Post by: Crafty_Dog on November 25, 2018, 03:38:55 PM
https://www.bloomberg.com/news/articles/2018-11-21/beijing-to-judge-every-resident-based-on-behavior-by-end-of-2020?fbclid=IwAR0anodbMEwanEG40qXZ7ZnhCtHHIAeUo7EX0QxoOGs8JOXIP47s2_URCsQ



https://www.independent.co.uk/news/world/asia/china-social-credit-system-flight-booking-blacklisted-beijing-points-a8646316.html?fbclid=IwAR2CLnBWSiTFKT-oePzZOLgM2twuPV8j1ncac0JuOyoLWexJ5XTmT59dbdk
Title: Intresting read on China's trajectory
Post by: Crafty_Dog on November 25, 2018, 06:29:09 PM


https://www.bloomberg.com/new-economy-forum
Title: Lippmann Gap
Post by: bigdog on December 03, 2018, 02:06:50 PM
https://warontherocks.com/2018/12/the-lippmann-gap-in-asia-four-challenges-to-a-credible-u-s-strategy/
Title: China - Russia
Post by: ccp on December 03, 2018, 05:43:46 PM
https://pjmedia.com/spengler/a-sino-russian-greater-asia-from-shanghai-to-lisbon/
Title: China stepping up its military buildup 15 yr sooner to 2035
Post by: ccp on December 03, 2018, 06:02:47 PM
https://freebeacon.com/national-security/china-speeding-large-scale-military-buildup/
Title: Re: Lippmann Gap
Post by: DougMacG on December 05, 2018, 02:48:18 AM
https://warontherocks.com/2018/12/the-lippmann-gap-in-asia-four-challenges-to-a-credible-u-s-strategy/

Bigdog, thank you, a good serious read but my impression is that the author does not acknowledge the concept of an inflection point in mathematics.
Title: Re: China
Post by: Crafty_Dog on December 05, 2018, 03:01:42 AM
Yes, glad to see Big Dog here again.
Title: China's growing arctic presence-- polar silk road
Post by: bigdog on December 07, 2018, 06:42:23 AM
https://www.wilsoncenter.org/article/chinas-growing-arctic-presence
Title: How to read Chinese economic data
Post by: Crafty_Dog on January 04, 2019, 12:42:52 PM


http://www.aei.org/wp-content/uploads/2019/01/Chinas-economy.pdf

Title: Bloomberg: Donald Trump has some surprising allies in China
Post by: Crafty_Dog on January 13, 2019, 10:39:14 PM


https://www.bloomberg.com/opinion/articles/2019-01-13/donald-trump-has-some-surprising-allies-in-u-s-china-tariff-war?fbclid=IwAR0BvUte8X1mDIElL85VoKzZIydP0dneA5eO4cq5hDRo4gXxf3WBieScdfI
Title: Re: Bloomberg: Donald Trump has some surprising allies in China
Post by: DougMacG on January 14, 2019, 04:18:27 AM


https://www.bloomberg.com/opinion/articles/2019-01-13/donald-trump-has-some-surprising-allies-in-u-s-china-tariff-war?fbclid=IwAR0BvUte8X1mDIElL85VoKzZIydP0dneA5eO4cq5hDRo4gXxf3WBieScdfI

"Some wealthy entrepreneurs are moving their money offshore because they fear their tainted earnings will be confiscated."

Better get their familes out too.

Great story.
Title: Re: China
Post by: ccp on January 14, 2019, 04:50:36 AM
"great story"

especially coming from Bloomberg.

I am getting their mag now - just ordered something and offered their mag for free
and after looking through part of the first two issues there is was not any pro Trump offerings that I could find.

Title: GPF: Chinese Economy hurting, threat from housing sector
Post by: Crafty_Dog on March 01, 2019, 08:31:04 AM


Bad signs for the Chinese economy. Chinese leaders will kick off a two-week economic policy summit next week. A slew of negative data released this week underscores yet again just how much they’ll have to talk about. On Thursday, China’s official composite purchasing managers’ index, which gauges activity at mostly large, state-owned firms, fell to 52.4 in February from 53.2 in January – the lowest reading since Beijing began publishing the index two years ago. (Anything below 50 reflects a contraction.) Manufacturing dipped further into negative territory, dropping to 49.2 from 49.5 a month earlier, while services slowed from 54.7 to 54.3. (Part of this can be explained by an annual slowdown that accompanies the Lunar New Year holiday.) Meanwhile, data from China UnionPay shows credit card defaults surpassing 4 percent in at least a half dozen provinces. A survey of Chinese bankers showed widespread concern about the growing risk of a sudden spike in nonperforming loans. And official data showed prices for new housing in first-tier cities rising just 0.4 percent in January, compared to 0.9 percent in December, while prices for preowned houses fell 0.1 percent – the fourth consecutive month of decline. If real estate in China collapses, everything collapses.
Title: Gordan Change: Ethno-Fascism and The Coming Collapse of China
Post by: Crafty_Dog on April 06, 2019, 05:32:07 AM
https://www.gatestoneinstitute.org/13995/china-third-reich?fbclid=IwAR1ufq-cB5m1bRzB69NWYyn_uzjZUtzPAAaDL811NROUwFDdzMzEp5XlLJs
Title: Stratfor: Can China take care of its elderly?
Post by: Crafty_Dog on April 23, 2019, 03:53:40 AM
An issue which I have repeatedly mentioned over the years:

April 20, 2019



By Phillip Orchard


Can China Take Care of Its Elderly?


Beijing is facing a pension crisis of its own making.


China’s elderly may soon be grumbling. Last week, the Chinese Academy of Social Sciences released a study estimating that China’s main state pension fund could be exhausted by 2035 – in other words, before workers born in the 1980s retire. The previous day, Beijing announced that China’s seven wealthiest provinces will, for the first time, start helping foot the bill for local pension funds in poorer regions already running dry. The immediate issue may be fixable. But the underlying problems will get worse before they get better, cutting to the heart of the Chinese Communist Party’s predicament on how to preserve its compact with its people.


 

(click to enlarge)


Where’d the Money Go?
For a nominally communist state, China doesn’t actually have a particularly strong social safety net. Historically, the bulk of the social welfare burdens have fallen either to state-owned enterprises or a patchwork of pension systems run largely by provincial and local governments. A job with a state agency or state-owned enterprise, for example, was long referred to as having an “iron rice bowl” – meaning a guaranteed pension and virtually free healthcare and housing. Until China’s first labor law came into effect in 1995, unproductive state workers were difficult to fire, meaning they essentially enjoyed these benefits for life. Over the past two decades, however, China has sought to gradually pare down the state sector. By 2017, partially as a result, state-owned enterprises accounted for around 15 percent of employment across China, down from about 80 percent in 1978.

As jobs moved increasingly to the private sector, provincial and local government pensions were expected to pick up much of the pension slack. But this created a fragmented, underfunded system plagued by loopholes, conflicts of interests, corruption and notoriously poor collections enforcement. A 2018 survey by 51Shebao, a social insurance information provider, claimed that more than 70 percent of Chinese firms were behind on their social insurance contributions.

Adding to this problem, a shift triggered by China’s state-sector reforms and China’s resulting accession to the World Trade Organization has hammered provincial and local funds. As the most lucrative private sector industries sprouted up in the export-centric provinces along China’s southeastern coast, Chinese migrant workers followed. Yet, China has been slow to abandon its Mao-era “Hukou” household registration system, which forces most migrant workers to obtain health, education and pension services only in their home province. As a result, the firms employing migrant workers are often paying pension contributions to coastal governments, while poorer, interior governments are still often on the hook for these workers’ retirement. According to the Chinese Academy of Social Sciences, just seven of China’s 32 provinces account for nearly 70 percent of all pension contributions. Guangdong alone receives as much funding as the rest of the ten wealthiest provinces combined.

Already, pension systems are in crisis across China’s interior provinces and in the industrial “rust belt” in the northeast. Last year, for example, a funding shortfall forced authorities in Heilongjiang province to delay pension payments. The Chinese Academy of Social Sciences estimates as many as 16 provinces will fall short this year. The social risk associated with this problem has been made starkly clear over the past four years by a surge of protests by People’s Liberation Army vets, many of them upset about being denied pensions and other benefits.


 

(click to enlarge)


The issue is likely to get quite a bit worse, thanks in no small part to China’s infamous one-child policy. In short, China is getting old before it gets rich, with more than a third of China’s population expected to be older than 60 within 30 years. And retirees are living longer, too. The predictive power of demographics is often overstated. Nonetheless, China’s population curve poses staggering problems for the pension system. In 2018, there were 2.8 contributors for every retired person. By 2050, according to official estimates, this ratio will fall to 1.3 to one. With China facing a prolonged economic slowdown, Beijing will find itself increasingly having to choose whether to rob Peter or to pay Paul. Last month, for example, Beijing moved to address a private sector credit crunch with a $300 billion package of tax and fee cuts – including sharp cuts to pension contribution requirements.


 

(click to enlarge)


Bigger Problems

Narrowly speaking, the pension issue itself still may be fixable; it’s effectively a policy transmission problem. There’s enough money floating around, at least for the time being; China just needs to iron out major kinks in the system to get the funds where they’re needed. Toward this end, it has initiated some Hukou reforms, including new measures making it somewhat easier for migrant workers to register in second- and third-tier cities (where the government wants more workers to move anyway). It’s gradually doing away with family planning controls. It’s forcing state-owned enterprises to transfer 10 percent of their shares to government pension funds, while also allowing the funds to start investing overseas. Meanwhile, China has been taking steps toward more streamlined, centralized pension systems. On Jan. 1, for example, it created a national contributions pool and transferred responsibility for collections away from local governments, paving the way for the provincial transfers announced last week. To soothe disaffected PLA veterans, it launched a national-level veterans affairs administration last year.

China’s situation is not entirely unique. U.S. Social Security is likewise facing a funding shortfall stemming, in part, from demographics. And in nearly every country, wealthier regions are forced to subsidize livelihoods in poorer ones. In 2015, New York received 83 cents for every dollar its taxpayers sent to Washington, while Mississippi got $2.13.

But two broader challenges highlighted by the pension crisis are particularly intractable in China. One is the central government’s historical struggle to keep the wealthier coastal regions aligned with the rest of China – one of the country’s core geopolitical imperatives. The more acute coast-interior disparities become, the more wealth the coasts will be asked to transfer to the interior, and the more coastal resistance to Beijing’s writ there’s likely to be.

The second is the scope of the grand bargain the Communist Party has made with the Chinese public – and the extraordinary degree of risk embedded in this social contract. Essentially, Beijing gets full rights to micromanage the Chinese people. In exchange, it takes on full responsibility for the welfare of the people. In other words, when the state demanded they do so, hundreds of millions of Chinese citizens gave up the right to have multiple children who, in keeping with core Chinese values, would see to their care in their golden years. Now, they’re finding the state may force them to spend these years destitute and alone. When Beijing scaled back the state sector, hundreds of millions left the interior to work in manufacturing on the coasts, propelling China toward untold wealth and global influence. Now, they’re finding that the state has neglected to make those who’ve gotten rich off their labor contribute their share to the social safety net – and that Hukou, a system designed for social control, is preventing them from getting what’s theirs.

Risky Bargain

Beijing can make a persuasive enough case that an economic slowdown is inevitable due to forces beyond its control. It’s capable of lowering public expectations of infinite growth and deflecting the responsibility of party mismanagement for the hard times to come. Xi and other senior leaders are constantly warning that China is not yet rich, that the project of national rejuvenation means constant preparation for hard times ahead. But Beijing cannot easily explain away problems plainly rooted in policy myopia, corruption and systemic dysfunction. And polls routinely show that what Chinese people want most from the party is not a headlong pursuit of national prosperity, but rather clean and responsive governance tailored to preserving the grand bargain.

This is why, under Xi, Beijing’s emphasis has shifted toward things like “quality growth,” pollution, corruption and social welfare. Xi has approached these sorts of issues with a heavy hand, focusing primarily on purifying the system of corrupt and recalcitrant elements. This is, in part, because so many other factors darkening China’s outlook are outside his control. He also presumably realizes that, as China’s external woes intensify, the party will need to prove that the power it has appropriated from the people is being wielded in service of their demands.

Ironically, though, this has meant strengthening the role of what Beijing can most directly control – the machinery of the state – and further narrowing space for political, civil and economic freedoms. Under Xi, Beijing has been strengthening state-owned enterprises, centralizing the bureaucracy, embedding party watchdogs at private firms and exploring new ways to supervise society. This, in turn, means the state is implicitly agreeing to shoulder ever more responsibility for the public’s welfare – and more of the public’s ire when it falls short.


Title: GPF: China's great wall of debt
Post by: Crafty_Dog on April 23, 2019, 01:57:58 PM
second post

China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle
By Dinny McMahon

The trickiest thing about writing anything lively and persuasive about the Chinese economy is just how many interlocking problems there are. Nearly any one of them could trigger a cascading crisis. Beijing’s success or failure in reining in shadow lending, for example, will determine the future of the private sector, local governments and countless asset bubbles. A collapse in any of these could spread to the broader banking system or, perhaps worse, property markets, which affect just about every corner of the Chinese system.

Put simply, China is locked in a high-stakes game of financial “whack-a-mole,” with staggering geopolitical consequences riding on the result. To explain the risks embedded in any particular one of them, ideally you’d explain them all. But weaving together a complete picture in fewer than 2,000 words — without rendering it unreadable with jargon and cliche — is a skill I’ve yet to master.

In “China’s Great Wall of Debt,” Dinny McMahon does the trick superbly, albeit in a brisk 285 pages. It ties together nearly all of China’s lurking demons — from shadow banking to ghost cities to zombie firms — explaining the underlying forces and pathologies fueling their spread, as well as Beijing’s limited options for dealing with them without risking an overcorrection that only accelerates the arrival of a crisis. It’s peppered with insights, illustrations and anecdotes, and at times even delves into a sort of black humor befitting the depth and scale of China’s pathologies. I listened to the first half of it aboard a kayak during a long day of bass fishing, which speaks to its pace and readability rare for books on the subject matter. I liked it so much, I went back and read it again the old fashioned away.

Phillip Orchard, analyst
Title: Stratfor: China's BRI
Post by: Crafty_Dog on April 26, 2019, 07:23:17 AM
    Mounting concerns over Beijing's Belt and Road Initiative will not deter China from doubling down on its overseas infrastructure expansion, as the country seeks to expand its export market amid an economic slowdown.
    Beijing, however, will seek to allay the concerns of participating countries by renegotiating costs and attracting third-party investors.
    The developing world could also gain more options in terms of infrastructure projects as China's major competitors, including the United States and the European Union, also plan similar initiatives.

Nearly six years since its inception, the Belt and Road Initiative, the sprawling Chinese program to connect Eurasia by land and sea, has generated enthusiasm and alarm in equal measure. The initiative's focus on infrastructure development, as well as Chinese financing options that are more enticing than those offered by many international institutions, has provided cash-strapped countries with their only effective means to improve infrastructure. From landlocked Ethiopia and Laos, to the ports of Piraeus in Greece and Doraleh in Djibouti, China has constructed and financed railways, ports and other facilities, brightening the prospects of local economies. These undertakings are just a few of the multitude of projects in the BRI, which China is bankrolling with $70 billion in investments and $400 billion in loans.

The Big Picture

China's Belt and Road Initiative entered its sixth year with a lot of momentum, but the project is also generating growing resistance and skepticism about the country's debt financing and its strategic intent. China's ability to react to these challenges — which include rival initiatives from major global competitors — will determine the fate of the project in the coming years.



On the flip side of the coin, however, the BRI has triggered local pushback, resulting in setbacks for some projects and sparking resistance from rival nations. The sheer size of many BRI plans has generated growing concern over financial sustainability, commercial viability, so-called "debt traps" and the large number of Chinese workers descending upon host countries to build some projects. This combination of anticipation and alarm will form the backdrop of the second Belt and Road summit currently underway in Beijing. Beijing will tout this year's attendance — at least 37 countries had planned to send representatives, up from 29 in 2017 — plus a broader geographic reach, as well as a longer list of signatories, including Italy, as proof of the initiative's progress. The concerns, anxieties and objections to the BRI, however, have spurred China's competitors to draft their own infrastructure initiatives in a bid to prevent more countries in Eurasia from falling under Beijing's sway. Ultimately, the degree that China manages to respond to the concerns, adjust its approach and adapt to greater international competition to fund infrastructure projects will determine the success of the initiative for years to come.

Sweetening the Pot

According to the RWR Advisory Group, at least 234 BRI projects had encountered problems by 2018 as a result of public protests, shifting political sensitivities, differences over financing and other issues. Malaysia, Pakistan and Myanmar, for instance, have sought to reduce the costs of their cooperation with Beijing, while others, such as Nepal, have canceled select projects. China's opaque approach in dealing with these projects, meanwhile, has also engendered skepticism about the potential for local corruption.

Elsewhere, Chinese companies have been accused of corruption and collusion with local politicians in Equatorial Guinea, Malaysia and Bangladesh in connection with large projects, while political players in Sri Lanka, the Maldives and Zambia have questioned a number of aspects of the BRI. Farther afield, China's approach and its overt interest in the European periphery, India's neighbors, the former Soviet sphere and even the South Pacific have paralleled its geopolitical strategy, fueling concerns and anxieties among regional powers like the United States, European Union, India, Australia and (albeit to a lesser degree) Japan and Russia. Such concerns have prompted these powers to launch similar economic and infrastructure initiatives to compete with the BRI. Beijing's competition to build infrastructure is fiercest when it comes to Washington, which has worked to directly counter the East Asian giant by dangling the prospect of $60 billion in funding to countries in the Indo-Pacific region.

This map shows countries with at least some participation in China's Belt and Road Initiative

These difficulties, however, have done little to deter Beijing from intensifying its commitment to the initiative, which continues to be a domestic and foreign policy priority. China is also striving to line up more countries, especially in the developed world, to participate. For China, beyond the well-documented goal of improving the country's overland and maritime links with the rest of the world, the initiative is even more important in the current strategic context.

Because its domestic economy is slowing at a time when its top export destination — the United States — is also straining, Belt and Road has become one of China's few means of cultivating export markets, as well as absorbing surplus labor and industrial capacities. Indeed, thanks to the initiative and Beijing's support, China's state-owned cement and steel producers have widened their footprint in Central Asia, Latin America and Southeast Asia, while Chinese-produced cement, steel and aluminum have flooded into countries that are building large infrastructure projects. Ultimately, with Washington striving to counter Beijing anywhere and everywhere, China understandably sees the initiative as a diplomatic and strategic buffer that helps compensate for its geopolitical limitations.

This map show trade flows in 2018 from China to countries participating in the Belt and Road Initiative

Pushing Back Against the Pushback

With these interests and concerns in mind, Beijing has quietly modified its approach to ease resistance. Over the past six months, the Chinese government has sat down with host countries to discuss project costs and financing terms. In negotiations on key BRI projects with Malaysia, China offered a 10 percent reduction on the $20 billion East Coast Rail Link; likewise with Myanmar, it substantially downsized the cost of the deepwater port of Kyaukpyu from $7.3 billion to $1.3 billion. Beijing's gesture has opened the door for discussions on other projects, as partners like Ethiopia, the Maldives and Pakistan are lining up to renegotiate the terms of their deals.

Beijing has also instructed its firms to take steps to boost oversight of their overseas investment activities, particularly in regard to risk assessments, environmental appraisals and respect for local sensitivities.

Beijing has quietly modified its approach to the Belt and Road Initiative to ease resistance.

Meanwhile, the Chinese government appears to have become more open to external investments and financing for the initiative. When Pakistan invited Saudi Arabia to join the $62 billion China-Pakistan Economic Corridor (CPEC), Beijing expressed some initial displeasure before welcoming the development. Riyadh's participation (Abu Dhabi has now joined the CPEC as well) will likely open the door to more third-party investments from countries that have amicable ties with Beijing.

China, however, is also trying to court its rivals in an effort to remove obstacles and smooth resistance to its initiative. As part of China's recent detente with Japan, the two countries have discussed joint projects along the BRI, possibly in Southeast Asia or Europe. China, meanwhile, has approached core European powers including Germany to discuss the possibility of joint projects in Eastern and Central Europe, where both Berlin and Brussels believe Beijing's activities threaten the bloc's unity. Naturally, however, China faces a risk in opening up the project to third-party countries: a loss of control over financing. To date, state-backed Chinese companies and financiers are estimated to have provided over 80 percent of the funding for the BRI.

Beijing's openness to third-party investments reflects its growing acknowledgement that domestic funding alone cannot satiate the demand and would even threaten its own companies and banks if they assume all financial risk on their own. Indeed, with domestic state-owned enterprises and banks already burdened by large debts, serious debt defaults on BRI projects would hurt Chinese companies as much as it would hurt the host countries.

Still, despite China's move to cooperate with Japan and the European Union, lingering distrust and underlying competition have limited any concrete progress on joint projects. Ultimately, Beijing is likely to remain extremely cautious about external investment and financing given that its tight control over investments and funding has been a boon for its exports, labor force and ability to access precious commodities. As a result, Beijing will find itself unwilling to cede too much ground — especially at a time when its economy is under stress and it wishes to expand its geopolitical footprint.
Getting in on the Action

The upcoming summit will provide a clue as to how far Beijing is willing to push back against the local and international criticism to defend its signature initiative. Although Japan has cooperated with China somewhat on the BRI, it (along with India) have proposed an alternative to the initiative in Africa. And Australia, as Stratfor noted in a June 2018 analysis, "is pledging an extensive campaign of aid, trade and diplomacy in the South Pacific in the hopes of regaining the position it has lost to China in its traditional backyard." Elsewhere, the European Union submitted its own infrastructure and investment strategy for Asia last year, emphasizing sustainability and rules-based principles to counter China.

But the most direct opposition comes from the United States. As part of its great power rivalry with China, the United States established the International Development Finance Corporation, a mechanism that will distribute $60 billion in capital for infrastructural development. In part, the United States wishes to work with Japan and Australia, as well as the European Union and Canada, to offer alternative infrastructure investments in the Indo-Pacific to counter China's ambitions. Accordingly, Washington has begun engaging in talks with countries involved in large projects, offering consultation on risk assessment and project viability. Indeed, officials from the United States have reportedly assisted Myanmar's government to downsize the deep-water port of Kyaukpyu amid Naypyidaw's concern that its indebtedness to Beijing could compromise the port — something that Sri Lanka has already faced with the Hambantota Port as a result of Colombo's inability to repay its debt to Beijing.

A map showing China's port investments around the world.

As noted in a previous Stratfor analysis, none of these alternative proposals are likely to sideline China's enormous and well-funded infrastructure plan, as they all "lack China's capital, human resources and moral flexibility." But Beijing's willingness to adjust its approach to sustain the initiative, the increased external scrutiny on Chinese projects, as well as rival offers from China's competitors, will provide the developing world with more alternatives for partners. While Beijing has a head start in terms of the BRI, Washington has signaled its intention to muscle in on its major rival's preserve. And over time, as the two expand their competition into the realm of infrastructure, smaller countries will increasingly face a choice between the globe's major superpowers.
Title: I am just not sure I believe all these
Post by: ccp on May 01, 2019, 10:33:47 AM
paleontological findings that come out of China:

https://www.wsj.com/articles/ancient-humans-dwelled-at-great-heights-scientists-find-11556730001
Title: Chinese Demographics: Wifeless men
Post by: Crafty_Dog on May 19, 2019, 06:32:14 AM
Something we have mentioned here previously:

https://www.lifenews.com/2018/05/11/men-in-china-and-india-cant-find-wives-because-71-million-girls-were-killed-in-abortion-or-infanticide/?fbclid=IwAR3-gu_c4--s3bVBhpO2jB-G3wZ3l98oMBQIUdGrRbQ2PlUIMlLV40_MfYo
Title: Re: China
Post by: ccp on May 19, 2019, 09:59:13 AM
was this in part of the one child policy or does female infanticide  occur besides that?
Title: Re: China
Post by: DougMacG on May 19, 2019, 11:30:41 AM
was this in part of the one child policy or does female infanticide  occur besides that?

Yes, that is the bulk of it.

"Seventy million unborn baby girls were aborted—killed in the womb simply because they were female."
https://en.wikipedia.org/wiki/Abortion_in_China#History

In the 1950s abortion was illegal in China.  By the 1970s one child policy was law and by 1975 sex selective abortions had started. 
https://www.scientificamerican.com/article/china-s-new-birth-rule-can-t-restore-missing-women-and-fix-a-population/

https://www.unfpa.org/resources/trends-selective-abortions-girls-india

Leftist women here still think enabling 'doctors' to kill their baby girls 'empowers' women.  Hard to find a more powerful example of cognitive and moral dissonance and denial of heartbeat and feeling-of-pain science.

It didn't help the lives of their boys either!

It was one thing for a child to grow up with siblings and another thing for a generation to grow up with everyone around you an only child boy.

Title: $ flees Chinese stocks
Post by: Crafty_Dog on May 22, 2019, 08:13:31 AM


https://www.theepochtimes.com/global-investors-flee-chinese-stocks-at-fastest-pace-since-2015_2931637.html?ref=brief_News&utm_source=Epoch+Times+Newsletters&utm_campaign=be5981731f-EMAIL_CAMPAIGN_2019_05_22_12_22&utm_medium=email&utm_term=0_4fba358ecf-be5981731f-239065853
Title: Re: $ flees Chinese stocks
Post by: DougMacG on May 22, 2019, 01:48:08 PM
https://www.theepochtimes.com/global-investors-flee-chinese-stocks-at-fastest-pace-since-2015_2931637.html?ref=brief_News&utm_source=Epoch+Times+Newsletters&utm_campaign=be5981731f-EMAIL_CAMPAIGN_2019_05_22_12_22&utm_medium=email&utm_term=0_4fba358ecf-be5981731f-239065853

What part of, you've been caught stealing our technology, they don't understand?  I wonder if Xi has experienced a market shock before.  I hope nothing happens to their little export business.
Title: Re: China
Post by: Crafty_Dog on May 22, 2019, 02:38:33 PM
They've been getting away with it for decades; our tech elite does not care that the tech is being stolen as long as they get mega rich; our government is running up over a $Trillion$ debt a year and will continue to do so as far as the eye can see; President Trump pulled an inside straight to get into office and now trails proven corruptable buffoon Slow Joe by ten points in the polls; the Chinese apparently have bought Duterte of the Philippines; the slo-mo capture of the South China Sea continues apace; and the Chinese get to simulatanously play good and bad cop with regard to the Norks.

And whatever economic pain there is can be blamed on Trump-- it's not like the Chinese people never get to hear non-official positions (thank you Goolag) , , ,
Title: Re: China
Post by: ccp on May 22, 2019, 02:50:58 PM
A guest on John Batchelor was saying how the Chinese have a law that bans technology stealing

but the Communists  simply don't enforce it.

just paying us lip service

Title: Re: China
Post by: DougMacG on May 22, 2019, 05:22:18 PM
A guest on John Batchelor was saying how the Chinese have a law that bans technology stealing

but the Communists  simply don't enforce it.
just paying us lip service

We reported on the new law in the trade thread:
https://dogbrothers.com/phpBB2/index.php?topic=2563.msg115139#msg115139

In the following post, GPF says "The new law is vague..."

Good for Trump to stop everything instead of entering into a flawed, one sided agreement for the sake of a photo-op.  Obama with Iran could have learned from this.
Title: Re: China
Post by: G M on May 22, 2019, 10:23:37 PM
A guest on John Batchelor was saying how the Chinese have a law that bans technology stealing

but the Communists  simply don't enforce it.
just paying us lip service

We reported on the new law in the trade thread:
https://dogbrothers.com/phpBB2/index.php?topic=2563.msg115139#msg115139


In the following post, GPF says "The new law is vague..."

Good for Trump to stop everything instead of entering into a flawed, one sided agreement for the sake of a photo-op.  Obama with Iran could have learned from this.

Obama didn't get snookered by Iran. He did exactly what he and Iran wanted.
Title: Even POTH says China using misintel on Hong Kong
Post by: Crafty_Dog on August 15, 2019, 01:10:50 PM
https://www.nytimes.com/2019/08/13/world/asia/hong-kong-protests-china.html?fbclid=IwAR3SSlHgszuHnZ8wnlWolvQnLA1LxgvHTozK0I_yKaTGrX4XDu_wcF1ApuM
Title: Chinese savings rate shrinking fast
Post by: Crafty_Dog on September 04, 2019, 07:28:51 AM
I have posted often of the implications of China's unique demographic profile due to the one child policy for quite some time now , , ,

https://www.theepochtimes.com/imf-warns-that-chinas-savings-rate-is-shrinking-fast_3066411.html
Title: Re: China
Post by: DougMacG on September 04, 2019, 07:12:23 PM
Does anyone remember when the Chinese currency was going to pass up the US dollar and become the global currency of choice for international transactions - by now? 

FYI, The yuan’s share in international payments dropped to 1.81 per cent last month.  Compare with the US$ at 40% and Euro at 34%.
https://www.scmp.com/economy/china-economy/article/3025021/chinas-dream-making-yuan-global-currency-hit-hong-kong

Transaction conducted in or through Hong Kong accounted for three quarters of the yuan’s offshore use, but 13 weeks of anti-government protests and the impact of a deepening US-China trade war have delivered a double blow to Beijing’s strategic plan to make the yuan a widely used international currency, according to analysts.
----------------
Back to the drawing board.
Title: WSJ: HK protestors' cat and mouse games with authorities
Post by: Crafty_Dog on September 18, 2019, 01:06:33 PM


 The Hong Kong Protester’s Toolkit for a Cat-and-Mouse Game With Authorities
Protesters believe their identities may be collected digitally by mainland China and their participation used against them in the future
Protesters in Hong Kong fear they are being monitored by the local government and potentially by China, a country at the cutting edge of mass surveillance. So demonstrators have developed hacks to avoid arrest and hide their digital tracks. Photo composite: Sharon Shi

By John Lyons and
Sharon Shi
Sept. 16, 2019 6:10 am ET

On a recent afternoon, Carl Chow headed into one of the big pro-democracy marches that have convulsed Hong Kong for months. He didn’t plan to break the law, but he took pains to hide his identity behind a surgical mask all the same.

“There are a lot of cameras all around and you don’t know who is standing beside you,” said Mr. Chow, a film student in his early 20s.

Hong Kong’s mostly young protesters say they fear their participation in the movement may follow them for life. They face arrest at protest marches deemed unauthorized by the city, or where clashes with police take place. Police have arrested around 1,450 protesters so far.

More ominously, they believe their identities may be collected digitally by mainland China and their participation used against them in the future. While there is scant evidence to prove this is happening, China’s advances in facial recognition and other techniques have made it among the world’s most aggressive surveillance states, they point out.

To ease these fears, even peaceful protesters take measures to hide themselves.

For example, they dress in black, making it difficult for authorities to single out any one person by their clothing, protesters say. They cover their faces with masks and neck scarves.

Many carry umbrellas to shield against security cameras or unfamiliar people with cameras.

“Actually, we can hide ourselves in a crowd,” said Mr. Chow.

The stakes are higher for the so-called protest frontliners, who often confront police in tear-gas laden skirmishes. Police target them for arrest and have charged some with crimes such as rioting that can carry jail terms of up to 10 years.

Also dressed in black, those at the frontlines have their faces typically completely obscured behind gas masks, helmets and goggles. They use laser pointers to blind police.

Protesters are careful with their communications. Most use the encrypted messaging app Telegram to exchange information about coming rallies.

They take pains to spray paint or tape over cameras along march routes, or in subway stations when coming or going from a protest. They are careful to pay in cash for their subway rides so their movements can’t be tracked via their regular subway fare cards.

The day Mr. Chow marched, some protesters destroyed surveillance cameras along the route, ripping out the internal workings of one, and felling another altogether. As some worked to destroy the cameras, others gathered around blocking the view with umbrellas.

Destroying the cameras reflects protesters’ fear that Hong Kong—a former British colony that was returned to China under a “one country, two systems” agreement in 1997—is losing its semiautonomous status and becoming more tightly controlled, and surveilled, by Beijing.

“We don’t want Hong Kong to become China,” said Mr. Chow before joining the crowd, tears pooling in his eyes. He didn’t participate in vandalizing the cameras.

For more than three months, hundreds of thousands of Hong Kong residents have protested weekly against the encroachment of mainland China. The protests started to oppose a proposed new law that would have allowed the extradition of suspected criminals to China for trial. But they have since expanded to include other demands such as an inquiry into police violence and the right to elect the city’s leader through direct voting. Hong Kong Chief Executive Carrie Lam recently pledged to withdraw the extradition bill, but the demonstrations have continued.

Write to John Lyons at john.lyons@wsj.com
Title: Mass prisoner transfer
Post by: Crafty_Dog on September 22, 2019, 02:27:20 PM
https://www.news.com.au/world/asia/chilling-video-shows-chinese-police-transferring-hundreds-of-blindfolded-shackled-prisoners/news-story/67a3f1742b261c6dc78334ff16b6d775?fbclid=IwAR2xtcw9wGD8IAyo8iMv1xcqK-IHkDdft3BpcdKpJtbCTYBhv4cwxXbkIiY#.fdo1q
Title: Why do we never hear any outrage (Uighurs)
Post by: ccp on October 04, 2019, 07:47:56 AM
from the billion Muslims about what is going in China?

for God's sake they are treated great in the USA and all we hear is bitching from them about persecution here
and look what goes in in the biggest communist tyrannical country in the world and to my knowledge at least in MSM not a peep of outrage about that from the Muslims:

https://www.nbcnews.com/news/world/inside-chinese-camps-thought-detain-million-muslim-uighurs-n1062321
Title: Re: Why do we never hear any outrage (Uighurs)
Post by: G M on October 04, 2019, 05:58:46 PM
Because they understand that China will methodically kill them all, if China decides it needs to.


from the billion Muslims about what is going in China?

for God's sake they are treated great in the USA and all we hear is bitching from them about persecution here
and look what goes in in the biggest communist tyrannical country in the world and to my knowledge at least in MSM not a peep of outrage about that from the Muslims:

https://www.nbcnews.com/news/world/inside-chinese-camps-thought-detain-million-muslim-uighurs-n1062321
Title: China-Hong Kong, Footage of Police shooting Protester at this link
Post by: DougMacG on October 05, 2019, 11:47:14 AM
https://www.nbcnews.com/think/opinion/after-hong-kong-protester-shot-cycle-violence-threatens-more-tragedy-ncna1062431

It took 3 minutes for someone to help him.  The cop who shot him tackled the first person who tried to help. 
Title: Re: China-Hong Kong, Footage of Police shooting Protester at this link
Post by: G M on October 05, 2019, 04:39:49 PM
https://www.nbcnews.com/think/opinion/after-hong-kong-protester-shot-cycle-violence-threatens-more-tragedy-ncna1062431

It took 3 minutes for someone to help him.  The cop who shot him tackled the first person who tried to help.

As much as I side with the goals of the protesters, I would point out that charging US law enforcement with a metal rod would quite likely result in getting shot.
Title: Re: China-Hong Kong, Footage of Police shooting Protester at this link
Post by: DougMacG on October 05, 2019, 07:24:27 PM
As much as I side with the goals of the protesters, I would point out that charging US law enforcement with a metal rod would quite likely result in getting shot.

Agreed - but US LE would not have blocked medical assistance. (?) That was a chaotic scene; hard to read all of what was going on.
Title: Re: China
Post by: Crafty_Dog on October 06, 2019, 01:59:27 PM
Then there is the matter of flashing those green lasers into the eyes , , , OTOH without the  respect of authorities for a well armed people, what to do?

Title: China asserts extraterritorial "discourse power"
Post by: Crafty_Dog on October 09, 2019, 12:19:08 PM
https://www.newyorker.com/news/daily-comment/china-forces-the-nba-to-weigh-value-against-values?source=EDT_NYR_EDIT_NEWSLETTER_0_imagenewsletter_Daily_ZZ&utm_campaign=aud-dev&utm_source=nl&utm_brand=tny&utm_mailing=TNY_Daily_100919&utm_medium=email&bxid=5be9d3fa3f92a40469e2d85c&cndid=50142053&esrc=&mbid=&utm_term=TNY_Daily

https://www.cnn.com/2019/10/09/business/nba-china-partners/index.html?fbclid=IwAR2qitLaCxsK95d-KO7C55frfy6QxPagpRlCvSXlddnOg-taqA9IbaT0jUg
Title: China, 1/3 of arrested Hong Kong protesters under age 18
Post by: DougMacG on October 10, 2019, 06:40:34 PM
https://www.scmp.com/news/hong-kong/politics/article/3032429/nearly-third-hong-kong-protesters-arrested-over-past-four
Title: China: Capital outflows at record levels
Post by: Crafty_Dog on October 11, 2019, 10:26:14 AM
https://www.bloomberg.com/news/articles/2019-10-11/china-hidden-capital-flight-at-a-record-in-2019-iif-says
Title: GPF: China as a Seller's Market: Serious Read
Post by: Crafty_Dog on October 14, 2019, 10:34:26 AM
China as a Seller’s Market



Modern China’s past success was based on exports. Its future must be based on imports.



By Jacob L. Shapiro



China owes much of its current economic success to former ruler Deng Xiaoping, who famously opened up the economy to the rest of the world. His reforms transformed China into a manufacturing powerhouse, and in doing so, they turned the country’s biggest liability – a massive and impoverished population that upsets socio-economic harmony at home and constrains Chinese power abroad – into its greatest asset. China became the world’s factory because its workers could make things cheaper than workers in other countries could. The ratio of China’s exports of goods and services to its gross domestic product increased from 4.6 percent during the first year of Deng’s rule to a high of 36 percent in 2006 – long after Deng had passed away. During the same period, its GDP increased by a factor of 18.

The transformation into an export powerhouse reshaped the global economy. China made so many goods so proficiently that it drove prices down and gutted the manufacturing sectors of formerly competitive countries. China’s workforce simply undercut most everyone else. The economic roots of the current U.S.-China trade war, as well as of China’s massive current structural economic challenges, are born from these developments.

That, however, is China’s past. China’s export industry was arguably the most important indicator of China’s economic health and its international status from 1980 to 2006. But since 2006, the importance of China’s exports has fallen; the ratio of exports of goods and services to GDP dropped to 20 percent last year. The last time the ratio was that low, Bill Clinton was president of the United States. To understand China’s present and past means understanding China’s export strategy. China’s future, however, will be defined far more not by what it sells but by what it buys.

For much of world history, China was the most technologically advanced and economically robust civilization in the world. China believed it was the “Middle Kingdom” in part because it could credibly claim to be the center of economic gravity on Earth for millennia. When the British Empire was still in its infancy and wanted to trade with the Qing Dynasty, the British discovered much to their chagrin that they possessed nothing the Chinese were particularly interested in buying. Even as the British developed an obsession with Chinese silk, porcelain and tea, the Chinese looked down on British trinkets, preferring instead to trade for things like silver that they could buy things with at home. Britain had to become a drug-dealer to pique China’s interest, and even then, only succeeded at forcing its goods into the Chinese market at gun(boat)point.

This general self-sufficiency defined China’s behavior on the global stage. Contrast it with Japan, which has virtually no natural resources of its own. The demands of a modern, industrialized economy forced Japan to procure abroad what it didn’t have at home, moving it to create a massive maritime empire in the 20th century and culminating eventually in a disastrous military defeat at the hands of the United States. China, replete with natural resources, had no such need. But that is no longer the case. China is no longer self-sufficient. It now needs to buy things from abroad to maintain its way of life. How China manages this newfound dependence on foreign resources and goods will play a major role in Chinese behavior on the world stage in the coming decades.

An exhaustive analysis would be quite a tome, so we’ll focus on three of China’s most important imports: oil, cereals and microchips.

Oil

China is no longer the fastest growing oil consumer in the world – that honor now belongs to India. But China is still the largest single importer of oil in the world today – by a long shot. It imported more than 9 million barrels of oil per day in 2018, more than double India’s oil imports, and almost as much as Western Europe combined, according to OPEC. Since 1980, the amount of oil China imports has increased by a whopping 1,268 percent (not a typo).



 

(click to enlarge)



China’s top source of oil last year was Russia, which accounted for roughly 16 percent of crude imports. China’s dependence on Russian oil could come with its own geopolitical implications depending on how far China indulges in dreams of territorial revanchism. Russia, after all, controls oil-rich Sakhalin Island only because China was forced to surrender control in the 1860 Treaty of Beijing, which ended the Second Opium War.

But the largest collective source of Chinese oil imports by far is the Middle East. In 2018, China imported over 45 percent of its oil from nine Middle Eastern countries, mostly from Saudi Arabia, Iraq, Oman, Iran and Kuwait. This means China is dependent not just on open maritime trading routes in the Middle East but increasingly on its ability to defend Chinese ships and on the political stability of a notoriously unstable region. This may force China to exert itself in the region’s political and security affairs.

Cereals: Wheat, Rice and Corn

China accounts for 21 percent of the world’s population but only 9 percent of its arable land and 6 percent of its water. Yet as late as the 1950s, China was actually a net exporter of grain, particularly rice. Then it became official policy of the Communist Party to maintain grain self-sufficiency as China’s population increased. The results were tragic. From the late 1950s to the early 1960s, as many as 45 million starved to death as grain yields were exaggerated to meet Mao’s unrealistic targets.
The disaster of the “Great Leap Forward” only reinforced China’s need for grain security. Even as China became a net grain importer in 1961, importing increasingly more of it over time, China has (largely successfully) aimed to keep a 95 percent self-sufficiency rate for grain production while substantially increasing domestic grain production in the past two decades. And if the trade war is any indication, China won’t try to abandon this goal any time soon.

It’s a matter of debate whether China can continue to be self-sufficient. A recent Bloomberg report concluded that it would be impossible for China to produce enough grain for its growing population if it starts “eating like Americans.” A 2010 study by leading Chinese experts at the Chinese Academy of Sciences and China’s Rural Technology Development Center determined that not only would China be self-sufficient in grains but that technological advances and agricultural sector reforms would allow China to contribute to food security worldwide. A February 2018 article in the NPJ Science of Food Journal was less effusive but no less optimistic about the future of China’s food security, partly because China’s aging population suggests grain consumption has already entered a slow decline.



 

(click to enlarge)



Whatever the case may be, the fact is that China has vastly increased the quantities of its cereals and grain imports – and indeed, of food in general – over the past two decades. In its report from May 2019, the U.N. Food and Agriculture Organization classified China as a major importer of coarse grains, rice, oil crops, sugar, meat and dairy. Even if China manages to achieve self-sufficiency in wheat, rice and corn in the future, it will remain dependent on imports of other major crops such as soybeans and on meat. There is, after all, a difference between survival and living well – and what might pass for self-sufficiency today may no longer satisfy Chinese appetites in even 10 years.



 

(click to enlarge)



The wealthier China gets, the more pressure its agriculture sector will be under, and the more China will look abroad for food. A recent report published by the Chinese Academy of Agricultural Sciences and the International Food Policy Research Institute said China would achieve food security and grain self-sufficiency by 2035 – tellingly, “food security” in this context does not just mean emphasizing structural reform on the supply side of agriculture, but also, according to the report, realizing China’s Belt and Road Initiative ambitions.

Microchips

Even if the United States and China manage to reach some kind of trade deal in the coming months, their rivalry over technology will define bilateral relations for a generation to come. According to a recent study by James Lewis for the Center for Strategic and International Studies, China is the world’s largest consumer of semiconductors, accounting for 60 percent of global demand. But it produces only about 16 percent of semiconductors used domestically, and only half of these are made by Chinese firms. Beijing’s goals to increase this to 40 percent by 2020 and to 70 percent by 2025, however, will be difficult to achieve. For the time being, China will be dependent on foreign suppliers of advanced chips.



 

(click to enlarge)



Over the past two decades, China has significantly increased its imports of electronic integrated circuits. But unlike, say, food and oil, the real value of microchips is in the technological expertise needed to produce them. China’s dependence on microchip imports will therefore manifest differently from its imports of goods and resources. China will continue to import chips with the goal of weaning itself off of any dependence on foreign technology or advanced parts. Whether and how fast China is able to do this will determine how aggressive China can be as it pursues its interests on the world stage.



 

(click to enlarge)



Unfortunately, no single statistic exists to evaluate how quickly a country’s technological prowess is increasing. In terms of value, China’s semiconductor imports in 2018 were almost equal to the value of China’s oil imports during the same year, underscoring their importance – and China’s dependence. Data compiled by the Sanford C. Bernstein private securities firm indicated that China purchased $160 billion worth of semiconductors in 2016 while selling just $25 billion of its own. That suggests China has a long ways to go to catch up overall, but the same data also showed that China sold just $2 billion of its own semiconductors in 2006, which means Chinese semiconductor sales increased over 12 fold in a 10-year period.

The less dependent China is on foreign technology, the more aggressive China can be in securing some of its other interests and the more demanding China can be in future negotiations with other global powers.

It is hard to overstate just what a monumental transformation China has undergone since Deng first came to power in 1978. The changes have brought to Beijing’s doorstep challenges no previous Chinese dynasty has ever had to face. China may opt to mimic the U.S. approach after World War II in shaping or even creating an international system bent to China’s needs. China may take the Japanese path and attempt to secure its needs through strength. Or perhaps China will chart its own characteristically Chinese course, securing its place in the world’s globalized economy in new ways this author has not imagined. Ambiguous as the how is, that China must do so is a certainty.


Title: Taiwan and the Falun Gong
Post by: Crafty_Dog on October 14, 2019, 10:44:21 AM
second post

https://www.theepochtimes.com/taiwan-says-it-will-deny-entry-to-chinese-officials-involved-in-persecution-of-falun-gong_3111849.html?utm_source=Epoch+Times+Newsletters&utm_campaign=e371228df1-EMAIL_CAMPAIGN_2019_10_13_08_26&utm_medium=email&utm_term=0_4fba358ecf-e371228df1-239065853
Title: Chinese pollution
Post by: Crafty_Dog on October 22, 2019, 10:52:19 PM
https://www.youtube.com/watch?v=OwOBRH56Ic0&fbclid=IwAR2czCxiBg5RUxI5KDVy0UeZ8L7Qn7pennm--TSe2HtxO5syzINBDf7LGW4&app=desktop
Title: China accused of mass organ harvesting
Post by: Crafty_Dog on November 13, 2019, 08:40:14 AM
https://www.businessinsider.com/china-harvesting-organs-of-uighur-muslims-china-tribunal-tells-un-2019-9?r=US&IR=T&utm_content=buffer4e21d&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer-bi&fbclid=IwAR1biHJdKjNKGRBHVK-hr0p5bf5z1svobN3e5lBhtMAR5oHSQ9_o_BtWkq8
Title: GPF: China's banking system in trouble
Post by: Crafty_Dog on November 13, 2019, 09:24:13 PM
China's banking problems. Fragility in the Chinese banking system has Beijing shook. Since the beginning of the year, China has been grappling with a liquidity crunch that’s been hitting private sector small and medium-sized enterprises and local and regional banks the worst. Over the summer, the government was forced to abruptly take over a failing bank in Baoshang, scramble to prop up several other teetering banks and undertake a number of measures to keep credit in the economy at healthy levels (without, that is, exacerbating China’s staggering debt risks by opening the monetary stimulus taps too widely). These efforts may have staved off a cascading crisis, but they haven’t fixed the underlying problems. Data released last week showed that credit growth continued to slow in October, suggesting the central bank’s targeted measures have been insufficient. Also in the past two weeks, two lenders were hit with bank runs. The China Banking and Insurance Regulatory Commission on Tuesday pledged tighter management of small banks and insisted that bankruptcies would be allowed only if a slew of central government measures – from bailouts to forced mergers to outright takeovers – somehow failed. The Chinese banking system needs to go through a period of painful restructuring to develop the efficiencies the Chinese economy needs. But mass financial panic, which the CBIRC is trying to avoid, wouldn’t do the Chinese economy any favors.
Title: HK catapults
Post by: Crafty_Dog on November 15, 2019, 10:32:38 PM
https://www.thescottishsun.co.uk/news/4952922/hong-kong-protesters-build-medieval-style-catapult-firing-petrol-bombs-as-they-ramp-up-war-with-cops/?utm_source=facebook&utm_medium=social&utm_campaign=sharebarweb
Title: The WSJ catches up with me on Chinese Demographics
Post by: Crafty_Dog on November 17, 2019, 09:00:52 PM
Old Age Will Put China to Rest
Retirees will be a fifth of its population by 2040, and productivity will quickly fade out.

By Andy Kessler
Nov. 17, 2019 2:27 pm ET

Chinese retirees play cards in a retirement home in Beijing, June 18. PHOTO: HOW HWEE YOUNG/SHUTTERSTOCK
The trade tiff with China lingers on—let’s just cut a deal for zero tariffs and move on. Then we can tackle the next question: Is there any real chance that China—with gross domestic product per capita lower than Mexico’s—could soon pass the U.S. in size and strength? The prospect is daunting, but we’ve been here before. Does anyone remember books like “Trading Places: How We Are Giving Our Future To Japan”? Me neither. The reality is that for every country, demographics is destination.

I recently attended the Sohn Conference in San Francisco, which raises money for charity by having hedge-fund managers pitch their best investment idea. Most talks were about broken stocks or esoteric cloud software companies hoping to double in value in three years. But Adam Fisher from Commonwealth Asset Management talked about decadeslong trends in China. (I didn’t talk to Mr. Fisher directly: Silly securities laws prohibit funds from marketing broadly while they’re raising money. So my notes will have to do.)

It turns out that China’s work-age population has peaked or is close to peaking—that pesky one-child policy worked. Even worse for Beijing, according to projections by the United Nations Development Program, China’s 65-and-over population is expected to grow by more than 150%, from 135 million in 2015 to 340 million by 2040, which will be 21% of the population. That’s a lot of retirees. By the way, the current retirement age in China is 60 for men, 55 for women, though both are set to increase gradually.

By comparison, Japan’s 65-and-older population reached 26% by 2015. But as the saying goes, Japan got rich before it got old. What about China?

According to the political economist Nicholas Eberstadt, less than 65% of Chinese workers are covered by any retirement benefits. That share drops to 35% for urban migrants. That’s many mouths to feed in old age.

And here’s where it gets dicey. China’s big coastal cities, Beijing, Shanghai, Shenzhen and Guangzhou, have already caught up with the wealthy countries of East Asia in terms of productivity and purchasing power parity. Mr. Fisher notes that sustained growth will therefore depend on improvements in China’s inland. He calculates that western China would have to increase its total-factor productivity by 8% to 10% a year to pay for those 205 million additional retirees. Unless China develops an antigravity device or a perpetual motion machine, that’s a virtual impossibility.

Recall what happened in Japan. Since its stock market peaked in 1990, Mr. Fisher says, total hours worked in Japan have dropped 20%. In the U.S., hours worked rose 40% in the same period. Even though Japan’s productivity was higher than the U.S. (with a stress on “was”), its nominal GDP flatlined. Its government had to step in with increasingly worthless stimulus programs.

Japan’s debt-to-GDP ratio has risen to an eye-popping 238%, while interest rates have dropped. The interest-rate decline has been partially offset by the strong yen. This was the great “carry trade,” of which many hedge funds took advantage: Borrow cheap in Japan and invest elsewhere, though you’d lose some of the leverage when repaying the loans with a more expensive currency.

Mr. Fisher thinks something similar will happen in China. As its public sector—yes, the Communist Party—levers up to compensate for the GDP shortfall, interest rates will drop, then drop some more. Mr. Fisher thinks they’re headed toward zero.

Why? Here’s how the Federal Reserve puts it generally: “The overall boost to savings at the expense of current consumption caused by an increase in life expectancy puts downward pressure on r-star,” the “natural” rate of interest. Also, more retirees mean lower output, so governments must intervene with stimulus as production drops.

China’s currency is also a factor. Maybe the yuan will rise like the yen, creating another great opportunity for a carry trade. But no one can say (this is why macro investors have spotty records). Remember that unlike Japan, China will get old before it gets rich. Ever lower interest rates might mean an ever-weaker currency. Or they could mean China will prop up interest rates to protect its currency, which would further hurt its economy. A rock and a hard place.

Beyond an interesting investment thesis, this has global implications. China is a manufacturing powerhouse, but for how long? Rising wages mean its comparative advantage is leaking away. Productivity growth is its only hope. Think robots!

Unlike a one-child policy, productivity can’t be legislated. It takes smart people with incentives and property rights to innovate and solve real problems. White House National Economic Council director Larry Kudlow told last year’s Wall Street Journal CEO Council that China’s “state run economics is doomed to failure. Doomed.” As its population ages, we’ll see if Messrs. Kudlow and Fisher are right.

Write to kessler@wsj.com.
Title: Expect a drop in price for organ transplants
Post by: G M on November 19, 2019, 04:36:47 PM
https://www.youtube.com/watch?v=F0Qv0OGsoac&feature=emb_logo

Learn to drive a rifle, or ride in a train.

Good thing that can't ever happen here!
Title: George Friedman: The Pressure on China
Post by: Crafty_Dog on November 23, 2019, 04:10:47 PM
   
    The Pressure on China
By: George Friedman

The Chinese People’s Liberation Army has begun minor operations to try to quell the unrest in Hong Kong. This is a step that the Chinese hoped to avoid. For one thing, they wanted to portray the unrest as minor, not requiring their intervention. For another, they did not want issues raised about Chinese human rights violations, which inevitably emerge in such interventions. At a time when China is trying to portray itself as the global alternative to the United States, it doesn’t want other countries, particularly those in Europe, noticing human rights abuses.

This strategy took another huge blow with the leak over the weekend of government documents describing in detail a broad Chinese assault that has been underway for several years on the ethnic minority Uighur community in the western province of Xinjiang. The documents gave detailed accounts of massive detention camps for “retraining” purposes and the separation of families on a scale that is startling even for China. Beijing clearly wants to break the back of Islam in the province.
 
(click to enlarge)
Chinese detention of Uighurs is not new. We have been hearing about this for over a year. What is startling is the leak of documents so sensitive that they validate claims of mistreatment that the Chinese long denied, for obvious reasons. This raises a key question: Who released the documents? They might have been leaked by Chinese officials, appalled at what is going on in Xinjiang. They might have been released by the Chinese government as a warning to other dissident groups. They may have been released by senior members of the Chinese government who have become disillusioned by President Xi Jinping, hoping to force him out.

All three are possible, but to understand the events in Xinjiang, we need to also consider what’s happening in Hong Kong. The Xinjiang detentions predate protests in Hong Kong by quite a while but demonstrated a turn of the Chinese government away from liberalization. Xi had already taken that turn during his massive anti-corruption purge, which obviously was a cover for a systematic purge of real and potential opponents. The demonstrators in Hong Kong watched the purges and the events in Xinjiang, and realized that the fairly radical extradition bill, which sparked the initial protests, was the cutting edge of an attempt to force Hong Kong to submit to the Chinese framework and to Beijing’s power.

That is what is happening in Xinjiang, a province that is formally part of China but not Han Chinese, the majority ethnic group in China. Han China is surrounded by four buffer states: Manchuria, Inner Mongolia, Tibet and Xinjiang. Its eastern coast is dotted by former European enclaves, such as Hong Kong and Macao. Over the years, the Chinese struggled to retain these buffers. Japan seized much of Manchuria in World War II, with less than unanimous opposition. There have been uprisings and resistance in Tibet. Xinjiang was rumbling with Islamist sentiment. And while Macao accepted mildly the redefinition of its status, Hong Kong exploded at what it saw as an attempt to redefine its status prior to negotiated dates.

Tibet’s resistance, led by the Dalai Lama, remains. Manchuria and Inner Mongolia are pacified. But Hong Kong and Xinjiang are the real dangers. They cannot be left to fester, lest Islamist terrorism spread to Chinse cities, or Hong Kong serve as an inspiration to other cities in eastern China. The efforts needed to pacify them, however, carry costs outside of China. The Belt and Road Initiative could turn from being an ambitious Chinese project into a symbol of Chinese repression. This is not an image China wants to project.

For months, riots on the streets of Hong Kong have been broadcast on global television and discussed over social media. Those who have been paying attention have known about the repression of Uighurs in Xinjiang for a while, but it had not entered the global zeitgeist. Until now. Xi, who came into office as the central power that would modernize China and make it a great power, is now facing three domestic problems. The first is the fading memory of the anti-corruption purges. The second was the festering repression in Xinjiang now made virally public. The third is the riots in Hong Kong. In the first two cases, China is made to seem Stalinist and fascist. In the last case, it appears inept, unable to bring the matter to a close. To put it another way, the Chinese clearly wanted Hong Kong to settle down without action from Beijing to drive home the message that China is modernizing despite the Xinjiang affair and the purges. But Hong Kong may not fade away and the PLA might have to enter Hong Kong in force.

China needed to present itself to the world as a burgeoning economic power and a benign political power, overseeing a united mass of people moving forward in history. The purges raised eyebrows but could be dismissed as what they were claimed to be: an anti-corruption campaign. Xinjiang was far away and, for most people, out of focus. But Hong Kong is not far away or out of focus. It forces us to see the other two issues in a different light. Now we see China not as a symbol of progress, but as a fearful nation struggling to repress discordant elements.

This brings us back to the question of who leaked the documents. There are three possible explanations for the leak. First, Xi’s team might have leaked them to show his determination. Second, they might have been leaked by someone in the government who was appalled by what they saw. Finally, they could have been leaked by an emerging anti-Xi faction in the Central Committee, appalled by Xi’s handling of the United States and Hong Kong and using the documents to weaken him.  Of the three, I favor the third explanation. Too many important things are going wrong in China for such a faction, however small at this point, not be forming.

Xi’s incompetence is manifest. The major task of the Chinese president is to handle the American president, and Barack Obama, George W. Bush and Bill Clinton were handled. He failed to bring Donald Trump under control with promises of future meetings and postponed studies. As a result, China is in a trade war with its largest customer. In addition, quite apart from the trade issue, the Chinese financial system is unstable and growth is slowing. Now, Hong Kong is out of control, and the global talk is of Chinese concentration camps. This is not what was expected from Xi.

The Central Committee is the ultimate arbiter of what China does, particularly if the president weakens and loses his way. There must be some in the Central Committee who remember Xi’s inauguration and have concluded that China’s evolution has not gone the way they expected and Xi promised. The Central Committee is usually opaque, as it is now, but if there is opposition developing to Xi, and it is hard to imagine there is not, then release of these documents merely turns a known event into a global event, further showing Xi’s incompetence.

All of this is framed by a primordial fear. Before Mao’s victory, regional conflicts tore China apart and allowed the Japanese to seize major parts of the country. Regional conflicts in the future are the single biggest threat that China does not want to face again. The Chinese are suppressing the threat in Xinjiang, and now maybe in Hong Kong. But China does not want to have to suppress regional threats. Xi, however, is doing just that and he also came in suppressing political threats with the purges.

Between that and mishandling the Americans, many nerves are being touched. I would bet that the leak came from the Central Committee, and that Xi has enemies.   



Title: Re: George Friedman: The Pressure on China
Post by: DougMacG on November 25, 2019, 07:41:07 AM
A number of interesting points here.  Xi has political pressures too.  Who knew?  He can't just sit and wait for Trump to leave.  He has leakers, infighters, deserters and backstabbers.  He has unrest, big time, and it could spread.  He has recession, at least in places.  He has debt.  He has infrastructure challenges, pollution, unemployment and bad press worldwide.  It's tough being a totalitarian thug. 

He's negotiating with a half-crazy leader of the world's largest economy at a 5-fold disadvantage - and he's losing.  He's arguing for an equal relationship but everyone knows that's BS because he could have that agreement in a instant.  He wants the whole trade dispute to go away so he can go on stealing technology but that toothpaste is not going back in the tube.  He has been called out and exposed and people can't un-see what we all saw.

Xi saw the Democrat debate clip where they asked who would cancel the Trump tariffs on China on their first day and no one raised their hand.  Oops, there goes Plan A.

Now he has seen the Hong Kong election where he is opposed by millions empowered by their own numbers.  This is not a few hundred people standing in Tiananmen Square that can be crushed and silenced.

Xi sits one tweet away from seeing the President of the United States call for Hong Kong style elections in mainland China.  Has anyone ever said THAT out loud?

What is amazing is how fast things can change when they finally do change.  China was on the verge of passing up the US economy and now there are on the verge of seeing India pass them in our lifetime.

It seems to me Xi's challengers from the inside must come from hardliners since that's what they all are.  That might be the least of his problems.   He also has 1.43 billion others to worry about.
Title: GPF: China
Post by: Crafty_Dog on November 25, 2019, 11:38:32 AM
   
    Daily Memo: Democracy in Hong Kong, Attacks in Yemen, Leaks in China
By: GPF Staff

In Hong Kong, the people have spoken. Nearly 3 million Hong Kongers – or more than 70 percent of Hong Kong voters – went to the polls on Sunday and voted overwhelmingly for pro-democracy candidates in local district councils. Anti-establishment candidates won nearly 90 percent of the 452 seats up for grabs; more than half of the seats were previously held by Beijing-friendly candidates. The pro-democracy camp now controls 17 of 18 district councils. It’s hard to say how exactly this will affect the standoff between Beijing and protesters in Hong Kong. Pro-Beijing lawmakers still hold a healthy majority in the Legislative Council, elections for which are set for September 2020. So, for now, Beijing will still be able to rely on the Hong Kong government to carry its water and put a democratic veneer over its preferred policies. Still, Sunday’s results underscore that Beijing’s historical divide-and-conquer approach to managing Hong Kong protests –playing on the Hong Kong business community’s desire for stability to deprive radical protest elements of support and grind them down over time – isn’t working this time around.

China’s leaks are getting worse. On Friday, Australian media reported that a Chinese spy named Wang Liqiang had defected to Australia, delivering Canberra a trove of information exposing widespread Chinese influence operations in Hong Kong, Taiwan and Australia. China has claimed that Wang is a grifter, releasing a document purportedly detailing his conviction on fraud charges in Shanghai in 2016. Either way, the issue will inevitably fan the flames of suspicion about Chinese meddling in the domestic political affairs of its neighbors. In Taiwan, for example, pro-Beijing politicians with the opposition Kuomintang are scrambling to discredit the reports, and Taipei has launched an investigation into a Hong Kong-listed company allegedly used as a front for Chinese espionage in Taiwan. Australia’s domestic spy agency, meanwhile, has opened an investigation into revelations from Wang that Beijing had attempted to install an agent in the country’s federal legislature.

