Dan Drezner makes the case.

Posted by Kevin Sullivan at 3:25 PM | Email Author | Permalink

John Pomfret in the Washington Post sounds the alarm on China:

China's government has embraced an increasingly anti-Western tone in recent months and is adopting policies across a wide spectrum that reflect a heightened fear of foreign influence.

The shift has accelerated as China has emerged stronger from the global financial meltdown, with a world-beating economic expansion rate and a growing nationalist movement. China has long felt bullied by the West, and its stronger stance is challenging the long-held assumption shared among Western and Chinese businessmen, academics and government officials that a more powerful and prosperous China would be more positively inclined toward Western values and systems.

While the lede sounds ominous, there's nothing in the piece to substantiate that level of alarmism. What's more, in an article purporting to show China rebuffing the West across "a wide spectrum," there's no mention of China's military or Taiwan. That seems like a pretty significant omission.

And I think it shows that U.S. policy, in a perverse way, may have thus far succeeded with China. The U.S-China competition, as noted by the piece, is purely economic. That doesn't mean the competition doesn't carry damaging consequences. The uptick in complaints about currency manipulation suggests it does. But given that some form of competition with a rising China is inevitable, wouldn't it be preferable that it occur along the economic spectrum, and not a showdown over Taiwan or another security-related issue?

Stepping back, two administrations have now premised their engagement with China along the "responsible stakeholder" paradigm. As China developed, we would afford them a greater say in the international system so long as they accepted that system as the basis for world order. But with China failing to tow the Western line on climate change and Iran (and taking a number of other countries, including democratic ones, with them) and evidence emerging that they're gaming the international economic system to their advantage, this position seems less tenable. And while the U.S. still acts as if trading off against a hierarchy of interests flies in the face of all that is good and proper, it may be the future of stable relations with China (and other emerging powers) depends on it.

(AP Photo)

Posted by Greg Scoblete at 7:24 AM | Email Author | Permalink

Today, the Associated Press reported on the wrap-up of China's National People's Congress. A largely rubber-stamp legislative body of 3,000 delegates, this year's Congress passed the Communist Party government's annual report with 97.5 percent approval.

Although not a central part of the story, the article goes on to state the following:

"Delegates, who include hundreds of army officers, themselves are carefully vetted by Communist Party officials and selected in a perfunctory election by lower-level committees." [Emphasis added]

It's true that most of these delegates are predetermined in the high-level politics of China, yet the abundance of reporting out of the West on the "perfunctory" processes in Chinese politics understandably skews the perception of its audiences. As much as those in America or elsewhere buy into the common narrative that China is a near-totalitarian regime, it has been experimenting seriously with inner-party democratic reform in lower level elections for over 14 years.

According to one report (PDF) by Joseph Fewsmith in the China Leadership Monitor , in 2001-02, about 5,000 of 16,000 official positions were chosen through elections, some more democratic than others. In some places, there have even been direct, competitive elections for a position, called a “public recommendation, direct election” (公推直选).

And aside from the institutionalized democratic processes, like elections, there are all types of democratic negotiating in China via social movements -- a field which I research. For example, workers might protest over nonpayment in China's southern sunbelt region and, wanting not to risk larger instability, local governments appease their demands. Democracy is more than punching a ballot.

Is China a one-party state? Yes. Is it more repressive than most states in the West? Yes.

But these facts are beside the point. Westerners, and particularly Western media and newswires, have to start seeing some of the complexity in the gigantic world of Chinese politics. As much as it confuses our worldview, we might have to decide that China is not Big Brother.

Kevin Slaten was a junior fellow in the China Program at the Carnegie Endowment for International Peace. Now, he lives in Taiwan on a Fulbright Grant. His opinions in no way reflect the views of the State Department or Foundation for Scholarly Exchange. He blogs at http://www.kevinslaten.blogspot.com/.

(AP Photo)

Posted by Kevin Slaten at 3:30 PM | Email Author | Permalink

Evan Feigenbaum at Asia Unbound wonders why it's so "hard to turn common interests with China into complementary policies." His answer:

First, Beijing rarely shares American threat assessments. And China’s leaders, even when they do sense a challenge to “stability,” are far more relaxed than are Americans about the scope and nature of those threats.

This is certainly true of Pakistan, where Beijing trusts the military’s instincts and senses little threat to the Pakistani state. It’s true of Iran. And it’s true of North Korea, which few Chinese believe will collapse and where a managed transition toward Chinese-style reform is the medium-term outcome China seeks to achieve.

Second, even when Beijing shares America’s sense of threat, countervailing interests still obstruct cooperation.

In Afghanistan, for example, China certainly shares America’s core interest: a stable Afghan state that does not harbor, nurture, or export terrorism. But Chinese decision-makers become uncomfortable when told that the path to victory might require a long-term NATO presence on China’s western border, U.S. bases or other military arrangements in Central Asia, and enhanced U.S. and NATO strategic coordination with neighbors that have had difficult relations with China.