Meanwhile, on Sunday, The New York Times published another tranche of leaked Chinese government documents detailing the scale of its crackdown on ethnic Uighurs in Xinjiang and on the International Consortium of Investigative Journalists. (Unlike the previous leak, which was provided by a member of the Chinese political establishment, Sunday’s documents seem to have come from Uighur exiles.) The incident shows that some sort of movement may be underway to use the situation in Xinjiang against President Xi Jinping – and to perhaps provide ammunition to foreign powers looking for a moral justification to move against China.
Title: China just weaponized the smartphone
Post by: Crafty_Dog on November 30, 2019, 06:14:48 PM
https://www.forbes.com/sites/zakdoffman/2019/11/29/china-just-weaponized-the-smartphone-heres-why-you-should-be-concerned/?fbclid=IwAR0UUW2QxDoRxJLsOJhCrFNJ5a2wjiR3uvNrY73z6vDAA51V27LKxv0Co5o#6712499960c3
Title: More bank runs
Post by: Crafty_Dog on December 02, 2019, 08:00:34 AM
https://www.theepochtimes.com/more-bank-runs-worry-chinese-regulators-investors_3161461.html?utm_source=Epoch+Times+Newsletters&utm_campaign=c5ecc18118-EMAIL_CAMPAIGN_2019_12_02_12_19&utm_medium=email&utm_term=0_4fba358ecf-c5ecc18118-239065853
Title: Re: More bank runs in China
Post by: DougMacG on December 02, 2019, 08:26:19 AM
https://www.theepochtimes.com/more-bank-runs-worry-chinese-regulators-investors_3161461.html?utm_source=Epoch+Times+Newsletters&utm_campaign=c5ecc18118-EMAIL_CAMPAIGN_2019_12_02_12_19&utm_medium=email&utm_term=0_4fba358ecf-c5ecc18118-239065853

Paraphrasing a mob boss that opponents think Trump is:

You steal from us, cheat us in trade, backstab us on North Korea and in international affairs around the world ...

... I hope nothing bad happens to your fragile little economy over there.

Who knew that every debt loaded, government propped up sector of their economy was directly or indirectly tied to their export economy of which USA was their largest customer?

Every minute they wait to settle their differences with us, a supply relationship in Vietnam and elsewhere with the US grows stronger.
Title: Re: More bank runs in China
Post by: G M on December 02, 2019, 12:13:21 PM
So much winning!


https://www.theepochtimes.com/more-bank-runs-worry-chinese-regulators-investors_3161461.html?utm_source=Epoch+Times+Newsletters&utm_campaign=c5ecc18118-EMAIL_CAMPAIGN_2019_12_02_12_19&utm_medium=email&utm_term=0_4fba358ecf-c5ecc18118-239065853

Paraphrasing a mob boss that opponents think Trump is:

You steal from us, cheat us in trade, backstab us on North Korea and in international affairs around the world ...

... I hope nothing bad happens to your fragile little economy over there.

Who knew that every debt loaded, government propped up sector of their economy was directly or indirectly tied to their export economy of which USA was their largest customer?

Every minute they wait to settle their differences with us, a supply relationship in Vietnam and elsewhere with the US grows stronger.
Title: China: Mandatory facial scans for phone users
Post by: Crafty_Dog on December 05, 2019, 10:46:01 AM
https://www.theepochtimes.com/china-introduces-mandatory-facial-scans-for-phone-users_3162905.html?utm_source=Epoch+Times+Newsletters&utm_campaign=8ed52957f0-EMAIL_CAMPAIGN_2019_12_04_12_20&utm_medium=email&utm_term=0_4fba358ecf-8ed52957f0-239065853
Title: Hong Kong virus spreading
Post by: Crafty_Dog on December 06, 2019, 02:09:24 PM
https://www.americanthinker.com/blog/2019/12/chicom_nightmare_hong_kong_protests_spread_to_gigantic_guangdong.html?fbclid=IwAR2BwkHWpvTOsmIwEuN9kVQxZxTQdkvez4Etz_Y8MsA3T-mIx8h6r2PK34o
Title: Re: China
Post by: ccp on December 06, 2019, 02:52:07 PM
good news
though waiting the military put down.

hopefully not bloody
Title: Re: Hong Kong virus spreading
Post by: G M on December 06, 2019, 07:56:18 PM
https://www.americanthinker.com/blog/2019/12/chicom_nightmare_hong_kong_protests_spread_to_gigantic_guangdong.html?fbclid=IwAR2BwkHWpvTOsmIwEuN9kVQxZxTQdkvez4Etz_Y8MsA3T-mIx8h6r2PK34o

My core pessimist nature says this will be crushed, but I figured that Hong Kong would have been crushed by now. If this spark spreads and and the PRC ends as a result, this will be the greatest win for freedom in human history.
Title: Another mega HK demo
Post by: Crafty_Dog on December 08, 2019, 11:01:18 AM
https://www.nytimes.com/2019/12/07/world/asia/hong-kong-protests-us-chamber-commerce.html?action=click&module=Top+Stories&pgtype=Homepage&fbclid=IwAR2MC1nSONHxsXWNUe-Zm1htri6Sx-vQ2_5Su2XCpd8wo9qmIXZyxwEqqog
Title: U of PA China expert says Red China about to disintegrate
Post by: Crafty_Dog on December 11, 2019, 03:34:30 PM
https://www.theepochtimes.com/the-chinese-communist-regime-is-on-the-brink-of-disintegration-says-leading-china-expert_3167543.html?fbclid=IwAR2QTNLcwZF-DZzu2_MNPukxqVelTiUFBnz87CKmkHuMRMhoBWdcBUWj22U
Title: Re: U of PA China expert says Red China about to disintegrate
Post by: DougMacG on December 11, 2019, 05:11:52 PM
https://www.theepochtimes.com/the-chinese-communist-regime-is-on-the-brink-of-disintegration-says-leading-china-expert_3167543.html?fbclid=IwAR2QTNLcwZF-DZzu2_MNPukxqVelTiUFBnz87CKmkHuMRMhoBWdcBUWj22U

Yes, when do massive mainland protests begin?  Before it's too late?

China launches mandatory face scans for mobile users
https://qz.com/1759108/china-launches-mandatory-face-scans-for-mobile-users/


Today at SCMP:
Hong Kong police should stop using tear gas on protesters – it’s both harmful and ineffective
https://www.scmp.com/comment/letters/article/3041570/hong-kong-police-should-stop-using-tear-gas-protesters-its-both
Title: Corona Kung Flu hitting tech sector in China?
Post by: Crafty_Dog on February 07, 2020, 02:24:39 PM
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The Coronavirus Spreads Fears of a Shutdown in China's Tech Sector
Matthew Bey
Matthew Bey
Senior Global Analyst, Stratfor
9 MINS READ
Feb 7, 2020 | 10:00 GMT
An employee sits in the showroom of an Apple store in Beijing after it closed for the day on Feb. 1, 2020.
An employee sits in the showroom of an Apple store in Beijing after it closed for the day on Feb. 1. So far, China's technology industry has been spared the worst of the new coronavirus outbreak, but that could quickly change.

(KEVIN FRAYER/Getty Images)
HIGHLIGHTS
Because Wuhan is a relatively minor player in China's technology industry, the sector has been spared the worst of the new coronavirus. That could change if the outbreak spreads to the country's R&D heartland right next door....

Without question, the new coronavirus has taken a toll on China and many other places in the world, infecting at least 30,600 people and killing 633 as of Feb. 7. But only now, as the Lunar New Year holiday draws to a close, is Beijing preparing to assess just how much economic damage the coronavirus outbreak has wrought, especially as China is central to the global electronics and information technology sector.

The Big Picture
China is an indispensable part of the global tech sector, and the new coronavirus has the potential to drastically affect its supply chains and operations. But the virus' epicenter, Wuhan, is not as crucial as other areas, meaning authorities could minimize the impact of the virus to a few specific product types in the industry if it manages to contain the geographic scope and scale of the outbreak. If the virus does lose its intensity, for instance, the vast majority of the tech sector's operations, especially in cities in Jiangsu province and Shanghai, might suffer only limited impacts.

See The Geopolitics of Disease
Ultimately, the breadth of the impact depends on how far the virus spreads beyond its current location. Hubei province and its capital, Wuhan, are not critical nodes for the vast majority of China's electronics sector. But neighboring provinces, including Shaanxi, Henan and Jiangxi, are all home to cities that are prominent in the global technology sector, while the provinces with the second and third most confirmed cases so far, Zhejiang and Guangdong, are arguably China's two most critical areas for tech. For the moment, the risk of the new coronavirus to such provinces is somewhat limited — but all that depends on the success of China's containment strategy in Hubei: For if the outbreak continues, it would have a monumental impact on China's tech sector, resulting in significant shortages.

A Limited Effect on Tech — For Now
If the worst of the virus remains centered on Hubei, then the impact on supply chains for the Chinese — and, thus, the global — tech sector is likely to remain relatively limited. In 2017, Hubei produced less than 1 percent of China's overall integrated circuit production and just 1 percent of the country's overall television output. The following year, the province accounted for only 2.4 percent of the country's mobile phone output and 3.6 percent of its microcomputer equipment — two goods for which China's share of global production isn't high. Undoubtedly, there will be individual supply chains that will lack components as a result of the quarantine in Hubei, but large producers of goods like circuits, TVs, mobile phones and microcomputer equipment would be able to find suppliers outside the province over time if necessary.

Four maps showing industrial output by Chinese province for selected sectors.
But while Wuhan sits on the margins of China's semiconductor industry and broader tech sector, a prolonged industrial shutdown would have three important implications. First, China has penciled in Wuhan as a key location for domestic semiconductor manufacturing. There are two primary companies currently operating in Wuhan, primarily in the Donghu New Technology Development Zone. The more established company, Wuhan Xinxin Semiconductor Manufacturing Corp. (XMC), operates a small, 300 mm fabrication plant and functions as a contract pure-play foundry for the semiconductor industry. The other major semiconductor firm is Yangtze Memory Technologies Co. (YMTC), which was founded by China's Tsinghua Unigroup and is now owned by several other public investment funds, including the National Integrated Circuit Industry Investment Fund, colloquially known as China's "Big Fund." YMTC acquired a 100 percent stake in XMC in 2016.

Both XMC and YMTC are presently building two new, large facilities that will boost Hubei's overall production capacity by a factor of nearly 15. That, ultimately, will make Wuhan one of the pillars of China's long-term push to achieve greater self-reliance and global prominence in the semiconductor sector — especially in the memory segment of the industry — and a key city in the country's Made in China 2025 initiative. Before the outbreak, XMC and YMTC had ramped up construction on the facilities, but the companies could now slow down the building process or delay it by several months — if not a year. But once fully operational, YMTC's Wuhan plant will be China's largest memory semiconductor chip plant, with a planned capacity of 300,000 wafers per month. And with their Wuhan investments, both XMC and YMTC are focusing heavily on 3D NAND memory chips, which are central to China's push for self-reliance in chip production as they are an integral component of smartphones and other mobile devices. There are only a few companies that specialize in 3D NAND memory chips, such as South Korea's Samsung and SK Hynix, Japan's Toshiba and the United States' Intel and Micron — the latter of which Tsinghua Unigroup tried to buy in 2015 before running into opposition from the Obama administration. Thwarted, Tsinghua Unigroup formed YMTC instead.

A map showing the location of integrated circuit production and semiconductor plants in China.
The second key implication will be the more acute impact on China and Wuhan's optical fiber industry, which accounts for roughly 20 percent of China's overall output in the sector and, according to officials in the city, boasts a global market share of 25 percent. As a focal point for China's fiber optics industry, the Donghu New Technology Development Zone has referred to itself as "China Optics Valley" thanks to major firms like Wuhan Yangtze Optical Technology Co. (YOTC) — the world's largest supplier of optical fiber preform, optical fiber and optical cables — Fiberhome Technologies and Accelink Technologies. While there may be some global inventories that can withstand a limited, weekslong outage in the Wuhan fiber-optic sector's production capacity, a shutdown that lasts more than a few weeks could substantially hurt supply chains in the industry.

Finally, Wuhan is a leading center for research and development in China's technology sector. At the university level, Wuhan is home to Wuhan University, which is consistently ranked among China's top five universities, as well as the Huazhong University of Science and Technology, which is invariably among China's top 10 research universities and the operator of the Wuhan National Laboratory for Optoelectronics. Wuhan is also the site of research and development centers for Hon Hai Precision manufacturing (also known as Foxconn), United Imaging, Tencent, Huawei and Xiaomi (which opened its second headquarters in the city in December 2019), but the outbreak will halt new R&D endeavors, potentially setting China back in terms of novel advancements — especially if Wuhan suffers a long-term decline in overseas visitors because of its damaged reputation even after the outbreak subsides.

A graphic showing the breakdown of Hubei province's total manufacturing output.
The Consequences of Contagion Beyond Hubei
Unsurprisingly, if the provinces beyond Hubei continue to suspend their industrial activities, the ramifications would be much more severe for China. Many of Hubei's neighbors are crucial tech hubs, and the three provinces that have witnessed the next most cases, Zhejiang, Guangdong and Henan, are particularly big players in the sector. Already, a number of these areas have delayed the resumption of operations after the end of the Lunar New Year as a precaution, pushing back the start date from Jan. 29 to Feb. 9. Apple, for instance, has noted that orders for 45 million AirPods are at risk because of the measures necessary to contain the virus.

Hangzhou, the capital of Zhejiang, is the headquarters of Alibaba and one of the key hubs for China's overall tech sector. In terms of manufacturing, the province is not as critical as some neighbors, like Shanghai and Jiangsu, but it is crucial to the technological development of China's internet services sector and — together with Beijing — a leader in the country's artificial intelligence development. But in response to the new coronavirus, Hangzhou officials have reduced and restricted travel in several districts, including the area where Alibaba's center is located, in hopes of limiting the expansion of the virus. (The technology departments of China's services sector can at least mitigate the impact of the coronavirus by asking their employees to work remotely.) But if Hangzhou were to suffer a similar outbreak to Hubei, it would likely portend other major outbreaks in places like Shanghai and Jiangsu, as it would indicate the failure of efforts to halt the spread of the virus.

The most important Chinese province for tech, however, is Guangdong, an area that is home to more than 113 million people and major cities like Guangzhou, Shenzhen and Zhongshan. If the virus spreads to such a degree that officials must take extreme measures, it would paralyze the innovation, production and export of tech components in Guangdong. After all, the province manufactures 50 percent of China's TVs, produces 45 percent of its mobile phones and makes more than 15 percent of its semiconductor and microcomputer equipment.

A graphic showing the spread of the new coronavirus beyond China.
Henan province, which had registered 851 cases as of Feb. 6, directly borders Hubei to the north. Its capital, Zhengzhou, is particularly important for the manufacture of smartphones and iPhones — in fact, the presence of Foxconn's largest iPhone assembly line has led some to dub the metropolis "iPhone City." While its share of domestic smartphones is somewhat smaller, Zhengzhou and Henan province shipped a quarter of China's total smartphone exports last year, more than half of which were directly from Foxconn's operations. On Feb. 5, Foxconn issued new targets for 2020 sales, increasing the rate from just 1 to 3 percent this year. That's down from goals of 3 to 5 percent issued just two weeks earlier on Jan. 22. And in a further measure to check the virus' spread, Foxconn has vowed to subject any employee who returns from the Lunar New Year holiday from anywhere outside Henan province — not just from Hubei — to 14 days of quarantine.

More likely than not, the impact on tech supply chains beyond Hubei will be limited so long as the number of new coronavirus cases does not reach crisis-level proportions. At present, it appears that the virus will lay low some operations outside Hubei for upward of 10 days, given that many factories are planning to resume operations by Feb. 9. In the coming days, it will become clearer whether further contagion beyond Hubei's border will occur and, if so, how much it will impact operations outside Wuhan. If the virus does spread more significantly than most suspect, then almost all of China's tech sector along the Yangtze River Basin will be at risk of more acute disruptions — either from the direct impact of shutdowns or the secondary impact from closures among suppliers. In such a case, factories in China's technological heartland might remain shuttered long after Feb. 9.
Title: Re: Corona Kung Flu hitting tech sector in China?
Post by: G M on February 07, 2020, 09:19:06 PM
It's hitting every sector of the Chinese economy. Not long until it's hitting the world's economy as well.


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The Coronavirus Spreads Fears of a Shutdown in China's Tech Sector
Matthew Bey
Matthew Bey
Senior Global Analyst, Stratfor
9 MINS READ
Feb 7, 2020 | 10:00 GMT
An employee sits in the showroom of an Apple store in Beijing after it closed for the day on Feb. 1, 2020.
An employee sits in the showroom of an Apple store in Beijing after it closed for the day on Feb. 1. So far, China's technology industry has been spared the worst of the new coronavirus outbreak, but that could quickly change.

(KEVIN FRAYER/Getty Images)
HIGHLIGHTS
Because Wuhan is a relatively minor player in China's technology industry, the sector has been spared the worst of the new coronavirus. That could change if the outbreak spreads to the country's R&D heartland right next door....

Without question, the new coronavirus has taken a toll on China and many other places in the world, infecting at least 30,600 people and killing 633 as of Feb. 7. But only now, as the Lunar New Year holiday draws to a close, is Beijing preparing to assess just how much economic damage the coronavirus outbreak has wrought, especially as China is central to the global electronics and information technology sector.

The Big Picture
China is an indispensable part of the global tech sector, and the new coronavirus has the potential to drastically affect its supply chains and operations. But the virus' epicenter, Wuhan, is not as crucial as other areas, meaning authorities could minimize the impact of the virus to a few specific product types in the industry if it manages to contain the geographic scope and scale of the outbreak. If the virus does lose its intensity, for instance, the vast majority of the tech sector's operations, especially in cities in Jiangsu province and Shanghai, might suffer only limited impacts.

See The Geopolitics of Disease
Ultimately, the breadth of the impact depends on how far the virus spreads beyond its current location. Hubei province and its capital, Wuhan, are not critical nodes for the vast majority of China's electronics sector. But neighboring provinces, including Shaanxi, Henan and Jiangxi, are all home to cities that are prominent in the global technology sector, while the provinces with the second and third most confirmed cases so far, Zhejiang and Guangdong, are arguably China's two most critical areas for tech. For the moment, the risk of the new coronavirus to such provinces is somewhat limited — but all that depends on the success of China's containment strategy in Hubei: For if the outbreak continues, it would have a monumental impact on China's tech sector, resulting in significant shortages.

A Limited Effect on Tech — For Now
If the worst of the virus remains centered on Hubei, then the impact on supply chains for the Chinese — and, thus, the global — tech sector is likely to remain relatively limited. In 2017, Hubei produced less than 1 percent of China's overall integrated circuit production and just 1 percent of the country's overall television output. The following year, the province accounted for only 2.4 percent of the country's mobile phone output and 3.6 percent of its microcomputer equipment — two goods for which China's share of global production isn't high. Undoubtedly, there will be individual supply chains that will lack components as a result of the quarantine in Hubei, but large producers of goods like circuits, TVs, mobile phones and microcomputer equipment would be able to find suppliers outside the province over time if necessary.

Four maps showing industrial output by Chinese province for selected sectors.
But while Wuhan sits on the margins of China's semiconductor industry and broader tech sector, a prolonged industrial shutdown would have three important implications. First, China has penciled in Wuhan as a key location for domestic semiconductor manufacturing. There are two primary companies currently operating in Wuhan, primarily in the Donghu New Technology Development Zone. The more established company, Wuhan Xinxin Semiconductor Manufacturing Corp. (XMC), operates a small, 300 mm fabrication plant and functions as a contract pure-play foundry for the semiconductor industry. The other major semiconductor firm is Yangtze Memory Technologies Co. (YMTC), which was founded by China's Tsinghua Unigroup and is now owned by several other public investment funds, including the National Integrated Circuit Industry Investment Fund, colloquially known as China's "Big Fund." YMTC acquired a 100 percent stake in XMC in 2016.

Both XMC and YMTC are presently building two new, large facilities that will boost Hubei's overall production capacity by a factor of nearly 15. That, ultimately, will make Wuhan one of the pillars of China's long-term push to achieve greater self-reliance and global prominence in the semiconductor sector — especially in the memory segment of the industry — and a key city in the country's Made in China 2025 initiative. Before the outbreak, XMC and YMTC had ramped up construction on the facilities, but the companies could now slow down the building process or delay it by several months — if not a year. But once fully operational, YMTC's Wuhan plant will be China's largest memory semiconductor chip plant, with a planned capacity of 300,000 wafers per month. And with their Wuhan investments, both XMC and YMTC are focusing heavily on 3D NAND memory chips, which are central to China's push for self-reliance in chip production as they are an integral component of smartphones and other mobile devices. There are only a few companies that specialize in 3D NAND memory chips, such as South Korea's Samsung and SK Hynix, Japan's Toshiba and the United States' Intel and Micron — the latter of which Tsinghua Unigroup tried to buy in 2015 before running into opposition from the Obama administration. Thwarted, Tsinghua Unigroup formed YMTC instead.

A map showing the location of integrated circuit production and semiconductor plants in China.
The second key implication will be the more acute impact on China and Wuhan's optical fiber industry, which accounts for roughly 20 percent of China's overall output in the sector and, according to officials in the city, boasts a global market share of 25 percent. As a focal point for China's fiber optics industry, the Donghu New Technology Development Zone has referred to itself as "China Optics Valley" thanks to major firms like Wuhan Yangtze Optical Technology Co. (YOTC) — the world's largest supplier of optical fiber preform, optical fiber and optical cables — Fiberhome Technologies and Accelink Technologies. While there may be some global inventories that can withstand a limited, weekslong outage in the Wuhan fiber-optic sector's production capacity, a shutdown that lasts more than a few weeks could substantially hurt supply chains in the industry.

Finally, Wuhan is a leading center for research and development in China's technology sector. At the university level, Wuhan is home to Wuhan University, which is consistently ranked among China's top five universities, as well as the Huazhong University of Science and Technology, which is invariably among China's top 10 research universities and the operator of the Wuhan National Laboratory for Optoelectronics. Wuhan is also the site of research and development centers for Hon Hai Precision manufacturing (also known as Foxconn), United Imaging, Tencent, Huawei and Xiaomi (which opened its second headquarters in the city in December 2019), but the outbreak will halt new R&D endeavors, potentially setting China back in terms of novel advancements — especially if Wuhan suffers a long-term decline in overseas visitors because of its damaged reputation even after the outbreak subsides.

A graphic showing the breakdown of Hubei province's total manufacturing output.
The Consequences of Contagion Beyond Hubei
Unsurprisingly, if the provinces beyond Hubei continue to suspend their industrial activities, the ramifications would be much more severe for China. Many of Hubei's neighbors are crucial tech hubs, and the three provinces that have witnessed the next most cases, Zhejiang, Guangdong and Henan, are particularly big players in the sector. Already, a number of these areas have delayed the resumption of operations after the end of the Lunar New Year as a precaution, pushing back the start date from Jan. 29 to Feb. 9. Apple, for instance, has noted that orders for 45 million AirPods are at risk because of the measures necessary to contain the virus.

Hangzhou, the capital of Zhejiang, is the headquarters of Alibaba and one of the key hubs for China's overall tech sector. In terms of manufacturing, the province is not as critical as some neighbors, like Shanghai and Jiangsu, but it is crucial to the technological development of China's internet services sector and — together with Beijing — a leader in the country's artificial intelligence development. But in response to the new coronavirus, Hangzhou officials have reduced and restricted travel in several districts, including the area where Alibaba's center is located, in hopes of limiting the expansion of the virus. (The technology departments of China's services sector can at least mitigate the impact of the coronavirus by asking their employees to work remotely.) But if Hangzhou were to suffer a similar outbreak to Hubei, it would likely portend other major outbreaks in places like Shanghai and Jiangsu, as it would indicate the failure of efforts to halt the spread of the virus.

The most important Chinese province for tech, however, is Guangdong, an area that is home to more than 113 million people and major cities like Guangzhou, Shenzhen and Zhongshan. If the virus spreads to such a degree that officials must take extreme measures, it would paralyze the innovation, production and export of tech components in Guangdong. After all, the province manufactures 50 percent of China's TVs, produces 45 percent of its mobile phones and makes more than 15 percent of its semiconductor and microcomputer equipment.

A graphic showing the spread of the new coronavirus beyond China.
Henan province, which had registered 851 cases as of Feb. 6, directly borders Hubei to the north. Its capital, Zhengzhou, is particularly important for the manufacture of smartphones and iPhones — in fact, the presence of Foxconn's largest iPhone assembly line has led some to dub the metropolis "iPhone City." While its share of domestic smartphones is somewhat smaller, Zhengzhou and Henan province shipped a quarter of China's total smartphone exports last year, more than half of which were directly from Foxconn's operations. On Feb. 5, Foxconn issued new targets for 2020 sales, increasing the rate from just 1 to 3 percent this year. That's down from goals of 3 to 5 percent issued just two weeks earlier on Jan. 22. And in a further measure to check the virus' spread, Foxconn has vowed to subject any employee who returns from the Lunar New Year holiday from anywhere outside Henan province — not just from Hubei — to 14 days of quarantine.

More likely than not, the impact on tech supply chains beyond Hubei will be limited so long as the number of new coronavirus cases does not reach crisis-level proportions. At present, it appears that the virus will lay low some operations outside Hubei for upward of 10 days, given that many factories are planning to resume operations by Feb. 9. In the coming days, it will become clearer whether further contagion beyond Hubei's border will occur and, if so, how much it will impact operations outside Wuhan. If the virus does spread more significantly than most suspect, then almost all of China's tech sector along the Yangtze River Basin will be at risk of more acute disruptions — either from the direct impact of shutdowns or the secondary impact from closures among suppliers. In such a case, factories in China's technological heartland might remain shuttered long after Feb. 9.
Title: Has Xi lost the Mandate of Heaven?
Post by: G M on February 11, 2020, 08:49:41 PM
https://nationalpost.com/news/world/with-the-coronavirus-crisis-xi-jinping-faces-chinas-chernobyl-moment

I am going with yes.
Title: China: Viral Alarm-- when fury overcomes fear
Post by: Crafty_Dog on February 13, 2020, 07:22:28 AM


http://www.chinafile.com/reporting-opinion/viewpoint/viral-alarm-when-fury-overcomes-fear
Title: From the Heart
Post by: Crafty_Dog on February 16, 2020, 08:42:31 AM


https://www.youtube.com/watch?v=Ot1ejwUeFpI&feature=youtu.be

Title: Michael Yon: China's big trouble in little Hong Kong
Post by: Crafty_Dog on February 20, 2020, 11:18:45 AM
https://www.jordanharbinger.com/michael-yon-chinas-big-trouble-in-little-hong-kong/
Title: Re: Michael Yon: China's big trouble in little Hong Kong
Post by: G M on February 20, 2020, 08:14:43 PM
https://www.jordanharbinger.com/michael-yon-chinas-big-trouble-in-little-hong-kong/

A lot of very good information packed into that interview. Worth the time.
Title: NRO: The Role of Chinese History
Post by: Crafty_Dog on February 25, 2020, 11:46:57 AM


https://www.nationalreview.com/2020/02/china-history-key-to-understanding-chinese-government-actions-today/?utm_source=Sailthru&utm_medium=email&utm_campaign=NR%20Daily%20Monday%20through%20Friday%202020-02-24&utm_term=NRDaily-Smart
Title: Forbes: Corona could be end of China as global mfg hub
Post by: Crafty_Dog on March 02, 2020, 06:22:10 AM
https://www.forbes.com/sites/kenrapoza/2020/03/01/coronavirus-could-be-the-end-of-china-as-global-manufacturing-hub/?utm_campaign=forbes&utm_source=facebook&utm_medium=social&utm_term=Valerie%2F#2fc431dc5298
Title: Re: Forbes: Corona could be end of China as global mfg hub
Post by: DougMacG on March 02, 2020, 06:42:52 AM
https://www.forbes.com/sites/kenrapoza/2020/03/01/coronavirus-could-be-the-end-of-china-as-global-manufacturing-hub/?utm_campaign=forbes&utm_source=facebook&utm_medium=social&utm_term=Valerie%2F#2fc431dc5298

Yes.  The decoupling began when China chose to fight back in the tariff war.  They had a good thing going and blew it when they should have locked it in.  Now US and global companies (like Apple) HAVE to source elsewhere.
Title: Re: China
Post by: ccp on March 02, 2020, 07:37:44 AM
I just read
maybe on drudge that about 80% of generics are manufactured in Red Communist China

I was shocked
prescribing these all day long
and never knew this  :-o :-o
Title: Good thing that can't happen here! China edition
Post by: G M on March 04, 2020, 07:03:42 PM
https://charleshughsmith.blogspot.com/2020/03/could-chinas-overlapping-crises-spiral.html?m=1
Title: Wuhan Kung Flu
Post by: Crafty_Dog on March 13, 2020, 09:05:23 AM


March 13, 2020   View On Website
Open as PDF



    The Next Phase of China’s Fight with the Coronavirus
By: Phillip Orchard

The Communist Party of China would like you to know it’s winning the war against the coronavirus, and that we all have Xi Jinping to thank. That’s been the core message from Chinese state media over the past few weeks, which marked a major turning point in the crisis. Internally, China’s massive mobilization against the virus appears to have stemmed the tide, with new infections slowing to single digits and Chinese industry gingerly getting back to work. And as the outbreak became a pandemic, Western governments’ spotty responses have put both Beijing’s early missteps and its later successes in a more favorable light.

It’s been a boon to Beijing’s propagandists, who can now call attention to China’s triumphs and the world’s woes. Their messaging has also made it clear that Xi and his inner circle will emerge from the public health crisis intact – and perhaps even stronger. Xi has commanded the decisive battles in the “People’s War” against an invisible enemy, at least according to state media hell-bent on elevating the president to almost Mao-like status.

But if Xi is safe on his throne, his realm is not. The Chinese economy is, to put it plainly, in really bad shape. Nearly every problem Beijing couldn’t figure out how to fix has been made an order of magnitude worse by the coronavirus crisis. And while the virus going global may be a shot in the arm for China’s hype machine, its spread may very well shut down the country’s most promising roads to a rapid recovery.

Xi’s Glorious Battle

A month ago, the CPC was reeling. The epidemic had become nearly uncontainable, and Xi’s tightly centralized decision-making structure and a culture of censorship were at least partially to blame. This created pressure both at home and abroad, forcing Beijing to implement a twist on Mao’s Hundred Flowers Campaign and relax the restrictions on independent reporting and to censor social media with a lighter touch. The outrage that followed, particularly after the death of whistleblowing doctor Li Wenliang, scared Beijing, forcing it into a series of clumsy moves to squelch dissent. Beijing was also forced to postpone its annual National People’s Congress, which the CPC relies on to align the machinery of the state with its agenda. For much of this time, Xi himself was conspicuously absent from the spotlight. When the central government finally launched a campaign to demonstrate its command of the crisis response, it was led not by Xi but by Premier Li Keqiang, the closest thing Xi has to a rival in the Politburo Standing Committee. But as soon as the outbreak looked like it would soon crest in early February, Xi was firmly back out in front.

The pillars of power in China are often described as “the three Ps”: the People's Liberation Army, personnel and propaganda. And by becoming the public face of the government’s response, Xi has demonstrated his control over each of them. In early February, he deployed the PLA, which answers directly to him as chairman of the Central Military Commission and had been noticeably absent from the response in January, to build hospitals, transport supplies, ensure public order and dispatch medics to the front lines in Wuhan. If Xi were losing control over key personnel appointments, he wouldn’t have been able to replace the party leadership in Hubei province with a pair of loyalists. Finally, the propaganda machine has gone into overdrive in lionizing the president. State media has begun referring to the president as “the People’s Leader” and, particularly during Xi’s long-awaited visit Wuhan this week, equating his leadership in the fight against coronavirus to Mao’s command of the Communist Party’s civil war victory in 1949. This matters more than mere symbolism. By effectively elevating Xi to Mao-like status, the Communist Party is wrapping its own legitimacy in Xi’s cult of personality even more tightly, making it near-impossible for rivals to dislodge him.

Still, there are at least two other “Ps” that also matter. The first is the public, which for now appears to broadly support the CPC. To be sure, there are glimpses of discontent over Beijing’s mismanagement – and not just in social media circles where outfoxing censors has become something of an art form. Doctors in Wuhan haven’t stopped speaking out about the government’s suppression of information about the virus. An exceedingly tone-deaf speech given by Wuhan’s party chief calling for a “gratitude education campaign” for the city’s residents ahead of Xi’s inspection tour had to be buried by censors after earning so much backlash. And leaked videos showed Chinese Vice Premier Sun Chunlan getting showered with insults from quarantined citizens during her own visit to Wuhan. But this has yet to translate into any sort of mass movement on the streets.

This is, in part, because the country has been effectively in lockdown. (Indeed, the digital systems put in place to combat the spread of the virus will be useful in combating attempts to mobilize against the government going forward.) It’s also because there’s no prominent opposition figure or party to rally around. (This is why any signs of a major split in the PLA or Politburo would be so important). But the power of the state’s messaging machine shouldn’t be dismissed. Propaganda is more effective when it contains nuggets of truth. Beijing can reasonably point to the lockdowns in Italy and elsewhere to make the case that its own response was within bounds, and it can point to the severe shortage of medical masks, testing kits, hospital beds and so forth in places like the U.S. to make the case that, whatever its flaws, the CPC’s model of governance is superior to Western democracies in a crisis.

The War Isn’t Over

The other “P” is prosperity. Breakneck growth was already becoming impossible to sustain. In February, the economy effectively ground to a halt. As many as a third of Chinese businesses remain shut down, with many more operating at only partial capacity. As was made clear by anemic credit growth figures released this week, Beijing's chronic struggles with getting liquidity to small and medium-sized businesses – which account for as much as 80 percent of employment in China, and more than half of which say they can’t last two months on their savings – persist. Even “shadow banking" hit a three-year low in February. This is good news for Beijing’s long-term battle against reckless lending, but it’s bad news in the current environment.

We’ve noted that China would be reasonably well-positioned for a “V-shaped” recovery once it could contain the virus enough to restart its manufacturing engine – that is, so long as it could keep systemic risks in, say, the financial or property sectors from rupturing. That’s basically what happened following the SARS epidemic in 2003. Once people can actually get back to work en masse, it won’t be hard to rev up Chinese factories and services sectors.

The pace of the recovery will therefore depend primarily on demand. Massive stimulus spending and the state sector will help here. But with the mass, short-term loss of wages likely to drag down domestic consumption for at least a month or two more, external consumption will once again be the key.

This is why the global spread of the crisis is such a problem for China – especially since it's happening at a pace that’s likely to last months and may surge again in the fall. Prolonged disruptions to trade would be bad enough for Chinese exports, which dropped more than 17 percent in January and February alone. The more European and the U.S. economies slow down, the more Western demand for Chinese goods will dry up. In this light, “doomsday scenarios” like the one put out by the United Nations predicting a $2 trillion hit to global gross domestic product somehow seem optimistic.
 
(click to enlarge)

Meanwhile, stress on financial markets in the West – combined with the likely boost to anti-globalization political forces and the broad awareness among multinational corporations that supply chains have become overly dependent on China – will blunt investment and capital flows into China. Despite China’s impressive capacity to screen just about everyone for the virus at just about every factory door or airport gate, it’s not impossible for the virus to come back. Additional mass quarantines, of course, could be incalculably disruptive. (One silver lining of the global slowdown for Beijing: The collapse of oil prices will have mixed effects on the Chinese economy, but on the whole it will do more good than harm.)

For almost a decade now, we’ve been waiting for the next big shock that would test the resilience of the CPC-led system. The assumption has been that the most likely shock would come from external forces. Turns out, the shock came from within, spread to the rest of the world and now looks likely to boomerang back. There’s nothing China’s propagandists can do about it.   

Title: COVid 19 Turning point for China?
Post by: DougMacG on March 18, 2020, 06:26:04 AM
https://www.realclearpolitics.com/articles/2020/03/18/beijing_fears_covid-19_is_turning_point_for_china_globalization__142686.html

"Instead of acting with necessary speed and transparency, the party-state looked to its own reputation and legitimacy. It threatened whistleblowers like the late Dr. Li Wenliang, and clamped down on social media to prevent both information about the virus and criticism of the Communist Party and government from spreading."
----------------------------
Never again to be trusted.

Title: Re: COVid 19 Turning point for China?
Post by: G M on March 18, 2020, 06:43:12 AM
Pariah State. Hard decoupling needs to be the policy.


https://www.realclearpolitics.com/articles/2020/03/18/beijing_fears_covid-19_is_turning_point_for_china_globalization__142686.html

"Instead of acting with necessary speed and transparency, the party-state looked to its own reputation and legitimacy. It threatened whistleblowers like the late Dr. Li Wenliang, and clamped down on social media to prevent both information about the virus and criticism of the Communist Party and government from spreading."
----------------------------
Never again to be trusted.
Title: Re: China
Post by: Crafty_Dog on March 24, 2020, 11:49:02 AM
China's Economy Braces for a COVID-19 Double Hit
7 MINS READ
Mar 24, 2020 | 14:59 GMT
Workers operate a production line of a new material company in Lianyungang, China, on March 23, 2020.
Workers operate a production line of a new material company in Lianyungang, China, on March 23, 2020.

(Costfoto/Barcroft Media via Getty Images)
HIGHLIGHTS
China's economy will sustain a double hit in 2020 due to COVID-19 given both the direct domestic impact of the virus control measures and the looming hit to global demand.
The government will need to tread carefully in stimulus spending given the risk of increasing economic instability by fueling unsustainable debt.
However, if the global outbreak worsens, the risk to economic growth and employment may compel Beijing to engage in large-scale spending in order to ensure political stability in the long term.
In China, the economic fallout of the COVID-19 outbreak will drag on 2020 GDP growth as the country endures the twin hits of both the early-year domestic slowdown and the as-yet-unknown drop in overseas demand in key markets. But the country’s high debt levels — partly fueled by its massive stimulus during the 2008 financial crisis, in addition to the structural slowdown already underway before the outbreak — means Beijing will hesitate to mirror the large-scale spending being implemented in other virus-ravaged economies, such as the United States, Japan and South Korea. China will now have to choose whether to help buoy its employment and annual growth targets through spending that could jeopardize long-term economic stability.

The Big Picture
China's COVID-19 economic damage and recovery path will be a key bellwether for the rest of the world as more countries weather the spread of the virus. However, government efforts to ensure a smooth rebound will be challenged by the legacy of the country's 2008 stimulus spending and ongoing structural slowdown.

See COVID-19
The Virus Fallout
The COVID-19 outbreak originating in China saw the country’s economy locked down for the better part of two months — a massive blow to export-oriented industries, as well as consumer and travel spending during a key annual holiday period. China’s combined January-February economic data released in mid-March showed a worse than expected hit to the economy due to the virus, with value-added industrial production down 13.5 percent, fixed asset investment down 24.5 percent and retail sales down 20.5 percent. Those months also saw at least 5 million workers lose their jobs, bringing the official unemployment rate to 6.2 percent — the highest on record and not even counting the massive pool of migrant workers inside the country that were idle during the same period but not counted in official unemployment numbers.

Even before COVID-19’s unexpected emergence, China had been in the throes of a structural slowdown in its economic growth. Over the past decade, China’s GDP growth, according to government figures, has gradually moderated from above 10 percent in 2010, to below 8 percent in 2015 before hitting 6.6 percent in 2018 and softening further to 6.1 percent in 2019 — the slowest in three decades. There is a broad consensus that the first quarter of the year will bring a contraction in GDP with COVID-19 factored in. And for the full year of 2020, economists across the board have revised their growth projections downward. Goldman Sachs dropped their initial 5.5 percent forecast to 3 percent, S&P lowered it from 4.8 percent to 2.9 percent and Nomura from 4.8 percent to 1.3 percent. High-level Chinese government leaks suggest that even the official projections may be revised downward from the current 6 percent for 2020 to 5 percent.


China’s growth figures will also depend on the scope and trajectory of the COIVID-19 outbreaks now burning through Europe, the United States and elsewhere. These outbreaks will dampen global consumer demand, posing a secondary hit to China’s economy even as the domestic sector tries to effect a recovery. 20 percent of China’s exports go to the United States; 9.2 percent to Germany, France, Italy and Spain; with 10.6 percent to South Korea and Japan.

What China Can Do
The spike in unemployment and drop in growth rates presents something of a political crisis for the Communist Party of China, which has based its legitimacy on the ability to deliver consistently rising prosperity and economic stability to the population. The 2020 party-mandated goal of doubling China’s 2010 GDP in order to achieve a “moderately prosperous society” is likely now out of reach. News of authorities’ early mishandling of the virus only deepens this risk — and spurs the party not only to focus on maintaining growth but also on ensuring blame for the pandemic rests at the local level and does not rise to the central government and President Xi Jinping.

So far, the government has emphasized an expectation that the second quarter will bring a recovery and return to normal. In mid-March, the government announced that, outside of the Hubei province epicenter, 90 percent of state-owned enterprises have resumed operations after virus-related shutdowns as have 60 percent of small- to medium-sized enterprises. Given the strong incentive to signal a robust rebound, there is reason to doubt this optimism and the true numbers are likely lower. An Economist Intelligence Unit survey of 200 large, foreign-backed firms found only half had resumed operations. Many provinces appear to have officially branded all businesses operating at one-third of normal capacity as having resumed their operations. Around 32 percent of Chinese manufacturers in the southern industrial core are reportedly facing shortages in supplies needed for production with a further 15 percent out of key stocks due to lingering supply chain disruptions related to COVID-19, according to an American Chamber of Commerce survey.

Given the uncertain next steps for the Chinese economy, the government is weighing its options to intervene. With governments worldwide moving quickly to stimulate their economies through monetary and fiscal policy, China’s central government has so far proceeded cautiously. Large-scale stimulus spending would exacerbate China’s already massive debts, which currently stand at three hundred percent of GDP. It also needs to be careful of measures that could fuel a bubble in the already potentially volatile property market. The central government is particularly watching local governments very carefully to prevent them from borrowing off balance sheets and increasing the risk of default. But without resorting to debt, local governments will face major limitations in their spending given that their budgets have already been squeezed by 2019 nationwide tax cuts that had been meant to offset the impacts of the U.S.-China trade war. Central-local tensions are already playing out, with local government plans for consumer handouts sparking a central government warning that they exercise caution and not overspend.

The direct domestic impact of lockdown measures to contain the virus, combined with the looming hit to global demand, will stymie China's economic growth in 2020.

To date, China’s central government has largely focused on tax relief and increased liquidity to try to offset the effects of the virus. It has not engaged in steep interest rate cuts (only 10 basis points) and shied away from massive stimulus spending on par with the $570 billion it spent during the global financial crisis. Instead, the People’s Bank of China has cut the reserve ratio requirement by 0.5 to 1 percent, freeing up $78.8 billion for lending by banks nationwide with instructions that this lending be targeted to smaller businesses most hit by the COVID-19 disruptions. China's Financial Stability and Development Committee has opened more offices across the country to oversee this process. China has more room to cut the reserve requirement ratio, which is currently around 10 percent (down from 20 percent in 2011) and a cut to zero could open up 20 trillion yuan in lending.

But the global spread of COVID-19 is rapidly unfolding a demand-side crisis for China as key markets experience economic damage. Given the drawbacks of aggressive government spending, China may wait until the second quarter when the other shoe drops in the form of demand-side hits to Chinese growth. More decisions could come ahead of the previously delayed sessions of both China's legislature, the National People’s Congress, and the government advisory body, the Chinese People’s Political Consultative Conference, which are now likely to be held in late April or early May. Leaks suggest Beijing is considering a massive stimulus that would see the 2020 government budget deficit rise to 3.5 percent, breaking the informal 3 percent cap of recent years. This spending could include $394 billion in special local government bonds, funds for infrastructure spending related to public health, emergency materials, 5G and data centers.

But such stimulus layout comes with downsides in the form of increased borrowing and threats to economic stability at a time when China is not only weathering a structural slowdown but still saddled with the debts accrued during the 2008 global financial crisis. However, China may calculate that these measures — and the attendant risks — are worth hazarding given the risks to the economy and political stability.
Title: Unpossible!
Post by: G M on March 24, 2020, 12:12:20 PM
https://www.japantimes.co.jp/news/2020/03/24/asia-pacific/politics-diplomacy-asia-pacific/wuhan-coronavirus-patient-numbers-manipulated-china-xi-jinping/

Trust global health and the global economy to their very trustworthy leadership!
Title: China, Unprecedented 21 Million Cellphone Users Disappear
Post by: DougMacG on March 26, 2020, 08:36:33 AM
troubling disappearance of some 21 million cell telephone accounts in China about the previous three months – an unprecedented decrease that hints at much more fatalities than disclosed by the government.
https://www.theepochtimes.com/the-closing-of-21-million-cell-phone-accounts-in-china-may-suggest-a-high-ccp-virus-death-toll_3281291.html
https://abc14news.com/2020/03/24/21-million-chinese-cellphone-users-disappear-in-three-months/
Title: Re: China
Post by: Crafty_Dog on March 26, 2020, 09:27:09 AM
My son's theory is that they are taking away the phones of those that have made or received international calls.
===========

https://www.theepochtimes.com/where-ties-with-communist-china-are-close-the-coronavirus-follows_3268389.html?utm_source=Epoch+Times+Newsletters&utm_campaign=b751c4c659-EMAIL_CAMPAIGN_2020_03_24_11_05&utm_medium=email&utm_term=0_4fba358ecf-b751c4c659-239065853
Title: Re: China
Post by: DougMacG on March 26, 2020, 09:38:11 AM
My son's theory is that they are taking away the phones of those that have made or received international calls.
===========

https://www.theepochtimes.com/where-ties-with-communist-china-are-close-the-coronavirus-follows_3268389.html?utm_source=Epoch+Times+Newsletters&utm_campaign=b751c4c659-EMAIL_CAMPAIGN_2020_03_24_11_05&utm_medium=email&utm_term=0_4fba358ecf-b751c4c659-239065853

That explanation makes sense - with a duplicitous, totalitarian, oppressive, repressive regime.  They can take their phones or just disconnect their service. 

I wonder if it is still considered free and universal health care if you can't have a phone to call a doctor?
https://en.wikipedia.org/wiki/List_of_countries_with_universal_health_care
Title: Re: China, Unprecedented 21 Million Cellphone Users Disappear
Post by: G M on March 26, 2020, 10:32:15 AM
troubling disappearance of some 21 million cell telephone accounts in China about the previous three months – an unprecedented decrease that hints at much more fatalities than disclosed by the government.
https://www.theepochtimes.com/the-closing-of-21-million-cell-phone-accounts-in-china-may-suggest-a-high-ccp-virus-death-toll_3281291.html
https://abc14news.com/2020/03/24/21-million-chinese-cellphone-users-disappear-in-three-months/

Probably not, given that my wife and her family in the US routinely talks to friends and family in China on a constant basis, uninterrupted since the Kung Flu started.
Title: Re: China
Post by: Crafty_Dog on March 26, 2020, 12:25:07 PM
Presumably the Commies are listening in and take the phones of those of disloyal to the Party , , ,
Title: Re: China
Post by: G M on March 26, 2020, 01:25:04 PM
Presumably the Commies are listening in and take the phones of those of disloyal to the Party , , ,

At the minimum. The social credit system wasn't created for giggles. The Chicoms have never hesitated to disappear dissenters.
Title: Sent by a friend, haven't watched it yet,
Post by: Crafty_Dog on March 31, 2020, 08:42:34 PM
https://www.youtube.com/watch?v=jFvCwdfoiH8&feature=youtu.be
Title: Millenial grapples with China-HK border issues
Post by: Crafty_Dog on April 02, 2020, 07:58:04 AM
https://www.youtube.com/watch?v=MQyxG4vTyZ8&feature=share
Title: China-- panic buying of food?
Post by: Crafty_Dog on April 03, 2020, 08:13:19 AM
https://www.theepochtimes.com/food-supplies-in-china-under-scrutiny-as-panic-buying-abrupts-across-country_3295736.html?utm_source=Epoch+Times+Newsletters&utm_campaign=0bbea86e14-EMAIL_CAMPAIGN_2020_04_02_06_31&utm_medium=email&utm_term=0_4fba358ecf-0bbea86e14-239065853
Title: Sucks to be the donkey
Post by: Crafty_Dog on April 13, 2020, 12:40:27 PM
http://cachlamdephieuqua.info/home/live-donkey-fed-to-tigers-at-chinese-zoo-420.html
Title: Re: Sucks to be the donkey
Post by: G M on April 13, 2020, 12:52:00 PM
http://cachlamdephieuqua.info/home/live-donkey-fed-to-tigers-at-chinese-zoo-420.html

Yeah, Tigers only eat organic tofu in the wild.

I guess there is nothing else to worry about in China.
Title: Re: China
Post by: ya on April 19, 2020, 06:52:37 AM
In these times of stress..
(https://pbs.twimg.com/media/EUnvvutUwAAi-lu?format=jpg&name=900x900)
Title: China's disappeared; where are they now?
Post by: Crafty_Dog on April 19, 2020, 08:10:39 PM
https://www.dailymail.co.uk/news/article-8233203/Chinas-disappeared-happened-dared-speak-coronavirus.html?
Title: Re: China
Post by: Crafty_Dog on April 19, 2020, 08:31:14 PM
https://www.youtube.com/watch?v=f4hUZwdZKqg&feature=share
Title: China, ChiComWHO Virus, "Because totalitarian regimes lie", Mark Steyn
Post by: DougMacG on April 20, 2020, 07:18:50 AM
[Which thread do you want to be the 'China Lies' thread?  There is a lot of material.]

Following is a 17 year old Mark Steyn column with the word sars replaced with COVID-19:

The appearance of the virus itself was a surprise but everything since has been, to some extent, predictable. Because totalitarian regimes lie, China denied there was any problem for three months, and thereafter downplayed the extent of it. Because UN agencies are unduly deferential to dictatorships, the World Health Organization accepted Beijing's lies. This enabled SARS COVID-19 to wiggle free of China's borders before anyone knew about it. I mentioned all this three weeks ago, but only in the last couple of days has the People's Republic decided to come clean -- or, at any rate, marginally less unclean -- about what's going on.
http://www.jewishworldreview.com/0420/steyn042020.php3

Steyn continued, April 20, 2020:
"It is profoundly depressing - on CNN, the BBC, CBC, etc - to hear the credibility their reporters still give to ChiCom/WHO propaganda.

Fool me once, shame on you. Fool me twice, shame on me.

Fool me thrice? Death on me."
Title: China: Human rights activists and religious people are mentally ill and drugged
Post by: Crafty_Dog on April 21, 2020, 07:52:54 PM
https://www.breitbart.com/national-security/2020/04/20/report-china-traps-human-rights-activists-religious-believers-mental-hospitals/
Title: China's Huawei: 5G Viral Spies
Post by: DougMacG on April 22, 2020, 06:07:19 AM
https://strategypage.com/on_point/20200331224243.aspx#foo
Huawei: 5G Viral Spies
by Austin Bay
March 31, 2020
February was a cruel month for the Chinese corporate giant Huawei Technologies, and rightly so. The "high-risk" telecommunications company with deep ties to Beijing's communist dictatorship deserves an even crueler April and a disastrous 2020 marked by criminal investigation, criminal indictment and billion-dollar lawsuits.

For several years Huawei has pursued a strategy to position itself as the world's biggest supplier of telecommunications equipment, with the goal of dominating global and regional communications infrastructure as well as crucial international digital systems.

Its most worrisome operation gambit involves the 5G "next generation" wireless communication systems that have the ability to connect cellphones, the internet, the internet of things -- well, virtually all things digital. Huawei intends to provide hardware and corporate technical support.

Here's the high-risk rub: Does anyone not on the payroll of the Chinese Communist Party trust Beijing's dictatorship with the power to pervasively monitor communications (spy locally as well as globally), interrupt, deny or corrupt digital services, and possibly take surreptitious control of digital devices, say, the air traffic control computers at Los Angeles International Airport?

Outrageous scenario? No, given Huawei's baggage is a legitimate worry exacerbated by the regime's criminal dishonesty (e.g., lying about COVID-19/Wuhan virus). For all practical purposes, Huawei is a Chinese Communist Party tool. In spy lingo, a cutout company can hide an espionage operation. Abundant evidence suggests Huawei serves as a cutout.

Which is why February's tough responses to Beijing's gambit were so encouraging.

On Feb. 10, U.S. Attorney General William Barr did more than make the case that Huawei poses a security risk to the entire free world. He also suggested several actions the U.S. and its allies could undertake to confront China and mitigate Huawei's threat. He suggested the U.S. form a consortium with private U.S. and allied companies to manufacture 5G equipment. He specifically mentioned Nokia and Ericsson. Nokia, Ericsson and Samsung are Nos. 1, 2 and 3 globally in holding standard and essential telecommunications patents. By this measure, three democracies, Finland (Nokia), Sweden (Ericsson) and South Korea (Samsung), have superior tech.

Huawei is sixth, according to one analysis. Huawei, however, has assets its intellectual superiors lack: Beijing's money and political muscle, and the covert support of the authoritarian state's intelligence services. Some sources estimate Huawei has received $75 to $80 billion from Beijing and used the money to increase sales by guaranteeing financing.

On Feb. 13, Barr's Department of Justice and the FBI detailed Huawei's national and international security risk. The DOJ's 56-page indictment hit the company with 16 charges involving "racketeering conspiracy and conspiracy to steal trade secrets."

Huawei faces numerous counts of intellectual property theft. The indictment has some interesting tidbits that stink of government espionage. Federal investigators found a "top-secret" Huawei manual that ordered "certain individuals" to conceal the fact that they worked for the company when meeting "foreign law enforcement officials."

Numerous analysts believe Huawei has aided Chinese espionage efforts. Huawei personnel have admitted that the company has the ability to intercept communications using its hardware, both in mainland China and in foreign nations.

The company databases contain information on foreign personnel, phone records and property that have nothing to do with telecommunications.

Moreover, it is a fact the Chinese dictatorship requires Chinese companies to give Beijing access to all data they hold. But Huawei is not a private corporation. It is owned by a holding company that is owned by a trade union investment committee that is essentially an arm of the All-China Federation of Trade Unions, which is a public entity.

Then there's l'affair Meng Wanzhou. Ms. Meng is chief financial officer of Huawei and daughter of its founder. According to the DOJ, she was directly involved in stealing American-developed source code. She tried to steal memory hardware and antenna technology. She also violated U.S. sanctions on Iran. The U.S. is trying to extradite her from Canada.
Title: China: Coronavirus and the Laboratories in Wuhan
Post by: DougMacG on April 22, 2020, 08:26:45 AM
US Sen Tom Cotton today in the WSJ, link below.
From the article:
...
Beijing has claimed that the virus originated in a Wuhan “wet market,” where wild animals were sold. But evidence to counter this theory emerged in January. Chinese researchers reported in the Lancet Jan. 24 that the first known cases had no contact with the market, and Chinese state media acknowledged the finding. There’s no evidence the market sold bats or pangolins, the animals from which the virus is thought to have jumped to humans. And the bat species that carries it isn’t found within 100 miles of Wuhan.

Wuhan has two labs where we know bats and humans interacted. One is the Institute of Virology, eight miles from the wet market; the other is the Wuhan Center for Disease Control and Prevention, barely 300 yards from the market.

Both labs collect live animals to study viruses. Their researchers travel to caves across China to capture bats for this purpose. Chinese state media released a minidocumentary in mid-December following a team of Wuhan CDC researchers collecting viruses from bats in caves. The researchers fretted openly about the risk of infection.

These risks were not limited to the field. The Washington Post reported last week that in 2018 U.S. diplomats in China warned of “a serious shortage of appropriately trained technicians and investigators needed to safely operate” the Institute of Virology. The Wuhan CDC operates at even lower biosafety standards.

While the Chinese government denies the possibility of a lab leak, its actions tell a different story. The Chinese military posted its top epidemiologist to the Institute of Virology in January. In February Chairman Xi Jinping urged swift implementation of new biosafety rules to govern pathogens in laboratory settings. Academic papers about the virus’s origins are now subject to prior restraint by the government.
...
This evidence is circumstantial, to be sure, but it all points toward the Wuhan labs.
https://www.wsj.com/articles/coronavirus-and-the-laboratories-in-wuhan-11587486996?mod=opinion_lead_pos5
https://nationalinterest.org/blog/coronavirus/could-wuhan-coronavirus-really-have-been-released-lab-simple-answer-yes-144862?mod=article_inline
https://www.youtube.com/watch?v=ovnUyTRMERI&mod=article_inline
https://www.scmp.com/news/china/military/article/3064677/meet-major-general-chinas-coronavirus-scientific-front-line?mod=article_inline
https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1745270.shtml?mod=article_inline
https://www.straitstimes.com/asia/east-asia/how-early-signs-of-the-coronavirus-were-spotted-spread-and-throttled-in-china?mod=article_inline
https://www.scmp.com/news/china/society/article/3052966/chinese-laboratory-first-shared-coronavirus-genome-world-ordered?mod=article_inline
Title: China'a Democratic Future
Post by: Crafty_Dog on April 23, 2020, 12:12:51 PM
https://claremontreviewofbooks.com/chinas-democratic-future/
Title: China 1971
Post by: Crafty_Dog on June 15, 2020, 08:41:34 PM
https://www.nytimes.com/1971/05/19/archives/china-transformed-by-elimination-of-four-olds.html
Title: 3 Gorges Dam
Post by: G M on July 09, 2020, 10:59:08 PM
https://www.taiwannews.com.tw/en/news/3951673

Hey, it's 2020. Why not?
Title: Three Gorges Dam
Post by: Crafty_Dog on July 14, 2020, 02:27:52 PM
https://www.patreon.com/posts/china-if-three-39315722
Title: Re: Three Gorges Dam
Post by: G M on July 14, 2020, 04:46:59 PM
https://www.patreon.com/posts/china-if-three-39315722

The destruction and loss of life would be mind boggling.
Title: China's STAR market
Post by: Crafty_Dog on July 30, 2020, 02:37:28 PM
A Year On, China's Tech-Focused Stock Market Is Making Strides
3 MINS READ
Jul 30, 2020 | 17:16 GMT
The STAR Market, China's equivalent to a tech-focused Nasdaq, is fueling growth in China's tech sector, but Beijing's regulation and fears of both domestic speculation and industry bubbles will constrain the exchange's potential for growth. A recent string of launches is demonstrating the STAR Market's potential power to raise capital and draw investment into the Chinese technology sector:

China's Semiconductor Manufacturing International Corporation (SMIC) raised $6.62 billion and surged 246 percent on its first day of trading on the STAR Market on July 16 — the largest mainland listing since 2010.
Ant Financial — the world's most valuable tech unicorn targeting a $200 billion valuation — announced July 20 that it would hold its IPO on a dual listing on Hong Kong and the STAR Market, shunning the U.S. and other global markets.
The STAR 50, the market's first index, launched on July 23 and showed a 49 percent rise since the start of 2020 — more than doubling the gains of its U.S. counterpart Nasdaq.
The STAR Market, known formally as the Science and Technology Innovation Board, has made it significantly easier for technology companies to list. China will likely continue to liberalize the market faster than its other domestic stock markets, as the exchange becomes increasingly central to China's overall technology ambitions amid its tech war with the United States.

Launched in July 2019, the STAR Market was designed to be the Chinese equivalent to the Nasdaq, aimed at attracting technology- and R&D-focused companies to raise capital and list on a domestic exchange instead of foreign exchanges.
The STAR Market differs significantly from other Chinese stock markets in several key ways, including a registration-based IPO system that allows pre-profit companies to list, thus granting a wider trading band for prices. 
Shanghai's STAR Market — along with China's other tech-focused exchange, Shenzhen's ChiNEXT — are central to China's ambitions of creating a domestic environment conducive to growth for companies in emerging technology sectors, (including those in the semiconductor, artificial intelligence and fintech industries) by creating future pathways for financing, which allows for more market-based incentives and easing regulatory burdens.
The board has become even more critical as the United States considers increasing pressure on Chinese companies listed on U.S. exchanges, such as the Nasdaq and NYSE, by increasing auditing requirements on Chinese companies and barring them if they have connections to the Chinese military.
The success of the STAR Market will depend on the innovativeness and quality of the companies involved in it, as well as the broader constraints to China's tech sector. Such constraints include concerns about access to international technology due to U.S. pressure, lack of competitiveness in certain industries to international peers, and government intrusion into corporate affairs and direction. Unlike other Chinese stock markets, the STAR Market is more focused on institutional investors than retail investors, but speculation around China's growing tech sector will likely remain a concern. China also fears that more liberalized stock markets could run the risk of creating more bubbles.

The STAR board allows companies to list without being profitable, which will enable companies to raise additional capital without having to show profits first — something essential in R&D-intensive industries.
The STAR Market's ease of listing will also enable Chinese companies to use the IPO process once venture capital sources dry up or move on, allowing for innovation to continue to grow.
The streamlined IPO process, in particular, provides tech firms with another avenue for financing beyond loans to help grow their business. This is crucial as most tech companies lack physical assets to put up as collateral, given that their value is often derived from intangible assets, such as intellectual property.
Title: Gatestone: China's genocide in Xinjiang
Post by: Crafty_Dog on August 12, 2020, 06:22:05 AM
https://www.gatestoneinstitute.org/16306/china-genocide-xinjiang
Title: GPF: The CCP and China
Post by: Crafty_Dog on September 04, 2020, 06:28:36 AM
   
    The Communist Party of Every Last Inch of China
Crackdowns in places like Inner Mongolia are easier to understand when you understand the difference between threats to the state and threats to the regime.
By: Phillip Orchard

In July, Chinese authorities announced a three-year plan to phase out Mongolian-language instruction for grade schoolers in the nominally autonomous northern region of Inner Mongolia. Beijing had imposed similar changes on ethnic Uighurs and Tibetans in 2017 and 2018 as part of its draconian forced assimilation campaigns. As a result, many of the 6 million or so ethnic Mongolians living in the province were understandably unnerved, seeing the move not as a well-intentioned policy aimed at promoting national unity and development, but rather as a form of cultural genocide – and a precursor of worse to come.

When the fall school term began on Monday, and students cracked open their new state-compiled textbooks to find them written in Mandarin, the result was what qualifies as all hell breaking loose in stability-obsessed modern China. Tens of thousands of people reportedly took to the streets throughout the province. Students and teachers walked out of schools – or, more accurately in some cases, climbed and pushed their way out after authorities tried to lock them in. Videos posted on social media appeared to show several scuffles with police. Beijing responded Thursday by doubling down on its new policies and launching a fresh campaign to arrest troublemakers.