Likewise on North Korea and Iran. It may well be that China doesn’t wish for a nuclear North Korea. But its emphasis on stability over and above every other objective puts it at odds with Washington and with the present government, at least, in Seoul about how to rank that objective relative to all others.

Feigenbaum later lauds the U.S. provision of "public goods" for the international system but of course the proffering of those goods is precisely why the U.S. feels threatened by things that most countries aren't nearly as concerned with. In such an environment, why would we expect other countries to put their economic interests aside to help us?

Posted by Greg Scoblete at 9:06 AM | Email Author | Permalink

Danielle Pletka laments the end of American civilization as we know it:

Consider that the president’s own staff can’t gin up a single special relationship with a foreign leader and that the once “special relationship” with the United Kingdom is in tatters (note the latest contretemps over Secretary of State Hillary Clinton’s bizarre intervention on the Falkland Islands); that neither China nor Russia will back the United States’s push for sanctions against Iran; that Iran, it seems, doesn’t want to “sit down” with the Obama administration and chat; that the “peace process” the president was determined to revive is limping pathetically, in no small amount due to missteps by the United States; that one of the key new relationships of the 21st century (advanced by the hated George W. Bush)—with India—is a total mess; that the hope kindled in the Arab world after Obama’s famous Cairo speech has dimmed; that hostility to America’s AfPak special envoy Richard Holbrooke is the only point of agreement between Delhi, Islamabad, and Kabul; that there isn’t a foreign ministry in Europe with a good word to say about working with the Obama White House; that there is a narrative afoot that began with the Obama apologia tour last year and will not go away: America is in decline.

Too many of these problems can be sourced back to the arrogance of the president and his top advisers. Many of Obama’s foreign policy soldiers are serious, keen, and experienced, but even they are afraid to speak to foreigners, to meet with Congress, or to trespass on the policy making politburo in the White House’s West Wing. Our allies are afraid of American retreat and our enemies are encouraged by that fear. George Bush was excoriated for suggesting that the nations of the world are either with us or against us. But there is something worse than that Manichean simplicity. Barack Obama doesn’t care whether they’re with us or against us.

And that's in just one year! Imagine how much he'll have ruined by 2012!

Needless to say, I find all of this to be a bit exaggerated, and even a bit disingenuous. Keep in mind that many once thought it cute or tough to alienate and insult allies; designating them as 'old' and 'new' Europe, for instance. When the Bush administration ruffled feathers it was decisive leadership; when Obama does it it's the collapse of Western society as we know it. Pick your hyperbole, I suppose.

After eight years in office, did President Bush actually leave us with a clear policy on ever-emerging China? How about the so-called road map for peace? How'd that work out? Did President Bush manage to halt Iranian nuclear enrichment, or did he simply leave Iran in a stronger geopolitical position vis-à-vis Iraq and Afghanistan?

Pletka attributes many of these perceived failings to "arrogance." But it has been well documented that the previous administration was also stubborn, resistant to consultation and set in its ways. How then, if Ms. Pletka is indeed correct, has this changed with administrations?

Pletka scoffs at the president's insistence that policy is "really hard," but he's right - as was George W. Bush when he said it. Perhaps, just perhaps, the problem isn't what our presidents have failed to do, but what we expect them to do in an increasingly multipolar, or even nonpolar world?

(AP Photo)

Posted by Kevin Sullivan at 8:50 AM | Email Author | Permalink

Nikolas Gvosdev writes:

Two years ago, Washington was abuzz once again with the prospects for a “League of Democracies” that would support U.S. global leadership. But in the aftermath of Cyclone Nargis, which devastated Burma/Myanmar, a very clear rift opened up between the democracies of the advanced north and west, which advocated an intervention on humanitarian grounds, and the democracies of the south and east, which proved to be far more receptive to China’s call for defending state sovereignty. In the Doha round of trade talks and in the ongoing climate change negotiations, the leading democracies of the south and east—Brazil, Mexico, South Africa, India and Indonesia among them—have tended to line up with Beijing instead of joining Washington’s banner.

The entire National Interest piece is worth a read, but regarding this snippet I would argue that if it's a "League of Pliancy" Washington had hoped for, then perhaps it should start viewing the world the way Vladimir Putin does. A key tenet of President Bush's so-called freedom agenda was that a more democratic world meant a safer world. I'm sure that's true. But it also means a more pluralistic world; one with many voices, and many interests.

This world could be a great place to live, if there were actually an international system to help guide and support emerging democracies alongside the already ensconced ones. But this is one of the freedom agenda's key failings: more democracy means more interests, which of course makes it harder for countries, such as the United States, that are used to dealing with more pliant actors.

Interests and emerging democrats will continue to overlap and conflict in the coming years, which is why it's imperative that our public officials learn how to lead in an increasingly multipolar tug of war around the globe. From what we've seen so far, I wouldn't hold your breath for such nuanced understanding in 2010 or 2012.