Dominating buffer zones such as Inner Mongolia is a core Chinese geopolitical imperative. It’s why the Communist Party of China is reportedly expanding its mass internment of ethnic Uighurs in Xinjiang, tightening the screws in Tibet, dismantling “one country, two systems” in Hong Kong, sparking royal rumbles in the Himalayas and putting the squeeze on Taiwan.

These moves, however, are only intensifying international pressure on Beijing at a time when it’s still grappling with the epochal political and economic crises created by the pandemic. So it would seem self-defeating to open up yet another front of unrest in the comparably stable Inner Mongolia. But Beijing doesn’t think it can manage these crises in any other way.

Around the Core

Five subordinate regions surround the ethnic Han core in China: Tibet, Xinjiang, Inner Mongolia, Manchuria and Yunnan. The regions are defined by impassable mountains, unforgiving jungle, vast desert grasslands and high tundra. When the core has been united under central rule, these features have served as shields against outsiders, their inhospitable geography giving China as a whole the defensible borders and security the Han core alone lacks. Between the Himalayas and the jungle uplands bordering Indochina, for example, southern China is protected and isolated by a true Great Wall. The west is a vast and dry expanse that would stretch thin any invading force. The North is the Gobi Desert and Siberia, bereft of major population centers. The core is exposed to overland invasion only through a pair of narrow corridors closer to the coasts, through parts of Manchuria and across the Vietnam border, allowing China to concentrate its defenses. Otherwise, China can’t easily invade anyone over land, but nor can it be invaded.
 
(click to enlarge)

Historically, however, when central authority over China’s buffer regions weakens, bad things tend to happen to China. Their geographies made them ethnically, culturally and economically distinct from the Han core, to varying degrees, and thus often outright hostile to the Han encroachment. And whenever the core has succumbed to its internal pressures, devolving into regionalism, warlordism and disarray, the outlying buffer regions have been quick to go their own way. If occupied by or aligned with an outside power – e.g. the Genghis and Kublai Khan’s Mongol invasion from north of the Gobi, the Manchu in the 1600s, the Europeans in the 19th century, the Japanese and Russians a century ago – the Han core fractures, and dynasties fall.

So even before the CPC had put the finishing touches on its victory in the Chinese civil war in 1949, it began turning its attention to the buffers, waging a decadelong campaign to subjugate Tibet, Yunnan and Xinjiang (to say nothing of expelling foreign forces from Manchuria). And the modern CPC, particularly under Xi Jinping, routinely cites China's historical pattern as justification for its crackdowns on the outlying ethnic regions. The party works diligently to keep the “century of humiliation” – the period between the 1830s and 1949 when the collapse of central authority in China led to it being carved up by foreign powers – in the collective Chinese consciousness. It must be neither forgotten nor repeated, or so the propaganda narrative goes, and the party will not cede to international interference in its efforts to fulfill its mandate of national rejuvenation.

It’s easy to dismiss Beijing’s historical justification for dominating the buffers as anachronistic. In theory, there are ways an outside power could use the buffers to threaten the Han core. India, for example, could try to dominate the Tibetan plateau and take control over China’s water supplies. But in reality, the days of overland invasion in China are gone, to say nothing of foreign occupation. No outside power is strong enough to overcome both the geographic barriers and the firepower China is now able to position along its borders, even if one wanted to.

And there is no threat emanating from within the buffers themselves on par with the Mongols or the Manchu of past dynasties capable of supplanting the central government. The CPC has proved capable of enforcing its writ in the most remote, geographically fractured parts of the country with brute force and a willingness to adopt draconian practices like the “re-education” centers in Xinjiang. It’s also relied heavily on more subtle and insidious measures, such as encouraging mass Han migration into the buffer regions, coopting ethnic institutions and civil society organizations like Tibetan monasteries, more tightly controlling school curricula, implementing a vast surveillance apparatus, and, of course, steadily narrowing the space for use of things like native tongues that can form the basis of a distinct identity. Winning hearts and minds has been a comparably lesser priority, but Beijing’s massive infrastructure buildouts have helped integrate the outlying regions into the economy of the heartland and create at least some incentives to buy into the CPC’s plans for national prosperity.

As a result, China’s buffers today are largely subjugated. The only real threat to the core from the periphery is Islamic terrorism. But beyond a pair of high-profile attacks – one at the gates of Tiananmen in 2013 and one in 2014 – even that has remained relatively contained to Xinjiang. A wave of self-immolations by Tibetan monks from 2009 to 2017 appears to have petered out. Inner Mongolia, in particular, has been a relative success story in ethnic integration. Occasional clashes between ethnic groups and the state mostly died out decades ago. There is lingering discontent over the forced resettlement of hundreds of thousands of nomads, and occasional protests over environmental damage done by the state’s development initiatives, particularly mining, in the resource-rich region (where ethnic Han, which now make up more than 80 percent of the population, have enjoyed the lion’s share of the extraction spoils). But there’s no substantive secessionist movement, and signs that unrest is boiling beneath the surface are rare.

Beware the Buffers

China understands that its biggest potential threats today come not from the buffers but from outside powers uniting against it. And while there’s been more bark than bite from other countries in response to Chinese oppression, the party’s human rights record makes it easier for foreign leaders to rally public support for the painful measures required to truly challenge China. They also make it more difficult for foreign businesses – ones China needs for employment, technology and diplomatic leverage – to stay in China. (See: persistent calls to boycott Western retailers that source materials allegedly produced by forced Uighur labor.)

So why does Beijing still fear the buffers – particularly one as sparsely populated and relatively placid as Inner Mongolia – so much that it would risk the backlash? The answer lies in the distinction between the interests of China as a whole and those of the CPC.

The CPC is not the 19th century Qing dynasty. The center is strong both in the core and the periphery. But while China is realistically safe from foreign invasion, it cannot fully shield itself from foreign influences. Combined with China’s immense internal pressure, these make the CPC’s hold on power inherently fragile. The party therefore has a low tolerance for any threat to social stability, even relatively minor ones. Even a pair of unsophisticated attacks by Uighur militants – which Beijing suspected were getting ideological and material support from militants in Central Asia and beyond – was enough to spook Beijing into effectively putting an entire region on lockdown. The fear of the public losing faith in its ability to provide security, and its fear of militants derailing Belt and Road Initiative projects (which are also essential to maintaining economic stability in the core) through Xinjiang to Central Asia, was evidently too overwhelming. Similarly, its fear of civil society or religious institutions being used to mobilize the public against it partially explains its desire to control Tibetan Buddhism. One of Beijing’s core fears with Hong Kong protesters, meanwhile, is the ways they could – perhaps with Western assistance – stoke instability on the mainland by funneling money and media to dissidents, airing the party’s dirty laundry, or shielding enemies of the state.

Beijing is expecting foreign pressure to intensify over the coming decades regardless of how it chooses to govern its periphery. Put plainly, in the face of mounting pressures, the party’s foremost priority is control. Undermining ethnolinguistic diversity – eroding ethnic identity as something that can supersede loyalty to the CPC – has proved to be a ruthlessly effective way to deepen its control. So too has starting the nation’s citizens on a steady drip of ideology and propaganda from a very young age.

The CPC is also betting that, at the end of the day, outside powers won’t really care all that much about human rights – at least not more than they care about strong economic or diplomatic ties with Beijing – and that its policies will succeed in the buffer zones.

And it may be right. What it’s allegedly doing in Xinjiang is horrifying. And yet, there’s been barely a whiff of meaningful outrage from governments from Muslim-majority countries such as Turkey, Pakistan and Indonesia. To the extent that there has been backlash over Xinjiang, it’s mostly come in the form of Western sanctions – mainly targeting Chinese sectors like AI and other emerging technologies, which the U.S. and friends are keen to check for geostrategic, not human rights, reasons. Matters as esoteric and plausibly well-intentioned as national curriculum standards in Inner Mongolia are hardly going to cause much of a stir abroad.

Either way, the central government seems to have concluded that pressure will eventually fade if its control is absolute. Internal movements lose support and wither. Foreign governments get distracted and move on. Shareholders in foreign firms return focus to the bottom line. The CPC, in its mind, just has to hold on tight until they inevitably do – and hope that it doesn’t suffocate the nation in the process.   



Title: GPF: China's Trial by Fire
Post by: Crafty_Dog on September 18, 2020, 06:04:35 AM
   
    China’s Trial by Fire
By: Phillip Orchard

From the COVID-19 outbreak to the subsequent economic crisis, with catastrophic flooding of the Yangtze River thrown in for good measure, 2020 has subjected the Communist Party of China to one existential crisis after another. Yet, Chinese President Xi Jinping seems to have a preternatural ability to swoop in and save the day. Not only does his administration appear to have come out from these calamities unscathed, but in some ways it seems to have grown stronger, more confident and more determined to dictate terms to foes foreign and domestic than ever – with Xi himself seizing every chance to turn crisis into opportunity to cement his power. It was Xi, for example, who Chinese propagandists say commanded the decisive battles in the “People’s War” against the invisible enemy, the coronavirus. It was Xi, according to his own comments during an August inspection tour of flood damage along the Yangtze, who’s continuing a centurieslong tradition of Chinese leaders demonstrating their mandate to lead by taming floodwaters. It was Xi who successfully waged a war on financial risk and who prepared China for the day when the U.S. would try to blunt China’s rise as a way to distract from its own problems, or so the narrative goes. It’s Xi who state media has increasingly been referring to as “the People’s Leader,” elevating the president to almost Mao-like status.

All this should pour cold water on persistent rumors of discontent with Xi in the upper ranks of the Communist Party of China. Of course, as Chinese elites wrangle for power and influence ahead of the Party Congress in 2022 – when Xi is expected to shatter CPC norms by sticking around for a third term as party chairman – palace intrigue will only intensify. And in a country like China, the next crisis is always just around the corner. Beijing is invariably choosing between bad options for dealing with immense problems, with many of its short-term fixes deepening its long-term structural issues, alienating powerful constituencies at home and antagonizing foreign powers.

But the reality remains: A year like 2020 is exactly why Beijing scrapped its Deng-era consensus leadership model and broadly supported Xi’s consolidation of power. His successes this year have been inflated, sure, but they have been real enough to validate his claim that a strongman must be at the helm during trying times. The most important question then is not whether Xi is strong or China is on the brink of collapse. He and China are simultaneously, perpetually both. What matters most for China and just about everyone else is how this combination of extreme power and extreme vulnerability shapes its behavior at home and abroad. It’s not about to change course.

Crisis Averted?

Two weeks ago, in a triumphant speech, Xi said, “The CCP’s strong leadership is the most reliable backbone when a storm hits. The pandemic once again proves the superiority of the socialist system with Chinese characteristics.” But if there were ever a moment when the Chinese public lost faith in the ruling party’s ability to govern competently, the pandemic could’ve been it.
The government’s mishandling of the virus could be attributed directly to its rigidly enforced top-down decision-making structure and institutional cultures shaped by censorship and paranoia. Indeed, when a popular doctor in Wuhan succumbed to the virus in early February, Chinese censors lost control of a flood of outrage over Beijing’s cover-up of the outbreak, and it briefly looked as if things had reached an inflection point. But the censors regained control of the narrative, and China’s lockdown made it impossible for anger online to become anger on the streets. More important, it largely succeeded in containing the virus, capping deaths at just a fraction of the numbers seen in major powers across the globe. By March, the president, who had been conspicuously absent from state media for much of the first two months of the year, reemerged to “take command” of the response just as the infection curve was being driven downward. A month later, he was declaring victory. Since then, bungled responses in the U.S., Europe, India and elsewhere have bolstered his argument that the CPC is uniquely well-suited to crisis response. (Democracies like Taiwan, South Korea and New Zealand have something to say about this.)

The systemic shock from the pandemic could well have exposed China’s economy as a house of cards. China shut down the bulk of its domestic economy almost overnight. Millions were abruptly out of work. Countless small businesses – which were already weighed down by tariffs and a credit crunch before the pandemic – faltered, searching for rescue from an immature banking system that had already proved ill-suited for meeting the needs of China’s burgeoning private sector. China’s convoluted financial system, already awash in shadow lending and toxic loans, appeared on the brink. Once Beijing was able to reopen most of the economy, it faced a secondary crisis in the form of collapsing demand for Chinese exports as the rest of the world sunk into crisis.

And yet, Beijing has somehow been able to keep its myriad interlocking systemic risks from triggering a cascading crisis. It never even needed to unleash a firehose of stimulus as it did after 2008 – measures that contributed directly to its staggering financial risks today. This week, the Organization of Economic Cooperation and Development predicted that China would be the only one of the world’s 20 leading economies to post positive growth this year. Here, Xi can rightfully take credit for pushing through a series of painful measures to curb financial risk beginning in his first term; these worked better than many expected. Meanwhile, his emphasis on strengthening state-owned enterprises – which in normal times have sapped the economy of its dynamism and are at the core of Western trade grievances – has been validated since SOEs have sopped up surplus labor and kept industrial production humming. Perhaps most important, Beijing’s worst nightmare – a massive spike in unemployment – came true, but without the attendant social unrest. There’s a case to be made that the experience will ultimately make Beijing confident enough to adopt a more sustainable economic model that doesn’t prioritize stable employment at the expense of profitability and dynamism.

Much of Xi’s success could have been undone by the collapse of the Three Gorges Dam, a structure that best embodies the vast potential and pitfalls of China’s ruthlessly ambitious approach to development. It's huge – so large that its construction in 1994 apparently slowed the earth’s rotation – illustrating China’s capacity to dream big and build bigger. It's critical; the 22,500 megawatts per day it can produce are vital for meeting the country’s insatiable energy appetite, breakneck urbanization drive, and soaring public expectations for prosperity.

But it also illustrates the fragility of the contract the CPC has made with the Chinese people. The dam was dogged by warnings about its structural integrity even before it was built, and its construction displaced tens of millions of people, many of whom saw their farms and ancestral lands submerged for good. These people were promised prosperity. If the dam collapsed – or even, as it did in this case, proved inadequate for controlling flooding around economic engines like Chongqing and Wuhan, killing hundreds of people and displacing millions more – they might quite reasonably wonder if the CPC was capable of honoring its end of the bargain. But it didn’t fail. In mid-August, Xi showed up in flood-ravaged Anhui province to hail his government’s success in taming the floods and implicitly compared himself to a legendary Chinese emperor who built a network of canals more than 4,000 years ago.

The Tip of the Iceberg

This run of purported successes can be interpreted in seemingly contradictory ways. On the one hand, you could see it as evidence of the Xi administration’s singular ability to marshal resources and take on colossal challenges – or at least validation of its insistence on centralizing power and micromanaging the country’s affairs. On the other hand, you could simply see it as a series of narrow escapes that expose just how many intertwined, potentially catastrophic crises are keeping Chinese leaders awake at night. You could see Xi’s propaganda blitzes as demonstrations of true triumph and confidence – or desperate bids for credit that betray a thinly veiled anxiety about the CPC’s tenuous hold on power.

Presumably, all these interpretations are valid. Xi’s administration will need all the luck it can get and all the savvy at its disposal because China has no shortage of crises on the horizon. The current pandemic may be under control, but the culture of censorship and institutional rigidity fostered by Xi may keep Beijing unprepared for the next one. The scale of the structural damage on the Chinese economy left behind by the pandemic won’t be fully apparent for years to come. The “grey rhinos” and black swans Xi is always warning about in the financial sector are still out there – and many of Beijing’s critical reform plans aimed at thwarting them have been put on hold. The pandemic, along with the CPC’s increasing dependence on state control, has accelerated the slide toward open hostility between China and the West. The Three Gorges Dam cannot realistically be upgraded. Floods will return. The problems exposed this year are really just the tip of the iceberg.

But to Beijing, the lesson of this year is evidently: trust only the party’s power. Its solution to a dysfunctional public health sector, for example, is to tighten central control over it. The only way to stave off a financial collapse is through painful measures aimed at curbing financial risk, and these can only be implemented with the brute force required to remove opposition and contain the fallout. If the Three Gorges Dam is flawed or insufficient, in the CPC's mind, then state power is needed to build more and build better – and to forcefully move the population out of harm’s way. If people are inclined to get upset about such things, then the state must be capable of preventing a revolt. If the West is going to turn against it, then Beijing must have the power to make clear that it won’t be bullied and reshape the region around its needs. And so forth.
Mao may have thrived on a doctrine of perpetual revolution, but Xi appears to be inescapably driven by permanent crises. This mindset is perhaps the inevitable result for a government haunted by China’s history – by the weight of rising public expectation, by the impossible task of meeting the needs of 1.4 billion people, and by the inherent difficulty of trying to make the massive machinery of the state run efficiently through sheer force of central will and ideology. But the downside risk of this mindset for Beijing is obvious – and for China’s neighbors, it’s particularly alarming. Either way, it's the one Beijing is sticking with, whatever storms may come.   



Title: Stratfor: China's Recovery
Post by: Crafty_Dog on September 18, 2020, 06:46:36 AM
China's Economic Recovery Continues
3 MINS READ
Sep 16, 2020 | 18:40 GMT

HIGHLIGHTS
China is likely the only major economy that will have positive growth for 2020 as a whole....

China is likely the only major economy that will have positive growth for 2020 as a whole, with gross domestic product now above its end-2019 pre-COVID-19 level, leading to a somewhat less deep global recession than anticipated. The economic recovery continued in August, with a small increase in retail sales from a year earlier and a slowing in the decline of private investment leading to a pickup in domestic demand, which until now lagged supply-side improvements. Still, that will not bring the global economy back to positive growth.

China's GDP grew by 11.5 percent (quarter-on-quarter) in 2020-Q2 after a decline of 8.3 percent in Q1, with further positive growth expected when Q3 data is released in October.

Previously, supply-side improvements led the recovery, with industrial production up 5.6 percent (year-on-year) in August after a 4.8 percent increase in July.

Industrial production was boosted by stronger than expected exports, which were up by 9.5 percent in August owing to increases in medical supplies, but also to higher consumer electronics exports.

Export demand is still at risk of a sudden potential increase in U.S. trade tensions ahead of the November election, which if realized would subtract from China's growth.

A 0.5 percent year-over-year increase in August retail sales indicates the beginning of a recovery in private domestic demand. This was mainly the result of further easing of COVID-19 lockdowns and less social distancing, as the virus is largely under control with an average of only about 20 new cases a day, according to Johns Hopkins University's daily tracker. Looser restrictions on service providers such as movie theaters boosted consumption and revenue, with box office receipts in late August at about 90 percent of where they were a year ago. Retail sales overall were still down by 8.6 percent in the January-August period, as high household indebtedness likely dampened spending.

What recovery there was previously in domestic demand until now was due mainly to government-supported infrastructure investment.

Fixed asset investment was off by only -0.3 percent from January to August compared to the same period last year, after declining by 1.6 percent through July.

The fiscal impulse from on-budget spending is substantial this year, with the general government consolidated deficit expected to reach about 11 percent of GDP, nearly double that of 2019.

Private sector investment remains depressed, declining 2.8 percent in January-August — although that's a narrowing of the 5.7 percent decline through July, which suggests that component of domestic demand is improving, too.

China's growth, while recovering, is still far below potential and the recovery remains uneven, especially with world demand sluggish. The latest data, however, relieves pressure on the People's Bank of China for monetary policy easing and will continue to support the yuan's appreciation against the dollar. Unlike advanced economy counterparts, the Chinese central bank has avoided flooding markets with liquidity and large cuts in interest rates, and seems to have acquiesced in the recent strengthening of the yuan in foreign currency markets
Title: China's panopticon ups its capabilities even more
Post by: Crafty_Dog on December 18, 2020, 06:55:21 PM
https://www.breitbart.com/asia/2020/12/18/chinas-alibaba-group-admits-made-uyghur-alert-facial-recognition-system/
Title: WaPo: China goes even more hard core on Tibet
Post by: Crafty_Dog on December 29, 2020, 03:28:49 AM
https://www.washingtonpost.com/opinions/global-opinions/chinas-atrocities-in-tibet-are-growing-too-big-to-ignore/2020/12/24/ba9d5c4e-4624-11eb-b0e4-0f182923a025_story.html?fbclid=IwAR0NvRnP9yU2FPE9RKc5QAbPiX6HlNnFfWwisHIjD_wIFY2mtKHd3jZ1JMI
Title: Re: WaPo: China goes even more hard core on Tibet
Post by: DougMacG on December 29, 2020, 05:45:44 AM
https://www.washingtonpost.com/opinions/global-opinions/chinas-atrocities-in-tibet-are-growing-too-big-to-ignore/2020/12/24/ba9d5c4e-4624-11eb-b0e4-0f182923a025_story.html?fbclid=IwAR0NvRnP9yU2FPE9RKc5QAbPiX6HlNnFfWwisHIjD_wIFY2mtKHd3jZ1JMI

Elections have consequences.
Title: China goes after Jack Ma
Post by: Crafty_Dog on January 09, 2021, 03:50:57 AM
https://www.gatestoneinstitute.org/16932/jack-uncle-horse-ma-is-a-bad-bet
Title: Re: China, Xi Jinping vs Jack Ma, Financial Times
Post by: DougMacG on January 13, 2021, 05:44:21 AM
What is the role of private commerce and investment in a totalitarian country, when THIS happens?

https://www.ft.com/content/751c2500-f50d-47c9-8f04-a28ad62285fd?63bac0e6-3d28-36b1-7417-423982f60790

Financial Times

Jack Ma vs Xi Jinping: the future of private business in China
The crackdown on Alibaba and Ant Group amounts to an unprecedented squeeze on a ubiquitous ecommerce empire
© FT montage; AFP/Getty Images | Jack Ma has not been seen in public since October

Four years ago, when Ant Group’s premier money market fund was racing to a peak of more than $260bn worth of assets under management, many of China’s state-owned banks and their regulators started to get agitated. In a series of calls and meetings with Jack Ma, Ant’s founder, bank executives and regulatory officials demanded that its Yu’E Bao fund be reined in.

“Yu’E Bao was pulling a lot of money from the banks,” says one person familiar with the discussions. “The banks were worried about the impact on liquidity and wanted Ant to take measures to minimise the impact. The conversations were pretty tense.”

In the end, Mr Ma had to back down and Yu’E Bao imposed caps on how much people could deposit. Between March and December of 2018, its funds under management fell by a third to $168bn and stood at $183bn last September.

The showdown would prove to be a prelude to the much bigger confrontation that now pits the Chinese Communist party and President Xi Jinping against not just Ant but also Alibaba, the ecommerce group founded by Mr Ma.

The stand-off, which has sparked rampant speculation about Mr Ma’s whereabouts, could become a defining moment for the future of private business in Mr Xi’s China.

On December 24, China’s market regulator announced it was launching an antitrust probe into Alibaba and sent investigators to its headquarters in the eastern Chinese city of Hangzhou, Mr Ma’s hometown. The announcement came just two weeks after the party’s politburo said it would target monopoly businesses to prevent the “disorderly expansion of capital”.

Jack Ma holds the gavel at the New York Stock Exchange in 2014. Mr Ma has not been seen in public since October last year © New York Times/Redux/eyevine

The move on Alibaba also came two months after financial regulators dramatically cancelled Ant’s planned $37bn initial public offering, which would have been the world’s largest.

Taken together, the measures amount to an unprecedented squeeze on a business empire whose ubiquitous services are central to the functioning of China’s pioneering online economy. Ant says Alipay, its payment app, is regularly used by 700m people — half of China’s total population — and 80m merchants, processing payments worth Rmb118tn ($18.2tn) in the group’s last financial year.

Alibaba’s shares have fallen by almost 30 per cent since the regulatory showdown began in late October, putting a big dent in the net worth of Mr Ma, who has not been seen in public since then. Over the same period his fortune has declined from $62bn to $49bn, according to Bloomberg data. The Hurun China Rich List estimated that Mr Ma had been the country’s richest man as recently as October 20 but would now rank fourth, his top slot taken by a bottled water tycoon, Zhong Shanshan.

The results of the showdown will say a lot about the sort of economy that China is developing. If Ant and Alibaba are crippled by regulators — or its founder is personally targeted by investigators — it will go down as a landmark moment in the party’s fickle relationship with China’s private sector even though Mr Ma is, ironically, a party member himself.

Since Deng Xiaoping launched the “reform and opening” era 40 years ago, the party has become ever more dependent on private sector companies for economic growth, job creation and tax revenues. But the party’s fixation with control, especially since Mr Xi came to power almost a decade ago, also triggers periodic crackdowns on the sector and prominent entrepreneurs.

Yet there is another potential outcome that would indicate a less fraught relationship between the party-state and business. The investigations into Ant and Alibaba could lead to the sort of settlements that are not dissimilar to those pursued in the US and EU against large finance and technology groups. That would leave Mr Ma’s two flagship companies humbled but still formidable and highly profitable national champions. Even then, a strong political message would have been sent.

“Chinese internet magnates can still enjoy thriving businesses and enormous fortunes if they are able to convince the top leadership of their loyalty,” says Chen Long at Plenum, a Beijing-based consultancy. “The top leadership wants to ensure that neither Ma nor anyone else ever crosses the red line of trying to exert personal influence over government policies again — at least not publicly. The government will support them on the condition that they serve the national interest first.”

Fintech revolution
Mr Ma has not appeared in public since October 24, when he gave a high-profile speech critical of the same state-owned banks he clashed with over Yu’E Bao’s rapid growth, as well as regulators who he said often sacrifice innovation on the altar of stability. According to people involved in the listing, the speech angered Mr Xi, who made the final decision to halt the Ant IPO.

A woman views a QR Code at an Ant Group stall in Shanghai. The move against Alibaba came two months after Chinese financial regulators cancelled Ant’s planned $37bn flotation © Feature China/Barcroft Media/Getty

Jack Ma with the winners of his 'Africa’s Business Heroes' TV competition in 2019. The usually high-profile Mr Ma missed the November final of last year's contest © africabusinessheroes.org
“To innovate without taking risks is to strangle innovation,” Mr Ma said. “There is no such thing as riskless innovation in the world. Very often, an attempt to minimise risk to zero is the biggest risk itself.”

He was speaking at the same forum where Wang Qishan, Mr Xi’s powerful vice-president and former anti-corruption tsar, had earlier emphasised the paramount importance of financial system stability. “Efforts should be made to prevent and lower financial risks . . . security always ranks first,” Mr Wang said. “While new financial technologies have improved efficiency and brought convenience, financial risks have been heightened.”

In an unprecedented public rebuke of Ant two months later, on December 26 China’s central bank criticised Ant for being too cavalier about financial risk and taking advantage of regulatory loopholes. But as frustrated as regulators are with Ant, they cannot ignore the beneficial effects of the financial revolution it has led in China.

“Ant Group,” People’s Bank of China vice-governor Pan Gongsheng admitted in his otherwise critical comments, “has played an innovative role in developing financial technology and improving the efficiency and inclusiveness of financial services”. The central bank, he added in a nod to jittery entrepreneurs, was also “unshakeable” in its commitment to “protect property rights and promote entrepreneurship”.

Mr Ma has long enjoyed support from officials in a range of State Council ministries, as well as the lead financial regulators, who appreciate the contributions of Ant, Alibaba and their rivals, all of whom have transformed China’s economy and made its online services sector a global leader. When his status as a party member was first confirmed only two years ago, it was in the context of an award he was receiving from the party’s Central Committee for “making China a leading player in the international ecommerce industry, internet finance and cloud computing”.

Alibaba and Ant’s ecommerce and online payment services were even more critical at the height of China’s successful battle to contain coronavirus, providing essential services to the hundreds of millions of people caught in draconian lockdowns.

“There are different lines of thought within the regulators,” Mr Chen says. “Until Jack Ma’s speech the pro-growth people had the upper hand. But Xi thought the speech was too much and a second [risk-averse] group took the lead. If his speech hadn’t happened, everything would have been fine.”

Disappearing acts are unusual for Mr Ma, who also missed the November finale of his African reality TV show — Africa’s Business Heroes. He routinely gives flamboyant musical performances at Alibaba events and hobnobs with heads of state and government leaders.

People’s Bank of China vice-governor Pan Gongsheng tried to calm jittery entrepreneurs when he said the central bank was 'unshakeable' in its commitment to 'protect property rights and promote entrepreneurship' © VCG/Getty

China's president Xi Jinping with other world leaders at the G20 summit in Hangzhou in 2016. Mr Xi was said to be irked that some guests sought meetings with Jack Ma during the event © Sergei Guneyev/TASS/Getty
As China’s most successful private entrepreneur, Mr Ma enjoys unique status in China — and overseas. His fluent English has made him a huge celebrity on the international conference circuit, with a star quality unmatched by any of his private or state-sector peers.

When Mr Xi hosted the G20 leaders summit in Hangzhou in 2016, some of his guests also visited Mr Ma — something that irked the Chinese president, according to one diplomat involved and other people familiar with the matter. Mr Ma’s VIP callers included Indonesian president Joko Widodo, Canadian prime minister Justin Trudeau and the then Italian premier, Matteo Renzi. Foreign leaders were offered limited time slots and the Chinese foreign ministry was mostly cut out of the process.

Over the past week rumours about Mr Ma’s whereabouts have abounded on China’s carefully monitored social media channels, while domestic media outlets have received strict instructions from censors about the stories they can and cannot run on Ant and Alibaba’s regulatory troubles.

Many of Mr Ma’s friends and colleagues strongly dispute suggestions that he is personally in any sort of legal jeopardy, let alone on the run. “He is in China and not travelling because of Covid, not anything else. He’s lying low,” says one friend of Mr Ma.

Another friend who communicates with Mr Ma regularly adds: “Everyone is asking me if he’s in danger, but he’s doing fine. He responds [to messages and calls] quickly and seems like he’s in good spirits. Discussions with regulators are still very much in process so he just has to stay quiet until they are resolved.”

Leadership missteps
Friends add that while Mr Ma may now regret the consequences of his October 24 speech, he meant what he said and still believes passionately in what he sees as Ant’s mission to transform the provision of financial services in the world’s second-largest economy.

Yu’E Bao, which translates as “account balance treasure”, was started in 2013 and allowed anyone in China, from restaurant staff to the urban yuppies they serve, to deposit as little as Rmb1 ($0.15) in a money-market fund and earn more interest than they could in a Chinese savings deposit account. Just four years later it became the world’s largest money market fund, surpassing JPMorgan’s US government money market fund.

The fund’s success was a dramatic demonstration of Ant’s potential. But it was also a threat to one of China’s most powerful vested interest groups — state banks and the officials who regulate them. The central bank was also concerned. In its annual financial stability report published in late 2018, the PBoC said it would “strengthen regulation of systematically important money market funds”, without mentioning Yu’E Bao by name.

A screen at a shopping event in Hangzhou shows Alibaba's number of delivery orders last year. The company's shares have fallen by almost 30% since the regulatory showdown against it began in late October © Wang Gang/China News Service/Getty
“When a taxi driver can deposit one renminbi in a money-market fund and get interest, that’s a big breakthrough,” says a former Alibaba executive. “Jack feels what Ant is doing is good for society.”

Mr Ma’s companies have rebounded strongly from regulatory disputes before, although Ant and Alibaba never faced scrutiny as intense as they now do. Ant’s run-in with banks and regulators over Yu’E Bao, for example, did little to hinder its overall business or influence.

Ant’s credit business grew so large that it now facilitates about one-tenth of all of China’s non-mortgage consumer loans.

The group also aligned its interests with those of powerful investors. Ant’s first fundraising in 2015 brought in a slew of well-connected shareholders, all of whom were set to be rewarded handsomely in the IPO. The Chinese government’s social security fund and a group of state-owned insurers held stakes in Ant valued at, respectively, Rmb48bn and Rmb45bn at the IPO price.

Shares belonging to an investment vehicle put together by Boyu Capital, whose executives have included the grandson of former Chinese president Jiang Zemin, were valued at Rmb15bn. Even China Central Television, the country’s state broadcaster, held Ant shares worth Rmb3bn.

“Financial regulators have been very concerned about Ant’s growing power and ability to push back against any attempts to bring it under control,” says one Chinese government adviser. “Previous attempts to bring Ant under more control were not really working because it was so big and so powerful. There is now clearly a very dramatic shift.”

Jack Ma in 2018 at a ceremony in Beijing to mark the 40th anniversary of China's opening up. Mr Ma fell foul of the authorities after giving a speech in which he was critical of state-owned banks and regulators in October last year © Mark Schiefelbein/AP
Bill Deng, a former Ant executive and co-founder of XTransfer, a cross-border payments platform, says Mr Ma may have become too confident.

“For a long time, regulators let Ant expand and I think [management] became a bit too complacent,” he says. “If there are hundreds of people praising you, you can get overly optimistic. Financial deleveraging policies have been a trend for several years now and the government is extremely careful when it comes to finance.”

Healthy growth
The cancellation of Ant’s IPO triggered a cascade of official and state media criticism of the fintech group. Regulators have also made clear they want the group to shift many of its businesses — including payments, lending, insurance and wealth management — into a new, more tightly regulated holding vehicle. This will increase Ant’s capital requirements and lower its valuation.

Authorities see the holding company model as a way to rein in large financial conglomerates while increasing their transparency. They also want Ant to share its vast trove of consumer data with the central bank — something it has refused to do before.

Recommended
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China plots ‘rectification’ drive to bring Jack Ma’s Ant Group to heel
Having to wait for a smaller return than they almost locked in a few months ago will be disappointing for Ant’s investors, but there are worse alternatives. “The Chinese government does not want to kill Ant, but to make sure it grows in a healthy way,” says Mr Deng. “Ant can surpass its current obstacles. If they have patience, they will be able to rise again.”

As for the antitrust investigation into Alibaba, a manageable outcome for the group would include an end to exclusivity arrangements that restrict merchants from selling on rival platforms. Alibaba could also potentially face a large fine — the maximum allowed would be 10 per cent of its previous year’s revenues — if it is deemed to have violated China’s anti-monopoly law.

“Debates about exclusivity have been going on for years, it’s a competitive market,” says the former Alibaba executive. “I don’t think Alibaba is going to get broken up. It’s just that the methods by which they fight for the market are going to be more regulated.”
Title: The forbidden country that forbids the Truth
Post by: Crafty_Dog on January 17, 2021, 02:58:12 PM
https://www.breitbart.com/asia/2021/01/16/pinkerton-china-the-forbidden-country-that-forbids-the-truth/
Title: Repeating the success of the Great China Wall on Southern Border
Post by: Crafty_Dog on January 26, 2021, 08:20:28 AM
https://www.breitbart.com/asia/2021/01/25/china-building-border-walls-boundaries-vietnam-myanmar/
Title: D1: Chinese Demographics
Post by: Crafty_Dog on February 09, 2021, 12:32:18 PM
China’s population problem. The number of newborns formally registered in China’s household registration system, known as hukou, fell around 15 percent in 2020, from 11.79 million in 2019. The damage to China’s demographic outlook done by tight population controls has been immense – and it may take several generations for the country to recover.
Title: Re: D1: Chinese Demographics
Post by: DougMacG on February 09, 2021, 04:18:54 PM
China’s population problem. The number of newborns formally registered in China’s household registration system, known as hukou, fell around 15 percent in 2020, from 11.79 million in 2019. The damage to China’s demographic outlook done by tight population controls has been immense – and it may take several generations for the country to recover.

It looks to me like the death rate projections are headed to 20 million per year, nearly twice the birth rate reported above.
https://www.macrotrends.net/countries/CHN/china/death-rate
https://www.worldometers.info/world-population/china-population/

That's plenty of people but countries with aging and declining populations take on demographic problems like finding workers and supporting their retirees. 
Title: Moutai
Post by: G M on February 09, 2021, 10:26:14 PM
https://video.sina.cn/finance/2021-02-08/detail-ikftssap4844421.d.html?p&p

https://www.zerohedge.com/markets/us-has-fang-china-has-booze-company

I learned about Moutai many years ago during Spring Festival. My wife's (wife now, we weren't married back then) extended family tried the Chinese drinking game on me (Ritual toasts and doing Moutai shots, you keep drinking, they switch out). I drank them under the table and staggered back to my hotel room chanting "USA! USA!"
Title: China's Potemkin Village
Post by: Crafty_Dog on April 09, 2021, 07:26:57 PM
https://americanmind.org/memo/chinas-potemkin-nation/
Title: China and organ harvesting (especially of Falun Gong)
Post by: Crafty_Dog on April 25, 2021, 06:24:58 AM
https://www.theepochtimes.com/mkt_morningbrief/texas-senate-passes-resolution-to-curb-chinas-forced-organ-harvesting-there-needs-to-be-a-global-outcry_3789109.html?utm_source=Morningbrief&utm_medium=email&utm_campaign=mb-2021-04-25&mktids=a3c631a4873a8bea89656ca33fcf7bf4&est=ayu%2BqiM22JhWL9eoMv2hX3L%2BvJGzb0uX628%2FSVAOO2%2BEPhz3MmtbS%2FLKYTN%2BOBltBbBe
Title: China's financial brinksmanship
Post by: Crafty_Dog on April 26, 2021, 06:39:48 AM
April 26, 2021
View On Website
Open as PDF

    
China’s Financial Brinksmanship
Beijing is embarking on its biggest game of market meltdown chicken to date.
By: Phillip Orchard

It’s becoming something of a semi-annual tradition in China: A major bank or company misses an earnings report or bond repayment, or finds some other way to hint that it may be in dire need of a bailout. Regulators remain conspicuously silent as panic ripples through the Chinese financial system, so much of which runs on widespread assumptions that the state, obsessed as it is with stability, will rescue just about any ailing institution to make sure it contains the spread.
Regulators let market anxieties mount seemingly to the breaking point, the implied message to investors being: “The days of risk-free, state-guaranteed financial returns are over. Do your own due diligence before blindly throwing money around and making this our problem, please.” Eventually, they issue a bland, technocratic statement, and everything calms down as the state starts brokering some sort of solution behind the scenes. Often someone goes to jail, or worse.

There have been several variations of this story in China in recent years, particularly since 2013, when Beijing first began tepidly addressing the moral hazard endemic to its $54 trillion financial industry. And it's basically what's been happening over the past month with China Huarong Asset Management Co., a massive, debt-plagued state-owned financial asset management company whose former chairman was executed in January on corruption charges. Huarong missed an earnings report at the end of March, sending bond markets into a tizzy amid rumors that it was headed for a painful restructuring, at best. But several things about Huarong – chief among them, the fact that the company was originally set up by the Ministry of Finance to metabolize other banks' toxic assets – make it Beijing's biggest, most complicated, most fraught game of market meltdown chicken to date.

What Makes Chinese Finance Unique

The Chinese government wants many conflicting things. It wants economic dynamism, which requires support for entrepreneurship and innovation, free flows of information, an impartial judiciary and at times a light regulatory touch – all operating in a financial system that allocates capital efficiently and prices risk accurately. It also wants control and stability, which means preventing market forces from creating surges of unemployment and social unrest. It also means restricting capital flows in and out of the country to head off a meltdown. It means preventing the accumulation of wealth by China's business titans from leading to the accumulation of political power. It means relying heavily on a sclerotic, incestuous network of state-owned enterprises and state banks to soak up excess employment and channel capital to party priorities.

Every government navigates these sorts of contradictory desires to some extent. The difference in China is the government's extreme intolerance for instability of any sort – even forms that, over the longer term, improve the system overall. So it props up inefficient companies, preserves or even bolsters the state sector, cracks down on information flows, suppresses protests and inserts party committees into private sector conglomerates. Beijing tries where possible to have the best of both worlds. But when forced to choose between dynamism and control, Beijing almost always opts for the latter.

There are many costs to this approach, especially when it comes to financial risk. For example, the domination of the financial system by state banks, which have heavy incentives to prioritize lending to state-owned enterprises and firms with hard assets available for collateral, forces others to rely on alternative, often less transparent or less-easily regulated sources of funding. Capital controls limit access to foreign financing. Perhaps most problematic, though, it generates widespread moral hazard. Put simply, because of Beijing’s existential fear of unemployment and social unrest, lenders and investors understandably just assume that the state will more often than not come to the rescue if things go sideways and pose any degree of systemic risk. Such assumptions are particularly common in the state sector, but increasingly they've extended into any part of the investment landscape. This was illustrated in 2018-19 with the rise of unregulated peer-to-peer lending platforms. Many borrowers defaulted, leading to protests by lenders who expected Beijing to make them whole despite the government never making implicit promises to do so.

The risks of moral hazard contributing to a broad financial crisis have increased as debt levels across the Chinese economy have soared since 2008 – and as it’s become more and more difficult for the Chinese economy to simply grow its way out of its debt problems. No country in history has amassed so much debt so quickly as China has without succumbing to a financial meltdown, according to the World Bank. Predictably, the sense of urgency in Beijing to address moral hazard has surged as well.

The most ruthless way to do so, of course, is to simply let people get burned a few times – to let poorly run banks or firms go bust and to let investors and lenders lose their shirts. But China can't tolerate the costs of such an approach, given just how central implicit state guarantees are to the entire Chinese financial system. To avoid triggering an uncontainable market panic – or simply to avoid inadvertently creating a credit crunch that grinds economic growth to a halt – Beijing has had to move at a seemingly glacial pace and find ways to instill market discipline over time.

Addressing Moral Hazard Head-On

China has been attacking the problem from several angles. On one level, it's been trying to make moral hazard matter less by pushing through an ambitious slate of reforms aimed at whipping banks and state-owned enterprises into shape before they reach a breaking point. It's also installed a much more muscular regulatory apparatus, pairing it with anti-graft authorities tasked with punishing wayward officials and tycoons and hammering local and provincial governments and banks to clean up their books and eschew “shadow lending” practices. What the system lacks in market incentives to act prudently, Beijing has been able to offset somewhat by the fear of President Xi Jinping.

But there's been no avoiding the need to address moral hazard head-on. Its first attempt, made in 2013, went extremely poorly. After a technical default between two small banks sent interbank lending rates soaring, Beijing initially refused to inject liquidity into the market. Within days, interbank lending ground to a halt, sparking a liquidity crisis that began to spread into the rest of the economy. It was the closest China has come to having its own Lehman Brothers moment. Beijing capitulated by the end of the month, intervening more forcefully to keep interbank lending rates stable.

The episode effectively deepened the problem of moral hazard for the next few years. But a string of near-failures by small banks in 2019 forced Beijing to try again. This time, it was more successful. In each case, the government ultimately intervened, but for the first time, it forced at least some bondholders to take losses, while the banks themselves were forced to restructure in painful ways that put them on more solid footing going forward. The move didn't spark a broader meltdown. Emboldened, Beijing then allowed a string of defaults among SOEs last fall totaling some $12.2 billion worth of local bonds. The share of onshore payment failures rose to 57 percent compared to 8.5. percent the previous year, according to Fitch.

Even so, Huarong is different. For one, it's bigger than any of the previous cases. In terms of asset size, the two main banks rescued in 2019 are half that of Huarong. For another, much more of its debt (an estimated $22 billion or more) is held in offshore dollar bonds, which makes the problem more difficult and expensive for the government to manage.

Most important, Huarong was set up in 1999 as one of four “distressed asset managers” with the specific task of metabolizing other banks' bad debts. These “bad banks” were largely considered successful in helping China avoid the fates suffered by South Korea and several other emerging markets in Southeast Asia following the 1997 Asian Financial Crisis. And Huarong's problems seem to stem primarily from its expansion over the past decade or so into other financial services, including shadow banking. It's unlikely, in other words, that its problems indicate that the Chinese system is so overwhelmed with toxic assets that even the bad banks can no longer cope. Still, perception matters more than reality in financial crises. If enough people believe that Huarong's problems reveal widespread systemic fragility – and a rise in speculation about problems some of the other distressed asset managers suggests such perceptions may be taking root – then things could get ugly fast.

There's another critical difference, though, that suggests Beijing is acting with a renewed sense of confidence in its ability to avoid triggering a panic: the fact that Huarong is owned directly by the Finance Ministry. This matters because, in previous cases, there were questions about how much regulators were caught unaware of the banks' problems, a factor that fueled potentially destabilizing speculation that authorities really had no idea how deep and wide the problems in the banking system truly were. Given its ownership, and given the fact that Huarong has been under close scrutiny for some time (its chairman came under investigation for corruption charges in 2018 and was executed in January), it's highly unlikely that its debt problems caught anyone off guard. And given its systemic importance, along with the fact that Beijing will have zero tolerance for any kind of financial chaos ahead of the 100th anniversary of the founding of the Chinese Communist Party this summer, there's little reason to think Beijing would even allow Huarong's problems to be made public, much less concerns to proliferate about Huarong going belly up, if it didn't think it was useful to do so.

By letting Huarong twist in the wind for a few months while saying just enough reassuring things (and leaking plans for a potential restructuring) to mitigate panic, Beijing is likely just taking its next step forward in its long, calculated fight against what it sees as an existential problem. That's the charitable view, at least. The other possibility – that Beijing is at once overmatched and overconfident and heading for an inevitable financial reckoning – may be unlikely, but staggering in consequence should it come to pass.
Title: Re: China's financial brinksmanship
Post by: G M on April 26, 2021, 01:49:14 PM
A desperate China is a very dangerous China.


April 26, 2021
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China’s Financial Brinksmanship
Beijing is embarking on its biggest game of market meltdown chicken to date.
By: Phillip Orchard

It’s becoming something of a semi-annual tradition in China: A major bank or company misses an earnings report or bond repayment, or finds some other way to hint that it may be in dire need of a bailout. Regulators remain conspicuously silent as panic ripples through the Chinese financial system, so much of which runs on widespread assumptions that the state, obsessed as it is with stability, will rescue just about any ailing institution to make sure it contains the spread.
Regulators let market anxieties mount seemingly to the breaking point, the implied message to investors being: “The days of risk-free, state-guaranteed financial returns are over. Do your own due diligence before blindly throwing money around and making this our problem, please.” Eventually, they issue a bland, technocratic statement, and everything calms down as the state starts brokering some sort of solution behind the scenes. Often someone goes to jail, or worse.

There have been several variations of this story in China in recent years, particularly since 2013, when Beijing first began tepidly addressing the moral hazard endemic to its $54 trillion financial industry. And it's basically what's been happening over the past month with China Huarong Asset Management Co., a massive, debt-plagued state-owned financial asset management company whose former chairman was executed in January on corruption charges. Huarong missed an earnings report at the end of March, sending bond markets into a tizzy amid rumors that it was headed for a painful restructuring, at best. But several things about Huarong – chief among them, the fact that the company was originally set up by the Ministry of Finance to metabolize other banks' toxic assets – make it Beijing's biggest, most complicated, most fraught game of market meltdown chicken to date.

What Makes Chinese Finance Unique

The Chinese government wants many conflicting things. It wants economic dynamism, which requires support for entrepreneurship and innovation, free flows of information, an impartial judiciary and at times a light regulatory touch – all operating in a financial system that allocates capital efficiently and prices risk accurately. It also wants control and stability, which means preventing market forces from creating surges of unemployment and social unrest. It also means restricting capital flows in and out of the country to head off a meltdown. It means preventing the accumulation of wealth by China's business titans from leading to the accumulation of political power. It means relying heavily on a sclerotic, incestuous network of state-owned enterprises and state banks to soak up excess employment and channel capital to party priorities.

Every government navigates these sorts of contradictory desires to some extent. The difference in China is the government's extreme intolerance for instability of any sort – even forms that, over the longer term, improve the system overall. So it props up inefficient companies, preserves or even bolsters the state sector, cracks down on information flows, suppresses protests and inserts party committees into private sector conglomerates. Beijing tries where possible to have the best of both worlds. But when forced to choose between dynamism and control, Beijing almost always opts for the latter.

There are many costs to this approach, especially when it comes to financial risk. For example, the domination of the financial system by state banks, which have heavy incentives to prioritize lending to state-owned enterprises and firms with hard assets available for collateral, forces others to rely on alternative, often less transparent or less-easily regulated sources of funding. Capital controls limit access to foreign financing. Perhaps most problematic, though, it generates widespread moral hazard. Put simply, because of Beijing’s existential fear of unemployment and social unrest, lenders and investors understandably just assume that the state will more often than not come to the rescue if things go sideways and pose any degree of systemic risk. Such assumptions are particularly common in the state sector, but increasingly they've extended into any part of the investment landscape. This was illustrated in 2018-19 with the rise of unregulated peer-to-peer lending platforms. Many borrowers defaulted, leading to protests by lenders who expected Beijing to make them whole despite the government never making implicit promises to do so.

The risks of moral hazard contributing to a broad financial crisis have increased as debt levels across the Chinese economy have soared since 2008 – and as it’s become more and more difficult for the Chinese economy to simply grow its way out of its debt problems. No country in history has amassed so much debt so quickly as China has without succumbing to a financial meltdown, according to the World Bank. Predictably, the sense of urgency in Beijing to address moral hazard has surged as well.

The most ruthless way to do so, of course, is to simply let people get burned a few times – to let poorly run banks or firms go bust and to let investors and lenders lose their shirts. But China can't tolerate the costs of such an approach, given just how central implicit state guarantees are to the entire Chinese financial system. To avoid triggering an uncontainable market panic – or simply to avoid inadvertently creating a credit crunch that grinds economic growth to a halt – Beijing has had to move at a seemingly glacial pace and find ways to instill market discipline over time.

Addressing Moral Hazard Head-On

China has been attacking the problem from several angles. On one level, it's been trying to make moral hazard matter less by pushing through an ambitious slate of reforms aimed at whipping banks and state-owned enterprises into shape before they reach a breaking point. It's also installed a much more muscular regulatory apparatus, pairing it with anti-graft authorities tasked with punishing wayward officials and tycoons and hammering local and provincial governments and banks to clean up their books and eschew “shadow lending” practices. What the system lacks in market incentives to act prudently, Beijing has been able to offset somewhat by the fear of President Xi Jinping.

But there's been no avoiding the need to address moral hazard head-on. Its first attempt, made in 2013, went extremely poorly. After a technical default between two small banks sent interbank lending rates soaring, Beijing initially refused to inject liquidity into the market. Within days, interbank lending ground to a halt, sparking a liquidity crisis that began to spread into the rest of the economy. It was the closest China has come to having its own Lehman Brothers moment. Beijing capitulated by the end of the month, intervening more forcefully to keep interbank lending rates stable.

The episode effectively deepened the problem of moral hazard for the next few years. But a string of near-failures by small banks in 2019 forced Beijing to try again. This time, it was more successful. In each case, the government ultimately intervened, but for the first time, it forced at least some bondholders to take losses, while the banks themselves were forced to restructure in painful ways that put them on more solid footing going forward. The move didn't spark a broader meltdown. Emboldened, Beijing then allowed a string of defaults among SOEs last fall totaling some $12.2 billion worth of local bonds. The share of onshore payment failures rose to 57 percent compared to 8.5. percent the previous year, according to Fitch.

Even so, Huarong is different. For one, it's bigger than any of the previous cases. In terms of asset size, the two main banks rescued in 2019 are half that of Huarong. For another, much more of its debt (an estimated $22 billion or more) is held in offshore dollar bonds, which makes the problem more difficult and expensive for the government to manage.

Most important, Huarong was set up in 1999 as one of four “distressed asset managers” with the specific task of metabolizing other banks' bad debts. These “bad banks” were largely considered successful in helping China avoid the fates suffered by South Korea and several other emerging markets in Southeast Asia following the 1997 Asian Financial Crisis. And Huarong's problems seem to stem primarily from its expansion over the past decade or so into other financial services, including shadow banking. It's unlikely, in other words, that its problems indicate that the Chinese system is so overwhelmed with toxic assets that even the bad banks can no longer cope. Still, perception matters more than reality in financial crises. If enough people believe that Huarong's problems reveal widespread systemic fragility – and a rise in speculation about problems some of the other distressed asset managers suggests such perceptions may be taking root – then things could get ugly fast.

There's another critical difference, though, that suggests Beijing is acting with a renewed sense of confidence in its ability to avoid triggering a panic: the fact that Huarong is owned directly by the Finance Ministry. This matters because, in previous cases, there were questions about how much regulators were caught unaware of the banks' problems, a factor that fueled potentially destabilizing speculation that authorities really had no idea how deep and wide the problems in the banking system truly were. Given its ownership, and given the fact that Huarong has been under close scrutiny for some time (its chairman came under investigation for corruption charges in 2018 and was executed in January), it's highly unlikely that its debt problems caught anyone off guard. And given its systemic importance, along with the fact that Beijing will have zero tolerance for any kind of financial chaos ahead of the 100th anniversary of the founding of the Chinese Communist Party this summer, there's little reason to think Beijing would even allow Huarong's problems to be made public, much less concerns to proliferate about Huarong going belly up, if it didn't think it was useful to do so.

By letting Huarong twist in the wind for a few months while saying just enough reassuring things (and leaking plans for a potential restructuring) to mitigate panic, Beijing is likely just taking its next step forward in its long, calculated fight against what it sees as an existential problem. That's the charitable view, at least. The other possibility – that Beijing is at once overmatched and overconfident and heading for an inevitable financial reckoning – may be unlikely, but staggering in consequence should it come to pass.
Title: China new App for snitches
Post by: DougMacG on April 28, 2021, 05:43:51 AM
https://www.americanthinker.com/blog/2021/04/ccp_launches_new_app_to_restrict_free_speech.html

China is trying to catch up with the US thwarting anti regime free thought and speech. We should be attacking this repression of a God given right instead of leading on it.
Title: WSJ: Hong Kong
Post by: Crafty_Dog on May 18, 2021, 02:43:58 AM



The powers that be in Hong Kong keep assuring the world that nothing has changed regarding its status as a financial center since the Chinese Communist Party imposed its national security law. Tell that to Jimmy Lai, the imprisoned media owner whose assets have now been frozen by the Hong Kong police.

The Hong Kong Security Bureau alerted Mr. Lai on Friday that his personal bank accounts and his 71% share in Next Digital, the company that publishes Apple Daily, have been frozen. The South China Morning Post says the value of the frozen assets is about $64.3 million. This is the first time we know of that the national security law has been invoked to deprive an owner of his equity in a publicly traded company in Hong Kong.

Hong Kong apologists will say that Mr. Lai is a special case because his media properties support economic and political freedom. Apple Daily continues to criticize the government even with Mr. Lai in jail. He is currently serving a 14-month sentence for his role in unapproved protests. He faces another trial in the coming months on three counts of violating national security laws that are a pretext to make the 72-year-old publisher an example of what happens if you challenge the Party.


But if the authorities can strip Mr. Lai of his assets based on a non-judicial order, then no private contract is safe. The asset seizure seems wholly arbitrary. Any shareholder in any Hong Kong-based company who offends Beijing on political grounds is vulnerable. Will the Hong Kong Stock Exchange file even a peep of protest?


The seizure won’t help Hong Kong’s eroding status as a global financial center. The political risk is high for a CEO or board of directors to float shares on the Hong Kong exchange, especially when alternatives are available. The decline of the once great entrepôt of economic freedom continues at an accelerating pace.

Title: Re: China Concentration Camps
Post by: DougMacG on May 23, 2021, 06:13:39 AM
https://www.dailymail.co.uk/news/article-9573113/Survivor-Chinas-modern-day-concentration-camps-reveals-horrors-walls.html

If we are not going in with our military to set these people free, the least we could do is boycott the Olympics in protest.

Why does China get a pass from the American and European Left?
Title: Re: China Concentration Camps
Post by: G M on May 23, 2021, 12:30:13 PM
https://www.dailymail.co.uk/news/article-9573113/Survivor-Chinas-modern-day-concentration-camps-reveals-horrors-walls.html

If we are not going in with our military to set these people free, the least we could do is boycott the Olympics in protest.

Why does China get a pass from the American and European Left?

Because they have been bought off by the PRC (the big guy gets 10%), and they admire the totalitarianism.
Title: Re: China Concentration Camps
Post by: DougMacG on May 23, 2021, 01:14:27 PM
quote author=G M
Because they have been bought off by the PRC (the big guy gets 10%), and they admire the totalitarianism.

   - Yes but they read polls and need 70 or 80 million people in support to stay in power.
Title: Re: China Concentration Camps
Post by: G M on May 23, 2021, 01:20:27 PM
quote author=G M
Because they have been bought off by the PRC (the big guy gets 10%), and they admire the totalitarianism.

   - Yes but they read polls and need 70 or 80 million people in support to stay in power.

They do?
Title: WSJ: Repression in HK
Post by: Crafty_Dog on May 30, 2021, 08:09:49 AM
China wants to silence Hong Kongers even as it persecutes them. A court judgment released Friday shows that a judge penalized former pro-democracy lawmaker and journalist Claudia Mo for speaking to Western journalists, including our own Jillian Melchior.


Police arrested Ms. Mo, along with nearly the entire opposition movement, in January. She and 46 others are charged with conspiracy to commit subversion under the national security law for organizing or participating in an informal pro-democracy primary election last July. Judge Esther Toh denied Ms. Mo bail in April, and the world learned why on Friday.

The national security law prohibits “collusion” with vaguely defined foreign forces and states that defendants may not receive bail “unless the judge has sufficient grounds” to believe that they “will not continue to commit acts endangering national security.” As a reason to keep Ms. Mo behind bars, prosecutor Maggie Yang described Ms. Mo’s WhatsApp correspondence with these pages, the New York Times, Bloomberg and the BBC.

In a court filing explaining her denial of bail, Judge Toh quotes from an Oct. 1, 2020, conversation Ms. Mo had with Ms. Melchior about 12 Hong Kongers who were captured after they tried to escape to Taiwan by boat.


Ms. Mo told Ms. Melchior: “The detention and treatment of the 12 Hong Kong protesters serve as the ultimate warning and threat to Hongkongers about what one can face if you’re caught. The new security law and the spate of arrests have worked as a scare tactic, probably fairly successfully—at sending a persistent political chill around the city.” Every word of that is true, and it was hardly a secret.

As a lawmaker, Ms. Mo fought for the liberties that China guaranteed to Hong Kong in its 1984 treaty with Britain. Her Legislative Council office sat across from the Hong Kong garrison of the Chinese People’s Liberation Army, and she decorated her windows with pro-democracy posters. Under the national security law, Ms. Mo now faces up to life in prison.

The Communist Party fears Ms. Mo because in the November 2019 district council elections, Hong Kong’s pro-democracy camp won in a landslide. Hong Kong’s government then used Covid as an excuse to cancel elections for the Legislative Council.

Judge Toh wrote in Friday’s filing that “it is submitted” by the Hong Kong government “that had the Election not been postponed,” then the opposition’s “conspiracy would have been carried out to fruition.” Get it: A free election is a conspiracy in Hong Kong. This is a tacit admission that if Hong Kongers could freely choose their representatives, they’d elect lawmakers like Ms. Mo. Instead, the Communist Party is locking away the opposition and denying bail for the crime of messaging with the press. Live and work in Hong Kong at your peril.

As we’ve said before, jailed publisher Jimmy Lai and Hong Kong’s other brave democrats deserve the Nobel Peace Prize.
Title: China Lied, People Died, Planet-Wide
Post by: DougMacG on June 01, 2021, 05:55:54 PM
https://strategypage.com/on_point/2021052694935.aspx

China's Bio-Economic War on the World Has Begun to Backfire
by Austin Bay
May 26, 2021

"I hoped that wealth would create a Chinese middle class that demanded freedom and moderation and peace.

Wrong. Chinese economic prowess merely fed its communist totalitarian war machine."
...

"The historical background supports the global significance of this week's sobering news: the likelihood that the COVID-19 virus (the Communist Chinese Party virus is another name) escaped by accident or on purpose from a Chinese laboratory in the city of Wuhan and infected the entire planet.

The Wall Street Journal has published an in-depth analysis of the evidence.

In February 2020, Senator Tom Cotton, R-Ark., suggested the virus may have escaped a research lab in Wuhan. The major mainstream media narrative: Cotton was damned, snarked and ridiculed, from The New York Times to CNN to Xinhua (the Chinese "official" news agency).

Xinhua spews propaganda. You trust The New York Times and CNN? Perhaps it's time you woke. (Does woke satirize antifa and BLM lingo? You decide.)

Even Dr. Tony Fauci says that the possibility that the COVID-19 escaped from a lab in Wuhan "certainly exists" and he's "totally in favor of a full investigation of whether that could have happened."

In spring 2020, Fauci and his bureaucrat cadre (which includes the mainstream media dolts) dissed Cotton.

Fauci et al owe Cotton an apology.

China lied about the origins of the virus, and people died, planet-wide. Bumper sticker: China lied, people died, planet-wide.

In 2020, I wrote a column arguing that China's dictatorship hid critical information about the virus, for fear of being exposed as incompetent. Realizing the pandemic's threat, Beijing's communist thugs in charge apparently decided to export it to the rest of the world so China would not suffer alone.

That's an act of war on the world.

China's communist dictators decided to wage bioeconomic warfare on the world."
Title: China's bioeconomic war on the world
Post by: G M on June 01, 2021, 06:06:40 PM
"China's communist dictators decided to wage bioeconomic warfare on the world."


They had key allies in place here.
Title: Re: China
Post by: Crafty_Dog on June 02, 2021, 06:11:52 AM
This thread is for internal Chinese matters, not China vs the world or America.



Title: China: Miracle surge in organ donors
Post by: Crafty_Dog on June 14, 2021, 07:16:54 PM
https://www.breitbart.com/asia/2021/06/14/china-claims-miracle-surge-organ-donors/
Title: Re: China
Post by: Crafty_Dog on July 19, 2021, 05:51:57 AM
https://www.gatestoneinstitute.org/17579/china-expropriate-tech-shares
Title: GPF: The Trouble with China's Tech Titans
Post by: Crafty_Dog on July 19, 2021, 06:15:13 AM
second post

July 19, 2021
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The Trouble With China’s Tech Titans
Beijing is throwing down the gauntlet before they get too powerful to manage.
By: Phillip Orchard

When Jack Ma got slapped down by the Communist Party of China late last year, the natural assumption was that his biggest sin was having the gall to question President Xi Jinping. After all, the Alibaba founder had lashed out about overzealous Chinese regulators – publicly, inside China no less – comparing them to pawnbrokers. Considering the urgency and political fragility of Xi's ambitious reform agenda, it’s little surprise that flouting Beijing's wisdom and authority by a celebrity billionaire was deemed out of bounds. So Ma paid the price: His fintech giant Ant Group's impending $37 billion initial public offering was scrapped, knocking Ma himself down the rankings of China’s richest men, and the company was ordered to restructure. Authorities launched an antitrust probe into Alibaba eventually resulting in record penalties. And Ma spent months out of the public spotlight; per state media, the “vampire” businessman was too busy learning to “embrace supervision.”