UPDATE:

Larison adds his own thoughts to the multipolarity vs. exceptionalism debate, and calls a bluff on Obama's neoconservative critics:

To take their criticism seriously, we would have to believe that his critics accept the reality and inevitability of multipolarity, and we would have to believe that they also accept the relative decline in American power that this entails. Of course, they don’t really accept either of these things. For the most part, they do not acknowledge the structural political reasons for resistance to Obama’s initiatives, and they recoil from any suggestion that America needs to adjust to a changing world. They locate the fault for any American decline entirely with Obama, because he fails to be sufficiently strong in championing U.S. interests. “Decline is a choice,” Krauthammer says, and he accuses Obama of having chosen it.

Posted by Kevin Sullivan at 7:17 AM | Email Author | Permalink

Zogby has a new poll out:

More than twice as many U.S. adults (58%) say that debt owed to China is a more serious threat to the long-term security and well-being of the U.S than is terrorism from radical Islamic terrorists (27%).

Interestingly there was little variation by party identification with a majority of Democrats, Republicans and independents all agreeing that the debt owed by the United States to China poses the greater threat. Opinion was consistent across all other major demographic and political sub-groups.

While I don't think terrorism is the most serious long-term threat we face, I don't think the debt issue vis-a-vis China is a huge problem either (in fact, it could potentially stabilize the relationship in what some have dubbed a "financial balance of terror"). The problem is the debt itself, not who we owe the money to.

Posted by Greg Scoblete at 12:08 PM | Email Author | Permalink

Austin Ramzey reports for Time that China has dialed back its defense outlays and seeks to explain why:

Amid those economic demands, another double-digit increase in military spending might be seen as excessive. But perhaps the most compelling reason for the slowdown in spending is that Chinese officials have become more cautious of the way the development of the People's Liberation Army is perceived abroad. Last year China marked the 60th anniversary of the founding of the People's Republic with an Oct. 1 military parade in front of Tiananmen Square. While generally a cause for celebration in China, the parade of soldiers, tanks and missile carriers was seen as intimidating by many foreign observers.

(AP Photo)

Posted by Greg Scoblete at 10:44 AM | Email Author | Permalink

KAOHSIUNG, Taiwan -- Two months ago, Haiti lost over 200,000 people to a magnitude 7.0 earthquake. Last week, Chile saw about 800 casualties and extensive from an 8.8 rumble. As I drank my coffee this morning, my apartment in Kaohsiung City, along with the rest of Taiwan, was shaken by a 6.4 quake. As of now, there are 13 people injured as a result.

Damage in Haiti (Washington Post).

The earthquake's epicenter was in Kaohsiung County, so the city was particularly susceptible. Yet students stayed in school and most businesses operated in their normal fashion -- although President Ma Ying-jeou canceled his day's schedule to respond to the quake's damage.

Despite similar seismic conditions, Taiwan fared tremendously better than Haiti. (Sure, a 6.4 is six times less powerful than a 7.0, but how many times must you multiply 0 casualties to get 212,000?) In fact, Kaohsiung even has three times the population as Port-au-Prince.

The obvious factor in the disparate outcomes is economic development, where Taiwan has had a far greater capability to prepare for such quakes -- though the enforcement of building codes has been questioned by some. Even Chile, suffering such a strong seismic event, saw relatively few deaths in the context of Haiti. To the Chileans' credit, they have also invested extensively in preparedness. Yet it is also notable that inequality in Chile is about five times greater than in Taiwan, so there are more vulnerable people in Chile during a quake.

Earthquake deaths seem to be rough, natural indicators of equitable development -- or lack thereof. You can even look at a similar region over time: compare the deaths in undeveloped California during a 1906 quake of 7.8 and a 1992 quake of 7.3. The former, in San Francisco, took 3,000 lives, while the latter, near Los Angeles, killed exactly two people.

What doesn't change with development, though, is the instant feeling of uncertainty one experiences as Earth swings your apartment building around you.

Kevin Slaten was a junior fellow in the China Program at the Carnegie Endowment for International Peace. He now lives in Taiwan on a Fulbright Grant. His opinions in no way reflect the views of the State Department or Foundation for Scholarly Exchange. He blogs at www.kevinslaten.blogspot.com.

Posted by Kevin Slaten at 10:12 AM | Email Author | Permalink

Dan Drezner chimes in:

1) China is cozying up to a powerful country on the periphery of the Middle East;

2) Because of its religion and periodically bellicose foreign policy, that country that is viewed as an outsider by the Arab Middle East;

3) This country is pursuing internal security policies that would generously be described as "controversial" by the rest of the world;

4) It's Middle East policy can have pronounced effects on China's own domestic politics;

5) All the while, Chinese energy dependence on the region is increasing rapidly.

Welcome to the Middle East, China!!

Indeed, although thus far that growing presence has been done on the cheap.