But since then, Beijing's crackdown on Chinese tech giants has expanded dramatically, targeting even firms whose founders have smartly avoided the temptation to poke the dragon. What's clear is Beijing doesn't just fear the wealth and potential for influence of its increasingly rich tycoon class; it fears the very empires they’ve built. This is partly because they're playing increasingly indispensable roles in Chinese society, meeting needs the Communist Party can’t, thus making them more difficult to bring to heel. It's also because the sources of their commercial power are often the same as those the party has traditionally relied on for its own preeminence and survival.

Why China Fears Them

Beijing's move against Ant Group appears to have worked. Almost immediately, other major players in the fintech space, including Ant Group's main rivals like Tencent, quickly got in line, announcing plans to undergo their own restructurings and accede to Beijing’s demands on things like stricter financial regulation and oversight of data flows. Several firms reportedly shelved IPO plans.

Authorities then moved onto other Chinese tech behemoths that have been gobbling up market share across the digital economy. It would be like Washington throwing down the gauntlet against Amazon, Google, Facebook, Uber, PayPal and Netflix and a couple dozen other dot coms all at once. Over the past month, it has turned its attention to companies newly listed on U.S. stock markets. The most high-profile of these was DiDi, a ride-hailing platform that apparently ignored "advice" from regulators to postpone its June 30 IPO on the New York Stock Exchange until Beijing's security concerns about the company's mapping system were resolved. Several DiDi-owned apps were removed from Chinese phones, and Beijing launched a sprawling security probe into the firm involving agencies – such as the feared Ministry of State Security – that traditionally haven't played a major role in Beijing's reform drives. Beijing also passed a major new data security law that gives the country’s main cybersecurity agency sweeping new powers over the tech sector, including the ability to block overseas listings.
Altogether, the moves have wiped out nearly $850 billion in market value for Chinese tech firms since February.

Largest Internet Companies
(click to enlarge)

The scope of the campaign underscores just how many potential emerging threats the CPC believes it’s trying to head off. Holding onto power, governing 1.4 billion people, and sustaining China's ascendency requires, in the CPC's view, several things that Chinese tech giants theoretically could undermine. For example, it needs control over information – that is, the ability to drive national narratives, stamp out dissent and signal clear directives to the vast machinery of the Chinese state. It needs the ability to act decisively and aggressively against financial risk. It needs the ability to overwhelm security threats before they take root. It needs to prevent the proliferation of competing centers of power – from allowing its tycoons to turn their wealth into excess political influence and returning China to the exceedingly factionalized environment that existed before Xi’s takeover. And it needs unquestioned recognition of the CPC's primacy and indispensability in the project of national rejuvenation.

Consider all the ways in which Tencent, perhaps China's most important company, alone could be problematic in this regard. The company’s sprawling empire includes some of China's biggest chat, payments, gaming, fintech, health care, real estate and e-commerce platforms. Tencent also happens to be one of China's biggest investors, both at home and abroad. Its founder, Pony Ma (no relation to Jack), is believed to be the second-richest man in China.

And this means Tencent has incredible, if largely theoretical, sway over how Chinese citizens communicate, over how and what news is disseminated, over how the party and state are portrayed in movies and music, and so on. Since its financial services platforms have been effectively operating as lightly regulated banks, it has the potential to disrupt Chinese financial stability. Its monopolistic practices threaten to stifle innovation and entrepreneurship, hindering China's modernization and sowing grievance among Chinese consumers. It also means Tencent is mining bottomless oceans of data about Chinese citizens – data that Beijing wants to harness for its own social control, to keep out of the hands’ of its foreign adversaries, and to keep tech firms from abusing or leveraging against the party. It's not hard to see how Pony Ma could decide to start exploring just how much his wealth and globe-spanning investments could be used to distort Chinese policies, both foreign and domestic, around his personal interests.

And Tencent is just one company. Jack Ma's empire is still roughly as large. JD.com, Baidu, Weibo, Meituan, Suning, NetEase, ByteDance and others all live more or less in the same stratosphere. All are growing by leaps and bounds, all are sucking up data at a staggering scale, and all are constantly pushing into new areas, particularly artificial intelligence.

Why China Needs Them

In some ways, though, this is what Beijing wants. Rebalancing the Chinese economy from exports to services and domestic consumption has long been the ideal but often elusive goal for Chinese policymakers. To the extent that China can progress toward this goal, these companies will surely lead the way. They expand the reach of Beijing's propagandists and give homegrown entertainment industries a leg up over potentially problematic foreign ones. They facilitate state surveillance. They ease China's own dependence on foreign technologies. Their financial services arms help offset endemic structural flaws in the Chinese banking system that traditionally struggles to get liquidity to small, private businesses. They shore up Hong Kong’s role as a global financial center. They pioneer all sorts of data-driven technologies that will define the next generation of warfare. They deepen the sense among Chinese citizens that China, under the CPC's guidance, has rapidly emerged as an advanced, innovative power with homegrown technologies competing against the West’s finest.

They can be valuable for Beijing's foreign policy objectives, too, by, say, deepening economic dependencies on China and/or mining for political clout in foreign capitals. Tencent, for example, has invested more than $50 billion in some of America’s most promising tech firms, including Snap, Spotify, Shopify, Stripe, Tesla and Zoom. China’s tech firms can help Beijing shape narratives about the country abroad. The more WeChat users there are in, say, Indonesia, the more power Beijing ostensibly would have to censor stories about Chinese activities around Indonesia's Natuna Islands in the South China Sea. In general, the more data from Chinese tech abroad flows back to the mainland, the more Beijing can probe for strategically or economically valuable insights. (See, for example, the face-palming problems the U.S. military ran into with fitness apps.)

Of course, this works only if these companies comply with Beijing's wishes – demands on censorship, data-sharing, financial oversight and so forth. And more often than not, what Beijing wants is less than ideal for these companies' bottom lines. Huawei, Tencent, Bytedance (owner of TikTok) and others have already lost access to foreign markets over suspicions of Beijing.

This underscores why Beijing is acting with such urgency to lay down new rules for the sector today. Chinese tech giants are only going to get bigger and more vital as the digital economy steadily expands – as control of data becomes ever-more crucial in the balance of power both at home and abroad. The CPC can't live with the threats they embody, but it can’t survive without the services they provide. Beijing, then, is trying to have the best of both worlds by doubling down first and foremost on its own control. It's making it clear that it can't and won't sacrifice its primacy for the sake of economic vitality or technological innovation or anything else – and that Chinese tech titans are welcome to lead the country into the future so long as they do it on Beijing's terms.
Title: ET: China's intel chief
Post by: Crafty_Dog on August 05, 2021, 04:58:56 PM
https://www.theepochtimes.com/the-complex-power-hierarchy-behind-chinas-internal-spy-chief_3932390.html/amp?utm_medium=social&utm_source=twitter&utm_campaign=digitalsub&__twitter_impression=true&fbclid=IwAR1kQ3ZkDAWg_DJ9iVZZJHVCoOvqWSQeT03CZLLrgq-n7W1xNDxltaKV-Vs
Title: Re: China
Post by: Crafty_Dog on September 14, 2021, 06:46:18 PM

September 14, 2021
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Daily Memo: China's Recovery, No Chips and Surprise Trips
Beijing expects the chip shortage to linger for a long time.
By: Geopolitical Futures

China’s economy sputters. A data dump coming Wednesday is expected to show slumps in several Chinese economic indicators in August, including industrial production and consumption. September isn't looking much better. There's a new outbreak of the delta variant in at least two cities, leading to sharp new curbs on travel. And the country is still trying to get some of its biggest ports back up and running following COVID-19 lockdowns and, more recently, closures related to typhoons. Perhaps most concerning, China's latest financial stress test – involving indebted property giant Evergrande – appears to be reaching an inflection point.

Out of chips. China, like everyone else, is also stressing about the enduring crunch in chip production. The Ministry of Industry and Information Technology said Monday that it expects the squeeze to remain severe for a long time to come. This comes as Toyota, one of the few automakers that seemed to anticipate the rapid rebound in consumer demand, is now slashing its production plans due to the crunch.
Title: GPF: China's grid problems
Post by: Crafty_Dog on September 29, 2021, 01:08:53 PM
By: Geopolitical Futures

China’s grid. China's electricity crunch seems to be getting worse. Rolling blackouts have reportedly begun in several major cities, including Beijing and Shanghai. The cuts are mostly policy-driven; provincial authorities are cutting usage to comply with annual consumption caps and carbon targets set by the central government. So in theory, if things get really bad, authorities can simply ease off. But it also appears to be at least partly driven by supply, with natural gas and coal prices soaring and with China's thermal coal reserves dropping to near record lows. There are also reports of unstable water supplies. The cuts are reportedly hammering small and large manufacturing businesses alike.
Title: Mass blackouts in China
Post by: Crafty_Dog on October 01, 2021, 08:44:19 AM
Posted by MY:

https://www.youtube.com/watch?v=eONGlAKxJzs&t=73s
Title: China's RE bubble popping?
Post by: Crafty_Dog on October 09, 2021, 07:12:11 AM
https://www.zerohedge.com/markets/catastrophic-property-sales-mean-chinas-worst-case-scenario-now-play?utm_source=&utm_medium=email&utm_campaign=137

Note the % of GDP that is RE!!!
Title: Re: China's RE bubble popping?
Post by: G M on October 09, 2021, 07:25:24 AM
https://www.zerohedge.com/markets/catastrophic-property-sales-mean-chinas-worst-case-scenario-now-play?utm_source=&utm_medium=email&utm_campaign=137

Note the % of GDP that is RE!!!

This could be the thing that crashes the global house of cards.

Plan accordingly.
Title: Re: China
Post by: Crafty_Dog on October 09, 2021, 08:35:49 AM
Or it could trigger a flood of money returning to the dollar.
Title: Re: China
Post by: G M on October 09, 2021, 09:05:57 AM
Or it could trigger a flood of money returning to the dollar.

Not now. Only a utter moron trusts the USG these days.
Title: GPF: Evergrande
Post by: Crafty_Dog on October 11, 2021, 04:20:06 AM
October 11, 2021
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Why Evergrande Is Going to Plan
Beijing saw the crisis coming and acted accordingly.
By: Phillip Orchard
The saga of debt-ridden Chinese property giant Evergrande, which has been rattling markets at home and abroad, isn’t going away anytime soon. After missing a series of bond interest and loan repayments in recent weeks, the sprawling conglomerate is facing a slew of additional deadlines in the months ahead, including $150 million in offshore payment obligations next week alone. All told, its total outstanding liabilities are estimated to be north of $300 billion, roughly 2 percent of Chinese gross domestic product. And so far, it’s done little more than the bare minimum to reassure lenders and bondholders that repayment will be forthcoming, opting instead to stay mostly silent as deadlines pass by.

It’s a huge deal for China, given Beijing’s all-consuming fear of a true financial crisis and the property markets’ role in just about every dimension of the Chinese economic system. Evergrande alone is believed to owe money to around 170 Chinese banks, another 120 or so financial services firms, plus about $20 billion to offshore investors. And it’s not even the only property developer threatening China's financial stability. Another, albeit much smaller cash-strapped property developer missed $315 million in repayments last week, for example, just weeks after claiming it was flush with cash. The credit ratings of dozens of Chinese firms were downgraded over the past couple of months.

But despite suggestions to the contrary, this isn’t China’s “Lehman Brothers” moment – a reference to the 2008 collapse of the Wall Street giant that kicked off the broader meltdown. Beijing hasn’t been blindsided by the fragility of the property sector; it has been moving intentionally to bring the crisis to a head. The risk, in other words, is not getting caught flat-footed but putting too much faith in the government’s ability to engineer an orderly correction and put the Chinese system on more sustainable long-term footing.

Not Really Lehman

In many ways, Evergrande embodies the Chinese business model of old. It benefitted from close ties to Communist Party of China elites that put it in position to ride the country’s decadeslong property boom. (Its founder, Hui Ka Yan, was once Asia’s richest man.) It racked up extraordinary debt to finance its breakneck growth, with thousands of projects across hundreds of Chinese cities. (The nature of the property development business, where companies have to pay a lot to build things and then wait a while for revenues to start flowing in, makes even healthy companies prone to cashflow crunches.) Like many of China’s biggest companies, Evergrande eventually expanded into sectors that had little to do with its original core business, including electric vehicles, wealth management, health care, and food and drink manufacturing. It bought a professional soccer club, splurged on player salaries, and renamed the club after itself.

Evergrande had good reason to believe that if it came to it, Beijing would step in with a helping hand. After all, the CPC, which fears financial instability like the Song dynasty feared the Mongols, had almost always rescued companies whose troubles could lead to mass layoffs or a cascading financial crisis. The CPC’s overriding desire for stability and control inevitably meant using a sclerotic, incestuous network of state-owned enterprises and state banks to prop up inefficient firms and stave off a reckoning. Becoming “too big to fail” was a feature, not a bug, in the eyes of most Chinese conglomerates.

But under President Xi Jinping, who in 2016 declared financial risk a priority on par with national security, the CPC has made clear that China is under new management, one that spurns Deng Xiaoping’s “everybody get rich” ethos, which became dominant in the 1990s.

And it’s easy to see why he would. The concentration of wealth in the hands of relatively few individuals naturally gives Beijing major political concerns. Moreover, no country in history has amassed so much debt so quickly as China has without succumbing to a financial meltdown, according to the World Bank. So long as China’s economy was galloping ahead at double-digit growth, with the corporate sector awash in easy profits to paper over inefficiencies and an immature system for pricing risk, the chances of an uncontrollable financial crisis were low. But as the Chinese growth model shifted from one driven by exports and land liberalization to investment, and as gross domestic product growth entered into a long if gradual slowdown, the margin for error began to narrow considerably.

As a result, since 2017, Xi’s administration has attempted to implement a suite of ambitious “de-risking” reforms. These include overhauling the regulatory apparatus, sending anti-corruption authorities after wayward officials and tycoons, and hammering local and provincial governments and banks to clean up their books and eschew “shadow lending” practices. Xi’s administration has also been gradually intensifying pressure on debt-fueled Chinese conglomerates known as “gray rhinos” and other similarly over-leveraged firms to sell off newly acquired overseas assets and scale down their financial services offerings. Over the past year, it has shifted focus to the tech sector, whose control of data and information and moves into financial services, among other issues, was generating serious alarm in Beijing.

Perhaps the biggest issue, though, has been Beijing’s war on moral hazard. Simply put, Beijing concluded that the widespread belief it would come to the rescue was fueling all sorts of risky lending and investment activity, stressing the ability of the state to manage the system and making a potential financial crisis more explosive if and when it ever came. So over the past few years, regulators have been engaged in a high-stakes game of trying to familiarize investors, lenders and companies with the concept of accountability. It let a handful of smaller banks and financial services firms fail outright and forced others into painful restructurings or mergers. Last year, it shocked everyone by doing the same even with some state-owned institutions, a sector previously thought untouchable given how much governments rely on state banks and state-owned enterprises to soak up excess employment and channel funding to party priorities.

A Different Animal

Evergrande, though, is a whole different animal, partly because of its sheer size. The pain of a disorderly collapse would be widespread and immense.

The impact would be enormous also because of the outsize importance of the property sector, both economically and politically. Land liberalization has been central to China’s breakneck growth since the 1980s. Last year, the sector accounted for around 29 percent of China’s economic output. Land sales are vital to how provincial and local governments raise revenue. The sector is critical to China’s urbanization goals and thus to its broader goal of rebalancing the economy away from exports and investment and more toward consumption, services and advanced manufacturing. Land as collateral is, therefore, fundamental to Chinese credit and banking systems. Property is where most Chinese households sink the bulk of their savings. Owning property is considered necessary for the marital prospects of your average Chinese bachelor. Already, the Evergrande crisis has sparked sporadic protests among folks who, for example, made upfront payments for homes that now may never get built.

Naturally, the many convoluted ways housing in the U.S. sparked the actual Lehman moment in 2008 spooked the Chinese leadership, as did the relentless building, speculation and securitization of property that resulted from the unfathomable amounts of stimulus Beijing unleashed in response. So, for years now, it’s been desperately searching for ways to tamp down on excesses in the sector and prevent overheating without inadvertently pricking the bubble and sparking a panicked overcorrection. This culminated in the August 2020 introduction of Beijing’s “three red lines”: tight thresholds for developers’ liability-to-asset, net debt-to-equity, and cash-to-short-term debt ratios. Failure to comply by 2023 supposedly will mean loss of access to new bank loans.

Evergrande’s debt problems were known long before the policy was introduced. And Beijing has shown no signs of backing off the new policy as its negative repercussions take root. Just the opposite, in fact. So it presumably wasn’t caught off guard by the various problems resulting from massive companies like Evergrande rushing to reorganize themselves on the fly – nor from the panic among lenders, investors and home-buyers as they came to realize they were paying for more than they knew.

Instead, Beijing appears to believe that the seemingly endless series of other crises it has weathered over the past few years has validated its approach to defusing them. It believes that by acting aggressively against financial risk before a real reckoning arrives – and by giving itself the regulatory and political muscle to force through painful changes and control the potential fallout – it doesn’t have to be as scared of triggering an uncontainable overcorrection as it was in the past. Indeed, in the case of the property sector, it appears even to be comfortable with accelerating the arrival of a potential crisis and responding nimbly enough to keep it from sparking an economy-wide conflagration. More specifically, by drawing out Evergrande’s collapse, it thinks it can slowly let the company, investors, lenders and buyers down easy, fence in potential contagion, give everyone time to adjust to the new reality, and keep panic under control.

It may be right. Or the scale of the potential crisis may overwhelm its best-laid plans. But then, it’s the scale that leaves it little choice but to stay the course.
Title: Serious Read: The triumph and terror of Wang Huning
Post by: Crafty_Dog on October 14, 2021, 03:12:33 AM
PALLADIUM
GOVERNANCE FUTURISM

N. S. LYONS OCTOBER 11, 2021  ARTICLES
The Triumph and Terror of Wang Huning

 Official White House Photo/Wang Huning observes as Chinese President Hu Jintao speaks with U.S. President Barack Obama, Toronto

One day in August 2021, Zhao Wei disappeared. For one of China’s best-known actresses to physically vanish from public view would have been enough to cause a stir on its own. But Zhao’s disappearing act was far more thorough: overnight, she was erased from the internet. Her Weibo social media page, with its 86 million followers, went offline, as did fan sites dedicated to her. Searches for her many films and television shows returned no results on streaming sites. Zhao’s name was scrubbed from the credits of projects she had appeared in or directed, replaced with a blank space. Online discussions uttering her name were censored. Suddenly, little trace remained that the 45-year-old celebrity had ever existed.

She wasn’t alone. Other Chinese entertainers also began to vanish as Chinese government regulators announced a “heightened crackdown” intended to dispense with “vulgar internet celebrities” promoting lascivious lifestyles and to “resolve the problem of chaos” created by online fandom culture. Those imitating the effeminate or androgynous aesthetics of Korean boyband stars—colorfully referred to as “xiao xian rou,” or “little fresh meat”—were next to go, with the government vowing to “resolutely put an end to sissy men” appearing on the screens of China’s impressionable youth.

Zhao and her unfortunate compatriots in the entertainment industry were caught up in something far larger than themselves: a sudden wave of new government policies that are currently upending Chinese life in what state media has characterized as a “profound transformation” of the country. Officially referred to as Chinese President Xi Jinping’s “Common Prosperity” campaign, this transformation is proceeding along two parallel lines: a vast regulatory crackdown roiling the private sector economy and a broader moralistic effort to reengineer Chinese culture from the top down.

But why is this “profound transformation” happening? And why now? Most analysis has focused on one man: Xi and his seemingly endless personal obsession with political control. The overlooked answer, however, is that this is indeed the culmination of decades of thinking and planning by a very powerful man—but that man is not Xi Jinping.

The Grey Eminence
Wang Huning much prefers the shadows to the limelight. An insomniac and workaholic, former friends and colleagues describe the bespectacled, soft-spoken political theorist as introverted and obsessively discreet. It took former Chinese leader Jiang Zemin’s repeated entreaties to convince the brilliant then-young academic—who spoke wistfully of following the traditional path of a Confucian scholar, aloof from politics—to give up academia in the early 1990s and join the Chinese Communist Party regime instead. When he finally did so, Wang cut off nearly all contact with his former connections, stopped publishing and speaking publicly, and implemented a strict policy of never speaking to foreigners at all. Behind this veil of carefully cultivated opacity, it’s unsurprising that so few people in the West know of Wang, let alone know him personally.

Yet Wang Huning is arguably the single most influential “public intellectual” alive today.

A member of the CCP’s seven-man Politburo Standing Committee, he is China’s top ideological theorist, quietly credited as being the “ideas man” behind each of Xi’s signature political concepts, including the “China Dream,” the anti-corruption campaign, the Belt and Road Initiative, a more assertive foreign policy, and even “Xi Jinping Thought.” Scrutinize any photograph of Xi on an important trip or at a key meeting and one is likely to spot Wang there in the background, never far from the leader’s side.

Wang has thus earned comparisons to famous figures of Chinese history like Zhuge Liang and Han Fei (historians dub the latter “China’s Machiavelli”) who similarly served behind the throne as powerful strategic advisers and consiglieres—a position referred to in Chinese literature as dishi: “Emperor’s Teacher.” Such a figure is just as readily recognizable in the West as an éminence grise (“grey eminence”), in the tradition of Tremblay, Talleyrand, Metternich, Kissinger, or Vladimir Putin adviser Vladislav Surkov.

But what is singularly remarkable about Wang is that he’s managed to serve in this role of court philosopher to not just one, but all three of China’s previous top leaders, including as the pen behind Jiang Zemin’s signature “Three Represents” policy and Hu Jintao’s “Harmonious Society.”

In the brutally cutthroat world of CCP factional politics, this is an unprecedented feat. Wang was recruited into the party by Jiang’s “Shanghai Gang,” a rival faction that Xi worked to ruthlessly purge after coming to power in 2012; many prominent members, like former security chief Zhou Yongkang and former vice security minister Sun Lijun, have ended up in prison. Meanwhile, Hu Jintao’s Communist Youth League Faction has also been heavily marginalized as Xi’s faction has consolidated control. Yet Wang Huning remains. More than any other, it is this fact that reveals the depth of his impeccable political cunning.

And the fingerprints of China’s Grey Eminence on the Common Prosperity campaign are unmistakable. While it’s hard to be certain what Wang really believes today inside his black box, he was once an immensely prolific author, publishing nearly 20 books along with numerous essays. And the obvious continuity between the thought in those works and what’s happening in China today says something fascinating about how Beijing has come to perceive the world through the eyes of Wang Huning.

Cultural Competence
While other Chinese teenagers spent the tumultuous years of the Cultural Revolution (1966-76) “sent down to the countryside” to dig ditches and work on farms, Wang Huning studied French at an elite foreign-language training school near his hometown of Shanghai, spending his days reading banned foreign literary classics secured for him by his teachers. Born in 1955 to a revolutionary family from Shandong, he was a sickly, bookish youth; this, along with his family’s connections, seems to have secured him a pass from hard labor.

When China’s shuttered universities reopened in 1978, following the commencement of “reform and opening” by Mao’s successor Deng Xiaoping, Wang was among the first to take the restored national university entrance exam, competing with millions for a chance to return to higher learning. He passed so spectacularly that Shanghai’s Fudan University, one of China’s top institutions, admitted him into its prestigious international politics master’s program despite having never completed a bachelor’s degree.

The thesis work he completed at Fudan, which would become his first book, traced the development of the Western concept of national sovereignty from antiquity to the present day—including from Gilgamesh through Socrates, Aristotle, Augustine, Machiavelli, Hobbes, Rousseau, Montesquieu, Hegel, and Marx—and contrasted it with Chinese conceptions of the idea. The work would become the foundation for many of his future theories of the nation-state and international relations.

But Wang was also beginning to pick up the strands of what would become another core thread of his life’s work: the necessary centrality of culture, tradition, and value structures to political stability.

Wang elaborated on these ideas in a 1988 essay, “The Structure of China’s Changing Political Culture,” which would become one of his most cited works. In it, he argued that the CCP must urgently consider how society’s “software” (culture, values, attitudes) shapes political destiny as much as its “hardware” (economics, systems, institutions). While seemingly a straightforward idea, this was notably a daring break from the materialism of orthodox Marxism.

Examining China in the midst of Deng’s rapid opening to the world, Wang perceived a country “in a state of transformation” from “an economy of production to an economy of consumption,” while evolving “from a spiritually oriented culture to a materially oriented culture,” and “from a collectivist culture to an individualistic culture.”

Meanwhile, he believed that the modernization of “Socialism with Chinese characteristics” was effectively leaving China without any real cultural direction at all. “There are no core values in China’s most recent structure,” he warned. This could serve only to dissolve societal and political cohesion.

That, he said, was untenable. Warning that “the components of the political culture shaped by the Cultural Revolution came to be divorced from the source that gave birth to this culture, as well as from social demands, social values, and social relations”—and thus “the results of the adoption of Marxism were not always positive”—he argued that, “Since 1949, we have criticized the core values of the classical and modern structures, but have not paid enough attention to shaping our own core values.” Therefore: “we must create core values.” Ideally, he concluded, “We must combine the flexibility of [China’s] traditional values with the modern spirit [both Western and Marxist].”

But at this point, like many during those heady years of reform and opening, he remained hopeful that liberalism could play a positive role in China, writing that his recommendations could allow “the components of the modern structure that embody the spirit of modern democracy and humanism [to] find the support they need to take root and grow.”

That would soon change.

A Dark Vision
Also in 1988, Wang—having risen with unprecedented speed to become Fudan’s youngest full professor at age 30—won a coveted scholarship (facilitated by the American Political Science Association) to spend six months in the United States as a visiting scholar. Profoundly curious about America, Wang took full advantage, wandering about the country like a sort of latter-day Chinese Alexis de Tocqueville, visiting more than 30 cities and nearly 20 universities.

What he found deeply disturbed him, permanently shifting his view of the West and the consequences of its ideas.

Wang recorded his observations in a memoir that would become his most famous work: the 1991 book America Against America. In it, he marvels at homeless encampments in the streets of Washington DC, out-of-control drug crime in poor black neighborhoods in New York and San Francisco, and corporations that seemed to have fused themselves to and taken over responsibilities of government. Eventually, he concludes that America faces an “unstoppable undercurrent of crisis” produced by its societal contradictions, including between rich and poor, white and black, democratic and oligarchic power, egalitarianism and class privilege, individual rights and collective responsibilities, cultural traditions and the solvent of liquid modernity.

But while Americans can, he says, perceive that they are faced with “intricate social and cultural problems,” they “tend to think of them as scientific and technological problems” to be solved separately. This gets them nowhere, he argues, because their problems are in fact all inextricably interlinked and have the same root cause: a radical, nihilistic individualism at the heart of modern American liberalism.

“The real cell of society in the United States is the individual,” he finds. This is so because the cell most foundational (per Aristotle) to society, “the family, has disintegrated.” Meanwhile, in the American system, “everything has a dual nature, and the glamour of high commodification abounds. Human flesh, sex, knowledge, politics, power, and law can all become the target of commodification.” This “commodification, in many ways, corrupts society and leads to a number of serious social problems.” In the end, “the American economic system has created human loneliness” as its foremost product, along with spectacular inequality. As a result, “nihilism has become the American way, which is a fatal shock to cultural development and the American spirit.”

Moreover, he says that the “American spirit is facing serious challenges” from new ideational competitors. Reflecting on the universities he visited and quoting approvingly from Allan Bloom’s The Closing of the American Mind, he notes a growing tension between Enlightenment liberal rationalism and a “younger generation [that] is ignorant of traditional Western values” and actively rejects its cultural inheritance. “If the value system collapses,” he wonders, “how can the social system be sustained?”

Ultimately, he argues, when faced with critical social issues like drug addiction, America’s atomized, deracinated, and dispirited society has found itself with “an insurmountable problem” because it no longer has any coherent conceptual grounds from which to mount any resistance.

Once idealistic about America, at the start of 1989 the young Wang returned to China and, promoted to Dean of Fudan’s International Politics Department, became a leading opponent of liberalization.

He began to argue that China had to resist global liberal influence and become a culturally unified and self-confident nation governed by a strong, centralized party-state. He would develop these ideas into what has become known as China’s “Neo-Authoritarian” movement—though Wang never used the term, identifying himself with China’s “Neo-Conservatives.” This reflected his desire to blend Marxist socialism with traditional Chinese Confucian values and Legalist political thought, maximalist Western ideas of state sovereignty and power, and nationalism in order to synthesize a new basis for long-term stability and growth immune to Western liberalism.

“He was most concerned with the question of how to manage China,” one former Fudan student recalls. “He was suggesting that a strong, centralized state is necessary to hold this society together. He spent every night in his office and didn’t do anything else.”

Wang’s timing couldn’t have been more auspicious. Only months after his return, China’s own emerging contradictions exploded into view in the form of student protests in Tiananmen Square. After PLA tanks crushed the dreams of liberal democracy sprouting in China, CCP leadership began searching desperately for a new political model on which to secure the regime. They soon turned to Wang Huning.

When Wang won national acclaim by leading a university debate team to victory in an international competition in Singapore in 1993, he caught the attention of Jiang Zemin, who had become party leader after Tiananmen. Wang, having defeated National Taiwan University by arguing that human nature is inherently evil, foreshadowed that, “While Western modern civilization can bring material prosperity, it doesn’t necessarily lead to improvement in character.” Jiang plucked him from the university and, at the age of 40, he was granted a leadership position in the CCP’s secretive Central Policy Research Office, putting him on an inside track into the highest echelons of power.

Wang Huning’s Nightmare
From the smug point of view of millions who now inhabit the Chinese internet, Wang’s dark vision of American dissolution was nothing less than prophetic. When they look to the U.S., they no longer see a beacon of liberal democracy standing as an admired symbol of a better future. That was the impression of those who created the famous “Goddess of Democracy,” with her paper-mâché torch held aloft before the Gate of Heavenly Peace.

Instead, they see Wang’s America: deindustrialization, rural decay, over-financialization, out of control asset prices, and the emergence of a self-perpetuating rentier elite; powerful tech monopolies able to crush any upstart competitors operating effectively beyond the scope of government; immense economic inequality, chronic unemployment, addiction, homelessness, and crime; cultural chaos, historical nihilism, family breakdown, and plunging fertility rates; societal despair, spiritual malaise, social isolation, and skyrocketing rates of mental health issues; a loss of national unity and purpose in the face of decadence and barely concealed self-loathing; vast internal divisions, racial tensions, riots, political violence, and a country that increasingly seems close to coming apart.

As a tumultuous 2020 roiled American politics, Chinese people began turning to Wang’s America Against America for answers. And when a mob stormed the U.S. Capitol building on January 6, 2021, the book flew off the shelves. Out-of-print copies began selling for as much as $2,500 on Chinese e-commerce sites.

But Wang is unlikely to be savoring the acclaim, because his worst fear has become reality: the “unstoppable undercurrent of crisis” he identified in America seems to have successfully jumped the Pacific. Despite all his and Xi’s success in draconian suppression of political liberalism, many of the same problems Wang observed in America have nonetheless emerged to ravage China over the last decade as the country progressively embraced a more neoliberal capitalist economic model.

“Socialism with Chinese Characteristics” has rapidly transformed China into one of the most economically unequal societies on earth. It now boasts a Gini Coefficient of, officially, around 0.47, worse than the U.S.’s 0.41. The wealthiest 1% of the population now holds around 31% of the country’s wealth (not far behind the 35% in the U.S.). But most people in China remain relatively poor: some 600 million still subsist on a monthly income of less than 1,000 yuan ($155) a month.

Meanwhile, Chinese tech giants have established monopoly positions even more robust than their U.S. counterparts, often with market shares nearing 90%. Corporate employment frequently features an exhausting “996” (9am to 9pm, 6 days a week) schedule. Others labor among struggling legions trapped by up-front debts in the vast system of modern-day indentured servitude that is the Chinese “gig economy.” Up to 400 million Chinese are forecast to enjoy the liberation of such “self-employment” by 2036, according to Alibaba.

The job market for China’s ever-expanding pool of university graduates is so competitive that “graduation equals unemployment” is a societal meme (the two words share a common Chinese character). And as young people have flocked to urban metropoles to search for employment, rural regions have been drained and left to decay, while centuries of communal extended family life have been upended in a generation, leaving the elderly to rely on the state for marginal care. In the cities, young people have been priced out of the property market by a red-hot asset bubble.

Meanwhile, contrary to trite Western assumptions of an inherently communal Chinese culture, the sense of atomization and low social trust in China has become so acute that it’s led to periodic bouts of anguished societal soul-searching after oddly regular instances in which injured individuals have been left to die on the street by passers-by habitually distrustful of being scammed.

Feeling alone and unable to get ahead in a ruthlessly consumerist society, Chinese youth increasingly describe existing in a state of nihilistic despair encapsulated by the online slang term neijuan (“involution”), which describes a “turning inward” by individuals and society due to a prevalent sense of being stuck in a draining rat race where everyone inevitably loses. This despair has manifested itself in a movement known as tangping, or “lying flat,” in which people attempt to escape that rat race by doing the absolute bare minimum amount of work required to live, becoming modern ascetics.

In this environment, China’s fertility rate has collapsed to 1.3 children per woman as of 2020—below Japan and above only South Korea as the lowest in the world—plunging its economic future into crisis. Ending family size limits and government attempts to persuade families to have more children have been met with incredulity and ridicule by Chinese young people as being “totally out of touch” with economic and social reality. “Do they not yet know that most young people are exhausted just supporting themselves?” asked one typically viral post on social media. It’s true that, given China’s cut-throat education system, raising even one child costs a huge sum: estimates range between $30,000 (about seven times the annual salary of the average citizen) and $115,000, depending on location.

But even those Chinese youth who could afford to have kids have found they enjoy a new lifestyle: the coveted DINK (“Double Income, No Kids”) life, in which well-educated young couples (married or not) spend all that extra cash on themselves. As one thoroughly liberated 27-year-old man with a vasectomy once explained to The New York Times: “For our generation, children aren’t a necessity…Now we can live without any burdens. So why not invest our spiritual and economic resources on our own lives?”

So while Americans have today given up the old dream of liberalizing China, they should maybe look a little closer. It’s true that China never remotely liberalized—if you consider liberalism to be all about democratic elections, a free press, and respect for human rights. But many political thinkers would argue there is more to a comprehensive definition of modern liberalism than that. Instead, they would identify liberalism’s essential telos as being the liberation of the individual from all limiting ties of place, tradition, religion, associations, and relationships, along with all the material limits of nature, in pursuit of the radical autonomy of the modern “consumer.”

From this perspective, China has been thoroughly liberalized, and the picture of what’s happening to Chinese society begins to look far more like Wang’s nightmare of a liberal culture consumed by nihilistic individualism and commodification.

The Grand Experiment
It is in this context that Wang Huning appears to have won a long-running debate within the Chinese system about what’s now required for the People’s Republic of China to endure. The era of tolerance for unfettered economic and cultural liberalism in China is over.

According to a leaked account by one of his old friends, Xi has found himself, like Wang, “repulsed by the all-encompassing commercialization of Chinese society, with its attendant nouveaux riches, official corruption, loss of values, dignity, and self-respect, and such ‘moral evils’ as drugs and prostitution.” Wang has now seemingly convinced Xi that they have no choice but to take drastic action to head off existential threats to social order being generated by Western-style economic and cultural liberal-capitalism—threats nearly identical to those that scourge the U.S.

This intervention has taken the form of the Common Prosperity campaign, with Xi declaring in January that “We absolutely must not allow the gap between rich and poor to get wider,” and warning that “achieving common prosperity is not only an economic issue, but also a major political issue related to the party’s governing foundations.”

This is why anti-monopoly investigations have hit China’s top technology firms with billions of dollars in fines and forced restructurings and strict new data rules have curtailed China’s internet and social media companies. It’s why record-breaking IPOs have been put on hold and corporations ordered to improve labor conditions, with “996” overtime requirements made illegal and pay raised for gig workers. It’s why the government killed off the private tutoring sector overnight and capped property rental price increases. It’s why the government has announced “excessively high incomes” are to be “adjusted.”

And it’s why celebrities like Zhao Wei have been disappearing, why Chinese minors have been banned from playing the “spiritual opium” of video games for more than three hours per week, why LGBT groups have been scrubbed from the internet, and why abortion restrictions have been significantly tightened. As one nationalist article promoted across state media explained, if the liberal West’s “tittytainment strategy” is allowed to succeed in causing China’s “young generation lose their toughness and virility then we will fall…just like the Soviet Union did.” The purpose of Xi’s “profound transformation” is to ensure that “the cultural market will no longer be a paradise for sissy stars, and news and public opinion will no longer be in a position of worshipping Western culture.”

In the end, the campaign represents Wang Huning’s triumph and his terror. It’s thirty years of his thought on culture made manifest in policy.

On one hand, it is worth viewing honestly the level of economic, technological, cultural, and political upheaval the West is currently experiencing and considering whether he may have accurately diagnosed a common undercurrent spreading through our globalized world. On the other, the odds that his gambit to engineer new societal values can succeed seems doubtful, considering the many failures of history’s other would-be “engineers of the soul.”

The best simple proxy to measure this effort in coming years is likely to be demographics. For reasons not entirely clear, many countries around the world now face the same challenge: fertility rates that have fallen below the replacement rate as they’ve developed into advanced economies. This has occurred across a diverse array of political systems, and shows little sign of moderating. Besides immigration, a wide range of policies have now been tried in attempts to raise birth rates, from increased public funding of childcare services to “pro-natal” tax credits for families with children. None have been consistently successful, sparking anguished debate in some quarters on whether losing the will to survive and reproduce is simply a fundamental factor of modernity. But if any country can succeed in reversing this trend, no matter the brute-force effort required, it is likely to be China.

Either way, our world is witnessing a grand experiment that’s now underway: China and the West, facing very similar societal problems, have now, thanks to Wang Huning, embarked on radically different approaches to addressing them. And with China increasingly challenging the United States for a position of global geopolitical and ideological leadership, the conclusion of this experiment could very well shape the global future of governance for the century ahead.

N.S. Lyons is an analyst and writer living and working in Washington, D.C. He is the author of The Upheaval.

https://palladiummag.com/2021/10/11/the-triumph-and-terror-of-wang-huning/?fbclid=IwAR1iwDnyb_g1xTXaApS48kHrPNVA4i5ic9KXIVOFonN_BjaN9aLofhzatQc
Title: GPF
Post by: Crafty_Dog on October 19, 2021, 12:19:37 AM
Chinese crises. China’s twin property and energy crises aren’t easing yet. Home sales in September slumped a whopping 17 percent year over year in September, though this is a modest improvement over the nearly 20 percent drop posted in August. Meanwhile, unusually early freezes in parts of China are pushing energy demand even higher. Industry leaders claim coal shortages will begin to ease in the coming month or so. Both issues appear to have contributed to the slowdown in Chinese economic output, with gross domestic product growth slowing to 4.9 percent in the third quarter, down from a brisk 7.9 percent in the second quarter. One silver lining for China: The global spike in energy prices is leading to a windfall for Chinese diesel and gasoline exports.
Title: Re: China bubble economy
Post by: DougMacG on October 24, 2021, 06:58:40 PM
Because of paywall I may never know what this says but Nobel Laureate Paul Krugman is usually a pretty good contrary indicator.

https://www.nytimes.com/2021/10/22/opinion/china-bubble-economy.html
Title: GPF: Xi's coming winter of discontent
Post by: Crafty_Dog on October 27, 2021, 04:13:11 AM
   
Xi Jinping’s Coming Winter of Discontent
His opponents sense an opportunity to make their move.
By: Phillip Orchard
At some point, roughly a year from now, the Communist Party of China will hold its semidecennial Party Congress. It's always a very big deal because, among other reasons, it's either when the next party chairman is anointed or when they take the reins, depending on the year. It's also when appointments to the Central Committee, the Politburo and the all-important Politburo Standing Committee are finalized.

After a decade in power, Xi Jinping appears none too inclined to stick with party precedent and step down. He declined to elevate a successor into the vice presidency in 2017, instead stifling some of the most promising prospects of the CPC's up-and-coming sixth generation of leaders. And he's spent much of the five years since laying the groundwork for a much longer stay in power. If he's not party chairman in 2023, it will almost certainly be because he's promoted himself to an even higher position that does not yet exist.

But that doesn't mean the coming year will be short on the sort of power struggle and palace intrigue that typically precedes the (invariably comatose) congresses themselves. The drama already appears to be starting, in fact – just as several simmering political and economic problems are threatening to boil over in the coming months. If a pre-congress window is ever going to open for Xi's opponents to start making their move, a long cold winter just might be the time.

Power

One thing to make clear first: The odds of Xi falling from power altogether are extremely slim. Absent some sort of severe personal health issue, it would take an epochal crisis in China at this point for the multiple rival factions to unite, mobilize against him and wrest away his control of the CPC's core levers of power. Throughout his reign, Xi’s sweeping purges have smashed up traditional factions, taken down extraordinarily powerful figures and their proteges, and reconfigured critical patronage networks that now have him at the center. He has tight control over the Central Military Commission, and thus the People’s Liberation Army, the foremost guarantor of CPC rule, and lately has been assiduously dismantling nascent factions in the other security services as well. His vision for "national rejuvenation" and his muscular approach to establishing China as a great power are, by all accounts, widely popular with the public. And anyway, the Communist Party has probably wrapped its own legitimacy too tightly in Xi’s cult of personality to avoid falling with him.

But even if his formal position is bulletproof, the true extent of Xi’s authority is by no means set in stone. Any major power struggles ahead of the Party Congress are likely to focus on diminishing his dominance of the all-important "three Ps": patronage, personnel and policy. And this itself could prove deeply problematic by, say, reviving crippling factional struggles and leading to paralysis in the sort of crises Beijing may face in the coming months. After all, Xi’s consolidation of power so far wouldn’t have happened without widespread recognition among Chinese leaders that the turbulent waters ahead necessitate a strongman at the helm. And he's been making good use of this apparent mandate, particularly since the beginning of the year, pushing forward painful and potentially unpopular reforms – targeting everything from the tech sector to gamer addiction – that a less entrenched leader may have avoided.

Still, backlash against some of these moves was likely inevitable, and there has been a slew of hints of bubbling discontent in recent months. To name a few: There's an intensifying purge focused on the police and other security services. Notably, this includes corruption probes targeting figures who were instrumental in helping Xi carry out his scorched-earth anti-graft campaign upon taking office in 2012. This, combined with certain moves Xi has made to rein in reckless property developers, also hints at a rift between Xi and other influential party elders. Perhaps most interesting, these include 72-year-old Vice President Wang Qishan, Xi's right-hand man on the standing committee and chief of the much-feared Central Commission for Discipline Inspection during his first term – the sort of figure whose previous jobs may have made him a little too powerful for the liking of a dictator.

There's also been a mysterious series of PLA leadership changes. There's been grumbling about Xi failing to arrest the slide toward a new Cold War with the U.S., China's most important economic partner, as well as accusations of recklessly turning Europe and Australia against China. There have been veiled critiques of Xi's leadership and ambitions in prominent media outlets, explicit critiques from senior party figures previously considered untouchable, and open signs of an intensifying spat with Zeng Qinghong, a former vice president and Politburo Standing Committee member and confidant of former President Jiang Zemin. Former paramount leader Deng Xiaoping's acolytes have remained critical of Xi straying from Deng's "reform and opening" course. Conspicuously, Xi himself hasn't left China in more than two years – a reasonable enough decision during a pandemic, but nonetheless one that could be interpreted as a nagging fear of not being allowed to return.

Problems

In truth, this sort of stuff isn't all that unusual. Pick any six-month period during Xi's reign, and it's not hard to find grousing about his abandonment of the CPC's collective leadership model or about his cultivation of a cult of personality (strictly forbidden after Mao) – or about "hints" that something big is brewing against him. Xi left a long trail of bodies in his pursuit and consolidation of power, and he's not so powerful as to leave no enemy still standing. It just matters a bit more now, with so much likely to be up for grabs at the party congress and various factions in Beijing incentivized to pounce on any hint of weakness.

Likewise, the reality is that China is facing some pretty fierce storms on multiple fronts, both foreign and domestic. Two, in particular, aren't going away anytime soon. One is the potentially explosive crisis in the real estate sector, as embodied by sputtering property giant Evergrande. Beijing is intentionally trying to let the massively indebted company fail, but slowly, in order to contain market panic and the risk of contagion. This is a sensible approach, and probably better than either bailing the company out or leaving it to face its comeuppance alone. But it also means that week after week, Evergrande is going to be on the brink of default as one repayment deadline after another nears. This means that every week there’s the risk of Beijing's best-laid plans faltering and Evergrande's woes spreading deeper into the real estate sector, just as Chinese home prices are beginning to fall for the first time in years.

Perhaps the bigger unfolding crisis is China's power crunch. There is, simply put, no quick way out of it for China, particularly given the country's depleted thermal coal reserves. (Coal provides more than half of the country's electricity needs.) To be sure, China can import more coal. Already, in September, imports increased 76 percent on the previous year, when Beijing was focused on replacing imports with domestic coal. Indonesia is the biggest winner here. But many countries, including major buyers like India (which purchases around 17 percent of global thermal coal exports), are facing shortages of their own, meaning China will have to compete and/or overpay for the commodity, complicating its accompanying plans to cap electricity prices.

Imported coal, moreover, still accounts for only a small fraction of China's needs. So a dramatic surge in domestic output is necessary. Yet, it's not clear Chinese producers are up for the task. Earlier this month, Beijing reportedly told miners to deliver upward of 12 million tons per day through the end of the year, a sum roughly equivalent to a third of China's average annual output in recent years. (Chinese power consumption usually peaks in January.) Many mines would need to rapidly expand before boosting production, requiring steps that can't be rushed without risking major (and potentially politically damaging) accidents. Beijing is also asking them to charge less for the commodity while they're at it. Estimates suggest China may face a shortfall of 350 million-400 million tons.

Failure to pull through either of these problems would present any number of political risks. Widespread blackouts, particularly at the height of winter, would be particularly problematic given how expectations among the Chinese public have shifted from prosperity at all costs to a more comprehensive view of quality of life. (This is why Beijing now considers pollution and industrial accidents to be about as threatening as a surge in unemployment.) Widespread industrial and manufacturing shutdowns, whether from power cuts or parallel shortfalls in metallurgical coal inventories, would ripple through the economy and further stress the real estate sector – and thus directly threaten the livelihoods of the many Chinese elites who are heavily invested in Chinese real estate, including some of the country's most indebted firms, thereby worsening political infighting about whether to stay the course with Xi's nervy plans to manage the sector. It'd be a bad time for the resulting political paralysis.

It's not hard to see those who oppose Xi seizing on the opportunity to blame his policies for the real estate sector's woes and accompanying issues – even if his reforms were prudent and intended to eliminate the lingering threat of a far worse reckoning down the road. Likewise, it's not hard to see Xi's coercive measures targeting Australia, particularly a ban on imports of thermal coal from the country (which provided more than half of China’s imports in 2020), being blamed for the power crunch. That, in reality, this is a relatively minor cause of China's coal problem is irrelevant. In periods of extreme stress, the strength of a narrative matters far more than the truth of it. And if circumstances deteriorate badly enough in the months ahead, it's the narrative depicting Xi's continued reign as inevitable that could suffer most.
Title: As we have warned here for years now
Post by: Crafty_Dog on October 27, 2021, 09:19:40 AM
I have pounded the table for years of the bubble like quality of Chinese economic numbers:

This here from GPF:

Real estate warning. S&P on Wednesday warned that more than half of rated Chinese property developers have junk-rated debt, while a third could see acute liquidity crunches in the months ahead. All told, the sector has around $84 billion in debt scheduled to mature by the end of 2022. This comes a day after yet another Chinese developer, Modern Land, missed a payment, failing to pay interest and principal on a $250 million bond. China on Wednesday told property developers to get their act together.

===========

What implications/consequences if/when this really hits?
Title: Re: As we have warned here for years now
Post by: G M on October 27, 2021, 09:26:00 AM
The rest of the debt crippled economies, including ours have been floating on Chinese money. The collapse is coming.

Plan accordingly.


I have pounded the table for years of the bubble like quality of Chinese economic numbers:

This here from GPF:

Real estate warning. S&P on Wednesday warned that more than half of rated Chinese property developers have junk-rated debt, while a third could see acute liquidity crunches in the months ahead. All told, the sector has around $84 billion in debt scheduled to mature by the end of 2022. This comes a day after yet another Chinese developer, Modern Land, missed a payment, failing to pay interest and principal on a $250 million bond. China on Wednesday told property developers to get their act together.

===========

What implications/consequences if/when this really hits?
Title: Beijing unleashes sweeping bid to remold society
Post by: Crafty_Dog on November 01, 2021, 04:10:58 AM
https://www.theepochtimes.com/beijing-unleashes-sweeping-bid-to-remold-society_4008852.html
Title: Re: China
Post by: Crafty_Dog on November 01, 2021, 08:15:20 AM
GPF

Chinese debt. Around two-thirds of major Chinese property developers are still in violation of Beijing’s “three red lines” on debt. (They’re not required to be fully in compliance until 2023, but the lack of progress probably isn’t encouraging to regulators considering the pain being caused by deleveraging.) Chinese developers are facing another $2 billion in yuan- and dollar-denominated bond payments due this month.Strip.



Storage concerns. Chinese commercial and strategic oil stockpiles have reportedly reached their lowest levels since 2018, threatening shortages of diesel in particular. This is pretty stunning, considering how aggressively Beijing moved to top up and expand storage inventories after global crude prices collapsed in 2020. On Sunday, Beijing announced that it would release diesel and gasoline reserves to stave off shortfalls at the pump.
Title: Re: China
Post by: Crafty_Dog on November 02, 2021, 01:44:48 PM


Fretting over food. Last week, Beijing warned traders against hoarding and speculation of certain crops, such as lettuce. On Monday, it told people to refrain from pigging out at restaurants. And on Tuesday, the Commerce Ministry said families should consider stockpiling supplies as COVID-19 outbreaks are leading to new lockdowns and border closures. A major food crisis is one of Beijing's worst nightmares.

Fretting over energy. The COVID-19 resurgence is also complicating China's energy crisis. A major coal miner in Mongolia, one of China's most important sources of metallurgical coal (the kind used in steel manufacturing), has been forced to suspend operations due to a border closure caused by the coronavirus. However, Chinese steelmakers appear to be reducing output anyway, limiting the impact of the supply pinch. And as with thermal coal, Chinese power plants appear to be making some headway on replenishing their inventories.
Title: GPF: China returning to semi-normal?
Post by: Crafty_Dog on November 08, 2021, 04:04:49 PM
Progress. Some of China’s myriad supply chain problems are getting better. The state grid over the weekend insisted that electricity supplies have returned to normal and will remain that way, thanks to a rapid rebound in thermal coal inventories. (Chinese coal imports doubled in October.) But now diesel prices are surging. And despite attempts to rein in panic over food shortages, folks are still hoarding some staples, such as cabbage.

Chinese exports. The supply chain snarls haven’t had a major impact on Chinese exports. October alone saw more than $300 billion in Chinese exports, according to official figures, or a 27.1 percent annualized increase. The month pushed China’s trade surplus to an all-time high. Shipments to Europe were up 44 percent compared to a year earlier. Imports also soared by around 20.6 percent in October year over year, though it’s getting hit here by the shipping container pileup in the West.
Title: CCP admits many officials have one foot out the door
Post by: Crafty_Dog on November 09, 2021, 06:21:00 PM
https://www.theepochtimes.com/mkt_breakingnews/ccp-media-admits-large-number-of-officials-lack-confidence-in-the-ccp-could-flee-at-any-time_4088265.html?utm_source=newsnoe&utm_medium=email&utm_campaign=breaking-2021-11-09-2&mktids=532daa23ba33138fcf5898938cfc6975&est=ScopjugxDJ8GWpulJyZ%2FWrUmEY62lhqWuTkNeaQXxP0z8gQM14Wu7T7KQJQ1R%2F%2B1kD8q
Title: me too Chinese female tennis player vanishes
Post by: ccp on November 15, 2021, 11:17:29 AM
as expected:

https://nypost.com/2021/11/15/peng-shuai-disappears-following-sexual-assault-accusations/
Title: Re: me too Chinese female tennis player vanishes
Post by: G M on November 15, 2021, 12:25:05 PM
as expected:

https://nypost.com/2021/11/15/peng-shuai-disappears-following-sexual-assault-accusations/

Either she is in a Laogai or her organs are for sale as we speak.
Title: Re: me too Chinese female tennis player vanishes
Post by: DougMacG on November 15, 2021, 01:25:24 PM
as expected:

https://nypost.com/2021/11/15/peng-shuai-disappears-following-sexual-assault-accusations/

I forget, who is the citizens' group that oversees top Politburo members?

It isn't a me too movement if only one speaks up and then disappears.

Looks like Biden will cancel his summit over this and other human rights concerns.  - Just kidding.  'That's not in his lane.'
-----------------------------------------------------------
Jack Ma had a similar run-in with Chinese authorities.
https://marketrealist.com/p/is-jack-ma-still-missing/

ccp:  "as expected"

Yes, it's not why missing, it's why did they think they could speak out?


Title: Re: China
Post by: Crafty_Dog on January 06, 2022, 05:15:09 AM
https://www.theepochtimes.com/residents-barter-to-survive-under-chinas-extreme-covid-19-rules_4191844.html?utm_source=uschinanoe&utm_campaign=uschina-2022-01-06&utm_medium=email
Title: Stratfor: China's recovery hits a wall
Post by: Crafty_Dog on January 07, 2022, 11:49:16 AM
China’s Economic Recovery Hits a Great Wall
China’s economy faces significant headwinds in 2022, including recurrent COVID-19 outbreaks, weak domestic demand, and constraints on the country’s state-led investment model. This will force Beijing to provide stimulus by potentially increasing government and state-owned enterprise (SOE) infrastructure investment, relaxing its financial deleveraging campaign and intervening in the foreign exchange market, which could result in a slowdown in economic reforms and a falloff in long-term potential output. As Chinese President Xi Jinping starts his third five-year term as General Secretary of the Chinese Communist Party (CCP) and head of state, political stability will depend on the government delivering continuous growth. Slower growth in the world’s second-largest economy would slow the aggregate global economy, as well as potentially challenge the social contract in which the CCP provides Chinese citizens economic prosperity in return for political legitimacy.
Title: In the dead of the night
Post by: Crafty_Dog on January 12, 2022, 07:03:11 AM
https://www.dailymail.co.uk/news/article-10392071/Reality-Zero-Covid-China-quarantine-camps-confine-residents-cells-videos-show.html
Title: China's property sector in trouble again?
Post by: Crafty_Dog on January 19, 2022, 03:26:42 PM
https://www.zerohedge.com/markets/chinas-property-sector-crashing-again-and-time-it-has-reached-countrys-biggest-developer?utm_source=&utm_medium=email&utm_campaign=430
Title: ET catching up to me and adding lots of specificity
Post by: Crafty_Dog on January 20, 2022, 06:44:46 AM
China Builds 27 Empty New York Cities
James Dale Davidson
James Dale Davidson
 January 19, 2022 Updated: January 19, 2022biggersmaller Print
Commentary

As of 2016, China’s empty apartment units could house New York City 27 times over.

What does this mean to you? There are a lot of carry-on effects from wasting so many resources. As you delve into a thought exercise to get more acquainted with the ruinous consequences of credit bubbles, be grateful that you don’t really have to worry about malicious genies magically tagging you with mortgaged deeds.

That could be scary. Imagine that some cruel genie took a perverse dislike to you. What worse instance of malevolent magic could the genie perform than to present you with deeds to the astonishing inventory of 70 million empty apartments structures accumulating dust throughout China.

You might think it would make you a billionaire, a real estate magnate on par with Donald Trump. But think again.

This may be a good moment to retell an uncharacteristically charming story Trump told on himself, dating to the savings and loan crisis (S&L crisis) of the late 1980s and early 1990s. That was a time when 1,043 out of the 3,234 savings and loan associations in the United States failed as they tried to digest billions in over-mortgaged real estate properties.

At that time, Trump found himself walking the streets of the Upper East Side of Manhattan one evening with his girlfriend of the moment. As they walked, they came upon a bum in a tattered peacoat lying on a grate. Trump remarked to his companion, “That guy has $1 billion more than I do.” She responded, “But he doesn’t look like he has a penny.” Trump replied, “He doesn’t.”

When he said that, Trump’s fortune was hostage to the banks to which he owed about a billion dollars more than his properties would have realized in a fire sale. I describe this “as an uncharacteristically charming story” because Trump is hardly famous for making jokes at his own expense. Nonetheless, he confirmed to me in a conversation that the above account I share with you is valid. It shows Trump humorously acknowledging the implications of double-entry bookkeeping at his best.

With that in mind, how could you afford to pay the construction mortgages on 70 million apartment units with no residents deeded to you by the evil genie? A challenging question. You would have to do some fast talking with the Chinese banks of the sort Trump managed with New York banks decades ago during the S&L crisis.

Your only hope of avoiding being sucked into a black hole of debt defaults would be to hire some creative scoundrels disguised as accountants to help you persuade the banks to lend you additional billions (or more probably, trillions) to postpone the day of reckoning. Note that the extent to which you could succeed would only worsen the ultimate malinvestment problem. Your assets would not be enhanced in any way by being encumbered with additional debt. They would just become more costly.

Could you keep kiting the debt?

A $36.4 Trillion Question?
That is at least a $36.4 trillion question. Maybe a $45.9 trillion, or possibly even a $116.6 trillion question. The correct answer depends on China’s actual debt level. Unlike Trump’s challenge of three decades ago when the systemic debt issue was denominated in billions of dollars, the Chinese bad debt problem is 1,000 times worse.

Forbes reports the estimate of Professor Victor Shih of the University of California San Diego. Shih believes that Chinese official debt figures have proven woefully inadequate.

A $45.9 Trillion Question?
In 2017, Shih put total Chinese debt at 328 percent of GDP (reported at $14 trillion), therefore $45.9 trillion. According to Shih, “total interest payments from June 2016 to June 2017 exceeded the incremental increase in nominal GDP by roughly 8 trillion RMB.”

If so, that hints that the end is near. However, as rough as that sounds, the actual situation may be even worse.

Or a $116.6 Trillion Question?
If you are a connoisseur of forbidden truths, as I am, you don’t take official figures at face value. You keep digging for tells that reveal the real story. I am convinced that Chinese government statistics are as bogus as those in the United States. And more so.

Evergrande Community
An aerial view shows the Evergrande Changqing community in Wuhan, Hubei Province, China, on Sept. 26, 2021. (Getty Images)
Professor Christopher Balding of HSBC Business School, Peking University, an authority with good sources in the People’s Bank of China’s (PBOC) Financial Stability Board, recently did some subversive arithmetic combining “on balance sheet assets” with “off-balance sheet assets.” Remember, while debts are liabilities to the borrowers, they are assets to the lenders.

He concludes that total debt in China is a breathtaking 833 percent of GDP. That means a debt of roughly $116.6 trillion.

Wow. Just wow!

The actual debt level could be three and a half times higher than suggested by official figures. The National Development and Reform Commission says Chinese debt amounts to 260 percent of GDP ($36.4 trillion). The International Monetary Fund (IMF) accepts a lower official estimate of 230 percent. But suppose Balding’s report of 833 percent is correct. In that case, this is a matter of capital importance to the world economy and your investments.

Annual Interest Payments of 29 Percent of GDP?
Remember, interest rates in China are not as minuscule as those in the United States or negative as those in Europe and Japan. Assume the average interest rate paid equals the short-term interbank deposit rate of 3.5 percent. Balding observes, “this would imply financial services costs to the economy of 29% nominal GDP.” A large nut to crack. Even Chinese growth rates would not come close to covering annual carrying costs of 29 percent.

Is it possible that Balding is right?

Yes. I see several hints that he is.

Are Official Financial Figures Wildly Wrong?
For one thing, almost every Chinese bankruptcy case brings evidence of undisclosed liabilities of individual companies. Balding observes, “it is common to find enormous amounts of undisclosed debts or (Enron-like) asset management products in Chinese bankruptcies or defaults.”

This underscores the suspicion that the actual level of debt has been low-balled. In Balding’s words, it also means that “official on balance sheet financial figures are wildly wrong with disastrous consequences.” He warns, “This implies that we need to rethink the entire story of Chinese development and finance since probably about 2000.”


Balding continues: “Excessive indebtedness is distributed in virtually every sector of the economy. Before, if there was a shock to the corporate sector, householders and the government could step in and help. However, virtually no sector of the Chinese economy does not have an enormous indebtedness. Distributing it throughout simply lowers the capacity to handle a shock.”

‘No Good Deed Goes Unpunished’
Speaking of “shocks,” you should not be shocked to learn that Balding was fired from his post at Peking University after discussing his conclusion—based on PBOC data—that total debt in China has surged to 833 percent of nominal GDP.

In a corrupt world, where people have trillions of reasons to lie about the economy (and some have no doubt lost their lives for failing to heed them), the firing of Professor Balding is as close as you can expect to come to official confirmation that his numbers are correct.

A way of restating Balding’s revelations is that no one knows who owes what to whom or how much can be settled before the whole Chinese house of cards collapses. Estimates of bad debt in the Chinese banking system run as high as 50 percent of GDP—or about $7 trillion. Far more than enough to make the banking system insolvent.

A collapse of China’s asset bubble lies ahead. I doubt any Chinese tycoons are strolling the streets of Shanghai with their girlfriends, making jokes about street people being a trillion yuan richer than they are. That underscores a problem when the government of a country enlarges debt to magnitudes beyond the scale of assets held by even the wealthiest persons. That makes it all the more unlikely that mortgaged assets can be redeemed from hock while encumbered by anything like their current level of debt.
Title: ET: Political Instability awaits the CCP
Post by: Crafty_Dog on January 20, 2022, 06:47:37 AM
second

Political Instability Awaits the CCP
Ching Cheong
Ching Cheong
 January 19, 2022 Updated: January 19, 2022biggersmaller Print
Commentary

This year the Chinese Communist Party (CCP) will be plagued with internal political instability as its leader Xi Jinping tries to secure a third, if not lifelong, term at the 20th Party Congress set for autumn 2022.

Such a move violates the CCP’s tradition of upholding the two-term limit (each lasting for five years) of the presidency, which was stipulated in Article 79 of the 1982 version of the Chinese constitution. In 2018, however, Xi amended the constitution to delete this clause, which removed the legal barrier to his bid for perpetual power. Naturally, Xi is sure to meet stiff resistance from various quarters within the Party.

Several events suggest that this year is likely to be a turbulent one for Xi and the CCP.

The first is the mysterious absence of Xi’s right-hand man, Li Zhanshu, at a tea gathering on New Year’s Eve, a traditional occasion in which members of the top leadership showcase their solidarity. Although Li reappeared on Jan. 11, proving that he’s politically safe, his absence still caused speculation that Xi is facing strong opposition.

Li ranks third in the seven-member Politburo Standing Committee, the supreme governing body in China. As chairman of the National People’s Congress (NPC), China’s rubber-stamp legislature, he was instrumental in amending the Chinese constitution to delete Article 79, the clause limiting the presidential term limit to two.

Li’s absence was not caused by illness. Under normal circumstances, when a senior official is unable to attend an important meeting due to an illness, the communique would say that he applied for sick leave so it wouldn’t cause speculation. However, there was no such announcement on Li’s absence.

Li’s absence could be the result of the anti-Xi faction trying to dislodge him, since he was the chief lawmaker who helped paved the way for Xi to retain power. Pressure against Li could have grown to the extent that Xi had to make some compromise, leading to Li’s temporary absence. This is a plausible explanation since during Li’s absence, there was an article from China’s top watchdog, the Central Disciplinary Commission (CDC), pointing obliquely at him when it mentioned that “a former leader of the Guizhou Province” helped his family member to subdue a business rival. Li’s reappearance on Jan. 11, sitting right next to Xi during a high-level meeting, suggests that the latter had somehow overcome pressure to unseat his protégé.

Another anomaly was the recall of Wang Shaojun from retirement to serve as chief of the Central Security Bureau (CSB), his previous post. The CSB is responsible for guarding all the senior members of the Party and, therefore, its head must be someone who Xi totally trusts. At the same time, anyone trying to stage a coup d’etat has to rely on the CSB, just like what happened in 1976 when the so-called Gang of Four was arrested. Wang had already retired in 2019, but on Jan. 11 he reappeared at a conference of senior leaders, which suggests that he was reinstalled as chief of the bureau.

When Wang retired in 2019, Zhou Hongxu, deputy chief of staff of the Northern Theater Army, took over as CSB director. By tradition this post was usually taken up by people from within the bureau. The only exception was in 1963 when CCP founder Mao Zedong ordered a field army general to head the CSB after he was forced to claim responsibility for his failed policy in 1962, the Great Leap Forward, leading to mass deaths from starvation. The move showed that Mao was afraid of being dethroned after he was forced to recede from the forefront of the political stage.

Thus, when Xi ordered a field army general to head the CSB, it showed that he did not trust the bureau. However, after a short while, the former CSB chief was recalled from retirement to head the same bureau again. Wang, 67, is obviously past the retirement age of 60. Xi’s decision puzzled everyone and indicated some sort of uncertainty at the core of the CCP.

Then came the indictment of former public security chief Sun Lijun on Jan. 13. One of the three charges against him was “illegal possession of a firearm.” As the deputy head of the police, possession of a gun is not illegal except in some very specific circumstances such as in highly confidential senior conferences, or in very close proximity to top leaders. In such situations, gun possession has to be pre-approved. Thus, to charge a police head of illegal possession of a gun suggests that Sun could be suspected of trying to make an attempt on Xi’s life.

Sun owed his political rise to former CCP leader Jiang Zemin. Sun was the deputy director of the notorious “610 Office,” a Gestapo-like agency under the Public Security Ministry that was created for persecuting the spiritual group, Falun Gong. He was promoted to deputy-ministerial rank when Zhou Yongkang, a powerful member of the CCP’s Politburo Standing Committee (the top decision-making body), was secretary of the CCP’s Central Political and Legal Affairs, which controls the country’s police, procuratorate, and court systems. Shortly after Xi gained power, Zhou was sentenced to life in prison for his alleged attempt to stage a coup d’etat against Xi. This close connection with Jiang and Zhou made Sun an obvious target of Xi.

Epoch Times Photo
Five sacked “610 Office” directors/deputy directors. (The Epoch Times)
This is highly plausible when one takes into consideration the communique issued by the CDC on Sun’s arrest on Sept. 30, 2021, which enumerates his crimes such as the following:

Betraying the “two safeguards” and disregarding the “four awareness.” The “two safeguards” refer to safeguarding Xi’s position as the core leader of the CCP and safeguarding the centralized authority of the Party. The “four awareness” refer to political awareness (which means putting politics above all things else); awareness of the overall situation; awareness of Xi as the core of the Party; and awareness of the need to align oneself with Xi. These are the political slogans put forward by Xi as the standard for loyalty among CCP cadres. In the specific CCP lexicon, Sun’s political crime was his disloyalty to Xi.
Seriously endangering political security and seriously undermining unity of the Party. In the CCP context, this could mean an attempted coup d’état.
Manipulating power to achieve personal political gain, including engaging in factional politics.
If the CDC found Sun guilty of these political crimes, then his “illegal possession of a firearm” suggests that he might have tried to assassinate Xi. In this regard, it’s noteworthy that the CDC admitted publicly that there was a plot against Xi. On Sept. 13, 2021, two major news portals in China published the same article that recapped a CDC “morning brief,” which disclosed that a “sinister gang” within the public security bureau tried to make an attempt on Xi’s life.

It’s no wonder that in his “2022 No. 1 Command for the Military Forces,” a decree issued by Xi in his capacity as the supreme head of the military, he urged the military to prepare for a successful convening of the Party’s 20th Congress. Xi ultimately has to rely on the military to make sure that his ambition to perpetuate power will not be dashed.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Ching Cheong
Ching Cheong
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Ching Cheong is a graduate of the University of Hong Kong. In his decades-long journalism career, he has specialized in political, military, and diplomatic news in Hong Kong, Beijing, Taipei, and Singapore.
Title: Chinese Racism
Post by: Crafty_Dog on January 24, 2022, 04:40:43 AM
https://www.youtube.com/watch?v=BtVozQG2Q-4
Title: GPF: Aid to interior presages deep issue for China's economy
Post by: Crafty_Dog on January 27, 2022, 06:01:46 PM
What Beijing’s Aid to Debt-Ridden Guizhou Presages for China’s Economy
4 MIN READJan 27, 2022 | 23:34 GMT





A farmer walks along rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.
A farmer walks near rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.

(STR/AFP via Getty Images)

Financial relief efforts for China’s Guizhou province reflect a slight softening of Beijing’s stance on local government debt and could be an indicator of a worsening national economic slowdown. On Jan. 26, China’s State Council laid out plans to assist the southern province of Guizhou in managing its debt load and resuming development projects. Guizhou is one of China’s poorest provinces and has defaulted on 68 debt products since 2018, the most of any province in the country. The State Council will allow Guizhou to renegotiate payment plans with financial institutions and restructure its debt, in addition to raising Guizhou’s debt limit to allow the construction of government-approved (i.e. not real estate) investment projects. This program for Guizhou runs counter to Beijing’s recent efforts to reduce debt risks, and shows Beijing’s concerns for local economic health.

Beijing has been cracking down on real estate debt over the past year, as shown by its decision not to bail out Evergrande, which has resulted in the privately-owned property manager’s slow-motion and ongoing collapse. These efforts have directly impacted local governments that procure a large portion of their budget from selling land to real estate companies.
Beijing has also urged state banks to make it more difficult for local governments to take out real estate loans. In addition, central authorities have pledged to restrict local government debt by reducing their ability to use local government financing vehicles (LGFVs) to facilitate off-the-books borrowing, which contributes to China’s hidden local government debt that is estimated to have exceeded $8 trillion in 2020 (or half of China’s GDP).
Beijing’s crackdowns on debt held by local governments and real estate firms have heavily contributed to China’s slowing economic growth, given that real estate investment and management together contribute as much as 29% of China’s GDP. China’s economy is expected to expand by just 5-6% in 2022 compared with 8.1% in 2021.
Because of their poverty relative to coastal provinces, China’s interior provinces are getting attention from Beijing for special development projects as part of China’s long-standing strategy to reduce geographic economic disparities. But these provinces are also the most vulnerable to national economic headwinds. A Jan. 26 State Council meeting revealed Beijing’s plans for Guizhou as a growth engine for central China and a desire to connect the region’s economic development to the east coast, including the manufacturing hub of Guangdong province. These growth plans may have made Guizhou a high priority for Beijing’s debt assistance. In addition, Beijing is trying to prevent entire provinces from suffering widespread layoffs during fiscal restructuring, even though sub-provincial governments in interior cities have often gone without such assistance.

Hegang, a prefecture-level city in China’s rust belt along the Russian border, has not been as fortunate as Guizhou province. In late December, the Hegang city government ceased hiring civil servants and announced the beginning of fiscal restructuring — making it the first prefectural-level Chinese city to attempt such restructuring, according to Huachuang Securities Co. Ltd. 
Coastal Guangdong, one of China’s wealthiest provinces, announced on Jan. 21 that it had moved all hidden debt onto government books. Compared with interior regions like Guizhou, however, Guangdong is estimated to have much lower levels of hidden debt.
Should the central government assist other debt-ridden interior provinces in the coming months, it could indicate that Beijing is becoming increasingly worried about a prolonged national economic slowdown. China’s interior is home to the bulk of the country’s least productive and most indebted regions. Though Guizhou was particularly vulnerable given its country-leading debt portfolio, many other inland cities and provinces are similarly at risk — struggling under growing fiscal burdens and dwindling real estate incomes, with underdeveloped provinces like Guizhou and Hegang representative of the deep income divide between China’s wealthy coastal regions and interior ones. But amid weak domestic demand and constraints on state investment in 2022, Beijing knows it cannot afford to let these debt-strapped localities sink, as provincial and local governments (including those in poorer inland regions) also drive China’s economic development. Thus, it will be important to watch for other interior provinces receiving further debt relief, as such assistance could indicate China’s economic headwinds are strengthening, as could local financial restructurings like that of Hegang. Beijing will also generally maintain its restrictive stance toward real estate investment, even if it eases back on the most extreme of its loan restrictions to avoid more collapses in line with Evergrande. Unless Beijing is willing to take on even greater national debt in its support of local provinces, “approved” infrastructure projects in Guizhou and elsewhere will likely be insufficient to make up for the local financing void left by real estate. Such national debt would further delay Beijing’s push for “quality economic growth” and worsen any future debt fallout or the austerity measures meant to forestall a fallout.
Title: Re: GPF: Aid to interior presages deep issue for China's economy
Post by: G M on January 27, 2022, 06:04:08 PM
Reminder: A economically fragile China makes it more dangerous, not less.


What Beijing’s Aid to Debt-Ridden Guizhou Presages for China’s Economy
4 MIN READJan 27, 2022 | 23:34 GMT





A farmer walks along rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.
A farmer walks near rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.

(STR/AFP via Getty Images)

Financial relief efforts for China’s Guizhou province reflect a slight softening of Beijing’s stance on local government debt and could be an indicator of a worsening national economic slowdown. On Jan. 26, China’s State Council laid out plans to assist the southern province of Guizhou in managing its debt load and resuming development projects. Guizhou is one of China’s poorest provinces and has defaulted on 68 debt products since 2018, the most of any province in the country. The State Council will allow Guizhou to renegotiate payment plans with financial institutions and restructure its debt, in addition to raising Guizhou’s debt limit to allow the construction of government-approved (i.e. not real estate) investment projects. This program for Guizhou runs counter to Beijing’s recent efforts to reduce debt risks, and shows Beijing’s concerns for local economic health.

Beijing has been cracking down on real estate debt over the past year, as shown by its decision not to bail out Evergrande, which has resulted in the privately-owned property manager’s slow-motion and ongoing collapse. These efforts have directly impacted local governments that procure a large portion of their budget from selling land to real estate companies.
Beijing has also urged state banks to make it more difficult for local governments to take out real estate loans. In addition, central authorities have pledged to restrict local government debt by reducing their ability to use local government financing vehicles (LGFVs) to facilitate off-the-books borrowing, which contributes to China’s hidden local government debt that is estimated to have exceeded $8 trillion in 2020 (or half of China’s GDP).
Beijing’s crackdowns on debt held by local governments and real estate firms have heavily contributed to China’s slowing economic growth, given that real estate investment and management together contribute as much as 29% of China’s GDP. China’s economy is expected to expand by just 5-6% in 2022 compared with 8.1% in 2021.
Because of their poverty relative to coastal provinces, China’s interior provinces are getting attention from Beijing for special development projects as part of China’s long-standing strategy to reduce geographic economic disparities. But these provinces are also the most vulnerable to national economic headwinds. A Jan. 26 State Council meeting revealed Beijing’s plans for Guizhou as a growth engine for central China and a desire to connect the region’s economic development to the east coast, including the manufacturing hub of Guangdong province. These growth plans may have made Guizhou a high priority for Beijing’s debt assistance. In addition, Beijing is trying to prevent entire provinces from suffering widespread layoffs during fiscal restructuring, even though sub-provincial governments in interior cities have often gone without such assistance.

Hegang, a prefecture-level city in China’s rust belt along the Russian border, has not been as fortunate as Guizhou province. In late December, the Hegang city government ceased hiring civil servants and announced the beginning of fiscal restructuring — making it the first prefectural-level Chinese city to attempt such restructuring, according to Huachuang Securities Co. Ltd. 
Coastal Guangdong, one of China’s wealthiest provinces, announced on Jan. 21 that it had moved all hidden debt onto government books. Compared with interior regions like Guizhou, however, Guangdong is estimated to have much lower levels of hidden debt.
Should the central government assist other debt-ridden interior provinces in the coming months, it could indicate that Beijing is becoming increasingly worried about a prolonged national economic slowdown. China’s interior is home to the bulk of the country’s least productive and most indebted regions. Though Guizhou was particularly vulnerable given its country-leading debt portfolio, many other inland cities and provinces are similarly at risk — struggling under growing fiscal burdens and dwindling real estate incomes, with underdeveloped provinces like Guizhou and Hegang representative of the deep income divide between China’s wealthy coastal regions and interior ones. But amid weak domestic demand and constraints on state investment in 2022, Beijing knows it cannot afford to let these debt-strapped localities sink, as provincial and local governments (including those in poorer inland regions) also drive China’s economic development. Thus, it will be important to watch for other interior provinces receiving further debt relief, as such assistance could indicate China’s economic headwinds are strengthening, as could local financial restructurings like that of Hegang. Beijing will also generally maintain its restrictive stance toward real estate investment, even if it eases back on the most extreme of its loan restrictions to avoid more collapses in line with Evergrande. Unless Beijing is willing to take on even greater national debt in its support of local provinces, “approved” infrastructure projects in Guizhou and elsewhere will likely be insufficient to make up for the local financing void left by real estate. Such national debt would further delay Beijing’s push for “quality economic growth” and worsen any future debt fallout or the austerity measures meant to forestall a fallout.
Title: Zero Wuhan and Manufacturing in China
Post by: Crafty_Dog on February 05, 2022, 10:26:31 AM
February 5, 2022
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Zero COVID and Manufacturing in China
The increasing costs of China's containment measures are raising concerns about the sustainability of Beijing’s approach.
By: Geopolitical Futures
Zero-Covid & Manufacturing in China
(click to enlarge)

It was in China, specifically the city of Wuhan, where the first cases of COVID-19 were detected in early 2020 before quickly spreading worldwide. China is now pushing a zero COVID policy using contact tracing, mass testing, a special app and lockdowns to try to eliminate the virus completely. Similar strategies have been adopted in other countries but were eventually abandoned in the recognition that COVID-19 is here to stay. But China is holding firm, imposing regulations very similar to the ones adopted at the beginning of the outbreak.

In the first year or so of these measures, they seemed to be a reasonable approach and helped Beijing successfully and rapidly contain the virus with fewer deaths than most Western countries. Two years later, however, things don’t look nearly as bright for China. The Delta variant proved extremely hard to control, and the containment measures are having ripple effects. In Xian, which saw the biggest lockdown outside of Wuhan, food shortages and deficiencies in medical treatment are growing.

Now, the rapid spread of the Omicron variant, which reportedly first emerged in Tianjin in December, and the increasing costs of keeping it under control are raising concerns about the sustainability of China’s approach. The economic impact is becoming more apparent, especially in the manufacturing sector in terms of both supply and demand. In January, output slowed to its lowest level in two years, mostly due to factories being forced to temporarily shut down. It’s unlikely that China will ease the measures before the pivotal Party Congress, where President Xi Jinping is expected to secure his third term, set for the second half of 2022.
Title: ET: Xi not Shu In
Post by: Crafty_Dog on February 14, 2022, 06:46:23 AM
CHINESE REGIME
Anti-Xi Article Goes Viral, May Derail Xi Jinping’s Plans for Third Term
By Nicole Hao February 13, 2022 Updated: February 14, 2022biggersmaller Print

0:00
6:01



1

An article criticizing Chinese leader Xi Jinping was allowed to go viral in mainland China, which analysts say reflect the intense struggle among different factions in the Chinese Communist Party (CCP) and its impact on Xi’s ruling.

China experts have said that Xi might not secure a third term, which will be revealed at the CCP’s Party Congress this fall, although Xi amended the Party’s constitution successfully in 2018 to remove term limitations.

“The 40,000-word long article listed mistakes that Xi Jinping has made in politics, economy, and diplomacy. It’s a summary of Xi’s ruling over the past nine years,” Li Hengqing, a China expert at the Washington Institute for Information and Strategy, told the Chinese-language Epoch Times on Feb. 8.

“After 2018, we all said that there’s no force to stop Xi from taking a third term. Now, we can see that the situation isn’t simple, and it’s unclear whether he can obtain it,” Li added.

He emphasized: “The article circulated broadly inside and outside of China. Even several friends from mainland China forwarded it to me [in the past days]. … It shows that the CCP factions against Xi are fighting to stop Xi from continuing in office.”

Xi became Chinese leader in November 2012 at the rubber-stamp legislature’s 18th conference, and won his second term in October 2017 at the 19th conference. The previous Chinese constitution ruled that each leader could only take two terms, which would have seen Xi retire in 2022. The amendment of the constitution paved the road to allow Xi to rule the country beyond the two terms—if he can secure support from the rest of the party leadership.

Xi Jinping
Chinese leader Xi Jinping is seen on a TV screen speaking remotely at the opening of the WEF Davos Agenda virtual sessions at the WEF’s headquarters in Cologny near Geneva, Switzerland, on Jan. 17, 2022. (Fabrice Coffrini/AFP via Getty Images)
Anonymous Commentary
On Jan. 19, an author under the pen name “Ark and China” published the article “Evaluate Xi Jinping Objectively” on overseas Chinese blogs. Since the Chinese New Year on Feb. 1, the commentary of Xi’s leadership became viral among readers inside China.

Taiwan’s state-run Central News Agency (CNA) reported on Feb. 9 that people in China had spread the article widely although the Chinese regime banned and censored the piece.

The commentary reviewed Xi’s performance over the past decade in the anti-corruption campaign, the party’s ongoing eradication of independent religion and beliefs, human rights abuses, its tight surveillance and control of the people, enhancement of propaganda, further revision of children’s textbooks and history books, the strengthening of state-run enterprises and suppression of the private sector, fighting with the Western world, and winning over developing countries by squandering the national treasury.

Its author opined that they don’t believe Xi has the capability to rule the country, and has angered both CCP officials who supported him and opposed him when he took office. Meanwhile, the Chinese people’s benefits and interests being encroached upon under Xi’s administrations, but their voices can’t be heard due to the regime’s censorship.

“At present, it’s difficult for him (Xi) to continue his ruling. The year 2022 will be his biggest turning point,” the author wrote. “Even if he miraculously secures another term, he will face more difficulties and complete failure before 2027.”

The author then went on to list three factors that could cause the collapse of Xi’s ruling alongside a predicted worsening of the political situation; the achievements claimed by the Xi regime are fabricated, the political foundation of Xi’s administration has been destroyed, and “the entire CCP bureaucracy” is opposed to Xi and his handful of supporters.

Fierce Infighting
Epoch Times Photo
The Chinese Communist Party’s Politburo Standing Committee, the nation’s top decision-making body (L-R): Han Zheng, Wang Huning, Li Zhanshu, Chinese leader Xi Jinping, Premier Li Keqiang, Wang Yang, and Zhao Leji meet the press at the Great Hall of the People in Beijing on Oct. 25, 2017. (Wang Zhao/AFP via Getty Images)
“Don’t treat the CCP as a political party! It’s actually a political gang. Like the former head of the Soviet Union Vladimir Lenin said, the communist party grows by fighting internally and cleaning (killing) its members,” Cai Xia, a former professor of political ideology at the CCP’s Central Party School, wrote in an opinion piece on Feb. 6 that was published on U.S.-based Chinese media YiBao.

Cai pointed out: “Due to the cruelty and bloody infighting within the party, all senior officials understand the hidden rule, which is to choose a faction and fight for it without thinking about what’s right or wrong.”

Li told The Epoch Times that the forces in the Chinese regime which are against Xi are gathering together now. “They are using all their resources and solutions to block Xi from taking the next term,” he said.

“The [viral] article is echoing the opinion of Chinese politicians. It stands on the point of maintaining the CCPs’s ruling in China but removing Xi Jinping,” Chen Weijian, New Zealand-based Chinese dissident and editor of online magazine Beijing Spring, told the Chinese-language Epoch Times on Feb. 8.

“At the Sixth Plenary Session of the rubber-stamp legislature’s 19th conference, the CCP factions presented their severe disagreements [on regime policies]. [The long article] is the latest bomb that the anti-Xi’s faction has detonated amid the factional fighting,” Gao Wenqian, former official biographer of the CCP’s first premier Zhou Enlai told VOA on Feb. 8.

Gao said that the CCP’s rigid dictatorship is growing increasingly fragile, and may break at any time.

Cai listed the crises the regime in Beijing is facing across China now, which include more white- and blue-collar unemployment, the financial crisis facing China’s largest real estate predators, the regime collecting more tax and fees from people who can’t earn a living and unprofitable enterprises, extreme COVID-19 policies that further damage the economy and threaten peoples’ lives, and young Chinese who refuse to have children even after marriage.

“This is a strong article that can drive public opinion against Xi,” Cai wrote.
Title: Re: ET: Xi not Shu In
Post by: DougMacG on February 14, 2022, 09:01:01 AM
Not possible to find an article criticizing Xi via collaborator Google.  I would like to see the English translation.

That's a big story.  You'd think it would come right up.
Title: Re: China
Post by: Crafty_Dog on February 14, 2022, 10:44:46 AM
Chinese to English translation capacity is well below that of the need, and so is the demand for it.
Title: Anti-Xi Article Goes Viral, May Derail Xi Jinping’s Plans for Third Term
Post by: DougMacG on February 14, 2022, 11:46:22 AM
Chinese to English translation capacity is well below that of the need, and so is the demand for it.

I'll settle for text of the original Chinese and I will post a translation.
Brave Browser has a Translate extension.  (So does Google.)

Google will lose it's commie contract if it circulates this document in any language.

It went "viral".  Somebody has it.
Title: Re: Anti-Xi Article Goes Viral, May Derail Xi Jinping’s Plans for Third Term
Post by: G M on February 14, 2022, 02:21:26 PM
Chinese to English translation capacity is well below that of the need, and so is the demand for it.

I'll settle for text of the original Chinese and I will post a translation.
Brave Browser has a Translate extension.  (So does Google.)

Google will lose it's commie contract if it circulates this document in any language.

It went "viral".  Somebody has it.

Machine translation is sometimes imperfect...

https://www.boredpanda.com/funny-chinese-translation-fails/
Title: ET: Property Developer Meltdown in China
Post by: Crafty_Dog on April 02, 2022, 02:35:31 AM
Property Developer Meltdown in China
Red-hot risk now expanding to Western auditors, shadow banks, and Beijing itself
 April 1, 2022 Updated: April 1, 2022biggersmaller Print
News Analysis

China’s big property developers are increasingly weak, and through the pressure of local officials, unloading risk onto the country’s financial system and Beijing itself.

Business news about China’s property developers on March 29 demonstrates multiple new fissures and risks in China’s already lagging economy.

The Financial Times revealed that the West’s Big Four accounting firms are abandoning many of their long-prized Chinese property developer clients due to the latter’s failure to file audited annual financial results by the deadline. In March, the embattled property developer China Evergrande was one of the companies that announced it would miss its deadline in Hong Kong.

“International auditors are resigning from China’s heavily indebted property developers as a wave of delayed financial results has increased uncertainty over the full scale of the sector’s worst-ever crisis and raised the threat of hidden debts,” according to the article by Thomas Hale and Tabby Kinder.

“Auditors are at increasing risk of legal action in connection with the turmoil in the Chinese property sector.”

Bloomberg noted that Chinese “shadow banks” are buying controlling stakes in projects from the distressed developers, likely due to pressure from local officials. One trust executive explained that the deals are preempting restructuring plans, which will make payments and deal-making more difficult.

Another possibility is that the spectacle of an American firm, Oaktree Capital, acquiring a major Evergrande asset in Hong Kong, the 2.2 million-square-foot “Versailles mansion” residential development, by repossession in January, embarrassed the Beijing regime. It may have reacted by forcing creditors to swap debt for Evergrande equity.

In December, Evergrande defaulted and will soon restructure more debt than was ever previously restructured by a single firm in China. Evergrande bonds coming due in 2025 are now trading at just 13 cents on the dollar, according to Bloomberg.

Police officers stand guard outside the Evergrande International Center
Police officers stand guard outside the Evergrande International Center where protesters have gathered to seek payment from China Evergrande Group, in Guangzhou, Guangdong Province, China, on Jan. 4, 2022. (David Kirton/Reuters)
PwC, a Big Four accounting firm, is currently under investigation by Hong Kong authorities for its Evergrande audit. PwC and Deloitte, both headquartered in London, have resigned over the last three months as the auditors for, at minimum, five developers from China.

“International investors are moving closer to legal action against Evergrande, which has borrowed around $20bn on international bond markets, after the company said last week that a mystery lender had claimed $2bn of cash at its property services arm,” according to the Financial Times.

Bloomberg sources made clear that China’s shadow banks are not necessarily buying stakes in failing development projects on a voluntary basis. “Local governments are pushing creditors, including trusts, to help distressed developers like Evergrande offload stakes in projects and find strategic investors to raise cash.”

Officials are apparently doing this not for the economic efficiency of the projects, but for state-planning purposes. “The most pressing concern for authorities is to ensure housing construction, and many trusts are considering taking additional stakes in Evergrande projects,” according to Bloomberg sources.

The sales may save Evergrande and other distressed property developers in the short-term, but they will only provide them with enough liquidity to settle some of their $3.4 trillion in liabilities, while offloading risk to the financial institutions that purchase the projects.

These financial institutions have less experience as property developers, and are under pressure from the regime, at the local level, to maintain the flow of financing and building to retain construction jobs and the illusion of economic growth.

Ultimately, the shadow banks could fail as a result, which would require a bailout by the regime.

“China’s shadow banks are emerging as unlikely white knights for embattled property firms by becoming mini-developers themselves,” according to the Bloomberg authors. “Trust companies including MinMetals Trust Co. and Zhongrong Trust Co. have bought stakes in at least 10 real estate projects this year.”

The unfinished housing projects that they bought may or may not “yield cash to pay off some of the $280 billion in property-backed funds sold by trusts to investors,” according to Bloomberg.

The hardest-hit Chinese property developer by indebtedness is China Evergrande, which announced on March 29 that trading in its shares will remain suspended, according to Reuters.

The good news for Evergrande is that it recently sold a minimum of seven housing developments, recovering $300 million of its initial capital contribution and settling liabilities of approximately $1.1 billion. The bad news is that these sales were to its creditor institutions rather than to actual customers who would live in the homes.

AVIC Trust, a financial firm affiliated with China’s main aviation and defense manufacturer, was the second-largest lender among trusts to Evergrande as of mid-2020. Instead of receiving payments on the debt, the aerospace-defense linked financial company took control of two residential projects in March, including a 5,000-unit project in Guangzhou, and a project in Nanjing.

Epoch Times Photo
An unfinished residential building through a construction site gate at Evergrande Oasis, a housing complex developed by Evergrande Group in Luoyang city, China, on Sept. 16, 2021. (Carlos Garcia Rawlins/Reuters)
Evergrande sold Chongqing and Dongguan projects to China Everbright Trust, owned by China Everbright Group, which is itself owned by China’s ministry of finance and a state investment firm.

MinMetals Trust, which purchased a 100 percent stake in a Kunming city residential project from Evergrande, as well as Evergrande stakes in Foshan and Guangzhou projects, said that buying stakes in the projects is an “optimal option” to dissolve Evergrande debt risk, at the same time getting the projects going again, according to Bloomberg.

MinMetals Trust is part of China MinMetals, a state-owned enterprise involved in metals and minerals trading. The company has comparatively little experience in real estate development.

The problem is that Evergrande debt risk is not being dissolved, as claimed by MinMetals Trust. It has just moved to Evergrande creditors who are not as good at property development, or will be forced by the Chinese Communist Party (CCP) to send more good money after bad, infusing capital into the building of phantom cities with few residents.

These and other economic failures of state-planning of the economy have real effects. The family company of Hong Kong billionaire Joseph Lau lost approximately $1 billion on China Evergrande shares and bonds in 2021.

Perhaps as a result, he is selling art assets, including up to $19 million worth of imperial Chinese porcelain from the Ming and Qing dynasties, due for sale by Sotheby’s in Hong Kong on April 29.


While Lau loses his museum pieces, regular Chinese are losing much more: their retirement savings and the homes they purchased, but never had the privilege of living in.

These are the sorry effects of Beijing’s state-planning of the economy, which the CCP is doubling-down on through forcing the purchase of Evergrande’s failing development projects by managers even less capable of making them successful.

This is the economic system that the regime seeks to export to the rest of the world through its plans of global hegemony.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
Title: GPF: China's Real Estate Bubble
Post by: Crafty_Dog on April 06, 2022, 06:31:04 AM
April 6, 2022
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Real Estate Is China’s Biggest Economic Vulnerability
Beijing has been reluctant to sacrifice growth and social stability to tackle its housing bubble.
By: Victoria Herczegh
China’s real estate sector is one of its economy’s most important assets. Real estate has contributed considerably to China’s transition to a socialist market-based economy and its strong economic growth in recent decades. Now, however, what once propelled the Chinese economy forward threatens to hold it back. Structural economic problems are emerging, and real estate is among the first sectors to show signs of distress. Given its significance to the Chinese growth model, failure to address these issues would likely trigger a crash that would wreck the Chinese economy and disrupt the global economic system.

On paper, there are multiple solutions to the crisis, but they conflict with another of Beijing’s priorities: reducing economic inequality. The inequality-fighting initiative, known as “common prosperity,” has been a major party focus since last year and is codified in the Chinese Communist Party’s current five-year plan. China will need to choose between resolving its real estate crisis or staying the course on common prosperity. While it will try to do both, in the end Beijing will prioritize common prosperity and delay tackling the real estate issue until later.

Seeds of a Crisis

China’s approach to growth – questionable by Western standards – stems from its perpetual need to maintain an economy that can both support a large population and prevent the wealth gap from widening further between the rich coastal cities and the vast interior. The country’s rapid urbanization, evolving financial sector and, just as important, the appetite of domestic and international investors have caused a real estate boom in China that kicked off in the 1990s and has continued ever since.

Quarterly Real Estate Contribution to Chinese GDP

(click to enlarge)

However, the reliance on real estate for strong and steady growth came at a cost: a reduction in Beijing’s control over market forces. The property market started to expand rapidly from the early 2000s on, as investors and developers assumed that its importance meant the government would backstop it. China depended on the sector’s expansion to maintain high rates of economic growth and households’ net worth, thus any market downturn would be short-lived. This optimistic assumption was true only for a while, though. Beijing soon started trying to contain the speculative fervor and rapidly rising prices – issues that threatened to undermine China’s exceptional economic growth.

Fearing a bursting of the housing bubble, the People’s Bank of China issued the “three red lines” policy, an ambitious set of reforms intended to improve the financial health of the sector by reducing developers’ leverage, improving debt coverage and increasing liquidity. In 2020, the first year of the reforms, most companies saw improvements in their asset-liability and debt ratios. However, as can be expected with new policies, there have been some side effects. For example, some firms increased their use of minority interests and joint ventures, enabling them to increase leverage through a subsidiary and net the equity value in their balance sheets. This reduced the transparency of the financial statements but did not reduce leverage. Also, with limits on the amount of debt companies could raise, their freely available cash levels and overall liquidity sources were decreasing, which could weaken a company’s ability to weather short-term crises.

China's Three Red Lines Policy
(click to enlarge)

The main reason the three red lines policy didn’t work as hoped is that it was too little too late. Because of China’s constant focus on maintaining the previous years’ growth rates, the country risked introducing reforms only when it appeared critical. Unfortunately for Beijing, it was the three red lines that triggered the current property market crisis.

It hit the headlines in December 2021: China Evergrande Group, one of the country’s largest property developers, was formally declared to be in default. Despite the government’s initial assurances that Evergrande was isolated and correctable, more cracks in the foundation soon appeared. At the beginning of March 2022, trading was abruptly halted for shares of Evergrande and two of its units on the Hong Kong stock exchange. The company said it and its units would not publish their annual financial results before the end-of-March deadline due to a comprehensive restructuring. The results still have not been published, and although Evergrande said its restructuring was on track, this has naturally raised further questions and concerns about the true size of the company’s debt.

The bigger problem facing the Chinese government is that the debt crisis is not at all confined to Evergrande. Since late November 2021, several other real estate developers have shown signs of trouble or, like Evergrande, even defaulted. International auditors are resigning from China's heavily indebted property developers as uncertainty grows about the scale of the crisis. Fears of hidden debt have sent some developers’ bonds plunging, even those that were previously deemed safe. This resulted in a severe loss for China: Last year’s defaults on offshore bonds from Chinese borrowers set an annual record, with the real estate sector making up about one-third of the missed payments. Every event taking place now within China’s real estate sector is compounding the crisis, making it increasingly difficult to solve.

Growing Debt of Chinese Real Estate Companies, 2022
(click to enlarge)

Too Big To Fail

Despite the alarm bells from the real estate sector, the Chinese government’s emphasis on stability and short-term growth has so far taken precedence over making more extensive real estate reforms. The principal reason for this is that the solutions to the real estate problems in the short term pose a huge risk of destabilizing the economy, which could threaten the Communist Party’s authority. In theory, property tax reform would correct the market distortion by disincentivizing real estate speculation and raising revenues for local governments. At the National People’s Congress on March 5, a comprehensive property tax plan was in fact rolled out as one of the main targets of the common prosperity program, topped with the slogan “houses are for living, not for speculation.” However, party elites criticized the plan, arguing that since many party members owned more than one property, the tax would burden them disproportionately and affect social stability.

Chinese President Xi Jinping’s property market reforms also did not align with the interests of senior local officials, whose priorities are generating economic growth, securing government budgets and preventing social chaos in their regions. Even though Finance Minister Liu Kun called for implementing and deepening the package of reforms at the beginning of the year, it has recently been announced by the Chinese Finance Ministry that the trial property tax reforms that are currently in effect in 10 cities would not be extended to more cities. Maintaining high employment and social stability and reducing the harm to loyal investors are too important for Beijing to risk.

Construction accounts for about 16 percent of urban employment in China. A collapse in the industry would leave about 5.5 percent of China’s population, without work. Already, a sudden rise in unemployment – to 5.5 percent in February from 4.9 percent in October – is almost certain to seriously impact social stability. It also won’t help narrow the wealth gap. Moreover, 30 percent of Chinese bank lending goes to housing construction, and at least 60 percent of bank loans are backed by property as collateral. Therefore, if the property market collapses, China will experience a full-blown financial crisis, which could undermine regime stability and have serious consequences for the global economy.


(click to enlarge)

China still has options to regulate the issue, even in its current state. Some positive changes are already taking place: Chinese banks are finally ready to soften up the three red lines policy to provide safe landing for the several real estate companies that are in trouble or have already defaulted. Also, the government is encouraging mergers and acquisitions in the real estate development sector, with larger, generally state-owned developers likely to take over financially weaker players perceived to have leveraged their connections to local governments to gorge themselves on debt. But rather than a few minor policies here and there, the scale of the problem will probably require a well-timed, well-coordinated chain of shock reforms – which is nowhere in sight right now.

Despite many red flags pointing to a full-scale economic crisis, China is keeping to its common prosperity initiative, implementing only policies that align with the growth objectives included in the current five-year plan. Those objectives are intended to help maintain domestic order and political stability. According to the current plan and the “China Vision 2035” proposal, China hopes to become a “moderately developed economy” – defined as an increase in gross domestic product per capita to $30,000 – by 2035. Even if harsh reforms significantly lowered growth rates for a few years, that would still be a reasonable goal, whereas it could take the country decades to recover from a total economic crisis. For China, there will probably not be a better time than now to reconsider its priorities.
Title: Agony in Shanghai
Post by: G M on April 10, 2022, 12:16:41 PM
https://twitter.com/JackPosobiec/status/1512855678741798923
Title: Bagging up cats
Post by: Crafty_Dog on April 11, 2022, 01:13:56 AM
https://michaelyon.locals.com/upost/1976717/communist-woke-are-evildoers
Title: Falung Gong in China
Post by: Crafty_Dog on May 08, 2022, 03:39:11 PM

https://www.theepochtimes.com/eternal-spring-the-story-of-18-brave-chinese-who-tapped-into-state-tv-to-air-uncensored-news-in-china_4445992.html?utm_source=China&utm_campaign=uschina-2022-05-08&utm_medium=email&est=qiRX6ioKdhy%2FtHvK4J9cIjREDBqMkZ8U0vfd4lhiEfPqpHY4tMM4vPxD3UZ6jkLm2ZSm
Title: Gordon Chang on China
Post by: ccp on May 08, 2022, 06:48:21 PM
heard the tail end of Gordon Chang on some radio show today on way home

and

he mentioned his web site

though I would post here
I have not had chance to read yet
though:

http://www.gordonchang.com/article.htm
Title: ET: Falun Gong
Post by: Crafty_Dog on May 12, 2022, 05:12:03 AM
https://www.theepochtimes.com/3-words-that-people-are-still-scared-to-mention-in-china-and-heres-the-reason-why_2783005.html?utm_source=Bright&utm_campaign=bright-2022-05-12&utm_medium=email&est=5DJvNLbTTVBdT0u%2BDdk3qKo6x1GPYTlgpjePqUOhOedwAs90IWNPYMS%2BskY15caBI5Ta
Title: Back to being a giant N. Korea
Post by: G M on May 24, 2022, 02:06:56 PM
https://www.youtube.com/watch?v=XmIxBb7BI24

Good thing that can't happen here.
Title: China spent more on Virus testing than military research
Post by: Crafty_Dog on May 30, 2022, 02:29:39 AM
https://www.theepochtimes.com/china-spent-more-on-mass-covid-19-testing-than-on-its-military-research_4494685.html?utm_source=China&utm_campaign=uschina-2022-05-29&utm_medium=email&est=6lHWl%2FM%2Fxq%2BVDz1%2FDrnSztrK3HZSQZbcqt0v5tXgCEgQ15yK2a%2F39meWgDa8khDB8Uq8
Title: Elon Musk agrees with point I have been making here for several years
Post by: Crafty_Dog on June 09, 2022, 05:47:32 AM
Elon Musk Predicts China’s ‘Population Collapse’
By Eva Fu June 6, 2022 Updated: June 7, 2022biggersmaller Print


Tesla CEO Elon Musk suggests that China could soon be facing a “population collapse” in the aftermath of Beijing’s decades-long population control program that until recently had restricted most families in China to a single offspring.

“Most people still think China has a one-child policy,” he wrote in a June 6 tweet that was pinned to the top of his Twitter account.

“China had its lowest birthdate ever last year, despite having a three-child policy! At current birth rates, China will lose ~40% of people every generation!” he wrote, before adding the grim note: “Population collapse.”

The one-child policy was instituted by the Chinese Communist Party between 1980 and 2015 in a bid to curb a population growth rate that the regime considered too rapid and facilitate economic growth. Violators of the limit were fined, forced to go through abortions or sterilizations, and could potentially lose their jobs.

Until its official abolishment in 2016, the policy had caused some 400 million abortions, accounting for about 28 percent of the nation’s 1.4 billion people, according to official statistics. It also led to child abandonment and infanticide of baby girls due to traditional social preferences for a son.

The decades-long policy has precipitated a demographic crisis in China, marked by a rapidly aging population and falling birth rates. Faced with a looming economic crisis from its dwindling workforce, the Chinese regime allowed two children for couples in 2016 and then increased the limit to three in 2021, as well as providing benefits on childcare, income tax, and housing to support growing families.

Epoch Times Photo
Children play at a playground inside a shopping complex in Shanghai on June 1, 2021. (Aly Song/Reuters)
But those measures have done little to convince couples to have more children.

China’s birth rate has been falling for five consecutive years. In 2021, about 7.52 babies were born for every 1,000 people, the lowest level since the regime’s takeover of China in 1949. By contrast, the birth rate for the United States in 2021 was 12 per 1,000 people.

In Guangxi Province, an autonomous region in southern China neighboring Vietnam, authorities in March started allowing married couples to have a fourth child in eight border counties.

But the latest official data from May show that the population of at least 15 Chinese provinces or municipalities, including Beijing, have shrunk, with 11 provinces seeing a decline. That included five provinces where the number of deaths exceeded births for the first time in decades.

Recent demographic studies indicate that the world at large, which currently has about 8 billion people, is confronting a population decline problem.

One of them, published in the medical journal Lancet, predicted that the global human population will peak at 9.7 billion in roughly four decades before starting to decline.

“Once global population decline begins, it will probably continue inexorably,” the authors wrote in a study published in 2020.

The Lancet study projected that by the end of this century, China will have lost 668 million people, or nearly half of its current population.

Musk has been vocal about the consequences of the world’s declining population growth.

CHINA-TECHNOLOGY-AI-CONFERENCE
Elon Musk (R), Co-founder and CEO of Tesla, and Jack Ma, co-chair of the UN High-Level Panel on Digital Cooperation, speak onstage during the World Artificial Intelligence Conference (WAIC) in Shanghai on Aug. 29, 2019. (Hector Retamal/AFP via Getty Images)
He recently shared a clip taken during the World Artificial Intelligence Conference in 2019, where Musk was seen sitting side by side with billionaire Jack Ma, founder of Chinese e-commerce giant Alibaba.

“Assuming there is a benevolent future with AI, I think the biggest problem the world will face in 20 years is population collapse,” he said. “I want to emphasize this: The biggest issue in 20 years will be population collapse. Not explosion. Collapse.”

Ma, in the video, concurred with him. “1.4 billion people in China sounds like a lot, but I think next 20 years, we will see this thing will bring big trouble to China,” Ma said. “The speed of population decrease is going to speed up.”

“Population collapse is the biggest threat to civilization,” wrote Musk in a May 24 tweet accompanying the short clip.
Title: China men beat up women in China
Post by: ccp on June 12, 2022, 03:27:09 PM
https://www.yahoo.com/news/outrage-china-over-video-women-062157117.html

my question is how is this handled in China?

We know here they get  free cards get out of jail cards.




Title: Re: China men beat up women in China
Post by: G M on June 12, 2022, 08:49:55 PM
Depends on who has the political connections to the CCP.

If the perps do, little to nothing will happen, only those reporting on it will face consequences. If the victim does, then the liver of the primary aggressor will be available for purchase soon.


https://www.yahoo.com/news/outrage-china-over-video-women-062157117.html

my question is how is this handled in China?

We know here they get  free cards get out of jail cards.
Title: Bank run? What bank run?
Post by: Crafty_Dog on July 14, 2022, 06:12:35 AM
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

============================

WSJ

China Property Market Shudders as Buyers Threaten to Stop Mortgage Payments
Bank shares and developers’ bonds sink, investors’ hopes of a near-term housing recovery fade

Aggregate new home sales at China’s 100 largest developers have fallen every month on a year-on-year basis since last July.
PHOTO: CFOTO/ZUMA PRESS
By Cao Li and Rebecca Feng
July 14, 2022 10:48 am ET

SAVE

PRINT

TEXT

Global investors and home buyers in China are losing confidence in the country’s property market, which has entered a new stage of turmoil after a year-long slide in sales, stalled projects and mounting real-estate developer defaults.

This week, a movement among frustrated homeowners who have threatened to stop paying their mortgages on unfinished homes quickly gathered steam on Chinese social media. People all over the country declared that they would do the same if developers don’t fulfill promises to deliver apartments that were earlier presold.

Shares of some large Chinese banks fell Thursday, led by declines in China Merchants Bank Co., which declined 3.7%. Several lenders released statements saying they have limited exposure to property projects where construction has been delayed, and that their risks from mortgage defaults are small and manageable.

The shares and U.S. dollar bonds of many developers also dropped, sending their debt securities to deeply distressed levels. Some investors described a wave of indiscriminate selling that has dragged down the bonds of even financially stronger Chinese companies with investment-grade credit ratings.

“It’s like a fire sale now,” said Kenny Chung, executive director and portfolio manager of fixed-income hedge-fund manager Astera Capital Partners, referring to the selloff in developers’ bonds. He said investors have lost almost all confidence in the entire China property sector, as home sales have shown few signs of recovery and the overall economy faces significant growth hurdles.

Pressure has been building in China’s housing market since authorities put in place rules to prevent excessive borrowing by the country’s developers. The country’s most heavily indebted property giant, China Evergrande Group, started having serious liquidity problems last summer, leading to construction halts at many of its unfinished projects. Spooked investors dumped many Chinese junk bonds, and more than a dozen developers, including Evergrande, subsequently defaulted on their dollar debt as credit-market contagion spread.

Country Garden bond due in 2030
Greenland bond due in 2025
Cifi bond due in 2028
Feb. 2022
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cents on the dollar
Since then, many of the developers still standing have struggled to convince investors and the Chinese public that they can withstand the downturn. An ICE BofA index of Chinese dollar junk bonds that haven’t defaulted had an average yield of around 29% on Wednesday, reflecting extreme market dislocation.

Aggregate new home sales at the country’s 100 largest developers have fallen every month on a year-on-year basis since last July, and the declines accelerated in the first half of this year, according to China Real Estate Information Corp., an industry data provider. Home prices have also been falling, and private indicators of housing prices have been showing far bigger drops than China’s official data.

“The market hasn’t reached its bottom,” said Song Hongwei, a research director of Tongce Research Institute, which tracks and analyzes China’s real-estate market.

A
Title: Bank run? What bank run? 2.0
Post by: Crafty_Dog on July 16, 2022, 12:38:50 PM
https://www.youtube.com/watch?v=OoNh4T0S-Yk&t=5s
Title: China suffering rapid slowdown
Post by: Crafty_Dog on July 22, 2022, 10:00:29 AM
https://www.foxnews.com/world/chinas-economy-suffering-rapid-slowdown-systemic-problems-surface?fbclid=IwAR1FZ7mtMsyrOKNFGqDtka8sXTOBCs5fZbjXf9iS9WG1UV0q45IBHj6jpt8
Title: Is China economy a house of cards ?
Post by: ccp on July 27, 2022, 04:59:43 AM
https://patriotpost.us/articles/90138-is-the-chinese-bubble-about-to-burst-2022-07-27

interesting ,  but I wonder the same for US economy.
Title: Re: China
Post by: Crafty_Dog on July 27, 2022, 09:49:12 AM
I would point out I consistently have been making this point here for several years. :-D
Title: GPF: New Purges, New Targets
Post by: Crafty_Dog on August 01, 2022, 06:50:28 AM
August 1, 2022
View On Website
Open as PDF

    
In China, New Purges, New Targets
The arrests of Evergrande’s leadership embody the debate over how Beijing handles economic recovery.
By: Victoria Herczegh

China’s restructuring of real estate giant Evergrande Group is not exactly going as planned. In mid-May, the company was on track to deliver a preliminary restructuring plan by the end of July that never materialized. Instead, the Chinese government has taken measures into its own hands. Beijing forced the chief executive officer and the chief financial officer to resign, and then arrested them for their alleged involvement in an embezzlement scheme. Similar fates have befallen officials of smaller real estate development companies, and there’s evidence to suggest the crackdown is spreading to the tech sector as well. All signs point to a possible countrywide purge, impeccably timed with the Central Committee Meeting in November and rapprochement talks between China and the United States. Politically, the purges help President Xi Jinping remove opposition; economically, they could help improve how Chinese companies interact with the West. Beijing needs both to succeed for it to have any hope of saving the Chinese economy.

Beijing’s intervention in Evergrande’s leadership embodies China’s internal debate over how it should recover economically. The company entered default in late December 2021 with over $300 billion in liabilities. The promise of debt restructuring, a measure of last resort, did not happen. Given the company’s size, it had an outsized influence on China’s GDP expanding by only 0.4 percent year-on-year. But it’s just a matter of economic policy. The two officials arrested are affiliated with Shanghai-centered banks and other large companies associated with political opposition to Xi. They aren’t politicians, strictly speaking, but their shared interest in maintaining foreign trade and investments comport with the opposition’s coastal growth model, as opposed to Xi’s consumption-based model.

It’s not uncommon for Chinese leaders to remove their enemies through purges based on corruption charges. Between 2012 and 2017, Xi himself ousted more than 150 people he believed to be a threat to his power. That campaign was aimed at political figures, mainly members of the Communist Party of China. But the current one appears to be taking aim at economic targets. Zhao Weiguo, the former head of the large and once very promising semiconductor producer Tsinghua Unigroup, was placed under investigation by officials in Beijing on July 26 after being forced to resign in May. Like Evergrande, Tsinghua struggled to repay the company’s debts, and its leader has had close personal ties with former President Hu Jintao, with whom Xi has had a fraught relationship. Xi’s purge has even netted such high-profile figures as Xiao Yaqing, China’s minister for industry and technology. Not coincidentally, Xiao started his political career as deputy secretary-general under Hu Jintao.

The cases of Zhao and Xiao show that no one, not even high-ranking officials, is safe as the purge continues in the coming weeks. One sector that is almost certainly going to be targeted is banking. Recently, depositors at some rural banks in central China were unable to withdraw their money, which resulted in regional protests. The banks promised to return the money, but those refunds are still in progress. Expect Xi to respond in kind.

Strategically, the purges are meant to show that Beijing is serious about allaying the concerns of Western investors. The episodes in real estate, tech and banking all share two characteristics: large amounts of Western money and major problems with servicing large sums of debt. Evergrande alone has $20 billion of its liabilities in offshore dollar-denominated bonds. These concerns are only compounded by retaliatory tariffs, financial restrictions and renewed COVID-19 lockdowns. A leadership reshuffle in such a prominent company suggests a major shakeup in how Chinese companies do business could be in the works. While the new leadership and debt repayment structures have yet to be finalized, the changes made in Evergrande will be a good indicator of how the Chinese government may be trying to prepare its economy to restore faith with Western businesses.

China needs to improve its ties with the U.S. Last week, Beijing gave its clearest signals yet that it intends to do so, at least on the economic front. On July 28, Xi spoke with U.S. President Joe Biden on the phone to discuss various aspects of their bilateral relationship and global issues. China’s Foreign Ministry released a statement emphasizing the need for China and the U.S. to communicate and coordinate on macroeconomic policies, keep global industrial and supply chains stable, and protect global energy and food security. They also discussed the need to de-escalate regional hotspots and to reduce the risk of stagflation and recession. Biden reportedly said U.S.-Chinese cooperation can benefit the people of each country. China’s current economic model depends heavily on exports, which have tanked over the past couple of years. China’s best hope for improving exports – and therefore reviving its struggling economy – depends on gaining access to the U.S.

While the purge will remove “problematic” actors, it’s not yet clear how the Chinese government plans to address some of the structural problems facing these sectors. Real estate companies of various sizes have yet to submit debt restructuring plans, and changes in leadership slow the process of drafting and implementing them. Liquidity crunches have forced developers to stall many projects across the country. Similar strains are being felt in the tech sector. Real estate, tech and banking are the foundations of China’s finances, and putting new, Xi-allied people to lead the most important companies would certainly change their management practice. It may also help align moves in the business sector with the country’s broader international economic agenda.

What’s clear is that Xi intends to consolidate political power and reposition Chinese businesses in a more favorable light to Western business. But this is not without risks of its own. The purge has just started, and even though it has already claimed several, it’s not clear how long or broad it will be. Moves on the political front, at the very least, are likely to continue as there is already talk about installing a new generation of party officials at the next Central Committee meeting. The sacking of Xiao shows that the reshuffling may have already started
Title: Chinese home sales crater, mortgage revolt spreads
Post by: Crafty_Dog on August 03, 2022, 12:07:17 PM
https://www.zerohedge.com/economics/china-new-home-sales-crater-40-mortgage-revolt-spreads
Title: Re: China real estate bust
Post by: DougMacG on August 16, 2022, 08:55:07 PM
https://hotair.com/john-s-2/2022/08/16/china-is-facing-a-real-estate-bust-n490228
Title: Stratfor: Chinese Energy
Post by: Crafty_Dog on August 30, 2022, 12:46:38 AM
Not what I was expecting:
===============
The Obstacles China Will Face in Fixing Its Energy Grid
8 MIN READAug 29, 2022 | 21:12 GMT


Editor's Note: The primary author of this assessment, Satvik Pendyala, is an Applied Geopolitics Fellow at RANE who has conducted significant research over the summer into China's electricity policy.

China's implementation of renewable grid reforms may address longstanding connectivity issues, but the emphasis on transmission infrastructure may raise new concerns about the grid's ability to respond to challenges. China is reinvigorating plans for long-range ultra-high voltage (UHV) power lines to connect underutilized renewable energy supplies to centers of consumption. Beijing is also expanding its plans for and implementation of smart grids to manage the complex flow of electric power across the country as Beijing seeks to advance its carbon reduction commitments, as well as mitigate concerns regarding pollution levels and regional imbalances in power production and consumption. These efforts have the potential to ease the greater challenges currently plaguing China's domestic development — namely, interregional competition, centralization of governance, mismatched regional implementation of national policies, and a poorly optimized electricity grid. If the reforms are enacted, China can finally integrate its renewables into a larger grid to reduce the amount of wasted power generation. An interconnected grid, however, also creates new vulnerabilities. And this, combined with climate-related shortages of hydroelectricity, may result in more power disruptions in the future.

For the next few years, China's electricity policy will focus on grid interconnectivity, peripheral installed capacity, and introducing ''smart grid'' technologies.

China has been continuing to develop the West-East Transmission grid project, which aims to connect the country's more power-generating provinces in the west with the more power-consuming provinces in the east. Significant UHV lines and generation infrastructure has already been constructed as part of the project, with more slated to be built over the coming year.

China's 14th Five-Year Plan, released in 2021 and updated in March 2022, emphasizes ''smart grid'' management along with UHV transmission and storage, increasing the central government's ability to track local grids given the interprovincial connectivity of such a smart grid system
In April, China's Central Comprehensively Deepening Reforms Commission (CCDRC) announced that environmental performance would be a key part of future cadre evaluation for promotion, which suggests local cadres may align their environmental policies with Beijing's to advance their careers.

Through these grid projects, Beijing is hoping to address the connectivity issues that have plagued its renewable sector. China's installed renewable capacity has rapidly expanded over the past decade. In 2010, solar and wind power together comprised only 3% of installed capacity, but as of 2020, they comprised nearly 25%. China has also invested billions in installing renewable energy in western, peripheral provinces. Connectivity issues, however, have hindered the utilization of this newly installed power capacity. Due to over-construction, renewables in China have had a high rate of ''curtailment,'' which is the amount of potentially generated energy that was not delivered to the grid. This largely stems from local governments in China building power capacity without concern for integration into the national network due to development incentives and regional development evaluations. For China's power grid, this scattershot approach to the energy transition has come at the cost of reduced efficiency and reliability.

Curtailment rates for renewables in China have often spiked above 8% over the last decade. The curtailment rate for wind energy in the country temporarily decreased after the central government imposed limits on renewable construction in 2017. But in 2020, wind and solar developments exploded amid the reintroduction of government subsidies, which has increased China's curtailment rate by causing the country's potential power capacity to further exceed absorption ability. So far, in 2022, Inner Mongolia and Qinghai reportedly face curtailment rates of up to 10-12% for renewables (the U.S. state of California, by comparison, averaged about a 3% curtailment rate in 2021).

Hydropower makes up the largest portion of China's installed renewable capacity. But in recent years, extended droughts related to climate change have significantly reduced the reliability of this energy source by leaving dams without enough water to generate electricity. In provinces like Yunnan, low rainfall in 2020 and 2021 reduced hydropower generation by 30% in some months. Sichuan — which relies on hydroelectricity for 80% of its power generation — is also currently facing a major ongoing drought, which recently forced the province to implement power cuts for industrial operations. Nonetheless, new dams have just finished construction in southwestern China and more are scheduled to be built.

The underutilization of installed renewable capacity in China partially reflects central-local and inter-regional policy disagreements on electricity production and transmission. Beijing's policy priorities are codified in its Five-Year Plans, but their implementation is left to local officials who must balance those central priorities against their region's economic and social interests. The Chinese government financially incentivizes provinces to develop local renewable energy sources by offering subsidies, guaranteed pricing and feed-in tariffs, which has resulted in oversupply and inadequate connections for built installed capacity. Another form of regional protectionism arises when local energy providers provide tax revenue for provincial governments, which incentives cadres to buy power from local power generators (and deters them from relying on inter-provincial transmitted power). This often results in the propping up of unprofitable companies, insecure financing for renewable ventures, and an unwillingness to fully utilize national UHV transmission lines.

For China's power grid, this scattershot approach to the energy transition has come at the cost of reduced efficiency and reliability. In August 2021, the NDRC reprimanded several provinces for failing to maintain ''low energy intensity,'' a measure of how efficiently energy gets turned into economic output. In 2020, China also failed to meet its 15% national energy intensity reduction goal laid out in its 13th Five-Year Plan. In the wake of these failures, China modified its energy intensity caps to encourage renewable energy production and greater efficiency, as well as bolster renewable usage and grid connections, while phasing out traditional energy generators. But grid disruptions have nonetheless continued to draw widespread attention.

In September 2021, due to coal shortages and concerns about industrial power use, the Chinese government ordered power-intensive industries to slow operations, which caused production delays. This iteration of cuts spanned many northern provinces and extended until December. Since then, power cuts have resumed amid a series of heat waves and droughts, which have increased the demand and slashed hydropower capacity.

China's energy plans can significantly reduce curtailment and promote regional interconnectivity in the long term. The political capital of leading renewable investment is not lost on Chinese leaders, who are keen on bolstering its domestic production of renewable components with an international market in mind. ''Smart grid'' technology, in particular, has been a major focus for the export market. Many countries that look to Beijing for energy leadership may request China to help upgrade their own grids.

Popular sentiment in coastal provinces has been to shift pollution- and land-intensive energy production out to China's western regions. As the central government is politically dominated by coastal provinces, Beijing has been massively investing in solar and wind power in the west, with Xinjiang alone planning to increase its solar and wind capacity to 80 gigawatts by 2025. This is bolstered by new UHV lines meant to increase transmissions eastward, contrary to regional protectionism that prioritizes local generation. Recent power cuts have tempered Beijing's ambitions, but have not slowed projects aimed at increasing China's peripheral generation and transmission. As of July, major interconnectivity projects are set to finish before the end of this year, such as the Huadian Jinshang Suwalong hydropower station in Sichuan.
The West-East Transmission project, connecting as far west as Xinjiang and Tibet to as far East as Jiangsu and Anhui, is expected to accelerate in the coming years. As this transmission grid matures, and as more provinces are connected out west and renewables are further able to deliver electricity, China will once again be able to bring its curtailment rates under control.
But this reform push will also come with trade-offs, including:

Increased risk of social unrest. As China increases its focus on renewables and prioritizes energy transmission, local traditional power generators in some areas risk going bankrupt, leaving people without jobs. In areas that are heavily dependent on coal-fired power generation, like Inner Mongolia and Shaanxi, unemployment in local energy sectors may cause social unrest and disrupt the implementation of the improved grid.

Potential for construction-related outages. There are some risks inherent in the construction of UHV lines. They are points of failure that increase the risks of outages by sabotage or accident. These lines become critical nodes, which may serve as points of reduced physical redundancy for the grid.

Continued vulnerability to extreme climate events. China's grid remains heavily dependent on hydropower generation in the West. This will leave the country's power grid vulnerable to supply disruptions as climate change increases the length and severity of droughts and, in turn, decreases the generative capacity of China's rivers. Such disruptions may eventually force China to walk back some of its more ambitious renewable transition goals and/or scale up non-hydropower energy sources. Beijing could also possibly look to nuclear to replace hydroelectricity as the base power load of its grid.
Title: FA: China's RE debts come due
Post by: Crafty_Dog on August 30, 2022, 07:39:05 AM
Second

=========

eijing’s Debts Come Due
How a Burst Real-Estate Bubble Threatens China’s Economy
By Brad Setser
August 30, 2022

https://www.foreignaffairs.com/china/beijing-debts-come-due-china-economy

The Chinese real estate sector is teetering. The largest private Chinese developer has defaulted on its external bonds. Most developers are struggling to refinance their domestic bonds. Home prices have gone down for the last 11 months. New construction is down 45 percent. The most acute stress can be traced back to developers who raised large sums by preselling yet-to-be built apartments. Some, however, failed to set aside reserves to guarantee the completion of these units, and households that took out mortgages to buy these homes have threatened to stop paying.

China’s real estate crisis poses financial risks, but it is ultimately a crisis of economic growth. Since the development and construction of new property is estimated to drive over a quarter of the country’s current economic activity, it is not difficult to see how a temporary downturn in the property market could become a prolonged economic slump.

The country’s state-backed financial system can still take large losses and thus avoid a financial meltdown. One state-backed institution can put money into another state institution, limiting the chance that losses on lending to a failed property firm will lead to the collapse of its creditors and trigger a cascade of defaults. The Chinese government can ask state-backed developers to complete building projects abandoned by private developers, providing financial help through the state policy banks. Pervasive government intervention isn’t the best way to run an economy over time, but the presence of institutions with deep pockets can prevent the destabilizing withdrawal of all financing to the property market.

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As a result, China likely will not suffer a crisis that recalls the U.S. Great Recession of 2008. But that doesn’t mean the Chinese economy is in the clear. A new growth engine won’t automatically replace the boost that the property sector traditionally provided. If China elects to goose growth by increasing exports—as it has done in the past—that could have serious implications for countries around the world struggling to find their economic footing after the shocks of the COVID-19 pandemic and Russia’s invasion of Ukraine.