Posted by Kevin Sullivan at 8:39 AM | Email Author | Permalink

Tom Barnett explains how China could reap the long-term benefits of the Iraq War:

Will the Chinese begin to assume the same kind of security role that the U.S. has historically played in the region anytime soon? Hardly. And yet China's increasing presence throughout the region already alters the correlation of forces. China's national oil company, Sinopec, is the only foreign firm to date to win oil access in both Iraq's Kurdish region and the south. Given Baghdad's ambition and Beijing's unquenchable thirst, the two are a match made in Big Oil heaven -- with Washington's blessing.

And more importantly, with Washington's security. China gets another energy source, minus the nasty byproducts and backlash that come with regional hegemony. Meanwhile, we will have spent approximately $2 Trillion to give China more markets in which they will attempt to supplant the dollar.

(AP Photo)

Posted by Kevin Sullivan at 4:15 PM | Email Author | Permalink

No doubt there are some who will take a report via Reuters that a 'senior' Chinese military officer wants to challenge the U.S. militarily as a bad sign:

The call for China to abandon modesty about its global goals and "sprint to become world number one" comes from a People's Liberation Army (PLA) Senior Colonel, Liu Mingfu, who warns that his nation's ascent will alarm Washington, risking war despite Beijing's hopes for a "peaceful rise."

While this quote and other points may seem ominous, this is far from a clarion call, nor a shift in China's policy. First of all, this is not a new theory, and is best outlined in John Mearsheimer's The Tragedy of Great Power Politics and a position which he has taken several times since. Secondly, this is not a policy paper, but a privately published book which the author admits is his own opinion, and is probably hyperbolized to generate sales. Finally, the author is a senior colonel, which sounds impressive, and is certainly not a junior rank, but is also not in a position of any real power either. In the end, the context does not really inspire awe.

Posted by David Benson at 12:28 PM | Email Author | Permalink

Rasmussen Reports notes that the public views China as a "long-term threat" to America:

Half the nation’s voters (50%) view China as a long-term threat to the United States, according to a new Rasmussen Reports national telephone survey. Fueling this sentiment is concern over how much U.S. debt China now owns and the expectation that China will use that debt against the United States at a later point in time.

Just 21% do not believe China is a long-term threat, but another 29% are undecided.

Eighty six percent (86%) of voters are at least somewhat concerned about the level of U.S. debt now owned by China, including 62% who are very concerned. Just 11% voters are not very or not at all concerned about how much U.S. debt China now owns.

Seventy-three percent (73%) believe it is at least somewhat likely China will use this debt against the United States in some fashion within the next five years. That number includes 45% who believe it is very likely. Only 16% say China is unlikely to use the debt against America, but that finding includes just two percent (2%) who say it's not at all likely. Twelve percent (12%) are undecided.

Posted by Greg Scoblete at 10:19 AM | Email Author | Permalink

A new Washington Post/ABC News poll takes stock of American attitudes on China:

Asked whether this century would be more of an "American Century" or more of a "Chinese Century," Americans divide evenly in terms of the economy (41 percent say Chinese, 40 percent American) and tilt toward the Chinese in terms of world affairs (43 percent say Chinese, 38 percent American). A slim majority say the United States will play a diminished role in the world's economy this century, and nearly half see the country's position shrinking in world affairs more generally.

The poll also found an America more or less resigned to playing a more reduced role in world affairs. 40% said it was neither good nor bad that the U.S. would play a smaller role in the world economy (vs. 15% who said it was good and 43% who said it was bad). The same 40% expressed ambivalence about the U.S. playing less a role in world affairs.

Posted by Greg Scoblete at 8:09 AM | Email Author | Permalink

David Shorr at Democracy Arsenal thinks I'm preemptively stealing the Obama administration's thunder by crediting Saudi arm twisting for getting China to sign onto Iran sanctions (if they do):

I can understand the argument that the Saudis get credit for pushing the sanctions across the finish line, but this analysis applies a pretty steep discount to all the earlier diplomatic work.

A fair point and I should clarify that if we define "engagement" to mean realigning the material incentives that confront the nations considering sanctions against Iran, then yes, the administration will deserve credit for effective diplomacy if China signs onto tough sanctions.

But if we define engagement to mean what I took the administration and its supporters to mean, that President Obama's efforts to improve America's image abroad have made cooperation on Iran sanctions more probable, than I'm not convinced. First, it posits a relationship between global public opinion and the decisions of leaders of autocratic states that I do not believe exists. Second, it holds that all that was missing on the part of the U.S. was a "good faith" effort to engage the Iranians to show China and Russia that Iran was truly intransigent.

But were China and Russia really holding off on sanctions because they felt the U.S. was insufficiently sincere in its efforts to reach a negotiated settlement? Or did they take a look at what they stood to gain and lose and decided they had more to lose through sanctions and then used whatever excuse was handy to gum up the works?