THE ANT, NOT THE GRASSHOPPER
China’s banks, trusts, and other financial institutions have lent huge sums to China’s property developers, to households looking to buy apartments, and to local governments building public infrastructure even as China’s big policy banks financed construction projects around the world as part of its Belt and Road Initiative. China’s financial system could do both kinds of lending without borrowing large sums from the rest of the world, thanks to the country’s enormously high domestic savings rate, which has averaged about 45 percent of its GDP over the last 20 years. By contrast, most large economies save about 25 percent of their GDP; before the pandemic, the high-saving Asian economies other than China generally saved about 30 percent of their GDP. Only oil-exporting economies generate comparable levels of national savings to China, and they usually do so for only a brief period after a large and unexpected rise in the price of oil.

Saving is often considered a virtue and the absence of significant external debt gives China more options for managing the current property slump. External credit, especially external credit to banks, is often withdrawn quickly during a market downturn. Domestically raised funds, in contrast, are generally stuck inside China.

But too much saving helped create China’s current financial difficulties, as it fostered an economic environment where China’s rapid growth effectively required increasing domestic debt. To understand why, it helps to remember that the counterpart of high savings is low domestic consumption. As a result, China’s rapid growth over the last 20 years has rested on either the ballast of exports or periodic bursts of investment.


China will not likely suffer a crisis that recalls the U.S. Great Recession of 2008.
Before the 2008 global financial crisis, China’s internal debt-to-GDP ratio was stable, as China could rein in its financial sector while stunning export growth propelled China’s economy and industrial development. Export-led growth minimized debt risks inside China but was destabilizing to the rest of the global economy. It led to job losses in the manufacturing-intensive parts of the European and U.S. economies; the United States was able to overcome the drag on demand from large external deficits only through an increase in household borrowing that proved to be globally destabilizing. Put simply, it was one of the factors that helped spark the 2008 recession.

After the global financial crisis, China maintained its rapid growth while its trade surplus shrank through extraordinary investment in property and infrastructure. Mobilizing such high investment required higher domestic borrowing as well. In the ten years following the global financial crisis, China’s internal debt-to-GDP ratio rose from around 150 percent to well over 250 percent of GDP. In essence, the debts of households, local governments, real estate developers, and state firms have all increased faster than their incomes. Ultimately, that is a risky dynamic.

That said, China’s central government debt has been stable: the country’s debt is less than 20 percent of its GDP—far below that of the world’s other major economies. China’s central state unambiguously has a large role in China’s economy, but that is because it backs most large Chinese banks and many investment funds. The Chinese government doesn’t collect a lot of tax, nor does it spend a lot on social benefits: China has not created a national system of unemployment insurance, does not offer high-quality universal health care, and limits the public services available to Chinese workers who move from rural areas to more prosperous coastal cities.

The result is an unusual mix of financial strengths and weaknesses. The central government in Beijing owns some of China’s most profitable companies, and it backs the healthiest part of China’s financial system, namely the big national banks. It has little direct debt. Local governments, however, are carrying substantial debt and have a weaker revenue base. They are also indirectly responsible for the many state firms that have been created to finance local infrastructure projects, and they back many of the weaker locally owned banks.


China’s central government doesn’t want to cover all losses from the real estate bubble.
The big property developers, meanwhile, carry staggering debt. The market borrowing of the largest private property developer, Evergrande, is around $100 billion. If all its promised apartments and unpaid bills are counted, the company owes an estimated $300 billion. Its peers have only slightly smaller balance sheets. China’s total debt isn’t a problem for an economy that saves as much as China does—the real problem is that the wrong parts of the economy are carrying most of the debt and will have difficulty repaying.

Still, China will likely manage the immediate financial risk that its property downturn has created. Some of the weaker property developers may not pay all their debt on time and in full. But China’s central government has the capacity to protect important institutions that lent to the big property developers. Beijing can also help local governments that will need to rescue local banks so they can support locally important firms.

China’s central government doesn’t want to cover all losses, however. Too much help would fail to teach a lesson to those who lent to the most poorly managed property developers, and that could potentially lead to a new round of risky behavior. At the same time, the central government cannot allow all the big property developers to fail simultaneously. It also cannot allow losses on past investment projects to stop the flow of new infrastructure financing because China’s economy would seize up from unpaid bills and stalled building projects. Unemployed urban workers and angry buyers of unbuilt apartments would threaten social and political stability. A restructuring of the debts of the developers is inevitable—but that restructuring must be combined with steps to help the financial system bear the associated losses and make sure the flow of credit to the economy doesn’t stop completely.

A NEW MODEL
In addition to avoiding a severe financial crisis, the Chinese government also needs to find a new growth engine to replace the ballast the property sector used to provide. Specifically, household consumption needs a jolt. COVID-19 lockdowns have taken a toll, and falling property prices could lead worried households to cut back on spending just when the overall economy needs more consumer demand.

This means China must shift to a new model for delivering stimulus by providing help directly to households. China’s persistently low consumption reflects the insecurities created by limited social benefits, high income inequality, and the burden low-income households carry because of a tax system that raises the bulk of its revenue from consumption taxes and poorly designed payroll taxes. In the long term, China needs a stronger national system of social insurance—in particular, more spending on public health and a better system of unemployment insurance—that is financed by higher progressive income taxes collected by the central government.

In the short run, China simply needs to shore up its existing system for providing social services and income support by transferring more revenue to local governments. China has historically kept central government borrowing down by shifting the fiscal burden to local governments. But this approach now risks the country’s financial stability. Local government revenues are under pressure from the property downturn, as they have relied extensively on land sales to property developers to help cover their budgets. The path to a healthier economy—one driven more by household consumption and less by state-guided investment—currently runs through an increase in the central government’s budget.

China, however, has been reluctant to move away from its existing model. The country’s top leadership views direct support for household spending as unproductive, and the finance ministry has consistently resisted running large central government budget deficits. The Chinese government’s recent announcements suggest that it wants to try to restart growth by authorizing more local investment in infrastructure and displacing imports with Chinese technology. But the high-wire act required to keep China’s economy moving without a more stable base of increased domestic consumption will only get more precarious over time.

GLOBAL IMPLICATIONS
China’s trade partners have a large stake in the outcome of the internal Chinese debate. For most of the global economy, the way China grows matters at least as much as how fast it grows. China relied on exports, rather than a rebound in household consumption, to drive its recovery from the outbreak of COVID-19 in Wuhan in 2019. With a shift in global demand toward goods putting upward pressure on prices everywhere, countries around the world have tolerated (if not always warmly welcomed) the increased supply out of China. China’s trade surplus was expected to fall naturally as COVID-19-related disruptions eased globally and in China.

That hasn’t happened. Instead, the latest trade data show that China’s external surplus is rising on the back of weakness in China’s imports. Over the summer, the world economy was lucky, as China’s slowdown reduced demand for commodities when the global economy was struggling to adapt to a reduction in the supply. But this doesn’t mean that the global economy can make up for a sustained shortfall in China’s own ability to generate demand for the industrial goods that its economy can now produce in large quantities.

Back in 2009, China’s economy was able to pivot away from exports toward domestic real estate investment to mitigate the global fallout from the U.S. housing crisis because China’s financial system was strong enough to support this shift. Plus, China needed more housing and modern infrastructure. Today, China could not reverse that pivot with a large move away from real estate and back to exports without significant disruption, in part because its share of the global economy has roughly tripled in the years since the global financial crisis. The scale of the lost domestic activity from real estate that would need to be made up through a shift in global demand toward Chinese goods is just too big, and China’s trading partners themselves are often struggling with their own debt challenges.

China can try to manage a permanent downshift in real estate investment by taking steps to sustain and strengthen household demand and by finding new ways to help the industrial sectors that have relied on excessive property investment retool to meet internal consumer demand. Above all, Chinese government officials need to accept this difficult truth: rising internal debt and the end of a period of unusually high investment means that China’s historic growth surge is most likely a thing of the past.
Title: Gatestone: Chinese psychiatric torture
Post by: Crafty_Dog on August 31, 2022, 02:52:46 AM
https://www.gatestoneinstitute.org/18843/china-torture-psychiatric-hospitals
Title: GPF: China's National Congress
Post by: Crafty_Dog on September 19, 2022, 01:58:55 PM
September 19, 2022
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Winning Friends and Influence at China’s National Congress
The level of dissent is unusually high ahead of this year’s planning conference.
By: Victoria Herczegh

The immediate future of China’s economy rests on the rapidly approaching 20th National Congress of the Chinese Communist Party. Unlike other recent congresses, where most major decisions were made ahead of time, the Oct. 16 meetup is awash in uncertainty. A beleaguered economy has created visible discord within the party leadership and civil society. Most notably, an influential party faction is pushing an economic recovery plan whose priorities starkly contrast with the strategy of President Xi Jinping’s government. Despite its best efforts, the Xi government has not managed to win over these critics or fully rein in social unrest before the congress. Though Xi is likely to win out, it’s important to watch the event for revisions to China’s short-term economic strategy and indications of regime instability.

A True Opposition

Held every five years in Beijing, the National Congress is where party elites elect members of China’s top political body, the Central Committee, which then approves the membership of the party’s most powerful decision-making organ, the 25-member Politburo and its seven-member Standing Committee. In other words, it's where China chooses its leadership and strategy for the next half-decade. The Standing Committee presides over all sessions of the congress and sets the agenda, the routing of legislation and the nominations for offices. Any major strategy or government initiative goes through the committee. The most important choice, though, is that of who should be president – the person with the greatest influence over the Standing Committee and other powerful bodies.

On paper, China has a multiparty system for cooperation and consultation, meaning there has always been an “opposition” in the country’s political framework. In practice, that opposition has been primarily symbolic. Minor democratic parties operate under the watchful eye of the Communist Party of China (CPC) and have influence only over insignificant social and environmental issues. This year’s congress is different. The strongest opposition is coming from within the government itself, in the Politburo, and its point of disagreement concerns the country’s economic recovery plan, not some trivial peripheral issue.

The political factions vying for control have made no secret of their dispute and intentions in the months leading up to the congress. This too is unusual. China’s political system leaves little room for competition over policy, so proceedings at a National Congress are typically a formality. Major decisions and appointments have already been made, and the congress is where they’re announced to the public. There is no agreed-upon, comprehensive list of “pre-appointments” this time around, even with the gathering less than a month away. There may be other reasons for this, but the obvious explanation is that the party hasn’t been able to agree.

Wide Base of Resistance

Xi’s opponents aren’t only people already in the halls of power. The CPC’s sometimes peculiar employment of COVID-19 containment measures suggests a deliberate effort to suppress potential popular unrest that Xi’s rivals in government could exploit. Since late August, Beijing has put millions of people in several cities under partial or full lockdown in response to even the slightest hint of a viral outbreak. Just a handful of asymptomatic cases have been enough to trigger lockdowns in large districts. The poor quality of China’s COVID-19 vaccines and rollout difficulties, as well as the government’s early emphasis on complete suppression of cases as indicative of its systemic superiority over the Western model, surely play a role in its heavy-handedness. But given the larger context, the primary cause of Beijing’s disproportionate public health response is probably political.

Conspicuously, the regions under the strictest public health scrutiny are the same areas that make up the economic base of Xi’s rivals. These include Shenzhen, Chengdu and Dalian. All three cities are major technology and manufacturing hubs, and thus host large firms and banks that support those sectors. These industries rely heavily on foreign trade and are thus hypercritical of lockdowns – in addition to Xi’s crackdown on their sectors and China’s increasingly strained commercial ties with the West.

Another example is Shanghai. The leading figure of the opposition in the Politburo is Han Zheng, the former mayor of Shanghai, who is still closely connected to the city’s financial and trading activities. It was notable, then, that Beijing earlier this month indefinitely postponed the finance-focused, Shanghai-based Lujiazui Forum a day before it was supposed to start. Han, along with other senior Chinese officials and economists, had openly criticized Xi’s handling of the economy, and the forum was very likely to feature a critical evaluation of the government.

For the dominant actors in these outward-looking cities, Xi’s economic and foreign policies are a real threat. They want Beijing to curb China’s substantial debt and further support tech and manufacturing. Given their ties to international markets, they also advocate cooperation with foreign actors to resolve China’s most pressing economic issues: an unsustainably large real estate bubble and a liquidity crisis in the banking sector. Their strong preference is for a strategy that favors coastal economies and requires a less confrontational approach toward the West.

The Xi government sees the country’s challenges differently. Its focus is on redistributing wealth (under the rubric of “common prosperity”), where the drivers of growth are government management and domestic consumption. To the extent possible, it wants to sideline international actors. It calls for the transfer of the coastal provinces’ immense wealth to the much poorer interior in the name of social cohesion (read: to avoid a peasant revolt). Xi’s crackdown on big tech and big finance, ongoing since 2020, is a major part of this plan.

Tale of the Tape

How this political battle plays out will to some degree determine what happens at the National Congress. The opposition’s main strength is in its ability to capitalize on social unrest from lockdowns and other social repression. Already fatigued from years of such measures, the public will have little appetite for tolerating new ones. In cities like Shenzhen and Chengdu, where government interests align with those of the Politburo’s opposition faction, there’s a risk that local leaders would allow citizens to express their discontent if it’s politically expedient for them to do so.

This is unacceptable for the president. To prevent the opposition from drawing on this social support, the Xi camp must continue its repressive measures. Since addressing the root problems of the opposition is a non-starter, it’s the only option the government has. Beijing adopted the COVID-19 strategy because it allows the national government to enact social and security measures outside the purview of local authorities. (Normally, local governments are responsible for maintaining law and order.) This wouldn’t dissolve the opposition of course, but it will at least make it think twice before acting, giving Xi and his loyalists time, if nothing else. Xi will meanwhile use his control over state media to downplay public protest, even if his ability to do so appears to be waning. He was unable, for example, to prevent national media from covering the Henan banking protests and the Wuhan lockdown protests.

Xi’s camp has an inherent advantage over its adversaries in that it is starting from a position of strength. The president has purged the government of potential threats since 2012, and he has used his economic agenda to help support his camp’s political agenda, most notably in the tech and real estate sectors. Most of his targets were affiliated with wealthy cities aligned with the Politburo opposition. But there are limits even to these crackdowns. And though they’ve claimed many victims, they have yet to nab members of the Central Committee and Politburo such as Vice Premiers Han Zheng and Hu Chunhua.

The opposition, then, comes from a position of relative weakness. Yes, it can incite local populations to action, but it is not powerful or organized enough to challenge Xi head-on at the congress. Some high-ranking opposition figures have enough political capital to keep their positions, but there’s a limit to how outspoken they can really be. And perhaps most important, it has yet to rally behind a single leader. Han and Hu play a role, as do local government officials throughout the country, but it’s hardly an organized network capable of creating and sustaining a viable alternative movement. CPC tradition dictates that presidential candidates present themselves at least six months before the congress to be able to solidify their national strategies within the party and publicize them. If a new presidential candidate presented himself now, he would not have much support in the party.

Who walks away with the vice premier posts will signal which political faction did well at the congress and, consequently, which national economic strategy will be pursued. There are currently four premiers, three of which are 68 years old or older – the retirement age established by party regulations. There have been exceptions to the rule, of course, as when older members resist surrendering their seats to a younger replacement whose views don’t align with theirs. Such may be the case this year. Two vice premiers, Liu He and Sun Chunlan, both in Xi’s circle, are set to retire, but there has been no indication of who will replace them. How these posts are divided among the factions will indicate the relative strength of each camp. The Xi camp is expected to remain in power, which means China will pursue its shared prosperity economic strategy. But with a good showing at the congress, the opposition could undermine such initiatives, thus weakening the party. And as history has shown, a weak central government in Beijing can often lead to crisis.

Title: A lot of smoke coming out of China
Post by: ccp on September 25, 2022, 10:05:39 AM

Moving Ya's thread  from India to China thread:

https://www.newsmax.com/newsmax-tv/blaine-holt-china-xi-jinping/2022/09/25/id/1088935/
Title: GPF: Is China losing its grip on media?
Post by: Crafty_Dog on October 05, 2022, 11:50:53 AM
October 5, 2022
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Is China Losing Its Grip on the Media?
There are foreboding signs ahead of the National Party Congress.
By: Victoria Herczegh

Over the past few weeks, there have been unusual signs of discontent in China, none stranger than an article written in a party mouthpiece by President Xi Jinping himself. It’s not so extraordinary for a president to publish something like this, especially ahead of the all-important National Party Congress, but the occasion is usually reserved for introducing positive catchphrases for next term’s agenda and praising the country’s recent growth. Instead, Xi focused on terms such as “struggle,” “peril” and “challenge,” hardly the picture Chinese media normally portrays of a faultless, all-powerful leadership.

For Chinese society, receiving information about public dissent is new, and it’s no surprise that it comes amid months of economic and financial distress, disappointment and frustration. Now is the time for Chinese leaders to keep the media under firm control, but it appears that they are losing their ability to do so. And if this is indeed the case, then they are losing one of their most powerful tools in maintaining power – a particularly foreboding prospect for a country that is historically prone to fragmentation.

Organs of Control

It’s well-known that China censors its media. Choosing what the people see and read is essential in maintaining faith in the government. It became more pressing, of course, with the widespread use of the internet and social media platforms. According to the first white paper on internet sovereignty issued in 2010 under President Hu Jintao, strict controls were meant to prevent sensitive state secrets from getting out and hurting the country. But over the next few years, it became clear that the measures were being used to censor people’s thoughts regarding the party, the government and especially the president. Under Xi, the government went one step further, using internet-based media as a tool to promote Communist Party propaganda. The danger to Xi, of course, was that improved access and communication would educate the people and bring his house of cards down, but the benefits – tightened control over all forms of state media, turning them into a powerful voice, a kind of foundation for the party’s unity and the government’s stability – outweighed the risks.

As with most everything else in China, media censorship is centralized, managed mainly from above. The most powerful monitoring body is the Communist Party’s Central Propaganda Department, which coordinates with the State Administration of Press, Publication, Radio, Film, and Television to make sure all media content promotes official party doctrine. The CPD was founded almost 100 years ago and has been operating ever since, suspended only once, during the Cultural Revolution (1966-76). The CPD is no less powerful than the police. It was designed to have the authority to take away all financing from media outlets that don’t fully comply with its official guidelines. In case of open defiance, media outlets risk restructuring or complete closure.

There are, of course, other organs of control. Since 2012, the central government and several private companies connected to the government have employed millions of civilians to review internet search keywords, forums, blog posts, news articles – basically all sectors of media. They receive detailed guidelines from the government on how to conduct monitoring and directives to restrict coverage of a range of politically sensitive topics. Some of them are paid by the CPD, but most get their salaries from the private companies that hired them. Some are true believers, and some are threatened or coerced into the job, which is to spot any sort of event or news that sheds negative light on the leadership or could undermine its power. They remove it from the web immediately, even censoring keywords that would lead to internet users potentially finding any clues related to the event. Those located outside China monitor websites like Facebook, Twitter and Wikipedia that are banned in China and have the means to take down compromising news that appear on domestic news websites, blogs or forums. Foreign websites must contend with the “Great Firewall,” the rules and measures employed to regulate domestic internet use, which prevents Chinese citizens from accessing particular websites with sensitive content by blocking the IP addresses of these websites. There are some foreign websites that are not blocked, but the CPD usually significantly extends the loading time for these websites. VPNs are illegal, but it’s impossible for the government to thoroughly monitor them.

The key for Chinese media censorship is speed, precision and efficiency, and the government has generally achieved all three under Xi. It employs a ton of people, and it has given authority to CPD officials to rewrite articles before they are published and, failing that, shut down websites and investigate their publishers.

Even so, the government’s ability to control and censor politically sensitive media content started to show signs of decline around late 2021, when the first reports on panic buying, food shortages, supply chain issues and other quarantine-related problems appeared prominently and frequently in Chinese media. Most of the information originated from small provincial branches of larger media outlets, which are generally not directly monitored by the CPD. This indicates that some of its subsidiary employees have been unable or unwilling to censor information. After all, it’s difficult to keep endemic food, inflation and supply chain issues completely under wraps.

Demonstrations are more censorable, yet in 2022 news of them got out and spread all over the world. The first reports were about a protest taking place in Shanghai due to COVID-19 lockdown measures. Then came the Henan banking scandal in July, followed by more COVID-related protests in Wuhan (August), Shanghai again (September) and Shenzhen (October). Meanwhile, forum discussions appeared from time to time, with people detailing their own negative experiences and fears related to quarantine, food security issues, unemployment and other highly sensitive topics. These threads get taken down quickly but not quickly enough. When people realize that there are thousands of others experiencing the same hardships, it will be easier for them to organize, and harder for the government to suppress the gatherings beforehand.

Backfire

The Xi administration continues to crack down on media companies, but some of its efforts to that end have backfired. Giant media groups such as Tencent and Baidu, for example, were recently fined a substantial sum of money, and some of their managers were fired and placed under investigation on suspicion of corruption. The crackdown was aimed at two things: redistributing money from large, wealthy companies to poorer interior regions, and getting rid of officials considered a threat to the government’s power.

The problem is that these are the very companies that help the government employ many of the monitors responsible for censoring forums, blogs and news websites. Losing money and fearing when the next axe would fall has obstructed the once smooth process of media monitoring by alienating employees and inspiring, however indirectly, organization and agitation.

Moreover, nearly all the top officials of China’s large media companies are affiliated with financial institutions based in coastal hubs whose interests do not always align with those of Xi – namely, ensuring stability through targeted crackdowns and redistribution. The fact that some of them were removed from their posts all but confirms that their interests were indeed in opposition to Xi’s. Consequently, workers found themselves in a position where even abiding by the government’s demands was not enough to avoid punishment. This may make them more sympathetic to the opposition and its purpose of weakening the leadership’s highly centralized power.

The emergence of an opposition group aligned with an important part of the general public might well be enough to start challenging the current regime. It’s a slow and incremental process, one that begins simply with the government not having absolute control. The National Congress on Oct. 16 will, to some degree, set the tone of how China will be governed in the next few years by giving the opposition, such as it is, an opportunity to present their ideas and gain positions with more momentum at its back.

However, the congress will also give Xi and his camp a chance to consolidate power, either through brute force or by introducing a new agenda that appeases party opponents and an increasingly skeptical body politic alike. The most telling part of the meeting will be the media coverage, which will indicate who has the upper hand. This, in turn, will influence the degree to which each political faction is able to control public sentiment. Thus is the nature of media in China.
Title: Zeihan: Chinese collapse coming
Post by: Crafty_Dog on October 16, 2022, 08:42:13 AM
https://www.youtube.com/watch?v=nqstQNiD3T8
Title: China, Russia
Post by: DougMacG on October 24, 2022, 05:19:56 PM
https://www.forbes.com/sites/craighooper/2022/10/24/as-russia-gets-weaker-xi-jinping-may-forgo-taiwan-to-grab-eastern-russia/?sh=32efa8756ce4

Strange theory...
Title: Re: China
Post by: Crafty_Dog on October 24, 2022, 06:34:58 PM
If only, but what would be worth the grabbing there?  At the cost of access to Russian oil, gas, and grain -while risking nuclear conflict?
Title: Re: China
Post by: DougMacG on October 24, 2022, 10:00:27 PM
If only, but what would be worth the grabbing there?  At the cost of access to Russian oil, gas, and grain -while risking nuclear conflict?

Doesn't make sense.  I thought Trump should have bought Siberia.  Right after I wrote that he made an offer on Greenland.  If I were running China I would buy it.  Or use their trick:  Lend against it, get the default, and take it.
Title: Re: China
Post by: G M on October 24, 2022, 10:26:46 PM
If only, but what would be worth the grabbing there?  At the cost of access to Russian oil, gas, and grain -while risking nuclear conflict?

Doesn't make sense.  I thought Trump should have bought Siberia.  Right after I wrote that he made an offer on Greenland.  If I were running China I would buy it.  Or use their trick:  Lend against it, get the default, and take it.

China is sending masses of Han Chinese to move there. In time, the Chinese will be the majority and the ethnic Russians the minority.

Good that that can't happen here!
Title: GPF: Stability for Xi, not China
Post by: Crafty_Dog on October 27, 2022, 09:11:22 AM
October 27, 2022
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Stability for Xi, Not for China
It’s unclear what the president’s “victories” at the congress mean for the country.
By: Victoria Herczegh

Ahead of the 20th National Congress of the Chinese Communist Party, which ended last Sunday, it seemed as though President Xi Jinping had lost some control of the country. China was riven with anti-government protests and weakened censorship, and there had emerged a real opposition faction, the key figures of which were expected to keep their seats in the Politburo. But not only did Xi manage to retain his position as general secretary of the CCP, but he also excluded those affiliated with the opposition from the Politburo and replaced them with loyalists.

The direction of the country’s management, then, seems unlikely to dramatically change; Beijing will continue to follow the consumption-and-production-based model espoused by Xi and his camp, despite the economic predicament it has put the government in. Over the past year, China’s real estate bubble has come close to bursting, with once highly successful large companies like Evergrande defaulting on their debt. The banking sector is also in trouble. Recently, Chinese banks, anticipating significant losses, have taken dramatic steps to enhance their loan loss reserves, tapping China's bond markets for about 30 percent more funds than they did last year. Moreover, China has an ever-growing unemployment problem, food insecurity and general dissatisfaction and uncertainty about the future that is enhanced by the almost daily mass testing and lockdowns of entire districts and cities. As a result, gross domestic product growth is well below government targets. The faction opposed to Xi prior to the congress wanted to solve these problems with an export-oriented approach, putting emphasis on trade conducted from wealthy coastal cities. With their expulsion, this now seems unlikely.

One of the ways out of the economic mire – indeed, a method embraced by both Xi and his opponents – is to boost high-tech innovation and development, getting into the global market. And there was reason for them to think of it as a viable solution. Over the past few years, China has managed to advance its semiconductor industry and establish a sizable domestic market. In the first quarter of 2022, China’s share of global chip sales managed to surpass Taiwan’s and was closing in on Europe’s and Japan’s. Still, in terms of technology and quality, China’s semiconductor industry is far behind that of its peers, and the only way to bridge the gap is to acquire advanced parts and equipment from abroad. However, last week the United States introduced wide-ranging export controls aimed at cutting China completely off from acquiring or manufacturing key chips and components for supercomputers, making it illegal for any American company to trade advanced semiconductor chips with Chinese companies.

Thus is China’s dilemma. It needs economic growth and stable finances in order to be able to support the recovery of its struggling real estate and banking sectors. It cannot give up high-tech innovation and development because it is the field that has advanced the most in the past few years, and it is also the sector China wants for leading its economic growth. As important, it needs access to dollar-denominated trade and investment. (There has been speculation about trade opportunities in places like Central Asia, and China is indeed interested in trading with them, but their markets simply cannot provide what the American market can.)

For these reasons, Beijing would ostensibly want to avoid confrontation with the U.S., but its rhetoric of late has been anything but conciliatory. During his speeches at the congress, Xi never mentioned the U.S. directly, but he spoke about intensifying the competition against the “anti-China” coalition, called on the party to work against “hegemonism and bullying,” and encouraged authorities to prioritize security over economic interests. As soon as the U.S. announced its trade restrictions, Beijing responded by saying the U.S. was abusing export control measures and bullying Chinese industry. And to be sure, the industry will suffer. The China Semiconductor Industry Association believes that if they remain in place, they could set the sector back by as long as a decade, thus depriving the country of one of its most viable paths to economic recovery. Hence the heightened rhetoric: Beijing seems to understand that this could mean a massive escalation of the trade conflict between the U.S. and China.

This means China needs to find other solutions to save its tech sector, but no solution is without its limitations. It has shown a willingness to pursue tech-based cooperation with the EU and South Korea, but both are U.S. allies and as such have refused to cooperate. Beijing may consider expediting its efforts to bolster its domestic markets, but technological production and innovation have been upended by the pandemic – and by China’s disruptive zero-COVID measures that have left entire cities on lockdown. (At the congress, the party explicitly said these measures will remain in place.) Beijing may also try to persuade Washington to revoke the ban or at least ease the regulations. That, of course, would require concessions on China’s part – for example, by distancing itself from Russia, or by making the purchases from the U.S. it had failed to make under “phase one” of the U.S.-China trade deal. As recent U.N. votes showed, the former may be more viable than the latter, which is constrained by finances Beijing would otherwise rather spend on its lagging real estate and banking sectors.

Xi may have achieved what he wanted to at the congress by sidelining his opponents, but it’s not clear what his accomplishments have wrought. The anger that led to anti-government protests has not abated, and if the economy doesn’t improve – which is hard to do without mending ties with the U.S. or ending lockdown measures – things may only get worse. Stability for Xi isn’t the same thing as stability for China.
Title: George Friedman on China
Post by: Crafty_Dog on November 08, 2022, 02:53:09 PM
https://www.youtube.com/watch?v=Jt8xo4qo71A

Very much disagree with his military assessment. For example, it won't be our navy vs. their navy.  It will be our navy getting blasted by their missiles.
Title: Protests erupting
Post by: Crafty_Dog on November 27, 2022, 09:16:22 AM
https://www.nationalreview.com/news/protests-erupt-across-china-in-defiance-of-xis-covid-19-lockdowns/?utm_source=email&utm_medium=breaking&utm_campaign=newstrack&utm_term=29816908
Modify message


https://michaelyon.locals.com/upost/3120485/reports-anger-erupting-across-china

https://apnews.com/article/taiwan-health-fires-social-media-50d7515e5fae00f5054062209e9306cc

https://www.theepochtimes.com/huge-protests-erupt-in-chinas-xinjiang-over-strict-zero-covid-curbs_4886950.html?utm_source=China&src_src=China&utm_campaign=uschina-2022-11-27&src_cmp=uschina-2022-11-27&utm_medium=email&est=kbjbFqhxVVqIivOjVeedBVN3N9DxALsxIWALP3fTqbZH%2Bpv2aqTSd8uNzPtZrN%2F%2Bg8ep
Title: Protests in Shanghai China
Post by: DougMacG on November 27, 2022, 03:13:44 PM
https://www.asahi.com/ajw/articles/14778572
Title: DC: Lockdown protests threat to Xi?
Post by: Crafty_Dog on November 30, 2022, 12:10:26 PM
https://dailycaller.com/2022/11/29/lockdown-protests-china-xi-jinping/?utm_medium=email&pnespid=6uNoCysXMbEdy._RrDu3FouKpE7zTpp2I.C8neY1oBRmyE.4TKPfCW6YHqlYJpJShOY.YNCx
Title: Re: China protests, invisibility cloak
Post by: DougMacG on December 05, 2022, 12:06:04 PM
https://www.scmp.com/news/china/science/article/3202087/chinese-graduate-students-invent-invisibility-cloak-can-slip-past-security-cameras-and-recognition
Title: Re: China health care
Post by: DougMacG on December 12, 2022, 06:43:46 AM
As Chinese authorities move to ease the burdens of sweeping pandemic lockdowns, lengthy quarantines and regular mass testing, the country’s hospitals are feeling the first shock of a giant wave of infections and shortage of health workers. Since the State Council, China’s cabinet, rolled out a new 10-point plan Wednesday to ease its stringent Covid-19 controls, ending mass nucleic acid testing and allowing some infected people to quarantine at home rather than in centralized facilities, hospitals are facing increasing workloads as infections surge. In cities such as Guangzhou, Shijiazhuang and Beijing that have taken the lead in implementing the new policy, fever clinics are full of patients and cross-infections between patients and doctors have begun to emerge. Experts predict a peak of infections in the next one to three months with about 60% of the population infected, which would squeeze already swamped hospital emergency rooms and intensive care units and burn out health-care workers. (Source: caixinglobal.com)
Title: Framing China's demographic decline
Post by: Crafty_Dog on December 19, 2022, 03:25:19 PM
Framing China’s Demographic Decline
undefined and Asia-Pacific analyst with RANE
Nate Fischler
Asia-Pacific analyst with RANE, Stratfor
9 MIN READDec 19, 2022 | 21:42 GMT



Editor’s Note: This column is the first part of an ongoing series that will explore China’s demographic challenges.

China’s impending population decline is often cited as a harbinger of its economic and strategic collapse. But while a shrinking population represents a major challenge, the assumption that a country derives its strength from the number of people living within its borders is often overly simplistic.

Indeed, China is facing various demographic issues with wide-ranging implications beyond population decline. The next five years will be critical in addressing these issues, which should be framed as part of an ongoing — and painful — middle-income transition that the Chinese government has determined requires strong central leadership to manage.

Centralization of Power
In October, Xi secured another five-year term as China’s leader, along with a thoroughly loyal cabinet. Since he came to power in 2012, there has been a clear trend of ever-growing power being concentrated in Xi’s hands — moving China away from the rule-by-consensus model established in the 1970s. This shift is a direct response to the various development challenges that China has been late to address, as a strong central government theoretically enables policymakers to be flexible, quick and decisive in addressing ongoing crises, as well as mitigating the societal turmoil that often accompanies middle-income transitions.

Each of the various demographic issues China is facing — which include a shrinking and aging population — would be difficult to overcome individually in a much smaller country, let alone simultaneously and at the unprecedented scale that China is grappling with. This daunting socioeconomic dynamic will, in turn, provide political justification and rationale to double and triple down on centralized power as Beijing prioritizes alleviating China’s various demographic crises through top-down policymaking.

A Hyperexpression of the East Asian Model
China’s meteoric rise was bound to slow. A low-income country implies production potential, and a country can develop from a pre-industrial to a post-industrial society only once, which China accomplished with impressive speed from the 1970s. Reaping the benefits in the form of seemingly boundless economic growth thus must occur within a constrained time frame, which has now run its course.

In many ways, China is experiencing a typical transition of East Asian economies. Japan and the Asian Tigers (i.e., Hong Kong, South Korea, Singapore and Taiwan) underwent similar middle-income transitions. This model involves low-income, high-growth stages leading to middle-income, middle-growth stages that then require reform, innovation and boosted per capita productivity to lead to a high-income, slow-growth stage.

China is broadly attempting to enter into the final stage and escape the so-called middle-income trap — a phenomenon where countries that undergo rapid economic growth are unable to make the final leap to become high-income developed economies after successful low-income to middle-income transition stages. In its effort to avoid this trap, the country is experiencing sweeping structural, cultural and social adjustments that go far beyond population growth (or lack thereof). Indeed, this transition is natural from a socioeconomic and development perspective, regardless of birth rate.

But China faces particularly daunting challenges as it undergoes what is otherwise a typical phenomenon due to its sheer size, unique political and societal implications, and shrinking population. For one, China’s population, geographic size and industrial capacity dwarf all of the aforementioned East Asian economies; taking on the middle-income transition at such a mass scale and under such unwieldy circumstances has never before been attempted.

With the exception of Singapore (due largely to its manageable size), the other three East Asian Tigers (Hong Kong, South Korea and Taiwan) all experienced significant sociopolitical turbulence during their transitions to advanced economies and broadly democratic political systems, including high unemployment, social unrest and political upheaval. Likewise, Japan declined into economic malaise and Indonesia endured mass protests. China, however, is attempting to prevent upheaval typical of the later stages of this transition model while also nurturing economic development (a combination not seen in the other cases), which requires innovative and technologically-driven mass social control and the enforcement of desired cultural mores. This creates an acute risk in China, where people lack an outlet to express their discontent — creating a pressure cooker that could explode into mass civil unrest, like that seen in 1989 (which culminated in the Tiananmen Square massacre) and, more recently, the Nov. 25-27 protests against the government's strict “zero-COVID” policies.

Then there is the issue of China’s looming demographic decline, as transitioning to an advanced economy with a population and workforce that has already peaked is far more difficult than doing so with a growing population (as was the case in Singapore, Hong Kong, South Korea and Taiwan).

Population Decline and Pronatalism
China’s population has long been expected to peak and start shrinking at some point between 2020 and 2040. But there are signs this decline may have already begun. China’s National Statistics Bureau recorded 10.62 million total births in 2021, down 11.5% from the previous year. Between 2020 and 2021, China’s birth rate also fell from 1.3 children per woman to 1.16 children — far short of the 2.1 replacement level.

These birth statistics are comparable to those China saw in the early 1960s, when the country was experiencing cataclysmic famine brought on by the Great Leap Forward and had half as many people. According to China’s 2020 census, the country’s population count stood at 1,411,778,724 people, though the actual number is likely smaller given Beijing’s tendency to massage national statistics and inflate demographic figures. After years of soft-pedaling or outright denying the issue, in 2017 the Chinese government finally began to acknowledge that the country’s fertility rate was suboptimal and has since become increasingly vocal on the issue, now admitting that population growth has slowed to the point of nearly contracting. But Beijing is acting far too late to reverse the trend, assuming it ever could.


The country’s population decline is compounded by rapid aging. Fewer people of working age (between 15-64 years old) create more retired dependents, reducing state revenues and increasing government expenditures on healthcare and pensions. This cohort of working-age Chinese citizens peaked in 2014 and, according to census data, has been declining at a rate greater than the total population — shrinking by 40 million from 2010-2021. The share of retired dependents, meanwhile, is skyrocketing.

A decreasing population, particularly among the working-age cohort, risks dragging economic growth in the absence of significantly increased per capita productivity. According to the data analytics firm CEIC, China’s growth in productivity per capita (where productivity outpaces labor force decline) is still outpacing the United States, but has been declining since 2010.

Additionally, increased labor costs in China — already twice that of neighboring Vietnam — will drive low-margin, labor-intensive manufacturing out of the country into markets with labor abundance. This, however, is partly purposeful given low-end labor moves overseas in developed economies. Nearby countries with cheaper labor (like Bangladesh, India or Vietnam) also can’t match China’s logistics and infrastructure, which will help mitigate this manufacturing exodus.

In response to its shrinking population, China has adopted pronatalist policies, ending its One Child Policy and Two-Child Policy and introducing the Three Child Policy in 2021. The country has also pledged to make pre- and postnatal services and fertility treatment more effective, affordable and accessible. Over the past decade, childhood education has emerged as a key government focus and is now widely available across the country. Local governments enacted subsidy programs for new parents and extended maternity leave. In wealthier regions, new mothers are now entitled to up to 158 days off, up from the 98-day statutory minimum established in 2012. This minimum maternity leave is on par with Japan and is higher than those set by several developed countries, such as Sweden and South Korea (which mandate at least 84 days of leave for new mothers). China also has the highest abortion rate among the world’s largest economies, at nearly 50 abortions per 1,000 women aged 15-49 (compared with 12 in the United States and five in Japan). China is taking measures to curb abortions for non-medical purposes, including sex-selective abortions, and more restrictions are likely as Beijing seeks to boost its population rate.
 
However, these pronatalist policies have so far failed to increase China’s birth rate. Indeed, there are few historical examples of sustained fertility growth in any country once it has dropped. In reality, China’s society is rapidly evolving along the track of other industrialized Asian nations and the global north in general. Marriage rates are declining and divorce rates are increasing — especially in the country’s highly urbanized coastal and eastern cities — amid a general deterioration of traditional social norms.

More couples are also choosing not to have children, and those that are starting families are waiting longer to do so. This is due to several factors. For one, the high cost of housing and education has made child-rearing too expensive for many; according to the Chinese think-tank YuWa Population Research, the average total cost of raising a child in China is nearly seven times per capita GDP (compared with four times in the United States). China’s insufficient social safety net is also deterring people from having children.

The notorious One Child Policy is often cited as the catalyst for China’s shrinking fertility rates. But the ban on having large families may have, ironically, not been necessary to contain China’s population growth, as the effects of the country’s industrialization in recent decades — including urbanization, broad access to education, and women joining the workforce — would have likely naturally slowed fertility rates.

However, population growth is not inherently advantageous. If economic outputs cannot keep pace, resources will become scarce and expensive. Such a predicament led the Chinese government to institute the One Child Policy in the first place, to control overpopulation and increase the standard of living. Growth in terms of per capita GDP can outpace total GDP growth, which is an indicator of greater individual wealth and higher individual productivity. China does not, then, necessarily need to rely on population growth for a stable economic trajectory. At nearly one billion people, China’s working-age population still dwarfs every other country (for comparison, the U.S. working-age population is 215 million, while Japan’s is 74 million).

Instead, China will look to manage a strategic demographic contraction by reorienting its economic fundamentals. This, however, will prove to be a major challenge as such economic fundamentals are encapsulated in retirement and social security, real estate and capital, labor, geography, and broader regional and geopolitical developments — all of which will be explored in the subsequent parts of this series.
Title: More on Chinee Demographics
Post by: Crafty_Dog on December 20, 2022, 02:01:09 PM


https://www.scmp.com/news/china/politics/article/3203833/chinas-shrinking-working-age-population-send-ripples-through-global-economy

Explainer | China population: with 2022 set to be a turning point, what’s next as economy, coronavirus take toll?
After increasing by just 480,000 to 1.4126 billion last year, demographers have predicted that China’s population could reach a turning point in 2022
Some 13 out of China’s 31 provincial-level jurisdictions saw their populations shrink last year, with six suffering declines for the first time in modern history
Luna Sun
Luna Sun in Beijing
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Published: 7:00am, 19 Dec, 2022


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China had 267.36 million people aged over 60 at the end of 2021, representing 18.9 per cent of the population, up from 264.02 million a year earlier. Photo: AP
China had 267.36 million people aged over 60 at the end of 2021, representing 18.9 per cent of the population, up from 264.02 million a year earlier. Photo: AP
As China’s path to fully reopening remains murky and chaotic with mounting economic headwinds, one pitfall seems to be more inevitable than others – the looming demographic crisis.
Demographers have predicted that China’s population could reach a turning point in 2022, with bleak birth rates and anecdotal evidence indicating that the increasing economic and political pressures have taken a toll.
The 20th party congress in November highlighted that “timely adjustments” have already been made to China’s childbirth policy, while President Xi Jinping also promised further improvements.
Demographers, though, have argued that it will be difficult for China to reverse the effects of its previous one-child policy amid the ongoing economic disruptions and changing attitudes within society towards marriage and family.
What key population figures were revealed in 2022?
Mothers in China gave birth to just 10.62 million babies in 2021, representing an 11.5 per cent drop from 2020, the National Bureau of Statistics (NBS) confirmed in January.
The national death rate was 7.18 per thousand last year, putting the national growth rate at 0.34 per thousand.

This contributed to an overall population increase of just 480,000 to 1.4126 billion last year.
The national birth rate also fell to a record low 7.52 births for every 1,000 people, down from 8.52 in 2020, to the lowest rate since records began in 1949.
Some 13 out of China’s 31 provincial-level jurisdictions saw their populations shrink last year, with six suffering declines for the first time in modern history.
What’s the make-up of China’s population?
China’s working-age population age – between 16 and 59 – stood at 882.22 million at the end of 2021, representing 62.5 per cent of the population, down from 63.35 per cent in 2020 and 74.53 in 2010.
China had 267.36 million people aged over 60 at the end of 2021, representing 18.9 per cent of the population, up from 264.02 million a year earlier.
Last year, 200 million people were aged 65 and over, up from 190.64 million in 2020, and accounting for 14.2 per cent of the population.

Permanent residents in urban areas increased by 12.05 million to 914.25 million, while rural permanent residents fell by 11.57 million to 498.35 million last year.
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China’s so-called floating population, featuring mostly migrant workers, reached 384.67 million in 2021, 8.85 million more than in 2020.
How many people are getting married in China?
The number of marriage registrations in China dropped by 7.5 per cent in the first three quarters of 2022, reaching 5.4 million, according to official data.
Last year, 7.64 million marriages were registered, which was the lowest total since records began in 1986, according to the Ministry of Civil Affairs.
The number of people getting married for the first time, a statistic more closely tied to new births, dropped to a record low of 11.58 million people last year, down by 708,000 from 2020, to the lowest since 1985.

00:13 / 01:05
Population decline in China raises concerns of economic implications
In November, authorities from the Inner Mongolia autonomous region said three years of coronavirus restrictions had not only brought tremendous impact on the economy, but also affected the normal life of residents, with marriage rates suffering.
​​Official records from Sichuan province showed that the number of marriage registrations dropped by nearly 30 per cent in 2021 compared to 2016.
The local government attributed the decline to a fall in the population within a marriageable age, rising wedding costs and a more diverse perception of marriage.
What’s been done to address China’s population problems in 2022?
After officially ending its one-child policy in January 2016 and responding to the 2020 census results by allowing each couple in the country to have up to three children since May 2021, China has taken further steps this year.
Provincial and municipal authorities have rolled out initiatives to encourage people to have more children, including offering parents more days off work as well as financial support.
In May, Jiangsu also became the first Chinese province to subsidise companies for paying insurance to female employees during their second and third period of maternity leave.
Companies can be reimbursed for 50 or 80 per cent of the social insurance paid to women who have a second child or a third child for six months, in a move viewed as a bid to help counter discrimination against hiring women.
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In November, Ningshan county in Shaanxi province became the first to offer cash subsidies to all couples, with a one-time subsidy of 2,000 yuan (US$287) for one child, 3,000 yuan for two and 5,000 yuan for three.
It also vowed to provide a monthly subsidy of 600 yuan for couples with two children until the second child turns three-years-old, while couples with three children can receive 1,200 yuan per month until the third child reaches 36 months.
In December, Yunnan province also offered one-time cash subsidies for families with a second and third child.
Cities are also loosening home purchase limits for parents with more children, while many have also started to cover assisted productive techniques under medical insurance.

00:04 / 00:30
China to roll out new incentives for couples to have more babies amid birth rate drop
In February, officials in Beijing announced that the city will include more than a dozen fertility services in a government-backed medical insurance scheme.
To address the problem of declining marriage registrations, provincial authorities are even playing the role of matchmaker, with vows to help young people find a partner while also implementing policies to ease financial burdens.
China has also launched a new nationwide marital and maternity survey to gain insight into what is driving the country’s declining marriage and birth rates.
The survey, authorised by the NBS and carried out in conjunction with family planning and demographic authorities, kicked off in September in several regions of Hunan province.
What’s next for China’s population?
Demographers predict that the negative effects of the coronavirus on births will bring the fertility rate in 2022 even lower than it was last year, while many have estimated that China’s population will peak this year and start declining in 2023.
“We will improve the population development strategy, establish a policy system to boost birth rates, and bring down the costs of pregnancy and childbirth, child rearing, and schooling,” Xi said in his speech to the 20th party congress.
Some demographers also see China entering a normalised phase of population decline, meaning the population level could fluctuate around the point of growth stagnation in the coming years before it starts to decline.

00:09 / 00:20
As world population hits 8 billion, China frets over too few babies
Chen Wei, a professor with the Population Development Studies Centre at Renmin University, said earlier this year that China’s natural population growth might not continue falling in the next 10 to 20 years, instead it will fluctuate around zero and could see small declines without rapid decreases.
India is projected to overtake China as the world’s most populous country next year, according to the United Nations’ “World Population Prospects 2022”.
Just three years ago, the UN projection was for India to overtake China by around 2027.
By 2050, China’s population is expected to have fallen to around 1.32 billion, while India’s will have hit 1.67 billion, according to the UN.
China is expected to release its official 2022 population figures at the start of next year.
Title: China: Wuhan Virus strategy backfiring biggly
Post by: Crafty_Dog on December 27, 2022, 06:41:51 AM
https://www.youtube.com/watch?v=cFgcgf3KwVY

Title: GPF: China's inflexible financial system and its declining population.
Post by: Crafty_Dog on February 22, 2023, 09:51:19 AM
China's Inflexible Financial System Amid a Declining Population
undefined and Asia-Pacific analyst with RANE
Nate Fischler
Asia-Pacific analyst with RANE, Stratfor
13 MIN READFeb 22, 2023 | 16:43 GMT





Editor's Note: This column is the third part of an ongoing series that explores China's demographic challenges. Part one can be found here; part two can be found here.

As discussed previously, China's shrinking population and rapidly aging workforce are pushing its government to adjust its social security, pensions and retirement policies. Yet Beijing's success with respect to these issues is intertwined with and will depend on the evolution of the country's broadly inflexible savings, finance and investment mechanisms.

As an economy advances and becomes more complex, the financial system plays an increasingly important role in properly allocating capital and labor to accommodate later stages of economic development. China's financial system, however, has failed to keep pace with its economic growth and increasing degrees of systemic complexity, as evidenced by the country's inefficient stock markets, overreliance on real estate investments, and overfunding of bloated state-owned enterprises.

Without changes that increase high-productivity capital growth, China's inflexible financial structure will continue to impede its economic development, as well as its leaders' ability to offset the impending fallout from the country's population decline. There is no existing model for China's predicament, but certain economic fundamentals will have outsized impacts on whether Asia’s largest economy can escape the middle-income trap in the face of mounting systematic and demographic challenges.

Unwieldy State-Owned Enterprises
China places great emphasis on strengthening specific industries, such as its so-called ''new-energy vehicle'' sector (which includes battery-powered electric cars and plug-in hybrids). But compared with developed economies, the country still lags behind in total productivity growth and innovation — both of which are critical to achieving a high-income economy. Capital allocation has proven a major inhibitor to innovation, which will likely prompt China to diversify its financial system from overly cumbersome state-owned enterprises (SOEs) to more streamlined, high-value-added SOEs and private enterprises while maintaining a high level of government involvement in the economy. China also possesses a plethora of advantages suggesting that a higher degree of innovation is attainable, including an enormous domestic market; generous investments in research and development; millions of scientists, engineers and software developers; and a developing legal framework to protect intellectual property.

Utilizing these advantages, however, has proven difficult. The Chinese government conducted a regulatory crackdown beginning in 2021 on the country's technology sector, which has curbed the angel investor practices of Chinese tech giants like Alibaba and Tencent. Dynamic tech startups built on intellectual property (as opposed to more traditional assets) have thus faced institutional constraints due to inflexible financial channels, political favoritism and weak rule of law, further suppressing innovation. To address these challenges, the Chinese government has said it will prioritize allowing market forces to allocate labor and capital away from bloated SOEs, which generate few patents, and into the far more innovative private sector. But state intervention in industrial planning and non-fiduciary priorities for SOEs confound this reallocation.

China typically has poor overall productivity growth due largely to the injection of capital into inefficient SOEs, which are often tasked with policy goals that limit their productivity. The government uses SOEs to fulfill social responsibilities like stabilizing employment. This, however, not only leads to employee redundancy that reduces worker efficiency and profits, but perpetuates Chinese workers' so-called ''iron rice bowl'' expectations of having a reliable job and long-term benefits. State support for SOEs — like preferential access to loans and financing, state bailouts and state contracts that significantly reduce the need to be competitive — also perpetuates China's inefficient allocation of capital and thus labor.

China has frequently stated it will enforce equal treatment and competition neutrality principles to reduce SOE inefficiencies. But it has rarely acted on these statements, which has created increasingly capital-needy state entities by letting stronger SOEs continue to merge with and acquire weaker ones. When the mostly state-owned companies in strategic sectors find themselves on the brink of bankruptcy, Beijing has also shown an unwillingness to let them fail — opting instead to continuously bail them out. China's hesitance to let SOEs go under is partially driven by the desire to prevent major layoffs that could lead to unrest. Yet reducing labor inefficiencies is key to boosting income, which is necessary to help ameliorate the challenges of a diminishing workforce.

Risky Banking and Underdeveloped Credit Systems
Credit allocation is a major factor in financial health, but decisions to that effect in China are typically made with heavy reference to window guidance (or regulatory directives vis-a-vis the credit supply as a means to realize policy goals) provided by the central bank or other government bodies, as opposed to market forces, which can distort valuations. China's decades of rapid economic growth saw liquidity expand and real estate and asset prices skyrocket. Households, businesses and financial institutions were then incentivized to ride the wave and take on risks that allowed them to systemically outperform those that did not, creating widespread individual and systemic financial risk brought on by financial distortions. Inverted balance sheets continue to drive insolvency risk, particularly as previously underlying economic assumptions — such as perpetually rising asset values, expanding liquidity and monetary stability — fluctuate unpredictably. This has been acutely demonstrated by China's ongoing real estate crisis, where the debt value of assets in a formerly reliable sector outpaced real value throughout the market and led to widespread default.

This highlights China's need to transfer GDP share to the household sector and provide investment avenues that more readily respond to market dynamics, which further implies a need to expand access to household credit. China, for a middle-income economy, has relatively high levels of bank and savings account ownership but low levels of formal credit use, with informal networks (such as friends and family) and informal credit from subprime financial markets being far more common. Informal credit carries a higher cost and financial risk in largely unregulated financial activity and is not effectively reinvested into the economy. Beijing wants to increase access to formal credit for individuals, as it did in 2022 by cutting lending rates in response to economic struggles and the depreciation of the yuan. But this has been complicated by the lack of credit rating agencies in China, making it difficult to gauge risk. Such an increase would give Chinese households greater access to purchases that are likely to appreciate in value over the long term, such as education and stocks. China's social credit score system is meant to partially address this issue, along with giving the state another lever of control over markets. Ultimately, the goal is to boost household spending power and, in turn, help offset the economic impact of China's demographic decline by strengthening consumption, ensuring each person spends more as the country's population shrinks. If China has fewer people but each spends more, this will help offset some of the economic headwinds inherent to a smaller population.

Overreliance on Real Estate
The volatility of China's stock markets has made them unreliable investment avenues. As a result, Chinese household investment remains heavily concentrated in real estate and other physical assets. Chinese investors also largely do not own many stocks or other forms of capital. But real estate holdings cannot be quickly turned into cash for consumers and investors — making them a highly underutilized source of capital with limited economic value.

The inability to effectively utilize capital — as well as China's recent real estate slowdown — is a driver for persistent capital flight, even after tightened regulations in 2016. China is broadly attempting to redirect investment into the country's stock markets and end its overreliance on real estate, which comprises about 70% of household wealth and generates about 30% of China's GDP. But as the primary store of household wealth, real estate cannot be unwound before Beijing establishes a viable investment alternative, which it is attempting to do by developing the country's private wealth management sector.

At the same time, China may need to undertake measures to help its ailing real estate sector due to the industry's economic importance. This could see Beijing relax the so-called ''three lines policy'' it introduced in 2020, which has since wreaked havoc on China's real estate sector by severely limiting the amount of debt property developers can take on. Without the ability to increase debt to fuel their growth, Chinese developers have scaled back their construction plans, pushing several into default. As Beijing tries to balance continued austerity and speculation busting with the overall health of the sector, it may loosen borrowing restrictions for the healthiest property developers, thereby providing these companies with enough liquidity to complete some of the unfinished projects that have recently triggered mortgage boycotts and unrest. Combined with Beijing's recent moves to improve mortgage terms for first-time homebuyers, this could help reinvigorate modest consumer demand for housing, which has fallen since the implementation of the ''three red lines'' policy. But the key would be to do so without re-incentivizing consumers to use real estate as an investment vehicle.

In addition to being a source of investment, China also sees real estate as a tool to support birth rates. Many local governments now provide loans and housing subsidies to families with two or three children, particularly in lower-tier cities where people are relocating for lower living costs — a practice that will only expand in the coming years.

China may seek to increase real estate taxes as well. Currently, the government only collects taxes on owned real estate assets (like properties) when the ownership is transferred — effectively making China the only major economy without a real estate tax. In addition to redirecting investment to the stock markets, China may make slow regulatory adjustments that enable the government to collect a low level of tax income on owned assets. Instituting a tax would put real estate into circulation as taxable rental housing as opposed to the current situation wherein every time a property is occupied it loses value. China has toyed with introducing real estate tax programs, but Beijing may be ambivalent to pursue such ideas in the near term amid the ongoing real estate crisis for fear of further disincentivizing homebuying.

Decreasing housing demand has translated to lower property values and higher vacancy rates in recent years — a trend that risks solidifying as China's population shrinks and further dampens demand, putting even greater pressure on the country's leaders to develop more efficient investment mechanisms.

Inefficient Stock Markets
In the coming years, China will likely look to improve the stability and productivity of its stock markets by, for example, supporting the growth of the private wealth management industry (especially for foreign firms in China) and diversifying into higher growth sectors like technology. China introduced two domestic stock markets in Shanghai and Shenzhen in 1990, and its stock markets' total market capitalization is now second only to that of the United States. Nonetheless, the system remains less efficient than its Western counterparts — largely because the original purpose of China's stock markets was to raise funds for SOEs, not to build a sound market economy. The stock markets' early days were characterized by rampant public speculation and day trading, which sank many investors and contributed to the perception that they were unreliable investment destinations, exacerbating the overexposure of citizens and institutions to real estate. Today, China's stock markets only account for around 3% of financing that the real economy can access, as measured by the country's Aggregate Financing to the Real Economy (AFRE).

IPOs, for their part, are often used for political means (like inflating a local government's economic portfolio), blurring the value of what is typically considered a reliable economic growth data point. IPOs are also constrained by lengthy approval processes and tight regulations that lead to frequent trading suspensions imposed by the China Securities Regulatory Commission (CSRC). These delays and interruptions often damage corporate credit and incentivize reverse mergers, leading to underperforming public firms and a near-zero delisting rate. Though this is slowly changing under tighter delisting regulations that seek to clear out shell and zombie companies by raising standards based on financial performance, share performance, compliance and law violation. Further, the CSRC on Feb. 1 began allowing companies to register IPOs directly with the Shanghai and Shenzhen stock exchanges, reducing regulatory hurdles. Such IPO reforms indicate that the actual health of an enterprise will play an increasingly prominent role in the country's stock markets, thereby increasing competition and making the stock markets a more reliable investment destination for small, medium and household investors. This will be crucial to boosting innovation through private enterprise, increasing household wealth and increasing consumption — all of which will be key in helping China navigate its middle-income transition and offset the adverse effects of its population decline.

Looking Forward
China's efforts to redirect investments away from real estate and into the stock markets imply the need to absorb a substantial amount of economic costs brought on by bad debt from mismatched balance sheets. China's accumulated public and private debt in all sectors of the economy totals upwards of $51.9 trillion, or nearly three times its GDP — amounting to a debt burden larger than that of the United States (which, as a developing economy, China is less prepared to manage). China's debt levels will only grow as retired dependents make up a larger share of the population due to pensions, insurance, healthcare and other social spending costs, highlighting the need to bring the country's financial systems up to speed with its increasingly complex economy.

Absorbing the costs of this redirection will probably fall squarely to the government (and, subsequently, local governments) as Beijing is unlikely to put the burden on businesses or households. The success of this redirection will be critical to China's success in weathering its impending demographic decline, since raising the GDP share of the household sector is necessary to drive a consumption-based economy.

Chinese policymakers understand that ensuring continued economic growth with a shrinking and rapidly aging population will require systematic changes that reorient China's economic fundamentals. They are already making substantive policy decisions to this effect. But deeply rooted institutional norms and co-dependent goals (like the fact that China cannot redirect household investment out of real estate without first boosting the efficiency of its stock markets) will ultimately constrain the impact of such decisions. Beijing will also need to reduce its favoritism for SOEs in order to realize its capital allocation goals, but non-fiduciary social responsibilities and the need to maintain employment for the sake of social stability will make this difficult. Potential solutions need to further account for additional strains emanating from China's labor mismatch, geographic divide and broader geopolitical challenges, which will be explored in the subsequent parts of this series.
Title: Re: China
Post by: ya on February 27, 2023, 08:57:36 AM
To know when China will initiate a war over Taiwan, watch their UST holdings, currently at 867 B. The last few years have shown a  decline in Chinese UST holdings. Based on that the war over Taiwan is still a few years away.

https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt (https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt)

For historical data see here https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt (https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt)
Title: Re: China
Post by: G M on February 27, 2023, 10:01:08 AM
An interesting analytical point!

To know when China will initiate a war over Taiwan, watch their UST holdings, currently at 867 B. The last few years have shown a  decline in Chinese UST holdings. Based on that the war over Taiwan is still a few years away.

https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt (https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt)

For historical data see here https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt (https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt)
Title: Re: China
Post by: DougMacG on February 27, 2023, 10:41:27 AM
Yes, good point.  Looks like already headed in that direction.
-----------
"UST holdings, currently at 867 B. The last few years have shown a  decline in Chinese UST holdings."

As an aside, China is not buying our debt (in recent years) as some keep saying, it's a net negative.  Even when it was over a trillion total holding, it was a cupful in a now 32T(?) bucket. 

Further aside, why are we still in deficit at all and still needing anyone to buy our debt?
Title: RANE
Post by: Crafty_Dog on April 07, 2023, 03:42:35 PM
Despite Recent Growth, China's Economy Is Still Headed for a Greater Slowdown
Apr 5, 2023 | 19:28 GMT





People walk on a street at the end of the workday in Beijing, China, on March 17, 2023.
People walk on a street at the end of the workday in Beijing, China, on March 17, 2023.

(GREG BAKER/AFP via Getty Images)

Despite the post-COVID uptick in economic activity, China's medium-term growth potential will continue to decline, while macro-financial vulnerabilities will remain elevated, which will accelerate efforts to strengthen political oversight of the economy — especially as policymakers try to reduce China's exposure to external economic pressure. Over the past 40 years, Chinese policymakers have proven remarkably adept at maintaining high growth rates while effectively managing financial risks. The government has relied on a mixture of state-led economic development and gradual, market-oriented liberalization. More recently, the government has backtracked on market-oriented reform despite previous commitments to let markets play a ''decisive role'' in economic development. China's political economy model has traditionally proved very effective in terms of mobilizing savings and channeling them into strategic sectors. A combination of financial repression (keeping interests on bank deposits low) and government-guided bank lending provided a cheap and stable source of funding for development-oriented, strategic economic sectors. Today, however, this system is channeling savings into relatively low-productivity sectors, like real estate and physical infrastructure, creating financial vulnerabilities and limiting future economic growth.

China's real GDP growth has averaged 8-9% over the past four decades. Recently, however, ten-year average economic growth has slowed to 5%. The government's official growth target for 2023 is ''around 5%.''
At the Chinese Communist Party's Third Plenum in 2011, China committed itself to letting markets play a ''decisive role'' in the country's economic development. Over the past few years, however, Beijing has increased the role of the government (and thereby the Communist Party) in state-owned enterprises and has announced its intention to do the same in the case of private Chinese companies.