Shorr believes that the Saudis are dragging China across the finish line, as if this is a final nudge before getting them on board. I don't think that's right. Dennis Ross, who is the White House point man on Iran, laid out his plan in Myth, Illusions and Peace for how to leverage the Saudis against China. Here's what Ross wrote:

China may seem to be a difficult case because it does receive about 13 percent of its oil from Iran. But make no mistake, if the Chinese had to choose between Iran and Saudi Arabia, they would choose the Saudis. They have massive new investments in Saudi petro-chemicals and are jointly financing new oil refineries, and the Saudis have agreed to fill a strategic petroleum reserve for China. Business is business, and the Chinese have a higher stake in Saudi Arabia than in Iran.

If Saudi Arabia is indeed cooperating with the U.S. in threatening China's economic interests in the Kingdom, and China relents, that is carrying them a considerable distance. And it has zero to do with how many people love America around the world or how sincere we were in dealing with Iran's clerical rulers.

But Shorr also holds out a more intriguing message that the U.S. should deliver to China - it is their responsibility to help the U.S. hem in Iran's nuclear ambitions in the name of regional stability:

The United States' strategy should be for all major powers to be status quo powers -- influential nations that share the responsibility for essential stability and a basically functioning world, as opposed to a more chaotic one.

I generally agree with this position but I worry about how it looks the more the relative balance of power shifts, as it is expected to do. We want China to be a "status quo" power because the present status quo is overwhelmingly favorable to us - it is one that we have shaped and led. Makes sense for us, but why is this a compelling message to China? And how much can we make it "worth their while" without starting to surrender important parts of that system?

As I understand it, the present status quo posits that the U.S. has a right to establish a worldwide constellation of military bases in the name of securing the global commons. As China's military capabilities improve, would we afford it room to do some of this policing, or view these moves as threatening our interests?

The U.S. has a right to travel halfway around the world to knock off a leader it objects to, without UN Security Council approval. Does China? The U.S. has the right to declare the Non Proliferation Treaty sacrosanct with respect to Iran, but not India. Does China get to carve out exceptions too? We can sell arms to autocrats in the Persian Gulf, who torture, decapitate, lash and crucify people, but China is being "irresponsible" in dealing with Africa's thuggish leaders. We can proclaim loudly and repeatedly that we have devised the best system of government and will see to it that it is spread everywhere - for the sake of our very security. China, presumably, enjoys no such missionary mandate.

Having China enhance the world's stability means that they'll embrace Washington's policy goals, something they appear less inclined to do by the day. And while I think the "responsible stakeholder" rhetoric is a wise tact for the U.S., it's important to acknowledge that the idea of "international responsibility" - where responsibility is defined as signing onto the U.S. or Western agenda - is a conceit. We need to ask why, as she grows ever more powerful, would China want to lock in an arrangement where they are the junior partner in Washington's world order? If the shoe were on the other foot, would we be so satisfied?

(AP Photo)

Posted by Greg Scoblete at 2:22 PM | Email Author | Permalink

Angus Reid finds that despite Chinese protests, most Americans support President Obama's decision to meet with the Dalai Lama:

In the online survey of a representative national sample of 1,004 American adults, 64 per cent of respondents agree with President Obama meeting the Dalai Lama in the U.S. Clear majorities of Democrats (65%), Republicans (59%) and Independents (63%) are in favour of this meeting....

Almost three-in-five Americans (57%) believe the U.S. should provide an official welcome to the Dalai Lama similar to the welcome offered to other religious leaders.

Full results here (pdf).

(AP Photo)

Posted by Greg Scoblete at 5:13 PM | Email Author | Permalink

To pick up on Kevin's point below, one of the rationales for sustaining American predominance in the Persian Gulf is to preemptively thwart a similar bid from China. If we are the arbiters of oil security, the theory goes, the Chinese will be reliant on the U.S. as she becomes ever more dependent on the stuff for her economy.

With Secretary Clinton's swing through the Middle East, we're calling in those chips:

Secretary of State Hillary Clinton flew to the Gulf on Sunday to seek oil-rich Saudi Arabia’s help in pressing China to join the US drive for sanctions against Iran, aides said. The US chief diplomat’s three-day trip to Qatar and Saudi Arabia is also aimed at enlisting broader regional support, including Turkey’s, in a drive to stop Iran’s sensitive nuclear work, her aides told reporters.

Note that we're not using our leverage over the region's oil producers to actually weaken China. Instead, we're cashing in our leverage in the Middle East in a desperate bid to.... maintain our leverage in the Middle East. We are, in effect, asking China to support an American policy designed, at least in some measure, to keep China in a state of strategic dependency vis-a-vis the United States. I guess we're about to see whether the Chinese value the emergence of another power in the Middle East or whether they like seeing America bogged down "policing" the place.

Posted by Greg Scoblete at 8:04 AM | Email Author | Permalink

Blake Hounshell writes:

First, let's get one thing straight: There will be no tough sanctions. As FP's Colum Lynch has reported, China doesn't even have a go-to Iran hand right now, and has shown little interest in damaging relations with a country that supplies 11 percent of its oil imports. Beijing will see to it that whatever sanctions do pass the U.N. Security Council are toothless, as the Chinese have done on all previous occasions. They'll give just enough to allow the Obama administration to say it passed something, while wringing concessions out of Washington that we may never know about.

Hounshell makes a fair point, although I'd imagine Washington's sales pitch will go something as follows: OK, that's where you get 11 percent of your oil, but where's the other 89 percent coming from these days? While Beijing worries about easy access to 11 to 14 percent of its oil, the West could attempt to make getting the other 80 to 90 percent more difficult. Faced with that option, perhaps China yields. Who knows. China has done a lot of prospecting and signed a lot of dotted lines in Iran, but questions remain - mostly due to preexisting sanctions - over whether or not heavier long-term investment in Iran will go smoothly. China is sitting on all these oil and gas exploratory contracts, fully aware that they lack the full tech and know-how to actually extract it all.

But there's another argument to be made, and I believe we're now hearing it from Secretary Clinton, who recently said:

"China will be under a lot of pressure to recognize the destabilizing impact that a nuclear-armed Iran would have in the Gulf, from which they receive a significant percentage of their oil supply."

Hint, hint: the more you invest in the Middle East, the more you have to invest in keeping the region safe and secure. Or, in short, the Biggie Smalls Doctrine. See U.S. foreign policy (1980 - present). Does Beijing wish to embed itself in the region as the United States has? Does China want its consumption costs tied to that instability? Washington, in making a kind of anti-hegemonic appeal, might be hoping the trouble is more than China's willing to endure.

Posted by Kevin Sullivan at 6:49 AM | Email Author | Permalink

Harsh Pant in the Japan Times gets hyperbolic about China's building of bases overseas, and claims that this is a sign that Beijing is going to pursue an aggressive foreign policy:

Now, however, one of the most prominent foreign policy thinkers in China is suggesting that establishing bases overseas is a Chinese right that the government cannot ignore. Shen Dingli, a professor at Fudan University in Shanghai, asserts that "it is wrong for us [China] to believe that we have no rights to set up bases abroad."

Dingli argues that it is not terrorism or piracy that poses the greatest threat to China's interests, but rather the potential of other states to block China's trade routes. To prevent this from happening, China, according to Dingli, needs not only a blue-water navy but also "overseas military bases to cut the supply costs."

There are plenty of reasons to believe that China is not a benign actor within the system, anyone who doubts this needs look only at the reaction China had to the Google 'incident.' Nevertheless, pointing to an article by a professor at a university only serves to muddy the waters. While Fudan University (复旦大学) is one of the top schools in the country, there is no reason to believe that Prof. Shen has any additional influence in government than any other professor. Moreover, part of the academic job description is to propose and debate ideas, whether they are realistic or not.

In the end, governments do what they want to further their interests as they see fit. While China did mull the idea, it was already ruled out before Prof. Shen published his paper. When looking at policy, we should do well to remember that academics' direct influence on foreign policy is generally low. After all, many of the top 'foreign policy thinkers' in the United States, of all political stripes and ideological persuasions took out an ad opposing the Iraq War, and we all know how that turned out.

Posted by David Benson at 4:10 PM | Email Author | Permalink

Sometimes people forget that China remains an authoritarian regime, but unfortunately, they cannot go long without reminding us:

It is strange to me that Liu Xiaobo has not received the attention that other causes celebres do. If there is any modern analog to Ghandi, or Martin Luther King, it is probably Liu Xiaobo. Poignantly, he is only accused of signing the Charter 2008.

For more news on issues from around the world check out the Real Clear World videos page.

Posted by David Benson at 10:25 AM | Email Author | Permalink

The economic recession is now out of its most acute phase, but the systemic damage and slow recovery will be felt for years in many Western countries, particularly the U.S. Conversely, China grew at about 8% last year and a top Chinese think tank has predicted 10% growth in 2010. As China roars into its year of the Tiger, America will be dealing with high unemployment and low single-digit growth for half a decade or more.

If we were to deem 2010 as a starting point for evaluating future economic prospects, China obviously has a leg up over the U.S. from the get-go, in terms of growth potential.

But which country is better positioning itself for long-term growth? Two decades from now, the gears of national economies will be churning without the last century's most popular lubricant: oil. In a future of oil scarcity, will the U.S. or China be more prepared?

Continue reading "China's Preparing for Oil Scarcity, But Is America?" »

Posted by Kevin Slaten at 9:24 PM | Email Author | Permalink

Writing in the New Republic, Matthew Kroenig offers one of the sharper takes I've read on the strategic implications of an Iranian bomb and why those implications mitigate against Chinese and Russian cooperation with the U.S.:

The United States’ global power-projection capability provides Washington with a significant strategic advantage: It can protect, or threaten, Iran and any other country on the planet. An Iranian nuclear weapon, however, would greatly reduce the latitude of its armed forces in the Middle East. If the United States planned a military operation in the region, for example, and a nuclear-armed Iran objected that the operation threatened its vital interests, any U.S. president would be forced to rethink his decision....