China's traditional approach to economic development has been strained for some time, and the continued failure to reform it will increasingly weigh on the economy's medium-term growth outlook. The International Monetary Fund (IMF) and most private-sector economists expect China's real GDP growth rate will continue to decline, which will put pressure on China's political economy model and financial stability. China's banking system intermediates a large share of total domestic savings, channeling significant amounts of it into the real estate and infrastructure sectors, which then leads to banks holding large financial claims on real estate companies and households. At the same time, local-government-backed funds — so-called local government financing vehicles (LGFV) — also raise funds to finance local infrastructure and housing projects, while local governments in China derive revenue from real-estate-related land sales. This system is highly interconnected, and financial problems in one part of it can quickly cascade through the entire system. Moreover, the system works well as long as there is sufficient demand for real estate and infrastructure, prices continue to rise, supported by solid economic growth, and borrowers are able to repay their debt. Moreover, the system works well as long as there is solid economic growth, sufficient demand for real estate and infrastructure, a continued rise in real estate prices, and borrowers are able to repay their debt. But banks face potentially significant losses if real estate companies are placed under financial distress and mortgage defaults rise. China has experienced a slight uptick in credit losses tied to the real estate sector, following the introduction of greater restrictions on real estate developers. These losses, however, have so far been relatively minor. If real estate prices fall or infrastructure investment proves unprofitable, banks will experience financial losses and LGFVs may be forced into bankruptcy or restructuring. To the extent that these vehicles are backed by local governments, the authorities may then be forced to bail them out at a time when they start to lose revenues from declining land sales. Viewed from a macro angle, ''excess savings'' are being channeled into sectors of the economy that will generate low returns and low productivity growth, which will weigh on China's medium-term economic growth and increase the risks of financial losses.

Bank loans amounted to 180% of China's GDP in 2022, up from less than 100% in 2008 and 150% of GDP in 2018. An alternative measure of domestic non-financial debt stands at around 300% of GDP, which is extremely high by international standards — particularly for a middle-income economy.
Land sale-related local government revenue amounts to 2-3% of China's GDP, while LGFV-related debt amounts to about 40%.
Chinese policymakers are fully aware of the significant medium-term economic challenges and macro-financial risks related to overinvestment in real estate and infrastructure, but they will continue to struggle to rebalance the economy. To the extent that policymakers are successful in terms of rebalancing the economy away from overinvestment in real estate, economic growth will slow, unless savings can be put to better use. According to the IMF, China's domestic savings rate amounts to 45% of GDP. It is impossible to reduce the excess domestic savings rate from 45% of GDP to, for example, a more reasonable 35% within just a couple of years without causing major disruptions, the very thing Beijing is trying to avoid. This means there is no such thing as a quick fix to China's economic challenges, leaving Beijing with no choice but to gradually adjust the country's economic model. If Chinese authorities continue to go slowly in terms of reducing the importance of the real estate and infrastructure sectors and limiting concomitant financial risks, financial instability risks will remain manageable due to China's high savings rate, significant control over the financial system and capital controls. Effectively, the entire system will remain backstopped by the government. A precipitous downward shift in economic growth, however, would expose these vulnerabilities immediately; by the same token, a precipitous reduction in real estate and infrastructure investment would lead to a sharp economic slowdown. This is precisely why Beijing has opted for a gradual approach. Such slow and steady policy adjustment will still lead to declining economic growth (and, in turn, increasing — if manageable — financial losses), but it will also make that slowdown more manageable overall.

Estimates vary, but most put the combined direct and indirect contribution of China's infrastructure and real estate sectors at 20-30% of GDP.
Non-performing loans (NPLs) stand at less than 2%, but the NPL ratio is a backward-looking indicator.
In light of deteriorating medium-term growth prospects and continued domestic financial vulnerabilities, Chinese policymakers will intensify efforts to limit China's susceptibility to foreign economic and political pressure. In addition to the aforementioned domestic challenges, China is also facing mounting foreign economic pressure — particularly from increasing U.S. investment and export restrictions — that could further hamper its economic growth by targeting innovative, high-productivity tech sectors, such as semiconductor chips, artificial intelligence and quantum computing. To mitigate this threat, the government will accelerate policies geared toward the ''securitization'' of foreign economic relations. In addition, Beijing will press for a more rapid shift toward ''dual circulation,'' a policy focused, among other things, on increasing domestic consumption and reducing supply chain vulnerabilities. But while these policies will help make China's political economy less susceptible to external shocks, they will also further weigh on medium-to-long-term economic growth. Greater state intervention and a lower degree of economic and financial openness will be less conducive to competition, innovation and hence economic growth. Chinese policymakers might be able to halt a slide in economic growth if they strengthen the role of the private sector and limit government interference in growth-oriented, high-productivity sectors. But Beijing is unlikely to offset these securitization measures with further market liberalization, despite such reform being needed to ward off a precipitous deceleration of economic growth that could keep China from reaching high-income status (a phenomenon known as the ''middle-income trap'').

The IMF expects Chinese real GDP growth to fall below 4% over the next four years. Some private-sector economists expect the growth rate to decline to a mere 3% before the end of the decade.
Under the leadership of President Xi Jinping, China announced a policy of ''comprehensive national security'' in 2014. In view of intensifying conflict with the United States, the trend toward increased political control will likely continue to limit market-based competition and weigh on productivity and economic growth.
China is the world's second-largest economy in nominal dollar terms at market exchange rates. It is the world's largest economy in purchasing power parity terms, a more accurate measure of economic size.
Title: ET: Anti-war sentiment
Post by: Crafty_Dog on May 02, 2023, 07:17:34 AM
Anti-War Post Goes Viral on Chinese Social Media Amid CCP’s Increased Aggression Toward Taiwan
Chinese People's Liberation Army (PLA) soldiers taking part in military training at Pamir Mountains in Kashgar, northwestern China's Xinjiang region, on Jan. 4, 2021. (/AFP via Getty Images)
Chinese People's Liberation Army (PLA) soldiers taking part in military training at Pamir Mountains in Kashgar, northwestern China's Xinjiang region, on Jan. 4, 2021. (/AFP via Getty Images)
Alex Wu
By Alex Wu
April 30, 2023Updated: April 30, 2023
biggersmaller Print

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The Chinese communist regime’s threats to annex Taiwan by force has escalated this year, accompanied by its more frequent military incursions into Taiwan’s water and air territories. Meanwhile, an anti-war post denouncing the regime’s war efforts has gone viral on Chinese social media platforms, resonating with countless Chinese citizens.

The post reads: “If the war breaks out, I will not go, and I will not let my children go. I am a person who lives at the bottom of society. No one remembers us in times of peace. Only in times of difficulty do they just begin to think of us. They say that when the country is in trouble, everyone needs to fulfill their duty. But they are not giving us the same treatment when they receive benefits or enjoy national privileges. Whoever wants to go to the war, go ahead. Anyway, I will not go, and I will not let my children go.”

Epoch Times Photo
Chinese People’s Liberation Army cadets conduct bayonet drills at the PLA’s Armoured Forces Engineering Academy in Beijing on July 22, 2014. (Greg Baker/AFP/Getty Images)
The anti-war post has been reposted on various online platforms in mainland China, and many netizens shared similar views in their online comments.

One asked in a post: “The children and wives of high rank officials have all moved to the United States. Why should we, the common people, have to risk our lives [to go to war for them]?”

Another said in a post, “Give me a weapon and see who I will fire at. I will definitely target those who force me to go to the battlefield. I have no grudges against anyone else.”

A netizen named “Le Si” posted on the Quora-like platform Zhihu, “Those who have received more benefits from the country should be more active to join in the war.”

Epoch Times Photo
Customers dine near a giant screen broadcasting news footage of aircraft under the Eastern Theatre Command of China’s People’s Liberation Army (PLA) taking part in a combat readiness patrol and “Joint Sword” exercises around Taiwan, at a restaurant in Beijing, China, on April 10, 2023. (Tingshu Wang/Reuters)
Some netizens also suggested that corrupt officials should be sent to the war, “Let urban management and agricultural management personnels go first!”

In another post on Zhihu, a netizen named “Thinking Slowly about the World” shared his views on the reasons why “unwilling to fight for the country” has resonated with so many Chinese people.

“First, the abuse of power and mistreatment of people by agricultural management, urban management, and even traffic police have caused significant negative impact, especially the agricultural management personnels who offended at least 60 percent of the public.”

The second reason is the huge disparity between the rich and poor in Chinese society, the netizen wrote, “such as the COVID-19 PCR testing product companies using the pandemic to make tens of billions of dollars.”

The third reason is the communist officials’ mass corruption, the post said. “They use their power to benefit their cronies, which is disgusting. That’s why some netizens asked, ‘Who are we going to defend? To defend ‘young master’ Zhou or to defend the ‘arctic catfish’ with nine-figure savings?’”

Zhou refers to Zhou Jie, the son of a Chinese Communist Party (CCP) official in Jiangxi Province who once flaunted his wealth on social media, saying that the tea he drank cost 200,000 yuan a catty (about $22,000/lb).

The “arctic catfish” is the name used by Chinese on social media for the granddaughter of a retired Shenzhen city official who is now studying in Australia. She bragged on social media that her family have nine-figure savings, all of which are provided by the common Chinese people, which triggered public anger.

Continuous Sentiment
This is not the first time that the Chinese public has expressed anti-war sentiment towards the CCP’s war mobilization efforts and war propaganda.

In February, mainland Chinese media published an article online, which read: “If the motherland has the need, will you go to the front line?” The report claimed that 94 percent interviewees were “willing to come forward.”

However, posts in the comment section of the article showed overwhelmingly the opposite response. Chinese netizens posted one after another: “Let the officials go first.”

“If I get conscripted, then I will rebel since I’ll have a gun in my hand.”

Epoch Times Photo
Chinese People’s Liberation Army (PLA) soldiers assembling during military training at Pamir Mountains in Kashgar, northwestern China’s Xinjiang region, on Jan. 4, 2021. (STR/AFP via Getty Images)
The CCP has taken a series of actions to prepare for war, most likely to invade Taiwan and repel the United States and Japan who would come to Taiwan’s aid.

The CCP has implemented new military Reserve Personnel Law on March 1, which raised the upper age limit for various ranks in China’s reserve forces, from soldiers to officers, up to 60 year-old.

The Chinese regime also passed a resolution on Feb. 24 to adjust the application of some provisions of Criminal Procedure Law for the military during wartime, which took effect on Feb. 25. The new adjustments took aim at “crimes of a military nature” that might pose a threat to the CCP, such as “defection and desertion” in the military during wartime.

The resolution also outlined a legal basis for the CCP to declare martial law if needed for domestic control.

China affairs commentator Li Dayu said of the anti-war post during his NTD News talk show on April 29: “If what the regime does really represents the will of the people, and its rule is really recognized by the people, people will not talk about it like this,” he said of the CCP.

“Starting an unrighteous war, what they will get is people’s indifference, and people will even help the other side.”

Li Yun contributed to this report.
Title: WSJ: China's deeper economic struggles
Post by: Crafty_Dog on May 30, 2023, 04:56:24 AM
Deeper Economic Struggles
Ballooning debt, tepid consumption and worsening relations with the West to weigh on growth, economists say
By Stella Yifan XieFollow
 and Jason DouglasFollow
May 30, 2023 12:01 am ET

China’s era of rapid growth is over. Its recovery from zero-Covid is stalling. And now the country is facing deep, structural problems in its economy.

The outlook was better just a few months ago, after Beijing lifted its draconian Covid-19 controls, setting off a flurry of spending as people ate out and splurged on travel.

But as the sugar high of the reopening wears off, underlying problems in China’s economy that have been building for years are reasserting themselves.

The property boom and government overinvestment that fueled growth for more than a decade have ended. Enormous debts are crippling households and local governments. Some families, worried about the future, are hoarding cash.

Chinese leader Xi Jinping’s crackdowns on private enterprise have discouraged risk-taking, while deteriorating relations with the West—exemplified by a new campaign against international due-diligence and consulting firms—are stifling foreign investment.

Economists say these worsening structural problems are hobbling China’s chances of extending the growth miracle that transformed it into a rival to the U.S. for global power and influence.

Instead of expanding at 6% to 8% a year as was common in the past, China might soon be heading toward growth of 2% or 3%, some economists say. An aging population and shrinking workforce compound its difficulties.

China could drive less global growth this year and beyond than many business leaders expected, making the country less important for some foreign companies, and less likely to significantly surpass the U.S. as the world’s biggest economy.

“The disappointing recovery today really suggests that some of the structural drags are already in play,” said Frederic Neumann, chief Asia economist at HSBC.

China’s economy expanded at an annual rate of 4.5% in the first quarter, boosted by the end of Covid-era restrictions.

Yet more recent signals suggest the revival is ebbing. Retail sales rose 0.5% in April compared with March. A bundle of data on factory output, exports and investment came in much weaker than economists were expecting.

More than a fifth of Chinese youths aged 16 to 24 were unemployed in April. E-commerce companies Alibaba and JD.com reported lackluster first-quarter earnings. Hong Kong’s Hang Seng Index, dominated by Chinese companies, is down 5.2% year to date, and the yuan has weakened against the U.S. dollar.

Most economists don’t expect China’s problems to lead to recession, or derail the government’s growth target of around 5% this year, which is widely seen as easily achievable given how weak the economy was last year.

McDonald’s and Starbucks have said they are opening hundreds of new restaurants in China, while retailers including Ralph Lauren are launching new stores.

A boom in electric-vehicle production allowed China to surpass Japan as the world’s largest exporter of vehicles in the first quarter. Beijing’s industrial policies and China’s manufacturing prowess mean it is still finding ways to succeed in some major industries.

“We still have confidence in the long-term growth story of China,” said Phillip Wool, head of research at Rayliant Global Advisors, an asset manager with $17 billion under management. He said the country’s transition to one that relies more on domestic consumption instead of exports will help keep it on track.

Still, many economists are growing more worried about China’s future.

The big hope for this year was that Chinese consumers would step up spending, as the main drivers of China’s past growth—investment and exports—languish.

But while people are spending somewhat more after almost three years of tough Covid-19 controls, China isn’t experiencing the kind of surge other economies enjoyed when they emerged from the pandemic.

Consumer confidence is low. More important, some economists say, is that Beijing hasn’t been able to meaningfully change Chinese consumers’ long-running propensity to save rather than spend—a response to a threadbare social-safety net that means families must sock away more for medical bills and other emergencies.


Chinese household consumption accounts for around 38% of annual gross domestic product, according to United Nations data, compared with 68% in the U.S.

“Consumer-led growth has always been a bit of an aspirational target” for China, said Louise Loo, China lead economist in Singapore at Oxford Economics, a consulting firm. Now, it might be even harder to achieve, she said, given how cautious Chinese consumers are coming out of the pandemic.

Although Beijing is trying to make it easier to borrow this year, lending data indicate households prefer to pay down debt than take on new loans.

In March, Zi Lu dipped into her dowry and paid off the remaining 1.2 million yuan, equivalent to about $170,000, on her mortgage for an apartment she bought in Shanghai two years ago. Working for an e-commerce retailer, she said sales have been underwhelming this year. Lu said she is anxious and wants to reduce her debt burden.

“I’m scared of getting laid off out of the blue,” she said.

Also looming over the economy is its massive debt pile.

Between 2012 and 2022, China’s debt grew by $37 trillion, while the U.S. added nearly $25 trillion. By June 2022, debt in China reached about $52 trillion, dwarfing outstanding debt in all other emerging markets combined, according to calculations by Nicholas Borst, director of China research at Seafarer Capital Partners.

As of last September, total debt as a share of GDP hit 295% in China, compared with 257% in the U.S., data from the Bank for International Settlements shows.

Viewing the debt buildup as a threat to financial stability, Xi has made deleveraging a centerpiece of his economic policy since 2016, weighing on growth.

To help deflate the country’s housing bubble, regulators imposed strict borrowing limits for property developers from late 2020. Property development investment fell 5.8% in the first quarter of this year despite policy efforts to stem the pace of the slide.


Two-thirds of local governments are now in danger of breaching unofficial debt thresholds set by Beijing to signify severe funding stress, according to S&P Global calculations. Cities across the country from Shenzhen to Zhengzhou have cut benefits for civil servants and delayed salary payments in some cases for teachers.

These problems are deepening when China’s appeal as a destination for foreign firms is waning, data show, as tensions rise with the U.S.-led West.

Foreign direct investment into China tumbled 48% in 2022 compared with a year earlier, to $180 billion, according to Chinese data, while FDI as a share of China’s GDP has slipped to less than 2%, from more than double that a decade ago.

Competition for investment with countries including India and Vietnam is heating up as firms seek to diversify supply chains, partly in response to the risk of disruption from conflict between the U.S. and China.

Jens Eskelund, president of the European Union Chamber of Commerce in China, said uncertainty over China’s long-term economic prospects is another factor in companies’ investment decisions.

“Naturally, it dampens the willingness to go out and invest in additional capacity if you are not super optimistic about the economic outlook,” he said.

Reforms to foster more productive, private-sector activity have stalled under Xi, who is placing greater emphasis on security than economic growth. Beijing has tightened regulation of sectors including technology, private education and real estate, leaving many business owners unwilling to invest more.


In the first four months of this year, fixed-asset investment made by private firms grew 0.4% from a year earlier, compared with 5.5% growth in the same period in 2019.

Chinese leaders have dialed up rhetoric to reassure entrepreneurs and investors. Li Qiang, China’s No. 2 official and new premier, said in March that China will open further to foreign players, and told Communist Party officials to treat private entrepreneurs as “our own people.”

Economists are split over whether policy makers, who have held off on launching large-scale stimulus as they did in 2008 and 2015, will resort to more aggressive stimulus now. Some, including economists from Citigroup, expect China’s central bank to cut interest rates in the coming months to lift sentiment.

Others say that Beijing’s restraint stems from fear of compounding already-high debt levels, and that more stimulus might do little to trigger demand for credit anyway.

Jeff Bowman, chief executive of Cocona, which makes temperature-regulating materials used in apparel and bedding, said he is still optimistic about China. He said that during a recent two-week business trip to Taiwan and China, customers who were focused on China’s domestic market were far more upbeat than their counterparts exporting to the U.S. or Europe, who he said “are hurting for sure.”

He said that Cocona, based in Boulder, Colo., plans to set up a subsidiary in China to expand its business there.

But many analysts still wonder where the growth will come from.

“The big question is, have we reached the point where awareness of the structural slowdown is becoming a near-term issue for confidence? Then it’s a bit of a vicious cycle,” said Michael Hirson, head of China research at 22V Research, a New York-based consulting firm.

Write to Stella Yifan Xie at stella.xie@wsj.com and Jason Douglas at jason.douglas@wsj.com
Title: China economy in trouble
Post by: ccp on June 02, 2023, 06:56:15 AM
listened to John Batchelor show last for short time
missed a lot of it

guest was telling John how the Chinese consumer had reduced spending
which China has relied on for the economy - even on mundane items like detergent

plus CCP had made poor investments overseas losing hundreds of billions

tried to find podcast on line

will post if I find it
Title: Re: China
Post by: Crafty_Dog on June 02, 2023, 06:37:49 PM
Malinvestment is broad and deep.
Title: Youth unemployment rate high
Post by: Crafty_Dog on June 24, 2023, 12:38:52 PM
https://www.theepochtimes.com/in-depth-chinas-economy-is-faltering_5329514.html?utm_source=China&src_src=China&utm_campaign=uschina-2023-06-24&src_cmp=uschina-2023-06-24&utm_medium=email
Title: Re: Youth unemployment rate high
Post by: G M on June 24, 2023, 01:14:32 PM
https://www.theepochtimes.com/in-depth-chinas-economy-is-faltering_5329514.html?utm_source=China&src_src=China&utm_campaign=uschina-2023-06-24&src_cmp=uschina-2023-06-24&utm_medium=email

https://amp.scmp.com/news/china/military/article/3225127/can-china-fix-youth-unemployment-woes-military-recruitment-drive
Title: Re: China
Post by: Crafty_Dog on June 24, 2023, 01:39:05 PM
A tempting linkage indeed!
Title: RANE: Demography and China's Geopolitical Challenges
Post by: Crafty_Dog on July 05, 2023, 07:59:28 AM
How Geopolitical Challenges Complicate China's Demographic Future
undefined and Asia-Pacific analyst at RANE
Nate Fischler
Asia-Pacific analyst at RANE, Stratfor
Jul 5, 2023 | 14:52 GMT





An elderly man and woman are pushed in wheelchairs along a street in Beijing, China, on May 11, 2021.
An elderly man and woman are pushed in wheelchairs along a street in Beijing, China, on May 11, 2021.
(Photo by WANG ZHAO/AFP via Getty Images)

Editor's note: This column is the conclusion to a series that explores China's demographic challenges. In parts one, two, three, four and five, we examined China's retirement, pension, financial and labor systems, as well as China's geographic divides. This final section outlines how external factors and geopolitics complicate the picture.

China's population is forecast to almost halve by the end of the century. While no country has attempted to economically overcome a population decline of this magnitude, the previous parts of this series have argued that China can surmount the risks of its shrinking population if it passes necessary (and sometimes painful) policies. These policies would aim to manage China's retirement and social security systems, the suboptimal relationship between real estate and capital markets, labor mismatch, geographic divides, and the transition from a middle-income to a high-income economy.

Nevertheless, there is no demographic or economic model for China's road ahead, especially in the face of geopolitical circumstances that are sometimes well beyond China's direct control. Chinese policymakers have staked the country's assertive geopolitical strategy on the assumption of a declining West and an ascendant China, but demographic issues and slowing economic growth suggest that this assumption may be flawed. This exposes a gap between strategic objectives and real capacity that spells risk to China's development.

Demographics and the Military
China's workforce peaked in 2011. Since then, China's labor pool has continued to shrink at an accelerating rate, and the total populations of the United States and its allies, which already total 70% of China's, are forecast to reach parity with China's around 2050. What's more, the population gap between the United States and China will likely shrink to a relatively small 400 million (from around 1.1 billion currently) by 2100. Though this timeframe is beyond the scope of immediate concerns, it speaks to the notion that time is no longer on China's side.

One way this shrinking population will affect China's strategic goals (beyond the economic implications discussed in previous parts of this series) is by lessening the conventional manpower available for the country's still untested armed forces. This development will put even more pressure on the country to develop its high-tech sector. China has already likely achieved technological superiority over the United States in certain areas, such as hypersonic missiles, but Beijing will have to make even greater technological gains in the military space to compensate for its waning populace.

This time crunch has also contributed to Chinese President Xi Jinping's distinct foreign policy choices, such as a slow strategic and rhetorical retreat beginning around 2014 from the longstanding "hide your strength, bide your time" mantra cultivated in the late 1970s. Under Xi, China has more actively pressed its territorial claims (Taiwan, the South China Sea and the East China Sea) and challenged perceived U.S. hegemony in the Asia-Pacific region and beyond. While this policy shift partially reflects China's vastly improved military capacity, it is also due to China's closing window of opportunity — both in terms of population decline and the diminishing economic dividend.

While this sense of urgency could lead China to take more drastic military actions, war would severely exacerbate the country's demographic challenges. Because the vast majority of Chinese families have only one child, a full-blown armed conflict could extinguish millions of Chinese bloodlines, creating an acute risk of social turmoil and widespread anti-government sentiment. This possibility will limit Beijing's willingness to pursue large-scale conflict, revealing how demographic decline is both a driver of and a constraint on China's geopolitical ambitions.

Pressure on the Social Contract
The Chinese social contract since the days of former leader Deng Xiaoping has been that the Party will provide economic prosperity if the people remain loyal and quiescent on political matters. To date, the government and populace have by and large upheld their ends of the bargain. However, the viability of this contract is declining since China can no longer rely on outsized economic growth to fuel an increase in living standards, leading to a projected new normal of 3-5% annual economic growth in the medium term. As the economy slows, socioeconomic inequalities will increase alongside sharpening geographic divides and regionalism. With enough strain, China's social contract could rip open, potentially leading to protests, unrest and, perhaps more consequentially, widespread doubt as to the Party's political legitimacy.

These domestic risk factors have previously contributed to government overthrow, which is a chief fear among policymakers. To forestall this possibility, Beijing will seek to enhance its legitimacy and create unity by increasingly emphasizing national security and Chinese nationalism. Utilizing a siege mentality, China will claim that the United States and its partners are attempting to contain China's growth, which, given that this is by and large the case, will not be a difficult idea to sell. The Party previously changed the focus of its social contract from revolutionary ideology under Mao Zedong to pragmatic economic development under Deng, showing that a fundamental shift in the source of the Party's legitimacy has worked before. However, even a successful transition of the social contract will happen incrementally and keep Beijing vulnerable to policy failures that may chip away at its legitimacy.

Tech Restrictions
In recent months, the United States has imposed export controls to block China from accessing technology and machinery used to produce semiconductors and has convinced some of its allies — such as Japan and the Netherlands — to follow suit. Given that China lags behind in cutting-edge semiconductor manufacturing equipment capacity — and has little recourse to circumvent these export controls for the time being — these restrictions are severely inhibiting China's semiconductor sector and, by extension, its plans for high-tech innovation intended to spearhead the country's economic transition. Moreover, the United States is considering similar export controls on artificial intelligence (AI) and cloud computing technologies, and the European Union is discussing its own set of restrictions on technology exports to China. This suggests that supply chain resiliency will play a larger role in Chinese foreign affairs and policymaking going forward in an attempt to bypass and neutralize these Western-led restrictions.

These export controls are also compounding China's employment struggles. China's youth unemployment rate hit a new high of 20.8% in May, revealing that there is a significant discrepancy between the increasing number of highly educated Chinese workers and the number of jobs that meet their qualifications. With Western nations constraining the growth of China's technology sector, this trend will likely only grow, further straining China's social contract. However, Western countries' attempts to cut off China's access to emerging technologies will make it easier for Beijing to emphasize the importance of national security as that social contract adopts a new focus.

International Leadership
An additional geopolitical challenge for China is resource scarcity, particularly with respect to its ever-growing demands for fuel and other energy sources, as well as high-protein foodstuffs. Because China does not have enough of these resources within its borders to ensure a smooth economic transition, it will look to increase its footprint and investments abroad, partially via Beijing's Belt and Road Initiative (BRI). BRI investments enable China to expand its influence in younger (and primarily less developed) Eurasian countries with lower labor costs, while also linking the region to tertiary Chinese territories in Tibet, Xinjiang and Yunnan. In addition to bolstering its relationship with Russia, which has become a source of cheap hydrocarbon products following its invasion of Ukraine, China is making significant inroads into Central Asia where it can import oil and gas.

To ensure it has enough resources to cope with its aging population, China will also look to leverage trade routes beyond its immediate periphery by forming and leading international institutions and groupings, such as the Regional Comprehensive Economic Partnership (the largest trade pact in the world) and the BRICS forum. In doing so, Beijing will seek to insulate its supply chains from potential shocks to its bilateral economic relationships amid its growing rivalry with the United States — particularly in light of the sanctions Washington and its allies have imposed on Russia following its Ukraine invasion; such sweeping Western sanctions would be far more catastrophic for China, a net importer of food and energy, and could lead to devastating food and energy shortages.

In addition, China's desire to challenge the United States as the world's only superpower has pushed it to cultivate economic partnerships in Central, South and Southeast Asia and beyond — not just through engagement, but by providing an alternative development and authoritarian governance model to third countries. However, these efforts could be constrained, as China also eschews formal military alliances as both a matter of policy and its political culture, which isolates the country despite its vast network of global economic partnerships.

Indeed, China has made efforts over the past year to raise its international profile as a responsible stakeholder and peacemaker. In 2023 alone, China brokered detente between Saudi Arabia and Iran, sent a mediator to attempt to broker peace in Ukraine and put forward a new peace proposal for the Israel-Palestine conflict. These initiatives reflect Beijing's desire to secure and multiply partnerships (but not alliances), and it is doing so with particular urgency to make up for lost time following three years of intense isolation during the country's "zero-COVID" policy.

Conclusion
China's population decline is coming amid a long list of other interrelated challenges, but Chinese leaders are not sitting on their hands. Though some policies will be less successful than others (such as Beijing's pronatalist initiatives), the crux of the matter will be transitioning China's economy to high-income status via the potential avenues laid out in this series while mitigating external threats to its development.

But China's recent economic slowdown — combined with its shrinking and aging population — has cast doubt on assumptions about a declining West and an ascendant China. As China pursues its goal of challenging the United States as the world's only superpower, the divergence between its growing geopolitical ambitions and shrinking demographic strength will invite new challenges from potential adversaries that Beijing will struggle to surmount.
Title: China: Xi thinks he's God
Post by: DougMacG on July 14, 2023, 05:39:11 AM
https://www.realclearpolitics.com/articles/2023/07/13/rep_gallagher_chinas_xi_trying_to_replace_god__149490.html#2
Title: ET: Chinese economy facing big challenges
Post by: Crafty_Dog on July 17, 2023, 10:44:32 AM
https://www.theepochtimes.com/analysis-chinas-economy-is-facing-its-biggest-challenge-in-decades_5133409.html?utm_source=China&src_src=China&utm_campaign=uschina-2023-07-17&src_cmp=uschina-2023-07-17&utm_medium=email
Title: Chinese economy, not what it used to be
Post by: DougMacG on July 31, 2023, 04:27:06 AM
Signs of deflation are becoming more prevalent across China, heaping extra pressure on Beijing to reignite growth or risk falling into an economic trap it could find hard to escape. While the rest of the world tussles with inflation, China is at risk of experiencing a prolonged spell of falling prices that—if it takes root—could eat into corporate profits, sap consumer spending and push more people out of work. Its effects would ripple across the globe, easing prices for some products that countries like the U.S. buy from China, but would also deprive the world of important Chinese demand for raw materials and consumer goods, while also creating other problems. Some economists see alarming parallels between China’s current predicament and the experience of Japan, which struggled for years with deflation and stagnant growth. (Source: wsj.com)
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Despite China’s government throwing just about everything in its policy basket at the real estate crisis, the sector continues to deteriorate, with sluggish sales, a growing list of unfinished projects, and mounting debt repayments. Consequently, more developers than ever are on the edge of defaulting on their maturing bonds estimated to be worth over 2 trillion yuan ($357 billion). Recent revelations indicate that the crisis, which is stretching into its third year, has now spread to state-owned developers, whose deep pockets had largely insulated them from the chaos, as well as some of the largest private developers. These include some of the biggest names. For instance, earlier this month, state-backed Sino-Ocean Group Holding Ltd. told creditors it’s been working with two major shareholders on its debt load. The nation’s second-largest developer by sales, China Vanke Co., said that the home market is “worse than expected.” Meanwhile, a key unit of Dalian Wanda Group Co. warned creditors of a funding shortfall of at least $200 million for bonds coming due. And to cap things off, Country Garden Holdings Co. Ltd., China’s largest developer, reported its first annual loss since its Hong Kong IPO in 2007. Source: caixinglobal.com
Title: NRO: Chinese economy in trouble
Post by: Crafty_Dog on August 08, 2023, 06:26:51 AM

   

Morning-Jolt.png
WITH DOMINIC PINOAugust 07 2023

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NR PLUS MEMBER FULL VIEW
China Is Not ‘Eating Our Lunch’ Economically

This is Dominic Pino filling in for Jim Geraghty, who is out on vacation. I’ll be back tomorrow, and then Noah Rothman will take over Wednesday through Friday.

On the menu today: China’s weak economy, and what it should teach us about the failures of central planning.

China’s Financial Woes

You wouldn’t know it from many American politicians’ rhetoric, but China’s economy is in big trouble right now. The country’s economy is setting off alarm bell after alarm bell, and its supposedly genius industrial planning is coming undone.

Let’s survey some recent facts about China’s economic performance.

China only loosened its Covid protocols in December, well after the rest of the world got back to normal. The totalitarian control of everyday life spooked many businesses operating in China and spurred them to seek alternatives. And the reopening of the Chinese economy has not gone as well as the reopening of Western economies.

After a brief surge in the early part of this year, the Chinese recovery is sputtering. “China’s consumer-driven recovery is showing more signs of losing momentum as spending slows on everything from holiday travel to cars and homes, adding to expectations for more stimulus to support the economy,” reported Bloomberg on June 25. “The rebound in consumption after China shed its Covid controls has propelled growth so far this year, but confidence is weak and evidence is mounting that the economy may need more help.”

To that end, while most other central banks around the world are raising interest rates in response to inflation, China’s central bank is cutting rates and worried about deflation. “China’s consumer prices did not rise at all in the year to June. The country’s GDP deflator, a broad measure of the price of goods and services, fell by 1.4% in the second quarter, compared with a year earlier. That is the biggest decline since 2009,” reported the Economist on July 27.

Falling prices might sound like a good thing, but it’s bad for an economy trying to catch up to the West. The Economist explains:

In catch-up economies, productivity grows briskly in industries, like manufacturing, that trade goods across borders. Because output per worker rises quickly, firms can afford to pay their workers more without raising their prices, which are pinned down by global competition. Meanwhile, in sectors such as services, which are not much traded across borders, productivity grows more slowly. Service firms must nonetheless compete with manufacturing for the country’s workers. That obliges them to raise their wages to attract recruits. Higher wages, in turn, force these firms to raise prices. These price hikes are required because productivity has not kept up, and possible because services are sheltered from global competition. The hikes also make the country more expensive: the price of haircuts rises in sympathy with the growing wages of increasingly productive manufacturing workers.

As a result of the weakness in prices and slowing growth, the Economist says that Goldman Sachs projects that China’s economy will be 67 percent the size of the United States’ this year, down from 76 percent in 2021. So China is losing ground relatively quickly.

The Chinese stock market is flagging. “The country’s benchmark CSI 300 index lost around a fifth of its value last year, and has risen much less than major indexes in the U.S., Japan and elsewhere in 2023,” reported the Wall Street Journal on July 31. “That is creating a sense of despair among the office workers, civil servants and other ordinary citizens who are responsible for the bulk of trading in China’s stock market.” About 200 million individual investors trade on Chinese markets, and many of them are moving their money to savings accounts despite the central bank’s rate cuts meaning lower rates of return there. A low but positive rate of return is better than a negative one.

The Journal also reported on August 3 that private-equity funds are afraid of investing in China: “U.S. dollar fundraising by private-equity firms that invest mainly in China has all but dried up. The days of large and easy profits are also over, as the country’s internet gold rush has ended. Chinese companies are finding it increasingly hard to go public in Hong Kong and the U.S., limiting many private-equity funds’ exit strategies. Chinese funds’ returns for the last two years have also disappointed investors.” The average annual return for China private-equity funds in 2022 was negative 5.6 percent.

Again, despite lower interest rates, home sales in China are cratering. That’s especially bad in China’s overly real-estate-dependent economy. Home sales from the top 100 developers fell by 33.1 percent year-over-year in July. Developers are worried about default, given the country’s ongoing credit crisis.

“China’s housing market is so bad that homebuyers appear to be flocking overseas to purchase a home in the US,” reported Business Insider on August 3. “Chinese buyers represented 13% of foreign buyer home purchases in the US, up from 6% of foreign buyer purchases last year.” Most of these purchases were of relatively expensive homes, and they were mostly for living in, not renting. That could mean wealthy Chinese are increasingly bearish about their country’s prospects and are seeking alternatives before things get even worse.

Net foreign direct investment in China hit its lowest point in at least 25 years in the second quarter. Bloomberg added:

The slump could be a lot deeper in reality than what both datasets show, analysts including Logan Wright of Rhodium Group wrote in a July report. That’s because the data increasingly measures purely financial transactions — including those by Chinese state-owned companies, rather than foreign corporate decisions, they said.

Youth unemployment is at a record high. The 16–24-year-old unemployment rate was 21.3 percent in June. (U.S. 16–24 unemployment was 7.5 percent in June.) Large numbers of unemployed young people, especially young men, have historically been a cause for concern in authoritarian countries. When the economy is delivering in a poor country, people are more willing to overlook an abusive government. When the economy stops delivering, dictators could be in trouble.

The mighty manufacturing sector is contracting. “China’s factory activity contracted for a fourth consecutive month in July, while non-manufacturing activity slowed to its weakest this year as the world’s second-largest economy struggles to revive growth momentum in the wake of soft global demand,” reported CNBC on July 30. And that’s based on data from the Chinese government’s National Bureau of Statistics, so the real picture might be even worse.

One of the main arguments U.S. politicians use for steel protectionism is that the Chinese government supports its steel industry and reaps great rewards for doing so. Not so much. “China’s leading steelmakers warned the industry faces a very challenging second half as demand disappoints, profitability lags, and pressure to cut costs mounts in the world’s top producer,” reported Bloomberg on July 29. Profitability has lagged for almost a year, and things are not projected to get better in the near future.

The other industry politicians like to talk about related to China, semiconductors, is another example of Chinese failure. China’s industrial-policy efforts in that industry, despite multiple attempts and billions of dollars spent, have yet to yield fruit, as the country still imports about 90 percent of the chips it needs.

All of this comes on top of the long-term problems caused by the one-child policy, which might go down in history as the worst government policy ever. The survival of the communist regime might depend on reversing the declining population that it brought about through its barbaric prohibition on having more than one child. The policy was enforced through decades of abortion and sterilization; now, the government is trying to get people to have more kids. Milton Friedman joked that if you put the government in charge of the Sahara Desert, there would be a shortage of sand. It turns out that if you put communists in charge of China, there will be a shortage of people.

It’s vital for the U.S. to take China seriously. Military, cybersecurity, and espionage issues are extremely important for the U.S. to get right, and the defense of Taiwan should be top of mind. Part of taking China seriously, though, is relying on facts, not rhetoric. China is not “eating our lunch,” as Joe Biden has said, and the country’s economic record is not a reason to jettison free-market principles. A country with newly built, nearly vacant cities is not a model for economic policy.

As Chinese economist Weiying Zhang wrote in his 2021 book, Ideas for China’s Future, “Imagine seeing a person without an arm running very fast. If you could conclude his speed comes from missing an arm, then you naturally will call on others to saw off one of your own arms. That would be a disaster. . . . Economists must not confuse ‘in spite of’ with ‘because of.’” China’s past economic successes have been in spite of its government’s penchant for planning, not because of it.
Title: Reuteres: China tips into deflation
Post by: Crafty_Dog on August 09, 2023, 05:53:56 AM
https://www.reuters.com/world/china/chinas-consumer-prices-swing-into-decline-deflation-risks-build-2023-08-09/?utm_source=Sailthru&utm_medium=Newsletter&utm_campaign=Daily-Briefing&utm_term=080923
Title: WSJ: Why millions of young Chinese are unemployed
Post by: Crafty_Dog on August 09, 2023, 12:51:38 PM
Second


TUESDAY, AUGUST 8, 2023
8/8/2023 4:24:00 PMShare This Episode
Why Millions of Chinese Young People Are Unemployed
More than one in five young people in China are jobless. The government blames college graduates, insisting that their expectations have gotten too high. WSJ’s Brian Spegele unpacks why new grads are holding out and what it could mean for China’s economy.


This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Jessica Mendoza: China's once buzzing economy is a shadow of what it used to be. Analysts projected it would come roaring back once COVID lockdowns eased up. But that hasn't been the case, and the job market for new graduates is especially bleak. Many of them have taken to social media to share their struggles through day in the life videos.

Speaker 2: (foreign language). Lately, life is like this. Either I'm interviewing or on the way to interviewing. When I had left home, my family asked, "What kind of a job do you want?" That time, I still had ideals and goals. Now I don't have any standards as long as I can make money. I want to ask you all, when you all are looking for jobs, is it also this hard?

Jessica Mendoza: More than 20% of young people between the ages of 16 and 24 who want a job, don't have a job. Our colleague, Brian Spiegel, based in Beijing, just came back from a reporting trip where he tried to figure out why.

Brian Spiegel: The most surprising thing I took from this trip is that it's not that jobs don't exist in China. Jobs do exist in China. The real crux of the matter is that there's a disconnect between the sorts of jobs that young people want today in China, especially college graduates, and the sorts of jobs that are available to them out in the market.

Jessica Mendoza: Welcome to the Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, August 8th. Coming up on the show, millions of young people in China can't find the work they want. To get a sense of what's going on with new graduates in China, Brian traveled to a city called Hefei. Around 9 million people live there. Brian says it's kind of like a Cincinnati with way more people.

Brian Spiegel: We wanted to go to a place that was not one of the wealthier Chinese cities out there like Beijing where I live, or Shanghai or Shenzhen for that matter. We wanted to go to a place to kind of understand what does it feel like to be an ordinary Chinese at this moment of particularly a young person. One day we went to a recruiting site and this recruiting site specialized in finding basically factory jobs, factory work, assembly line work for people of any age. And we go, and I'm expecting it's going to be completely rammed with people given the state of the economy and everything that I'd read about unemployment, youth unemployment and the place was entirely empty, and I'm kind of scratching my head about this.

Jessica Mendoza: That empty recruiting site reflects the gap between the kinds of jobs that students want and the jobs that are actually available in China today. And the gap is growing.

Brian Spiegel: Just to take university students alone, in 2023, the government estimates 11.6 million people are going to graduate from Chinese colleges. And if you compare that to just 2019, that number was only 8.2 million. For so many years, the Chinese government has been prioritizing the education of young people trying to move its economy up the value chain into higher skilled higher knowledge work. And so people heeded those calls and they went to college.

Jessica Mendoza: Many college grads chose fields that would get them into high paying industries. In China, that often means white collar jobs in the private sector or inside one of its huge state-owned companies.

Brian Spiegel: What the data shows is that the tech space, generally, according to one survey from a recruitment firm, it showed that 25% of undergrads wanted to go work in the tech space broadly defined. The next highest category had less than half of the same proportion. So what it shows is that not surprisingly ambitious people in China, just like they want to go work for Google or whatever it is in the United States, they wanted to go work for the hot tech company in China too.

Jessica Mendoza: But when COVID hit, the Chinese government under President Xi Jinping imposed years long restrictions that really hurt the economy. On top of that, Xi also implemented policies reign in growth of the very same industries that students wanted jobs in.

Brian Spiegel: The government of Xi Jinping had been on a very aggressive regulatory campaign against all sorts of private businesses, in particular businesses in the consumer technology space, big internet platforms. The property sector was being reigned in.

Jessica Mendoza: All that made the job hunt harder for new graduates. On his reporting trip, Brian talked to one of them.

Brian Spiegel: We met Leo (inaudible). We met her in Hefei at a coffee shop in Hefei. She graduated from college this spring.

Jessica Mendoza: Leo is 23 and she went to university in Hefei. She wanted to study animal sciences, but her parents convinced her to get a degree in engineering instead. And how did her parents respond when she agreed to study engineering?

Brian Spiegel: Yeah, I think they were all happy and proud of where she was going. It really looked like a pretty close to a sure bet that things were going to turn out well.

Jessica Mendoza: But then while she was in school, COVID happened, and when she graduated, the job hunt was rough.

Brian Spiegel: She told us she had an interview at a state telecommunications company that she was excited about. It didn't happen. Then she had another one at the giant appliance maker in China, also didn't happen.

Jessica Mendoza: Eventually Leo settled for an internship at a company that sold cell phones at a local shopping mall, not the engineering job she expected.

Brian Spiegel: And she said like, well, this is not exactly why I studied engineering. And she found herself kind of scratching her head saying, well, this isn't what I studied to do. Why did I spend the last three years, what did I do all that studying for? The other thing that happened in Leo's case that was kind of interesting was when she was a trainee, she was getting paid the Chinese equivalent of like $630 a month, which doesn't sound very much in the United States, but you could live off of it in Hefei. Well, as she gets to the end of her traineeship internship thing, they offer her a full-time job. But as part of that, they cut her base salary in half and they say, the rest of your salary can come from commissions. And she's doing the math in her head having seen the local economy saying, there's no way I'm going to get even close to making the amount of money that I was making as a trainee.

Jessica Mendoza: Leo decided not to accept the offer and she left the company. Her family is supporting her while she considers her next steps.

Brian Spiegel: It's important to remember that the young people in China today, the sort of people who are graduating from college, many if not the vast majority come from single child families as a result of China's one child policy. So parents in many cases have thrown everything into the success of their single child. And so if they're coming out of college and the parents have worked really hard and tough jobs for a long time for their kid to go to college, and they do and they come out and there's no job available, I think the parents, in many cases, they're okay. They don't want them to have the same difficult life that they had.

Jessica Mendoza: Right. It doesn't seem like progress.

Brian Spiegel: Yeah. Why would somebody who had studied so hard in the Chinese education system for so many years had been under pressure by their parents to go out and get the best job and to do them proud, why would they then be willing to fall back on a blue collar job? And that's when it began to hit me. In part, the phenomenon of youth unemployment today is a matter of expectations.

Jessica Mendoza: And the Chinese government has very different expectations than those of young graduates. How that friction is playing out, that's next. China's economy still depends a lot on manufacturing and exporting stuff to the rest of the world, but young people just aren't rushing to take factory jobs anymore. So publicly, what has the government been saying about the job situation?

Brian Spiegel: The government's message to young people is pretty clear. It's go and get a job. One of the slogans they like to use is find a job first, find a career later. When you read newspapers like The People's Daily, which is the Communist party kind of mouthpiece or flagship news newspaper, you understand that their message to young people is you're not too good for blue collar jobs. And the contributions you can make to society on working on a factory line are a lot better than if you're sitting on your parents' sofa.

Jessica Mendoza: Your duty essentially is to be working, not to be waiting for the right job to come up.

Brian Spiegel: And I think when young people see this, there's a lot of scoffing about all this. There's a lot of people feeling like the party's out of touch when they make statements like this that they don't recognize how difficult the job market is.

Jessica Mendoza: But the government is also taking action. They want to get young people working, doing any kind of work. They're offering subsidies to companies to hire new grads and rolling out loans to young people who want to start a business. Why does this situation matter so much to the Chinese government?

Brian Spiegel: A stable economy and a stable job situation are so fundamental to Xi's vision of making China a much more powerful country. But if you're not able to jumpstart people's careers early on, there can be so many knock on effects from that. What we're seeing in China, for example, is that if you don't have a stable job or stable income, you're going to be much less likely to go out and buy property. That puts pressure on the real estate market, which can then create financial risks for China. So you can begin to get a flavor of some of the economic costs of the fact that many young people in China are unemployed today.

Jessica Mendoza: So there are clear economic consequences, but there could also be political ones.

Brian Spiegel: For the communist party, the risk is that millions of young people end up living on the fringes of society. They're a bit bored without a clear direction. We're talking about such huge numbers of people, millions and millions of people. I think it's more than 11 million people are graduating from college in China this year. So you have to be careful about how much you generalize. But that's at least what I found in Hefei when I was there talking to people. At what point do these people begin to get disgruntled about how they're doing in life, about their prospects for the future? Already we see many Chinese scholars talking about the risks to social stability of young people not having jobs.

Jessica Mendoza: Does it seem like there's a future where the government just makes young people go to work whether they want to or not?

Brian Spiegel: There is no evidence of the government forcing anybody to take a job, which might've happened 50 years ago, or under (inaudible), for example, and I would find it highly unlikely they would try to implement a system like this.

Jessica Mendoza: And so what does this situation mean for China?

Brian Spiegel: It's one more important data point that the Chinese economy is facing serious issues right now. What the evidence shows is that the youth unemployment problem is at least in part a reflection of a lack of confidence and a lack of hiring, especially by the private sector. So the question to my mind will be what Xi Jinping do next. Up until this point, there's been a high priority placed on ideology. Does he take a more pragmatic turn? I think as we've seen many of the problems become much more pronounced in the Chinese economy, the Chinese government has said many things designed to shore up the confidence of business, to give them the confidence to invest, to hire young people, to grow their businesses for the future. But at the same time, it's really important to also note that many of the investors and economists that we speak to, they're really skeptical of empty promises.

Jessica Mendoza: That's all for today, Tuesday, August 8th. The Journal is a co-production of Gimlet and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
Title: Zeihan: China going down
Post by: Crafty_Dog on August 12, 2023, 07:32:57 AM


https://www.youtube.com/watch?v=j_m6RnCV-G0&t=1s
Title: George Friedman: The Chinese miracle that never was
Post by: Crafty_Dog on August 14, 2023, 06:04:31 AM
https://www.youtube.com/watch?v=doaXfyF2Sq0
Title: ET: China headed for decade of economic stagnation
Post by: Crafty_Dog on August 15, 2023, 07:33:16 AM
https://www.theepochtimes.com/mkt_app/china/analysis-china-is-heading-towards-a-decade-of-economic-stagnation-5459079?utm_source=China&src_src=China&utm_campaign=uschina-2023-08-15&src_cmp=uschina-2023-08-15&utm_medium=email&cta_utm_source=China&est=pufK5dRm5SCWYfULBlNjHjgaKc16RjyDbJvF1UZke5%2FBJ553Hdq8z3GZl1%2BSGK7rGKjL
Title: Evergrande files for bankruptcy in NY
Post by: Crafty_Dog on August 18, 2023, 11:22:40 AM
https://www.theepochtimes.com/mkt_app/china/chinas-evergrande-files-for-bankruptcy-in-new-york-5473817?utm_source=China&src_src=China&utm_campaign=uschina-2023-08-18&src_cmp=uschina-2023-08-18&utm_medium=email&cta_utm_source=China&est=KEJKbBVR7D2oWkcUVwmamVF1sx0Z3pLY4%2BoBXNpItBhlqL2C0AD6Y98YL0Y99JF5Hmk3
Title: Gertz: China nuc buildup and out
Post by: ccp on August 19, 2023, 08:52:50 AM
we've heard this before:

https://www.washingtontimes.com/news/2023/aug/16/no-let-china-nuclear-weapons-expansion-stratcom-ge/

Title: NRO on Evergrande's bankruptcy
Post by: Crafty_Dog on August 20, 2023, 12:42:25 PM
China: Never Grand

China’s Evergrande, the world’s most heavily indebted property company, has filed for Chapter 15 bankruptcy (a mechanism used in certain cross-border cases) in New York, a step designed to help its restructuring.

The Wall Street Journal’s Alexander Saeedy explains:

China Evergrande Group is seeking a U.S. court’s approval to restructure more than $19 billion in the company’s offshore debts, as the embattled property developer pushes forward on plans to complete one of the world’s largest and most complex debt restructurings…

[The] chapter 15 bankruptcy in New York…would recognize and give effect to the offshore proceedings for three Evergrande companies based in Hong Kong, the British Virgin Islands, and the Cayman Islands, respectively.

Court approval of the debt restructuring would make the deal legally binding in the U.S. and would close the door to any disputes against the plan that could be brought in America. Many of China Evergrande’s $19 billion in foreign bonds are governed by U.S. law.

Evergrande rose to become China’s second largest property developer, but it had built that position on the back of massive borrowing. Evergrande’s outstanding debt of $340 billion is, as Dominic Pino noted on Thursday, equivalent to about two percent of China’s GDP. Against that the company has assets supposedly worth $256 billion, although in situations such as this, assets have a way of being worth rather less than advertised. 

Not content with wild borrowing, Evergrande added some wild diversification to the mix. It has just sold a 28 percent stake in its electric vehicle (EV) manufacturer, Evergrande NEV as part of its effort to raise cash. That a heavily indebted property developer should have owned an EV maker in the first place was yet another warning sign, but there were plenty of others. Evergrande also owned (or owns), among other unexpected assets, fifteen “Fairyland” parks, aimed, Business Insider’s Matthew Loh reported back in 2021, “at promoting Chinese culture by using next-gen tech.” Loh links to a Wall Street Journal piece (also from 2021) in which the writers (Yoko Kobota and Liyan Qi) report that the theme parks involved “$100 billion in total investment, according to Journal calculations based on local-government numbers.” $100 billion! Perhaps inevitably Evergrande owned a soccer team. No less inevitable were the increasingly desperate measures taken by the company to keep afloat.

The Financial Times (September 20, 2021):

Crisis-hit Chinese property developer Evergrande used billions of dollars raised by selling wealth management products to retail investors to plug funding gaps and even to pay back other wealth management investors, according to executives of the company in Shenzhen.

Catastrophe had been on the way for a while, but what triggered the crisis at Evergrande was Beijing’s belated introduction in August 2020 of regulations — the Three Red Lines — designed to force a partial deleveraging of the hugely over-borrowed real estate sector (Evergrande was by no means the only culprit). Its other objective was to take some of the air out of a housing bubble which was not only intrinsically dangerous, but, by leaving too many people priced out of the market, risked creating social tension.

Evergrande defaulted on its dollar bonds in December 2021. It has not been the only property company to do so.

Writing in the Washington Post at the beginning of this year, Bloomberg’s Enda Curran looked back at how companies such as Evergrande had ended up in the position they had:

In 1998, China created a nationwide housing market after tightly restricting private sales for decades. Back then, only a third of its people lived in towns and cities. That’s risen to two-thirds, with the urban population expanding by 480 million. The exodus from the countryside represented a vast commercial opportunity for construction firms and developers. Money flooded into real estate as the emerging middle class leapt upon what was one of the few safe investments available, pushing home prices up sixfold over 15 years. Local and regional authorities, which rely on sales of public land for a chunk of their revenue, encouraged the development boom. This also helped the central government to meet its annual targets for economic growth, which often hit double digits.

The property craze was also powered by debt as builders rushed to satisfy expected future demand. The boom encouraged speculative buying, with new homes pre-sold by developers who turned increasingly to foreign investors for funds. Annual sales of dollar-denominated offshore bonds surged to $64.7 billion in 2020 from $675 million in 2009. Opaque liabilities made it hard to assess credit risks. The speculation led to astronomical prices, with homes in boom cities such as Shenzhen becoming less affordable relative to local incomes than London or New York.

Overall, housing prices were estimated to have increased six-fold over the fifteen years leading up to 2022.

But having acted too slowly, Beijing then (arguably) did too much too quickly. While the Red Lines were somewhat more flexible than their name might suggest (restrictions on further borrowing depended on how many Red Lines were crossed), the crackdown on borrowing created a liquidity squeeze (made worse by the Covid slowdown) that left many over-borrowed property companies with no chance of finding a way out, should one have ever existed. Adding to the misery has been the way that some property companies used preconstruction sales to finance current operations (that’s not unusual in this sector, but in China it was much less strictly regulated than elsewhere). Faltering new sales have meant that, in some instances, there has been no money to complete properties that had already been paid for in whole or in part.

Back to Curran:

Across China, millions of square feet of unfinished apartments have been left to gather dust. Economists at Nomura International HK Ltd. estimated in mid-July that Chinese developers had delivered only about 60% of the homes they pre-sold from 2013 to 2020. (Buyer protections commonly used abroad, such as escrow accounts and installment payments, have tended to be weak.) By mid-2022, wildcat mortgage boycotts by owners of unfinished homes had spread to over 300 housing projects in about 90 cities. The protests later subsided. But with more than 70% of urban China’s wealth stored in housing in some parts of the country, many livelihoods are at stake and the threat of popular unrest lingers.

Ambrose Evans Pritchard writing in the Daily Telegraph:

China’s $60 trillion property edifice is by far the largest asset class in the world.

It accounts for half of the world’s entire property sales, an astonishing figure given that China’s workforce is already contracting and net migration from the countryside has stopped.

The developers have debts of $5 trillion. By comparison, this is six times greater than America’s $800bn subprime property debt on the eve of the Lehman crisis.

In January, Beijing moved away from the Three Red Lines.

The Financial Times (January 11, 2023):

Beijing is now easing constraints on developer credit and even rolling out potential loans following a severe downturn that saw housing and land sales collapse, threatening a major pillar of an economy already ailing from coronavirus lockdowns.

Officials at multiple state-owned banks said they had effectively shelved the leverage curbs — whose three red lines refer to targets for debt, equity and assets for individual companies — in their assessment of borrowers. Late last year, state-owned banks announced hundreds of billions of dollars of potential new lending to property developers.

The authors of that report wondered whether this relaxation would be too late for Evergrande. Now we know. 

The next domino may be Country Garden (China’s largest house builder), which, as Dominic Pino noted, is teetering on the brink of default.

The Economist:

Country Garden is renowned for its huge projects in China’s second- and third-tier cities. The firm’s debts are smaller than those of Evergrande, a big, heavily indebted company that defaulted in 2021. But at the start of the year Country Garden was building four times more homes than Evergrande was before it defaulted. At the rate Country Garden was delivering them in the first half of 2022, at least 144,000 buyers will not receive homes they were promised by the end of this year. A sudden debt meltdown at the firm would leave even more families out in the cold.

That won’t delight a regime forever worried about its grip on power.

The Economist:

Until recently, most thought that Country Garden was immune to default. Since late last year officials have sought to calm the market by drawing up an informal list of healthy developers, including Country Garden, which investors could feel comfortable funding and Chinese citizens could trust.

The calculation has changed in recent days. Country Garden’s issue is not one of over-leverage in the style of Evergrande. Instead, it is a victim of a loss of confidence among regular folk—a sign the government is losing control. After a short rebound following the lifting of covid-19 controls, the property crisis has intensified. Prices are dropping. Sales among the 100 biggest developers fell by 33% in July compared with a year earlier. Country Garden’s tumbled by 60%. The firm’s decline is forcing market-watchers to confront their deepest fears about the property sector.

One is that property supply chains collapse. Over the past three years suppliers of materials, along with the engineering and construction firms that build homes, have often not been paid on time by developers. But so far this backbone of the sector has withstood the pressure. That could change as developers grow shorter on funds. The decline in payments to suppliers is already noticeable. Between 2021 and 2022, Country Garden’s transfers to such firms fell from 285bn yuan ($44bn) to 192bn yuan, according to S&P Global, a rating agency. They are all but certain to fall further this year. Although the biggest contracting firms will probably survive with help from the government, it is not hard to imagine widespread collapses among the myriad smaller engineering and materials companies that do the work on the ground.

Economist’s writers, singling out Sino-Ocean, also speculate that the trouble could spread to state-owned builders, up to now seen as safe.  They also suggest that Country Garden has the money ($22.5 million) to pay the debt that fell due this month by the end of a grace period that expires in early September, but that it is signaling a desire to eventually restructure as a way of putting pressure on the government to step in and help.

Pino also noted concerns about wobbles in the shadow-banking sector, which is, inevitably, heavily exposed to property. Trouble there would be another potent source of financial contagion. And then there is the matter of massive and often murky local government debt. Coping with that burden won’t be made any easier by the collapse in land sales, which (as mentioned by Enda Curran above) have been a useful source of revenue for local governments. One way or another, real estate may, on some estimates, have accounted for nearly 40 percent of local government income in recent years.

As Pino relates, the full extent of local government indebtedness is hard to quantify, but as Marc Joffe noted in an article for Capital Matters, the IMF estimates that, after adding in off balance sheet items, it stands at around 53 percent of GDP, and there are additional liabilities on top of that (at least one estimate suggests that the real number is running into the 70s). The central government is again sending out inspectors to work out how much that debt really amounts to, prior, presumably, to cobbling together a solution that avoids the social, political and economic risks of local governments running out of money. According to the finance ministry their income fell by slightly more than a fifth in the first half of the year, a number that, given the Chinese state’s way with statistics, may well be an understatement.

The ratio of China’s central government debt to GDP is (according to the IMF) 77 percent. Total Chinese debt (households, companies and the government) has been estimated by JPMorgan Chase at 282 percent, somewhat more than the average for developed economies (256 percent). The figure for the U.S. is 257 percent. But what distinguishes China is how rapidly this debt has grown. According to the New York Times’ Keith Bradsher, it has more than doubled when compared with the economy in the past fifteen years. A rapid accumulation of debt is a red flag under many circumstances. To be sure, there can be in a jump in the “good” debt that helps finance the growth of a rapidly developing market, but it’s not unusual for that to be accompanied by a surge in “unproductive” debt, something that China now has in enormous amounts.

Under the circumstances, it’s not surprising that Xi has been signaling to the private sector that the government will be handling it with a lighter touch than in the recent past. It would be foolish to believe him. In particular, foreign investors, who can easily take their money elsewhere, have watched the regime’s tightening grip and, finally, it seems, prompted in part surely by China’s slowdown, have been coming to a sensible conclusion. In the second quarter (Bloomberg reports) foreign investment in China fell to its lowest level in twenty-five years. Growing worries about a possible economic crisis are not going to help Xi’s efforts to lure them back, which is no bad thing. The West needs to do much more to loosen its unhealthily close trading relationship with China, and if the profits to be made in that market fall, so will the incentive to do business there. Falling rates of foreign investment will also hit China’s ability to, uh, innovate. As economist Kenneth Rogoff notes, “foreign companies build plants and they copy them. That has been the Chinese model. The slowdown in FDI [foreign direct investment] will also imply a slowdown in innovation.” Good.

How deep a crisis lies ahead is impossible to say. The stock market is at a nine month low and the yuan has come under pressure. The latter may mean trouble for those businesses — many of them in the U.S. and Europe — that compete with Chinese imports, as well as for those already struggling to sell their products into China’s sluggish economy.

Beijing now faces the challenge of reversing the deepening gloom, a challenge made all the more difficult by the interconnectedness of its woes. However, unlike its democratic counterparts, the regime has tools at its disposal that enable it to, so to speak, insist on calm. And it could always throw cash at the problem. Bloomberg reports that one prominent adviser to the Central Bank has called for direct payments of $551 billion to households to stimulate demand, an approach that an unenthusiastic Communist Party leadership has in the past denounced as “welfarism.” On the other hand, if writing large checks, whether to its citizens, its local governments or its embattled companies, or to all of them, is what it takes to maintain social peace, that’s what a Beijing leadership eager to hang onto their jobs will do. But even if such moves defuse the crisis for now, returning to the growth rates, however unsoundly based they may have been, of the last decade or so is going to be tough. Morgan Stanley is forecasting that China’s economy will grow by 4.7 percent this year. We’ll see. Capital Economics is predicting that (real) trend growth in the later 2020s will be 2.8 percent.