Some analysts argue that we shouldn’t worry about proliferation in Iran because nuclear deterrence will work, much like it worked during the Cold War. But from Washington’s point of view, this is precisely the problem; it is more often than not the United States that will be deterred. Although Washington might not have immediate plans to use force in the Middle East, it would like to keep the option open.

This is, in a nutshell, the threat from Iran. Few people seriously believe Iran is going to use a nuclear weapon, but it is very reasonable to think that the strategic fallout from an Iranian bomb would be less American freedom of action in the Middle East. But is that conventional wisdom correct? Consider Pakistan. They have nuclear weapons and we nonetheless threatened them after 9/11 and invaded a neighboring country to depose a government Pakistan was allied with. Russia and China have nuclear weapons, but that has not stopped the U.S. from moving into Central Asia.

A nuclear weapon is certainly invaluable for saving your own skin (see North Korea), but it's not worth much to other countries unless you're willing to explicitly extend them the benefits of your nuclear deterrent, like the U.S. has done with some of its allies. Looking at the Middle East, there aren't too many likely recipients for an Iranian nuclear umbrella (and developing the capabilities to credibly offer one is extremely expensive). So about the best a nuclear bomb would do for Iran is prevent U.S. military action directly against them. (And consider too that the first Gulf War against Iraq saw the U.S. attack a country with WMD.)

In other words, it's likely that the U.S. would still be able to project power in the Middle East with an Iranian bomb. In fact, a nuclear Iran would almost certainly see a sharp increase in American power in the region (as we have already seen) as the U.S. moves to contain Iran.

But this just underscores the difficulty in enticing China and Russia to help: we can't tell them that a nuclear Iran is a threat to them, because it isn't. We can't say that a nuclear Iran would prevent their freedom of movement in the Middle East, because that's not something we want either. We can't tell them a nuclear Iran increases the prospect for regional instability, because from Russia's perspective, anything that puts pressure on oil prices is a good thing. We can't threaten military force because from Russia and China's perspective, the more we're bogged down policing the Mideast, the less we're paying attention to them.

Posted by Greg Scoblete at 8:40 AM | Email Author | Permalink

China and the U.S. have a very special relationship based around the tremendous debt that the Chinese hold from the United States. Apparently, the PLA believes that gives them leverage. Reuters reports:

Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some US bonds to punish Washington for its latest round of arms sales to Taiwan.

The calls for broad retaliation over the planned US weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

This would definitely be bad for China. Much of the Chinese economy is based upon a low labor price which allows export prices to remain artificially low vis-á-vis the U.S. If the Chinese were to sell off a large portion of American debt, they would put pressure on their own currency. Moreover, while the sudden increase in U.S. securities on the market might make securing new US debt expensive, ultimately the change in the currency rates might encourage a re-balancing of the trade balance, which ultimately benefits the United States.

All this might be immaterial, insofar as the Chinese seem to realize this, even if the PLA doesn't.

Posted by David Benson at 12:05 PM | Email Author | Permalink

By Patrick Chovanec

Here’s a thought for Valentine’s Day:

Wei Shangjin, a professor at Columbia Business School, proposes an intriguing new theory in Forbes to account for why the Chinese save so much. Conventional explanations of China’s high savings rate focus on high out-of-pocket expenses for health care and education, the absence of a social safety net, and an undervalued currency that makes exports cheap and imports expensive. But in Wei’s view, it all boils down to sex — the gender ratio, that is, and the competition it causes in the marriage market.

In China today, he notes, there are 122 baby boys born for every 100 girls. Given China’s one-child policy, most Chinese parents, especially in low-income rural areas, have a strong preference for having a boy to carry on the family line (in my own observation, residents of high-income cities like Beijing, in contrast, seem to actually prefer girls). Even though it’s technically illegal under Chinese law to tell an expecting couple the sex of a fetus (for precisely this reason), many find out anyway and will abort a girl in order to try again for a boy. The result is a lopsided demographic with a lot more boys than girls.

China’s one-child policy was instituted in 1979, so that means there’s been plenty of time for those baby boys and girls to grow up and start looking for mates. And when they pair off, there aren’t enough girls to go around. According to the numbers, one out of every five young men will be unable to find a partner. Which means, if you don’t want to end up the lonely heart, you better have a plan to impress the ladies. For families with boys, Wei believes, that means saving up to buy housing and other accoutrements of wealth that will help attract a mate (in fact, in some parts of China, bachelors and their parents have resorted to forking over a cash “bride price” that can go as high as US$5,000, a payment that represents several years’ income for a farming family. The lucrative practice has given rise to organized scams involving “runaway brides” who take the money and disappear. For a rather eye-opening read on this topic, check out this recent Wall Street Journal article).

Wei’s theory, that mating competition drives high savings rates in China, is an interesting notion, one he tries to back up with hard data. He reports:

In our study we compared savings data across regions and in households with sons versus those with daughters. We found that not only did households with sons save more than households with daughters on average but also that households with sons tend to raise their savings rate if they happen to live in a region with a more skewed sex ratio.