All emerging markets have smash-ups along the way, and China is still, whatever some of its boosters may claim, an emerging market. Nevertheless, the Daily Telegraph’s Ambrose Evans Pritchard observes that China is “no longer on the same trajectory as Japan, Taiwan, and Korea at a comparable point of development.”  There’s a lesson there.
Title: Re: China
Post by: Crafty_Dog on August 24, 2023, 06:48:15 AM
https://www.theepochtimes.com/mkt_app/china/economic-crisis-may-expedite-beijings-timeline-for-attacking-taiwan-rep-gallagher-5479567?utm_source=China&src_src=China&utm_campaign=uschina-2023-08-24&src_cmp=uschina-2023-08-24&utm_medium=email&cta_utm_source=China&est=FMnpzbpignRqxGIHB%2BKOiF6eIRIkwHmGypj6XNVDd9JR4a6ScANMg9b1GzEaNFtOMbgD
Title: Seven Reasons
Post by: Crafty_Dog on August 26, 2023, 04:30:13 PM
1
https://www.theepochtimes.com/opinion/7-reasons-why-the-china-crisis-has-finally-arrived-5478822?utm_source=China&src_src=China&utm_campaign=uschina-2023-08-26&src_cmp=uschina-2023-08-26&utm_medium=email&cta_utm_source=China&est=Wm5e%2FN9dFN9RNNAN0Iu2MVPUJZHrhK0xgFtZJDXG%2FF5HqZF2TnHI4gHpVMN1qfs1AhTP


2
https://www.theepochtimes.com/china/china-saddled-by-almost-double-local-government-debt-expert-5480630?utm_source=China&src_src=China&utm_campaign=uschina-2023-08-26&src_cmp=uschina-2023-08-26&utm_medium=email&cta_utm_source=China&est=6WIRJpd05ThIhOkcWGgqLrNvVKTfUMJLzePlx1qyADZuKKNjOpya60LA8dY5thPEBaJ6

3
How Will China Tackle Its Mounting Real Estate Woes?
Aug 25, 2023 | 19:39 GMT

Facing mounting real estate problems, the Chinese government will likely pursue a modest intervention that would cause financial losses for investors and further slow economic activity. But large-scale social unrest or the imminent collapse of a systemically important company could trigger a heavy intervention that would stabilize the economy in the short term but plant the seeds for a far worse financial crisis in the future. Country Garden, China's largest real estate developer, missed debt payments and suspended onshore bonds in early August, fueling expectations of a coming debt restructuring. Chinese trust firm Zhongrong International Trust Co. — which is heavily exposed to real estate investments — also missed payments for dozens of investment products in July, prompting protests outside its office in Beijing. At best, these missed payments suggest the continued stagnation of China's real estate sector and the financiers thereof. And at worst, they presage a financial crisis as debt dominos fall in the real estate, finance and banking sectors, as well as in local government balance sheets and household savings. Beijing has been dealing with the issue of excessive real estate debt for decades, but in the last few years, the sector's sales have consistently dropped after China introduced its Three Red Lines policy of debt limits in August 2020, which short-circuited the real estate sector's debt-fueled growth model. In addition to Country Garden and Zhongrong's large debt issues, property developers representing over 40% of China's home sales are also estimated to be having trouble servicing their debts, which means that the sector as a whole is facing increasing financial risks. Moreover, China's current debt problems are taking place amid slowing economic growth, which may push Beijing to stray from its standard response to such issues in recent years: namely, the prioritization of debt sustainability over short-term economic growth.

On Aug. 18, Chinese real estate developer Evergrande filed for bankruptcy protection in U.S. courts, though the company clarified that it hadn't filed a bankruptcy petition. As of the end of 2022, Evergrande's outstanding debt had risen to $340 billion, surpassing Country Garden's $196 billion.

Lower-than-expected economic growth in 2023 has fueled Beijing's concerns about the real estate sector by reducing the Chinese economy's tolerance for a debt crunch and elevating risks of social unrest. Since Beijing ended its strict ''zero COVID'' lockdowns in late 2022, domestic and global expectations of a surge in economic growth have largely been unmet. China recorded only modest growth in the first quarter of 2023, which then gave way to a slowdown in activity in the second and third quarters. The much-anticipated rebound in domestic consumption after COVID-19 has yet to translate into a boom for retail sales, while foreign direct investment into China hit a 25-year low in the second quarter. Youth unemployment also hit a record 21.2% in June before the authorities stopped publishing the figure in July. In addition, industrial production continues to lag amid low Western demand for Chinese exports, while the yuan recently fell to a 15-year low against the U.S. dollar. Moreover, fixed asset investment — a perennial source of ''easy growth'' for the Chinese economy — hit a 15-month low at 5.3% year-on-year growth in July. Meanwhile, as of March, two-thirds of China's local governments had surpassed severe debt stress indicators set by Beijing. On top of official debt, the International Monetary Fund estimates that local governments' off-balance-sheet debt will hit $9 trillion this year. This dire situation prompted Beijing to send debt auditors to its 10 poorest provinces in August to get a better grasp of the scale of these obligations. But despite these manifold headwinds, Beijing refrained from announcing major stimulus at its mid-year economic policy meeting of the Politburo in July. Local government revenues and household savings, as well as corporate investment and lending portfolios, are all heavily tied up in real estate investments and physical housing, and thus these groups would be hit the hardest if real estate companies continue to miss debt payments. These vulnerabilities could spur social unrest, given the high concentration of household wealth in real estate, putting more pressure on Beijing to intervene somehow in this latest round of debt issues.

A government-affiliated think tank of Guizhou, one of China's poorest provinces, published an article in April claiming that it was ''impossible to effectively solve'' the province's debt problems on its own. The article was quickly taken down and Beijing has since urged the nation's economists to limit discussions of ''negative'' information.

Earlier this month, the U.K. bank Barclays and the Swiss bank UBS both downgraded their 2023 growth forecasts for China, with the former now expecting the Chinese economy to grow by 4.5% this year (down from 4.9%) and the latter now expecting it to grow by 4.8% (down from 5.2%).

The elevated social unrest China saw in 2022 has persisted into 2023, including the Wuhan pension protests in March, the August protests against the Bazhou city government for its botched flood response and, most recently, the Beijing protests over Zhongrong's missed debt payments.

Beijing's most likely course of action is a light intervention that lets some companies go under without massive bailouts, but significant social unrest or the risk of a systemically important company collapsing could force the government to intervene more heavily. Despite the real estate sector's financial struggles over the past two years, the Chinese government has held firm on its debt restrictions in the sector, which suggests long-term debt management remains a top priority for Beijing. Beijing will thus likely let some smaller real estate, banking, and investment companies undergo painful restructurings or even go bankrupt without offering major assistance via capital injections and other bailout measures. This strategy could perpetuate volatility in Chinese stock markets and prompt financial losses, primarily among investors as Beijing urges banks and developers to prioritize repaying household depositors and fulfilling housing construction contracts for first-time mortgage holders. But it could also trigger a broader downturn in business confidence in China. Beijing would only intervene heavily in restructurings if the collapse of a systemically important company seemed imminent, like it did in mid-2021 with Huarong, one of China's four national asset management companies. But if debt troubles simultaneously struck enough financial and banking companies, these troubles could hit households (despite Beijing's efforts to protect them) and spur protests that cross city and provincial borders. For Beijing, such widespread unrest — as seen in the ''white paper'' protests of November 2022 — would make a heavy intervention more attractive. Such an intervention would involve large bailouts of many companies, which would ameliorate current debt struggles and largely prevent the aforementioned, near-term downturn in markets. But it would also elevate China's long-term risks of financial crisis by delaying debt mitigation measures and reinforcing the belief that Beijing will deploy a safety net whenever the market is headed for a downturn, thus encouraging further risky lending and investments among stakeholders in the real estate, banking and finance sectors, as well as among households.

While still unlikely, it is possible that a wave of real estate defaults spurs a nationwide financial crisis that undermines President Xi Jinping's solitary position of power in Beijing and rattles the global economy. Such a crisis would also set back China's economic transition even as it somewhat eases the U.S.-China strategic competition. The Chinese Communist Party (CCP) has proven moderately successful at averting financial crises and softening economic downturns via state interventions. But these interventions required issuing significant local government debt, which is now Beijing's top economic concern alongside real estate debt. In the current real estate downturn, the country's leaders are unsure of the true scale and sectoral interconnectivity of China's domestic debt problems. Thus, a light intervention may risk letting seemingly isolated solvency issues evolve into a cross-sectoral debt crunch. Such a poorly executed intervention could prompt a heavy intervention or even a financial crisis, if Beijing's efforts prove incapable of stopping an avalanche of defaults in China's $52-trillion real estate industry. For scale, China's 2022 gross domestic product was $18 trillion. The fragility of China's economic recovery elevates this risk of Beijing mismanaging a light intervention effort. This is because local governments and businesses — with their assets either tied up in under-water real estate or their revenues stricken by low demand for land sales — have a lower tolerance for bearing additional liquidity strain, and the fact that Chinese households are already highly concerned about the future of their nest eggs, given three-fifths of household savings are in real estate. A true financial crisis could spur an economic recession in China and the world, making it harder for China to avoid the middle-income trap and surpass the United States in military and economic might. This crisis would also spur massive unrest in China, reducing President Xi Jinping's ruling legitimacy in the CCP and increasing the chance that Xi's outsized influence over the party is diffused across a broader cohort of top leaders, whom Xi must rely on to help steer China out of its dual social and economic crises. A more consensus-based leadership would make China's domestic and foreign policy more predictable and less national security-focused than under Xi alone, easing the rapid deterioration in China's relations with its neighbors. Still, China's technological and economic competition with the United States would persist, albeit at a slower pace as Beijing reprioritizes economic stability.

A Chinese financial crisis could start with a wave of real estate defaults, including some large bankruptcies, followed by solvency problems for the banks and third-party lenders that lent money to those developers, before finally hitting depositors and corporate investors that store wealth in the banking and real estate sectors, as well as in the countless wealth management companies overexposed to real estate investments.

In the 2008 global financial crisis, Beijing buoyed consumption by releasing $586 billion worth of stimulus spending on infrastructure, with much of this debt falling on local governments. And in 2015, a stock market crash wiped out 30% of the value of China's class A shares in just three weeks, prompting Beijing to spend $500 billion in reserves to buy up the market, which continued to fall a couple of months later.
Title: RANE: China's great economic rebalancing, part 1
Post by: Crafty_Dog on September 12, 2023, 05:51:38 AM


China's Great Economic Rebalancing, Part 1: The Problems
undefined and Global Economy Analyst at RANE
Markus Jaeger
Global Economy Analyst at RANE, Stratfor
Sep 11, 2023 | 21:10 GMT





Boats travel on the Huangpu River against the skyline of Shanghai, China, on Aug. 28, 2020.
Boats travel on the Huangpu River against the skyline of Shanghai, China, on Aug. 28, 2020.
(Photo by Kevin Frayer/Getty Images)

Editor's note: This is the first of a three-part series about China's economic rebalancing. Part 1 analyzes the problems Chinese policymakers are trying to solve, as well as those China's evolving economic model is causing.

China's economic rise over the past four decades has been nothing short of remarkable. With economic growth averaging nearly 10% annually since 1980, Chinese policymakers have proved adaptable and effective, in part due to China's state-capitalist economic system. This system offers a closed capital account, extensive state ownership and a prominent — even dominant — government position in the economy. As a result, policymakers can intervene forcefully and quickly to safeguard financial stability and maintain high economic growth.

However, China appears to have changed tactics and strategy. Instead of forcefully kickstarting the country's economic growth following the COVID-19-induced slump, the government has primarily limited itself to microeconomic reforms. Since then, most economists have downgraded China's growth potential to well below 5%, China appears to be on the verge of sliding into deflation, and recent defaults of major real estate developers have raised concerns about financial stability.

This shift in strategy is part of a broader rebalancing of China's economy as the country aims to stave off even greater economic and financial problems in the future. While policymakers have the tools to avoid a financial crisis as they manage this rebalancing, it remains risky, and it is far from clear what policies will replace China's defunct economic model in the coming years.

The problem of overinvestment
One major problem Chinese policymakers are trying to solve is the issue of overinvestment in unproductive sectors. This problem begins with China's high savings rates, which have underpinned the country's economic model for the last several decades and are currently at 45% of gross domestic product. By comparison, America's savings rate has not exceeded 20% of GDP in the past two decades.

In national accounting terms, savings are the share of national income that is not consumed. Savings can be converted into investments or exported in the form of current account surpluses. Since peaking at a massive 10% of GDP in 2007, China's current account surplus has declined to around 2% of GDP or less following the massive stimulus program launched at the height of the financial crisis in 2008. This leaves 43% of GDP (savings minus China's current account surplus) to be converted into investment.

China has invested most heavily in real estate and productivity-enhancing infrastructure projects, which boomed during the government's aforementioned stimulus program in 2008. For a while, China supported this boom, as housing and infrastructure projects were necessary parts of the country's urbanization. However, demand for real estate and infrastructure projects has since declined, leading to dangerous overinvestment.

Financially, overinvestment in real estate and infrastructure projects has increased financial risks. For example, excess apartments in cities with undeveloped real estate markets will remain unoccupied, at least for now, resulting in financial losses for investors and real estate developers. Additionally, unused real estate will not increase the productive potential of the economy. As a result, overinvestment in this sector is weighing on China's economic growth, relative to more productive, alternative investment elsewhere in the economy. Or at least, this type of economic growth is bound to be unsustainable and lead to significant financial losses.

These factors mean China is increasingly unable to convert part of its savings, which comprise a massive percentage of its GDP, into profitable investments. If this trajectory continues unabated, major medium- and long-term economic and financial risks will follow. To break this pattern, China needs to find alternative, profitable investment opportunities into which it can pour its excess savings. Structural economic reform would help aid this transition.

The risks of rebalancing
Until recently, China's government reluctantly intervened in the real estate and infrastructure sectors by bailing out debt-burdened developers and local government-related entities when their projects failed to provide sufficient returns. This interventionist policy prevented many investors from incurring too many losses and kept the real estate sector running smoothly. However, this strategy failed to motivate developers and investors to manage associated financial risk more wisely. As a result, they continued to invest money in unproductive projects, which helped prevent a broader macroeconomic adjustment.

To break this cycle, Chinese policymakers introduced the "three red lines" policy in 2020, which forced real estate developers to reduce the amount of borrowed money they use to make investments. This policy exposed developers' accumulated financial risks, and many large developers defaulted on their debt as a result. This time, the government did not bail them out, forcing developers to deal with the consequences of their poor risk management. These defaults have slowed investment in the real estate sector overall, which was a key goal of Chinese policymakers.

However, reduced investment and growth in the real estate sector (which, by some estimates, accounts for 25% of China's GDP), is slowing the country's overall economic growth. While Chinese policymakers view this slowdown as a reasonable price to pay to avoid further financial risks and the continued misallocation of savings, their economic rebalancing strategy has begun to have second-round effects. These include stagnating or falling real estate prices, as well as financial losses incurred by banks, individual investors and local governments.

Regarding the latter issue, a sharp reduction in housing-related income from land sales, on which local governments depend for revenues, will significantly restrict local governments' budgets. In addition, local governments often raise funds for infrastructure and housing projects through local government financing vehicles (LGFVs). If these investments go bad, local governments may have to bail out their LGFVs, incurring further financial losses. Therefore, economic rebalancing will put significant financial pressure on local governments.

Due to the risks of slowing investment in the real estate sector, Beijing must tread a fine line between rebalancing the economy and limiting the economic slowdown and financial losses. This requires a carefully calibrated policy that accounts for short-term and systemic financial stability, as well as medium- and long-term economic sustainability.
Title: RANE: China's Rebalancing Part 2, Part 3
Post by: Crafty_Dog on September 14, 2023, 10:42:23 AM
Not super impressed with RANE (Stratfor) on economics, but FWIW, here it is:
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China's Great Economic Rebalancing, Part 2: Potential Solutions
undefined and Global Economy Analyst at RANE
Markus Jaeger
Global Economy Analyst at RANE, Stratfor
6 MIN READSep 13, 2023 | 14:05 GMT





A truck drives between shipping containers at Nanjing port in China's eastern Jiangsu province on Aug. 6, 2023.
(Photo by STRINGER/AFP via Getty Images)

Editor's note: This is the second installment of a three-part series about China's economic rebalancing. Part one analyzed the problems Chinese policymakers are trying to solve, as well as those China's evolving economic model is causing. Part two offers potential solutions to these problems.

China's economic rebalancing is creating a host of issues. Most pressingly, government attempts to discourage overinvestment in the real estate and infrastructure sectors are slowing economic growth. Several short-term strategies are available to ease this transition, most promisingly an expansionary fiscal policy that increases private consumption. However, China will also need to make longer-term strategic changes to support its rebalancing, namely by creating alternative outlets for excess savings. Above all, these outlets will need to include more productive investment opportunities.

Short-term solutions: Consumption-oriented fiscal stimulus
To counteract the short-term slowdown in economic growth caused by reduced investment in the real estate and infrastructure sectors, the Chinese government has three primary policy levers: fiscal policy, monetary policy and exchange rate policy. Until now, Beijing has refrained from deploying these tools forcefully, instead focusing on microeconomic reforms aimed at facilitating private consumption. However, if the outlook for China's short-term economic growth deteriorates further, signaled by several months of deflation, policymakers would likely opt for a more expansionary fiscal policy to stimulate household consumption.

An expansionary fiscal policy would raise government spending and transfers and/or cut taxes, making it the most direct way to stimulate domestic demand, especially private consumption. Additionally, as private consumption rises, savings rates will decline, which will decrease overinvestment. In this way, an expansionary fiscal policy would help solve China's short-term issue of an economic slump while also supporting the government's longer-term goals of shifting away from overinvestment. The central government would need to fund this stimulus, as local government finances are already weak due to their reliance on falling real estate-related revenues and their prospective financial losses.

If an expansionary fiscal policy proves insufficient, policymakers could resort to altering China's monetary policy by cutting interest rates more forcefully. However, this option is not ideal, as lower interest rates would also increase unprofitable investment in sectors like real estate, slowing the deleveraging of the sector. Lower interest rates would also reduce banks' net profit margins, undermining bank profitability and their ability to absorb credit losses directly or indirectly related to the real estate crisis. Moreover, this strategy would widen the gap between Chinese and U.S. interest rates, which would put downward pressure on the yuan and lead to increased capital outflows. These constraints mean the government would likely only lower interest rates if the risks of recession and deflation are particularly high.

Lastly, the government could try to stimulate the economy by adjusting its exchange rate policy. In this scenario, a weaker  exchange rate would make China's exports comparably cheaper, thereby increasing foreign demand for Chinese goods. However, this strategy would be unlikely to significantly kickstart economic growth, given that China is far less dependent on external demand than it was in the past (and economic growth in its major export markets is declining). Additionally, this option would require a substantial weakening of the yuan, which might undermine domestic financial confidence. If that were not enough, weakening the exchange rate would require the government to cut interest rates, which, as stated previously, might compound the issue of overinvestment and lead to a host of undesirable knock-on effects. Therefore, Beijing is unlikely to resort to a policy of currency depreciation.

Longer-term solutions: Profitable investment opportunities and consumption
To ensure that China's short-term economic slowdown does not become a long-term stay in the middle-income trap, policymakers must create new outlets into which the country can pour its excess savings. By putting these savings to work, China's economic growth potential, which is already considerable, would increase. This is evidenced by the fact that China's per capita income is less than a third of the United States', pointing to what economists call catch-up potential, a country's ability to adopt advanced technology, improve human capital and increase capital stock to support faster economic growth and higher per capita incomes.

To tap into this potential, China needs to create profitable investment opportunities. This would require policymakers to introduce wide-ranging structural reform aimed at ensuring greater competition, a less privileged position of the state sector, and a greater role for markets to improve productivity and economic growth. Beijing's decision in March to relax controls on the technology sector may reflect early moves in this direction. However, finding or creating financially profitable and economic growth-enhancing investment opportunities will be challenging.

If the government fails to create more productive investment opportunities, China will still need an outlet for its excess savings. Policymakers would likely attempt to solve this issue by continuing to stimulate private consumption. However, this would require much more than a simple, one-off fiscal stimulus. Instead, policies would need to increase consumption structurally by raising the household share of national income, which would be fiscally costly and may be difficult to achieve politically. Even if such a stimulus succeeds, a large share of savings would need to be shifted to consumption, which would be a long-term process. A gradual transfer of income from the government and the corporate sector would be preferable. The government could support this stimulus by providing government-financed health and pension benefits, thereby reducing households' precautionary savings. If necessary, the government could also try to finance all or some of these measures through deficits or through higher taxes on the corporate sector, thus reducing corporate savings as well.

Chances of success
Chinese policymakers will face many challenges in the next few years, but they also benefit from several advantages. First, China's state-capitalist economic system enables policymakers to intervene forcefully and quickly to maintain economic growth and preserve financial stability. Second, China learned much from observing the Japanese and U.S. financial crashes in 1991 and 2008, respectively.

As a result, Chinese policymakers will continue to remedy overinvestment in the real estate sector and mitigate its related financial risks. In this scenario, China would gently settle into a lower growth trajectory (underpinned by continued high investment) in the context of more sustainable financial returns on investment. After all, the economy has plenty of catch-up growth potential left.

However, if policymakers fail to act forcefully enough, they could lose control of China's economic rebalancing. If this happens, China could be forced to implement disruptive large-scale financial restructuring in the real estate and infrastructure sectors, and even costly government bailouts. It might also push the economy into more sustained stagnation that could lead to deflation. As we will see in part three, this failure could impact China's political stability and have far-reaching implications for trade partners around the world.

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China's Great Economic Rebalancing, Part 3: Considering Failure
undefined and Global Economy Analyst at RANE
Markus Jaeger
Global Economy Analyst at RANE, Stratfor
5 MIN READSep 14, 2023 | 15:00 GMT





Delegates attend the closing ceremony of the Chinese Communist Party's 20th Congress at the Great Hall of the People in Beijing, China, on Oct. 22, 2022.
Delegates attend the closing ceremony of the Chinese Communist Party's 20th Congress at the Great Hall of the People in Beijing, China, on Oct. 22, 2022.

(Photo by WANG ZHAO/AFP via Getty Images)

Editor's note: This is the third installment of a three-part series about China's economic rebalancing. Part one analyzed the problems Chinese policymakers are trying to solve, as well as those China's evolving economic model is causing. Part two offers potential solutions to these problems, and part three analyzes the impacts of possible policy failure.

Despite policymakers' best efforts, worst-case scenarios sometimes come to pass. In the case of China's economic rebalancing, this scenario would involve a deep economic crisis and/or severe financial instability that sets the country's economic growth back for years. While these outcomes remain unlikely, they could occur if Chinese policymakers do not intervene forcefully enough in the face of excess savings and insufficient investment opportunities.

The consequences of such a failure could vary widely, potentially leading to a controlled recession or an all-out economic spiral. In either case, the effects would extend beyond China, significantly impacting China’s trade partners, particularly in Asia.

The path to policy failure
Chinese policymakers are discouraging investment in the country's real estate and infrastructure sectors, which is slowing economic growth. For this slowdown to remain only a short-term speed bump, China must support domestic demand, especially household consumption, and create new investment opportunities in the real estate sector's place to absorb the excess savings due to lower investment in the sector. However, in a low-probability, high-risk scenario, policymakers would fail to ensure that these alternative opportunities materialize.

A lack of productive investment opportunities would lead to an excess of savings with few profitable outlets. This would cause interest rates to fall, lowering financial returns. Decreased returns would weigh on financial institutions' earnings, hurting their capitalization levels and even long-term financial health, as happened in Japan in the 1990s and 2000s. Moreover, decreased investment would slow economic growth even further and could depress prices.

China's government has many powerful policy levers that could help prevent this scenario from spinning out of control. For example, the central government has enough fiscal space and financial firepower to implement a large-scale debt restructuring, leading to a period of "controlled bankruptcy." However, this option could lead to a significant fire sale of assets, which could depress prices and weigh on economic and financial confidence and growth. Additionally, tighter government control over the economy would likely lower economic confidence even more, which would make any stimulus policies less effective. For these reasons, the government may respond too slowly or not forcefully enough, thus increasing the risk of a financial crisis.

Domestic consequences
In a worst-case scenario, Chinese policymakers would lose control of the economic rebalancing and even the process of controlled bankruptcy. In the face of this uncertain economic future, Chinese households would increase their precautionary savings and companies would reduce investment, which could bring about economic stagnation. If this leads to price deflation, including of assets, the value of debt will rise in real terms, further compounding financial stress. This stress could lead both companies and households to save even more in order to pay off their debts or maintain their targeted net worth, exacerbating the above issues and leading to what economist Richard Koo has called a balance sheet recession.

Additionally, slow economic growth would make it difficult for debtors to repay their debts, raising the specter of a vicious debt-deflation cycle. It is worth noting, however, that China does not have an external debt problem. As a result, the government could forcefully intervene to stabilize the financial situation and impose a wide-ranging, if messy, restructuring of domestic debts.

Most importantly, a debt-deflation scenario could lead investors, including banks, to incur substantial financial losses in the context of low profitability due to lower interest rates. Additionally, if asset prices decline sharply, the nominal value of household savings would erode, and a slowing economy could also cause unemployment to rise. As Chinese citizens increasingly feel the pinch of this economic stagnation, the risk of social and political discontent will rise, possibly leading to protests.

Global impacts
If China enters a debt-deflation spiral of falling prices and depressed growth, even if it manages to avoid a financial crisis, the global impact will be serious. For instance, economic stagnation would lead to reduced consumption, including for foreign goods and services. China is the largest trading partner of around 120 countries, so reduced demand would negatively impact their economic growth.

Additionally, deflation would make Chinese goods cheaper in global markets, leading to higher Chinese exports and larger trade surpluses. This could quickly become a major source of international tension, possibly raising the specter of another U.S.-China trade war following the 2024 U.S. presidential elections. Protectionist tariffs, retaliation and counter-retaliation between the world's two largest economies would negatively impact global economic and investor confidence.

Looking forward
These potential domestic and international consequences of slow economic growth show how important it is for Chinese policymakers to create profitable investment opportunities and increase consumption. However, the complicated nature of forward-looking structural reform means nothing is guaranteed. Therefore, even if Beijing successfully rebalances the economy away from real estate sector investment, Chinese policymakers will have to muster all their skills to keep China's economic growth from declining further over the medium to long term.
Title: Zeihan: China fuct in ten years or less
Post by: Crafty_Dog on September 25, 2023, 08:39:04 AM


https://www.youtube.com/shorts/E-qZPmTJ3Ls
Title: FA: Slowdown was inevitable
Post by: Crafty_Dog on September 25, 2023, 02:23:27 PM
Not as bold as Zeihan, but in a similar direction.

China’s Economic Slowdown Was Inevitable
The Illusory Success of State Capitalism
By Yasheng Huang
September 25, 2023

https://www.foreignaffairs.com/china/chinas-economic-slowdown-was-inevitable

As China’s economy steadily grew in recent decades, its advocates championed the country as an antithesis—and an antidote—to liberal economics and politics. This argument seemed credible as China grew rapidly under an autocratic and economically statist system. At the same time, the United States—that beacon of Western democracy—was suffering from economic and political sclerosis.

This contrast between the Chinese and U.S. systems, and their disparate performances, led to questions regarding the effectiveness of the Western model of free markets and liberal democracy. Perhaps, as some observers have argued—including, most recently, the economist Keyu Jin—the Chinese economic miracle could be evidence of an alternative playbook to that which enabled the West’s success. China has risen, in this view, thanks to the power of statism and the wisdom of Confucianism craftily combined with the efficiency of the private sector. As China’s growth rate consistently averaged nine percent a year, the basic ingredients in standard economics came into doubt. Perhaps market finance, the rule of law, and property rights were unnecessary and, from the perspective of Chinese culture, undesirable and counterproductive contrivances.

These arguments have become less credible lately, as Chinese growth slows and capital flees in search of overseas havens. In August alone, capital outflows amounted to $49 billion. Chinese capitalists are leaving, too, fearful for their safety and the security of their property. At this moment of maximum statism under Chinese President Xi Jinping, the country’s growth is faltering badly, revealing the effect of an increasingly interventionist government. Contrary to the widespread view, China’s economic miracle happened because the government retreated from the commanding heights of central planning and left room for the market economy. Economic statism is not the savior of the Chinese economy—it is an existential threat to it.

Many have sought to use China as an advertisement for statism, but the country’s economic success actually had little to do with it. Although Confucianism and statism are perennial features of the Chinese system, the economy’s superlative growth only began in 1978, after the Chinese leader Deng Xiaoping launched a program of economic reforms. These reforms were, in many ways, utterly conventional—slowly opening the Chinese market to the world, allowing greater entrepreneurship, reducing government price controls, and privatizing state-owned industries—and their collective effect was a reduction of the power of the state. Rather than China’s growth being a testimony to the expanding power of the state relative to the market, the opposite is true.

This can be seen through a study of the first phase of significant Chinese growth in the 1980s. It was powered by small-scale rural entrepreneurship. Tens of millions of entrepreneurs from humble backgrounds built factories that flooded China with consumer durables, construction materials, food, and labor-intensive goods. This miracle owed nothing to the wisdom of the Chinese Communist Party, as Deng acknowledged in 1987. Hailing the rural economy as “our greatest success,” he declared that it was “one we had by no means anticipated. . . . [These enterprises] were like a new force that just came into being spontaneously. . . . The Central Committee [of the Chinese Communist Party] takes no credit for this.” The Chinese state endorsed—or benignly neglected—the spontaneous, bottom-up explosion of rural entrepreneurship, and the reformist leadership deserved full credit for not stifling it. The virtues of omission, however, should not be confused with those of commission. The Chinese economy took off because the state let go, not because it intervened.

A comparison of Chinese regions also shows this to be the case. The regions that have performed most strongly economically since 1978, including Guangdong and Zhejiang, have been the most market-oriented and have experienced the least state interventionism. On the other hand, those regions in which the state intervenes the most, such as in China’s northeast, are mired in high debt and struggle with lower rates of growth.

SAFETY AND SECURITY
Classic economic theory holds that, in order to create the conditions conducive to economic growth, entrepreneurs need strong property rights. Yet China has never had these. Their absence has fed the myth that China grew because of statist finance and industrial policy.

But a study of the historical record reveals the flaws in this assumption. In 1979, the Chinese government released the capitalists who had been imprisoned during the Cultural Revolution. These businessmen then had their confiscated bank deposits, bonds, gold, and private homes returned to them. This episode shows that—although China has never had a U.S.-style constitution—Beijing moved away from Maoist totalitarianism under Deng, thereby instilling a sense of security and confidence among Chinese entrepreneurs.

Under Xi, this has changed. Chinese capitalists have once again been marginalized, harassed, sidelined, and arrested. An extreme instance of this treatment occurred in July 2021. Sun Dawu, an agriculture billionaire, was sentenced to 18 years in prison, ostensibly for violating land regulations but, in reality, for his outspokenness. China is moving backward, toward the Cultural Revolution, and away from Deng’s reforms, a development not lost on Chinese entrepreneurs. They have become reluctant to invest and are trying to move their capital abroad. Far from reaping a reward, Beijing is paying a price for its lack of the rule of law.

THE ISLAND ENGINE
Hong Kong has always been an outlier. From the end of British rule in 1997 to the enactment of the National Security Law in 2020, the city preserved property rights, a free press, and the rule of law. Many high-tech Chinese firms, recognizing the desirability of this business environment, established Hong Kong domiciles. The territory has always been the largest investor in China, though many Hong Kong investors are Chinese firms. These companies established themselves in Hong Kong to acquire its legal protections and enjoy asset security. They then plowed their capital into China. This kind of institutional laundering was legally ambiguous, but for many years the pragmatic reformist leaders chose to look away, allowing Chinese entrepreneurs to enjoy Hong Kong’s rule of law and market finance while building their businesses in China.

Hong Kong’s advanced capital market—and access to global capital in general—funded the early rounds of Chinese high-tech startups that began in the 1990s. Before the rise of China’s own venture capital industry, foreign capital was needed to fund Alibaba, Baidu, Tencent, and many other high-tech startups. Much of the money came through Hong Kong. This was a globalization story par excellence credited to China’s open-door policy; to the knowledge and expertise of foreign capital; and to the hard work, ingenuity, and vision of Chinese entrepreneurs.

The forces that created China’s high-tech economy were the same as those responsible for the rural miracle of the 1980s. Both low- and high-tech Chinese entrepreneurship were caused by liberalization—globalization for the high-tech sector and financial reforms for the rural sector. Statist finance, eviscerating the autonomy of Hong Kong, and a retreat from globalization can only undermine the vitality of Chinese entrepreneurship and China’s growth engine.

THE INFRASTRUCTURE MYTH
Statism has been crucial in building China’s impressive infrastructure. But there is an inconvenient truth: the Chinese economy took off well before the gargantuan expansion of infrastructure in the country. The large-scale building of Chinese highways, for example, happened in two waves—one in the late 1990s and the other after 2008. In other words, China built its infrastructure after more than two decades of rapid growth. Growth enabled savings and raised government revenues as well as land values, and it funded state projects. Statism did not give rise to growth; growth gave rise to statism.

Infrastructure is beneficial to growth. But the Chinese infatuation with it poses a threat to future economic prospects. Continually building roads, railways, and ports has plunged China into precarious indebtedness, and because of this infatuation, Beijing has chosen to invest in physical infrastructure at the expense of education and health in rural China. This prioritization has already had damaging effects. For example, the poor state of China’s primitive rural health-care system in part justified the draconian COVID-19 measures in 2022, inflicting severe and possibly permanent damage to the Chinese economy.

China has also underinvested in its human capital relative to the size of its population. Among middle-income countries, China has the lowest proportion of high school graduates in its labor force, according to research done by Stanford University. There is the increasing possibility that the Chinese economy may stagnate, as growth stalls. Should this poor economic performance become prolonged, the Chinese brand of statism will be to blame.

VANISHED PRAGMATISM
Chinese success is not a story of laissez-faire capitalism but one of gradual and pragmatic liberalization. That spirit of pragmatism has largely vanished from China. Since 2013, the Chinese government has adopted a statist view of economic growth. At the same time, an obsession with national security matters has weaponized the state at the expense of the private sector. Beijing has betrayed and rejected its own success formula, and the economy is paying the price. Ultimately, it is the Chinese people who will suffer for as long as their government gets wrong these basic economic decisions.
Title: Re: China economic collapse
Post by: DougMacG on September 28, 2023, 03:36:04 AM
https://www.spectator.co.uk/article/can-china-contain-evergrandes-collapse/
Title: China facing massive pandemic deaths?
Post by: Crafty_Dog on September 30, 2023, 07:15:26 AM
https://www.theepochtimes.com/article/chinese-escapees-describe-massive-pandemic-related-deaths-in-china-as-unprecedented-5500812?utm_source=China&src_src=China&utm_campaign=uschina-2023-09-30&src_cmp=uschina-2023-09-30&utm_medium=email&cta_utm_source=China&est=%2BZ1Uz5JNuZYt12dtKudVXPQYIDVQOUQPSMzWG6bb42hxjOTddR1Wc90BQUVno%2BWIei%2BS
Title: George Friedman: China joins the chaos
Post by: Crafty_Dog on October 20, 2023, 05:59:50 AM
October 20, 2023
View On Website
Open as PDF

    
China Joins the Chaos
Thoughts in and around geopolitics.
By: George Friedman

Amid the chaos of several wars and the trainwreck that is the U.S. House of Representatives, there would appear to be few things left unsaid. What appears to be obvious is frequently false. In this case, our attention must be drawn to China, which, in the middle of an economic crisis, is moving its society in a strange direction it calls a grid system.

China is increasing its monitoring of citizens. This is a countrywide effort managed by the Chinese Communist Party. Neighborhoods and regions have been divided into grids, and in many cases, residents of the grids have been recruited to go door to door, inspecting the living spaces in houses and reporting their findings to authorities. China has long conducted inspections of homes, but the organization of these inspections allows for more detailed searches. The monitors’ task is to visit houses regularly and collect information on people, places, events, objects and emotions. In particular, they are inspecting computers for sites visited and content viewed. The grid workers are members or supporters of the CCP.

The degree of inspection, the large number of people tasked with monitoring and the wide range of subjects intended to be monitored indicate intensifying unease within the CCP. Economic dysfunction, political struggles (including the disappearance of senior party leaders) and dissatisfaction among citizens have led to a massive increase in monitoring in terms of both the number and the depth of searches. It is not clear what punishment might be meted out to those deemed unreliable, but monitoring will likely be zealous, with people rated on the findings related to key issues.

Attempts to observe a large population on this scale are rare. In indicating tension in China, it puts in motion a process that begins with resignations, moves to fear and results at a certain point in anger. We are a long way from that, except that it is clear the CCP senses danger and is prepared to devote resources and risk anger to stamp it out. The rest of the world still views China as a successful power, but the CCP is signaling that it sees its greatness as flawed.

This may be a brief observation, but it is worth noting.
Title: The Economist takes on Zeihan's take on China
Post by: Crafty_Dog on November 10, 2023, 08:09:05 PM


https://www.youtube.com/watch?v=XupM5_zHDbM
Title: Chinese rich fleeing? Or?
Post by: Crafty_Dog on November 15, 2023, 02:23:52 PM
https://rumble.com/v3vmf9p-xi-is-panicking.-chinas-wealthy-are-fleeing.html
Title: WSJ reads our forum
Post by: Crafty_Dog on December 05, 2023, 01:19:06 AM
China’s Colossal Hidden-Debt Problem Is Coming to a Head
Mounting financial stress at local governments leads Moody’s to lower its outlook on China’s credit rating
By Rebecca Feng and Cao Li
Updated Dec. 5, 2023 3:59 am ET


China is trying to defuse a financial time bomb that could severely damage its banking system.

Cities and provinces across the country have accumulated a massive amount of hidden debt following years of unchecked borrowing and spending. The International Monetary Fund and Wall Street banks estimate that the total outstanding off-balance-sheet government debt is around $7 trillion to $11 trillion. That includes corporate bonds issued by thousands of so-called local-government financing vehicles, which borrowed money to build roads, bridges and other infrastructure, or to fund other expenditures.

No one knows what the actual total is, but it has become abundantly clear over the past year that local governments’ debt levels have become unsustainable. China’s economic growth is slowing and the country is battling deflationary pressures that will make it harder for local governments to keep up with their interest and principal payments.

Economists say a significant chunk of the hidden debt—their estimates range from $400 billion to more than $800 billion—is particularly problematic and at high risk of default.

Chinese authorities have realized that the risks to the country’s financial stability and overall growth have become too large to ignore. They are trying to tackle the problem more systematically and are starting to swap out some hidden debt for new—and explicit—government debt.

The big worry is that a wave of defaults could spread losses far and wide. That could quickly snowball into a nationwide financial crisis if credit markets seize up and retail and corporate depositors start to get worried about the financial stability of banks that hold a lot of local-government bonds.

“Once a local-government financing vehicle defaults, the situation can easily get out of hand,” said Yao Yu, founder of YY Rating, an independent Chinese credit-research firm. Bonds from local-government financing vehicles make up close to half of China’s domestic corporate bond market, according to Wind data, and defaults could choke off funding for other borrowers if many investors and bond buyers back away.

In early November, China’s central government said it places “great importance to the prevention and resolution of the risk of hidden debts of local governments.” Bankers and local government officials were also warned that they would be held accountable for life if they raised new hidden debt.

Pan Gongsheng, the governor of the People’s Bank of China, said at a Beijing financial forum last month that the central bank would also provide emergency liquidity support to regions with relatively high debt burdens. He said China’s total government debt isn’t high by international standards and that the country is taking steps—including asset disposals and refinancing debt—to mitigate the risk posed by its local-government debt.

Moody’s Investors Service on Tuesday lowered its outlook on China’s credit rating to negative from stable, because the country is likely to provide more support to financially stressed local governments and state-owned enterprises. The credit-rating company also cited risks to China’s economic growth. Moody’s rates China A1, an investment-grade rating that is four notches below its top triple-A rating.


China has muddled through a yearslong property bust and dozens of real-estate developer debt defaults without massive losses to the country’s banks. That is largely because many property developers had raised money offshore by selling bonds to international investors and were less dependent on bank loans.

The situation is different for local-government financing vehicles. Most of their bonds are held by Chinese commercial banks, which also extended loans to them. A recent UBS report said domestic banks’ total exposure to local-government financing vehicles at the end of last year was equivalent to about $6.9 trillion—representing about 13% of the banking sector’s total assets.

For more than a decade, Chinese regulators have been trying to address the risks of the country’s hidden debt. The last round of major efforts occurred between 2015 and 2018. During that time, Chinese local governments also sold new public bonds to swap out their hidden debt, effectively giving the latter explicit government backing.


China’s Finance Ministry also told local governments to borrow more responsibly in the future. However, under pressure to stimulate growth, local governments went on another borrowing spree, and by the end of November, the outstanding bonds of their financing vehicles ballooned to more than twice what it was in 2018, according to Wind, a financial data provider.

Some cities and provinces are starting to show financial strains after a brutal property downturn caused local government income from land sales to plunge. Three years of heavy spending to contain the Covid-19 pandemic has also depleted their cash coffers.

In late 2022, Zunyi Road and Bridge Construction Group, a state-owned company that builds bridges and roads in debt-laden Guizhou province, extended the maturity of approximately $2.2 billion of bank loans by 20 years.

In May, a utility provider in the capital city of the financially weak Yunnan province repaid its domestic notes a day after their due date. And in October, a state-owned tourism group in Weifang, a city in China’s eastern Shandong province, missed $14 million in payments on nonpublic debt.

“In a lot of economically weaker regions and provinces, we’ve seen near misses and the last-minute scrambling to repay public bonds. It’s attracted more attention from the government to help alleviate these immediate liquidity problems,” said Chris Yip, a credit analyst at S&P Global Ratings.

There has been an urgent push for local governments to issue so-called special refinancing bonds to replace some of their off-balance-sheet debt.

Since October, close to 30 Chinese provinces and cities have raised the equivalent of around $200 billion in such bonds. The fundraising was mostly in regions with high leverage including the provinces of Guizhou and Yunnan, and the city of Tianjin. The debt swaps have helped lower the risk of imminent local-government debt defaults, by giving local governments more time to come up with funds.

“It’s not enough, but I think this is just the beginning,” said Robin Xing, Morgan Stanley’s chief China economist, of the debt exchanges that have been done so far. He reckons that there will need to be at least $700 billion worth of debt swaps to resolve the bulk of the troubled hidden debt.


“It is not really a restructuring plan but a refinancing plan. It leaves most of the problems with local government debt in place,” said Logan Wright, director of China research at Rhodium Group, a research firm. A report that Wright co-wrote last month said the debt extensions or swaps will hurt China’s economic growth in the long run because more fiscal resources will be required for debt repayment.

“Markets should still be concerned about near-term default risk and resulting financial contagion from [local-government financing vehicles’] debt,” Rhodium’s report said.

Most local-government financing vehicles currently depend on subsidies or capital injections from local governments and external funding. Most don’t generate enough cash from their operations to cover their interest payments, said Zhang Ning, a senior economist with UBS, after his team analyzed the financial statements of nearly 3,000 companies.

The longer-term solution, which could be hard to achieve, would involve restructuring some local-government financing vehicles’ debt and making them commercially viable enterprises. “The goal is not to come out debt free, but for them to become sufficiently profitable companies that don’t rely on governments for funding and support,” said S&P’s Yip.

Serena Ng contributed to this article.

Write to Rebecca Feng at rebecca.feng@wsj.com and Cao Li at li.cao@wsj.com
Title: WSJ: Chinese young "letting it rot"
Post by: Crafty_Dog on December 23, 2023, 03:29:06 PM
https://www.wsj.com/world/china/america-had-quiet-quitting-in-china-young-people-are-letting-it-rot-5f10d4a0?mod=world_feat5_china_pos3
Title: WSJ: Youth unemployment in China well over 20%
Post by: Crafty_Dog on December 29, 2023, 07:33:19 AM
China’s Jobless Don’t Always Show Up in the Data. But They Show Up in the Library.
Unemployed and afraid to tell their families, many need a place to figure out their futures; for some, it’s the stacks
Increasing numbers of people report spending time in the likes of Pudong Library in Shanghai after losing their jobs.
Increasing numbers of people report spending time in the likes of Pudong Library in Shanghai after losing their jobs.
By Wenxin FanFollow
Updated Dec. 24, 2023 12:01 am ET


Every weekday, Qin Ran arrives early at a Beijing public library, settles into her favorite cubicle, and tries to figure out what to do with her life.

It has been two years since the 36-year-old lost her job at a private-equity firm. Yet after a few freelance gigs and submitting a hundred or so résumés, she’s only landed two failed interviews.

She now spends her days browsing social media and studying for a graduate school entrance exam, which she hopes will let her delay the job search until later.

She has also started noticing other people around her age or younger showing up at the library every day. Although jobs aren’t part of the conversation when she talks to them, she says there is an unspoken understanding among them that they are all unemployed.

“It’ll be another 20-plus years before I reach retirement age. Will I have another opportunity to work?” asks Qin. 

China is facing some of its greatest economic challenges in a generation after the country emerged from the pandemic with sluggish growth and record-high youth unemployment. It is a whole new experience for many young Chinese, who until recently had only known a strong job market in which talented people could quit their jobs and find new ones almost immediately.

Many are taking refuge in a place that has long been a bastion for those in need of a place to hang out—or if necessary, hide out: the library.


Some say they feel cooped up at home or are too ashamed to tell their relatives that they lost their jobs, so they have to conjure up places to go during the day.

Hanging out at Starbucks costs money. Passing time in a park—which many Japanese salarymen did after that country’s boom went bust in the 1990s—doesn’t work when the weather is bad.

The idea has spread through social media, as more unemployed people post accounts of their experiences passing days in libraries, inspiring others to do the same. Such accounts have become so common that some readers have suggested an index be created with data from library attendance to better measure unemployment.


Although official unemployment is fairly low at around 5%, economists say that figure underestimates how challenging the job market has become because much of China’s rural population is excluded in the survey. Neither does the rate reflect the number of people who’ve recently lost full-time jobs, because anyone who works an hour or more in a week counts as employed.

Youth unemployment hit a record of 21.3% earlier this year, before the government stopped publishing the data, saying it needed to improve the methodology. Although authorities have promised to bring more jobs to college graduates, many private-sector companies have continued shedding staff.

In Guangzhou, Echo Wan says that as far as her extended family knows, she’s still working in risk control at Alibaba, the giant e-commerce company.

In reality, the 35-year-old quit in October after the company wanted her to move to a new team, which she felt wasn’t a good fit.


“Going to the library feels like the natural thing to do,” says Howie Huang, who spent four months unemployed.
Now, facing a tougher-than-expected job market, she regrets not trying to seek more internal opportunities before Alibaba broke up into six units earlier this year.

She finds some peace in the Guangzhou Library, where she can read or take a nap in one of the armchairs she finds. Otherwise, she works on sending out more résumés highlighting her master’s degree in mathematics and years of experience in risk control. 

Responses have been lukewarm, she says. Her career before now was much smoother, when she was riding the wave of China’s economic boom. “That is something difficult to duplicate at the moment,” she says.

She leaves the library after dinner and arrives home, where she lives with her daughter, her husband and his parents, by 9 p.m.—the time she used to get off work.

Although her husband knows she isn’t working, she has kept it secret from her in-laws. If they found out, they would be nagging her to stay home and have a second baby, she says.

Many unemployed people who pass time in libraries do get new jobs, though the experience sometimes shakes their confidence. 

Howie Huang, 33, spent months going to the sleek Pudong Library every day in Shanghai after he lost his job in information technology this summer. He sent out hundreds of résumés and jotted down his anxieties in an online diary, which he shared publicly.

The diary noted how he concealed his status from his parents, who don’t usually go online, so that they could be spared from worries. In an interview, he mentions a scene in “Tokyo Sonata,” a 2008 Japanese drama in which the protagonist hangs out in a park and a library after losing a position that was moved to China.

“The Japanese spent a whole day in a park during their economic downturn,” Huang says. “Now this is happening to me. Going to the library feels like the natural thing to do.”


Howie Huang was laid off twice in two years but eventually found work again.
After four months, Huang finally landed a new gig, though it involves an 80-minute commute each way. He had already been laid off twice in two years, alarming him after a decade of successful upward mobility.

Many of the most-regular library visitors are recent college graduates, who are among the worst-off in China’s labor market.

In a private library in a mall on the outskirts of Chengdu in western China, one 25-year-old woman, Tian, is growing ever more confused about whether going to college was a waste of her time.

After graduating two years ago, she wanted to get a civil service job for more stability. But that means competing with millions of other new graduates in an exam that only selects 2% of them, and she has already failed once.

While hanging out at the library, she has been studying for another go at the test, while debating whether it might be time to take a modest job beneath her qualifications.

Some of her classmates now make milk tea, she said. State media has been encouraging educated youths to “lose the long gowns”—symbols for learned scholars—and accept whatever work they can find.

“If everyone works in the system, who would be left to heal the pets or bring happiness to others from a coffee shop?” she told herself.

Yet she feels torn every time she is about to give in.

“I studied so hard so that I could have more options,” she says. “What’s the meaning of that?”

Write to Wenxin Fan at wenxin.fan@wsj.com
Title: $10T in local debt?!?
Post by: Crafty_Dog on December 30, 2023, 03:39:54 PM
https://www.msn.com/en-us/money/markets/china-s-10-trillion-hidden-debt-mountain-could-be-the-ticking-time-bomb-that-joe-biden-warned-of/ar-AA1fPx1n?ocid=msedgntp&pc=HCTS&cvid=f2c455f7fcd14ed0860ca7e95fb553b9&ei=15
Title: GPF: China 2024
Post by: Crafty_Dog on January 03, 2024, 08:21:51 AM
January 2, 2024
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2024 Annual Forecast: China
By: George Friedman


Forecasting national behavior is built on continuums. One continuum is a nation’s history. Another is our analytic method. Simply looking at nations will not provide a systematic forecast. The method, no matter how tested in the past, cannot produce one. Only a grasp of history, filtered through a forecasting method tested consistently and repeatedly, will yield a realistic forecast. We don’t look at a nation’s every issue; we focus on the issues that reveal patterns and indicate change. Thus, our forecasts will look at the past before they look at the future.

A Cycle Unfolds

China's central change has long been economic. The country has been impoverished by wars, internal instability and the need to appear to be a great power. For much of its modern history, the Chinese economy remained weak. This shifted around 1982.

There is a cycle to the emergence of major global economies lasting roughly 40 years. It was first seen in the emergence of the United States. Following the U.S. Civil War, the United States was economically shattered. By about 1890, the U.S. began focusing on securing investment from and, even more important, exporting to Europe. By 1910, the United States was producing and selling about half of the world’s manufactured products and exporting them primarily to Europe. This process was broken by about 1929, resulting in the Great Depression. World War I had cracked the foundation of the European economy, and by the mid-1920s, Europe could no longer absorb American production. Forty years after the American surge began, the U.S. economy went into crisis.

A similar process can be seen in post-World War II Japan. Smashed by World War II, the Japanese economy began to recover by focusing on manufactured goods, which were exported primarily to the United States. About 40 years later, U.S. businesses and the economy, overwhelmed by Japanese products, generated political barriers to Japanese goods. The Japanese economy staggered and around 1990 went into a deep recession, which many call the Lost Decade.

China has undergone a similar process. In the early 1980s, the regime shifted the Chinese economy from producing for the domestic market to manufacturing exports, primarily for the U.S. but also for other nations. China sought foreign investment as well. As the American economy and then the Japanese economy appeared unbeatable, China appeared to have taken their place. China was the power exporter and investment target for several decades and appeared to be about to dominate the world. As in the other examples, this process generated economic limits, as well as political ones. The cities and the provinces along the coast got rich, while the poorer, underdeveloped interior regions got left behind. The economy began to weaken in 2020, and by 2022, that weakening accelerated dramatically. As with the other cases, China’s system faced economic and political barriers, and roughly 40 years after it began its rise, the Chinese economy went into failure mode.

It's important to note that in the other two cases, the economic process was closely linked to war. The U.S. went into economic crisis because of the Civil War, had a growth period, and then went into economic crisis as a result of World War I and did not recover until World War II. Japan went into crisis because of World War II and began its transition to recovery during the Korean War when U.S. investment and demand for supplies were critical factors. China did go into economic failure due to World War II and Japanese occupation, but its emergence in the 1980s was not linked to war.

Forecast and Conclusions

We see the Chinese economy slowly emerging from its slump in the year ahead. But China still faces internal tensions within both the population and the regime. The country's economic problems, when viewed closely rather than from the standpoint of models, have created significant instability. All of China’s regions require investment, but the government lacks the resources to invest everywhere, which results in unemployment and business failures. This generates unhappiness in the population and attempts by the government to repress the frustration. We have already seen examples of this in China, and we expect it to continue or accelerate in 2024 with increasingly repressive measures.

The same sort of instability will exist in the regime. We have already seen significant shifts in the government. The president is seeking to build a structure filled with loyalists. He is also seeking highly capable personnel able to develop the country. Many countries around the world seek similar capabilities, but this condition presents a paradox. Loyalty and competence are frequently contradictory. As a result, we would expect personnel shifts to accelerate in 2024.

We do not see military action against the United States in the year ahead, for the same reason that China has bluffed but avoided war in previous years. Any large-scale military operation would have to depend on naval action, and any naval action against the United States means facing large numbers of anti-ship weapons launched not only from the sea but also from bases with multiple layers of defense. The Chinese cannot risk a defeat as it would delegitimize the government. Given the quality of U.S. space-based intelligence and multiple layers of defense and attack, a Chinese victory would be far from certain, and the risk of defeat makes war initiation politically dangerous.

Therefore the major events of 2024 for China will be some degree of economic recovery and managing the unrest. The economy should be steady, and while it may grow in 2024, it will be nothing like it was in the previous growth period.
Title: Gertz: part of Chinese military space program
Post by: ccp on January 05, 2024, 09:16:49 AM
https://www.washingtontimes.com/news/2024/jan/4/china-space-warfare-includes-cyberattacks-jamming-/
Title: Chinese Missile Force Disinformation
Post by: Body-by-Guinness on January 09, 2024, 05:08:09 PM
This piece examines rumor that water was used to “fuel” Chinese missiles, and that silo lids are ill-fitting, concluding it is disinformation, albeit arguing light is nonetheless shed on Chinese intentions.

https://weapons.substack.com/p/water-in-chinese-missiles-unlikely?r=1qo1e&utm_campaign=post&utm_medium=email&fbclid=IwAR1HLSqYQIKvf31PZ_933xROc1w02kvCW9kpyrcwlW3MN0hh9WXOHyDpSKY
Title: Zeihan on Chinese military corruption
Post by: Crafty_Dog on January 14, 2024, 07:49:59 PM
https://www.youtube.com/watch?v=43axCkGrrN4

Also comments on actual capabilities

https://www.youtube.com/watch?v=vn8nKcioRK8
Title: Chinese “Shadow Bank” in Default
Post by: Body-by-Guinness on January 24, 2024, 10:27:12 PM
Harbinger of a Chinese economic issue cascade?

https://chiefio.wordpress.com/2024/01/07/oh-dear-chinese-property-giant-bankruptcy/
Title: Re: China
Post by: Crafty_Dog on January 25, 2024, 05:21:48 AM
BTW compliments on the perfect choice of thread for this one  :-D
Title: Zeihan on the implications of the collapse of Evergrande
Post by: Crafty_Dog on February 02, 2024, 05:14:05 AM
https://www.youtube.com/watch?v=JD3m6U6g53k&fbclid=IwAR3hiosFsERWHf5oYplwMrJ8MLal4krZIqUZ5c6EZGyXdmyyExnUQsiwmMQ
Title: above post China overbuilt housing
Post by: ccp on February 02, 2024, 09:25:11 AM
~ 1.5 billion or more unfilled housing units in China!?  WOW

A collapse in China would be both good and bad for us I am thinking,
since we are so intertwined with them.



Title: Re: above post China overbuilt housing
Post by: DougMacG on February 02, 2024, 10:58:42 AM
"A collapse in China would be both good and bad for us I am thinking,
since we are so intertwined with them."

  - Yes, during the Trump temporary tariffs policy, I was watching and hoping for them to feel the squeeze and come to the fairness and reciprocity trade window instead of what we have now.  As posted then, we had four times the leverage in trade negotiations but it did not work and was interrupted by covid, where their worldwide culpability should have hurt them even worse but it didn't.  The decoupling has begun, both ways, and they have no intention of stepping up anything other than their trade and espionage war against us and to invade Taiwan.

None of that will change under a weak President.  It didn't even change under a strong one.

To the point made, we want them to feel the sueeze and change their ways.  Complete economic collapse is another matter with far higher risks (for us). 

I favor whatever brings about the fall of the oppressive regime. 
Title: Re: China
Post by: Crafty_Dog on February 02, 2024, 03:21:33 PM
"A collapse in China would be both good and bad for us I am thinking,
since we are so intertwined with them."

Or we could say that it is a certain slice of our elites who are so intertwined with them and that this will be a very good thing for clarifying their "loyalty" to America once again while diminishing their influence in our government.
Title: China & Red Sea Shipping: Heads they Win, Tails they Win Too
Post by: Body-by-Guinness on February 08, 2024, 10:06:32 AM
The reason Beijing seems so relaxed about the crisis is obvious: this is a situation in which China wins either way. Either the threat continues but shipping is safer for Chinese vessels than for others, in which case sailing under the protection of the red and gold flag may become a coveted competitive advantage, or Beijing finally tells Iran to knock it off, in which case China becomes the de facto go-to security provider in the Middle East. Both outcomes would be geopolitical coups. No wonder China is willing to accept a little short-term economic pain as the situation plays out.

– Nathan Levine

https://www.samizdata.net/2024/02/samizdata-quote-of-the-day-either-way-china-wins/
Title: Re: China
Post by: Crafty_Dog on February 08, 2024, 02:33:22 PM
BBG: This thread is for domestic Chinese issues.

Yours could go on the FUBAR thread or the Iran thread.
Title: GPF: China's Deflation Spiral
Post by: Crafty_Dog on February 17, 2024, 06:43:44 PM


February 17, 2024
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China's Deflation Spiral
Reversing the trend becomes more difficult the longer it lasts.
By: Geopolitical Futures
Chinese Economic Deflation

(click to enlarge)

Recent data show China experiencing its sharpest decline in consumer prices in over 14 years, while producer prices fell by 2.5 percent, dropping for the 16th month in a row. This situation indicates a significant risk of prolonged deflation in China, exacerbated by challenges like a real estate slump, stock market downturn, loss of investor confidence, weaker exports and low consumer demand. Despite expectations for a temporary price rebound in February due to Lunar New Year demand, China's economic issues – excess supply, insufficient demand and financial strain – persist.

China's deflation is impacting the global economy, potentially accelerating interest rate cuts in emerging markets reliant on Chinese goods and raising concerns in the West about competitive disadvantages due to cheaper Chinese exports. This scenario suggests a global influx of low-priced imports as China seeks international buyers, which, while tempering inflation in some regions, poses broader economic challenges.
Title: Anger grows at shadow banks
Post by: Crafty_Dog on February 18, 2024, 04:07:53 PM
https://www.theguardian.com/business/2024/feb/18/anger-grows-at-china-struggling-shadow-banks
Title: China’s Stock Market Tanking
Post by: Body-by-Guinness on February 22, 2024, 07:59:03 PM
Zero Hedge has its hyperbolic moments, but this post describing China’s failing stock market (which has lost $6 trillion) appears well documented.

https://www.zerohedge.com/markets/china-bans-stock-selling-market-open-close-limits-shorting?fbclid=IwAR2ZuB8G29gX5wl0Y5DJP_IOPohxap4_Mr3owGeUH2lDAeNz7v3kecuxYP0
Title: GPF: A Rare Bail Out
Post by: Crafty_Dog on March 20, 2024, 10:07:32 AM
March 20, 2024
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A Rare Bailout in China Sends Mixed Signals
Beijing hopes the illusion of improvement in the real estate sector will bring back foreign investors.
By: Victoria Herczegh

After years of trying to stabilize its troubled real estate sector, Beijing has unexpectedly intervened to support Vanke, the country’s second-largest property developer. This follows a downgrade in Vanke's credit rating to Ba1, considered junk status, by Moody’s. Chinese state media reported that 12 major banks, including the top six state-owned lenders, are arranging a syndicated loan of 80 billion yuan ($11 billion) for Vanke to help it meet upcoming repayment deadlines. The surprise intervention suggests the Chinese government may now offer stronger financial aid to prevent company collapses. Yet, with this initial bailout for Vanke, Beijing risks sending the wrong signal about its ability and willingness to offer similar support to other failing developers.

China’s strategy to stabilize the real estate sector has looked wobbly for some time. Since mid-2021, major developers have been defaulting on or delaying debt payments due to a liquidity crisis exacerbated by a regulatory crackdown on high leverage. The government’s previous measures to control housing prices, such as limiting purchases and setting price caps, have largely failed and were soon discarded. In 2023, property sales fell by 6.5 percent from the previous year, while property investment dropped by 9.6 percent, the second consecutive year of decline. Real estate behemoth China Evergrande Group collapsed in January and Country Garden Holdings faces liquidation in Hong Kong, despite earlier beliefs in their stability. Similarly, Vanke was considered financially robust until it revealed its financial troubles. What is unclear is why the Chinese leadership is now willing to rescue such struggling developers. After all, recent statements from the Communist Party’s annual “two sessions” meeting clarified that struggling companies should face bankruptcy and restructuring without expecting significant government help.

Vanke stands out from companies like Evergrande and Country Garden because it is partly state-owned; around 30 percent belongs to Shenzhen Metro, overseen by Shenzhen's state asset regulator. The State-owned Assets Supervision and Administration Commission of the State Council, or SASAC, manages such enterprises. Beijing's support for Vanke likely stems from its partial state ownership. Specifically, the collapse of a state-backed entity would challenge the Communist Party's credibility. A rescue, on the other hand, aligns with President Xi Jinping's emphasis on state control, especially in critical sectors like real estate. Vanke's situation is also significant because of its location in Shenzhen, a key tech hub. With the government keen to bolster high-tech industries following a lengthy crackdown, maintaining stability in Shenzhen is crucial.

A more ominous possible explanation for China’s U-turn is that leaders have become alarmed by the continued reluctance of foreign investors to return to business as usual with Beijing. Despite China's efforts to attract foreign investment through expos, sending business leaders abroad and repeatedly promising better conditions for foreign firms, direct investment liabilities dropped in the third quarter of 2023 for the first time since 1998. Companies are increasingly leaving China for Southeast Asia, India or Western countries, signaling that the situation may not improve soon. In addition to the country’s persistent economic challenges, a major deterrent for foreign companies is China's stricter regulatory measures under Xi, including amendments to the state secrets law and enforcement of a broader definition of espionage. There are some bright spots, like the fact that German foreign direct investment in China rose by 4.3 percent to a record 11.9 billion euros ($12.9 billion) last year. But a few megafirms concentrated in a handful of sectors will not provide enough outside investment to drive significant growth.

The fact remains that China’s leaders are not ready or willing to alter their market practices. Instead, they aim to attract foreign capital by creating the illusion of improvement, particularly in troubled areas like real estate. The collapse of partially state-owned firms such as Vanke would undermine this effort. However, bailing out the company risks creating the perception that Chinese banks can and will rescue other struggling developers, when in fact this bailout is likely a one-off. China’s banks, burdened with extensive mortgage loans, cannot bear further developer debts without risking their own stability.

Beijing likely hopes that recent economic bright spots, driven by manufacturing and fixed-asset investment, can fund the Vanke bailout and protect its reputation, delaying a severe debt crisis. But delaying is not solving, particularly if the tactics employed lead to moral hazard. One way or another, China’s over-indebted property market will continue to unwind. There is little that Chinese leadership can do but focus on the areas of the economy that are showing improvement and use the gains from these sectors to mitigate the downturn.