Even those not competing in the marriage market must compete to buy housing and make other significant purchases, pushing up the savings rate for all households.

The effect is significant. The household savings rate in China rose from about 16% of disposable income in 1990 to over 30% today, which is much higher than most countries. (The comparable rate in the U.S. was about 3% before the crisis, and 6% in recent months.) About half of the increase in the savings rate of the last 25 years can be attributed to the rise in the sex ratio imbalance.

When I read Wei’s article, it immediately called to mind a joke one of my Chinese students told me. My wife and I had just had our first child — a boy — this past October, and he was quick to congratulate me on this, for most Chinese, highly enviable outcome. I remarked, though, that my wife’s parents would actually have preferred a girl. He said that this was a common attitude in Beijing, unlike the rest of the country. A boy, he said, is like China Construction Bank. You must save and save in order to afford and buy a house. A girl, on the other hand, is like CITIC (China’s first financial institution set up to raise foreign investment) because she will bring in money from outside. It’s a very Chinese analogy — I didn’t quite get it at first — but it captures an outlook that would seem to back up Wei’s theory.

Demographics certainly have a big impact on saving and spending patterns, but the usual focus is on age, not sex. I don’t know whether Wei’s theory is correct — I still think saving to pay for out-of-pocket health care is a key factor — but it certainly presents food for thought. If it is true, even in part, it suggests that the Chinese preference to save rather than spend may go far deeper, and prove far less tractable, than many economists believe.

(In any event, China has certainly come a long way from 1973, when Mao allegedly made Kissinger a bizarre offer to send 10 million “excess” Chinese women to the United States. Don’t take my word for it, check out the BBC and AFP).

-------------
Patrick Chovanec is a professor at Tsinghua University's School of Economics and Management in Beijing, China. He blogs at http://chovanec.wordpress.com/

Posted by RCW Staff at 1:50 PM | Email Author | Permalink

The subject of U.S.-China ties is hot now and no wonder, with so many divisive issues on the agenda. The question is, which issues should matter to the U.S. and which ones should we let slide? Max Boot offers his cheat-sheet:

That doesn’t mean we should engage in needless and self-destructive confrontations with China over global warming and currency, but that also doesn’t mean we should mindlessly kowtow to China’s every whim. As I argued in this Weekly Standard article in 2005, we should pursue a balanced approach to China, tough on security and human-rights issues but accommodating on trade and currency policy.

The interesting thing to note about Boot's preferences is that his points of emphasis (human rights and security) are the matters that don't actually impact American lives, while the things he wants to let slide (especially currency) are Chinese policies that do have a good deal of impact on the lives of Americans. China's human rights record is an internal matter, whereas her currency valuation is an international matter of fairly large significance for the U.S. economy. Why, I wonder, does one trump the other?

(AP Photo)

Posted by Greg Scoblete at 6:14 AM | Email Author | Permalink

Gordon Chang is extremely well known for being bearish on China, and so represents only one side of the scholarly debate on China and Chinese policy. Nevertheless, he points out something that is very interesting, and is often overlooked when dealing with U.S. and Chinese relations. Often people seem to think that the U.S. needs China because China has a huge market, but the trade balance shows that really it is China which needs the U.S. market. The only thing China buys in large quantities is U.S. debt, which I think most Americans would happily quit exporting.

For more videos on world events, check out the Real Clear World Video page.

Posted by David Benson at 3:11 PM | Email Author | Permalink

Relations continue to sour between the United States and China:

This could be an interesting natural experiment on the power, or lack thereof, of sanctions. While it is possible that a wobbly company might be hurt by sanctions, it seems unlikely that the economic titans that are U.S. defense contracting companies are among them. If this squabble heightens, this may finally spell the end of "Chimerica."

For more videos on the events of the world, look at the Real Clear World Videos page.

Posted by David Benson at 9:03 AM | Email Author | Permalink

Secretary Gates is often described as a pragmatist. That's not a bad thing, of course, but when it comes to the business of trying to set the U.S. on solid strategic footing for the 21st century, pragmatism can be a liability, since it won't look at the underlying issues but instead tries to manage the present situation as best it can. The key to understanding Secretary Gates' strategic thinking, I think, came in a speech he gave at the National Defense University in September 2008. Gates said:

Think of where our forces have been sent and have been engaged over the last 40-plus years: Vietnam, Lebanon, Grenada, Panama, Somalia, Haiti, Bosnia, Kosovo, Afghanistan, Iraq, the Horn of Africa, and more.

Unfortunately, rather than wrestle with these questions, it's simply taken as a given that this is what America must do as a global power and so it's off we go to China to borrow the money to pay for it all. That is, in a nutshell, what the current defense strategy promises. We will "rebalance" the force, cutting into the conventional platforms that give America true security to pay for the nation building/counter-insurgency in the mostly irrelevant litany that Gates highlighted.

(AP Photo)

Posted by Greg Scoblete at 4:55 AM | Email Author | Permalink

Via Blake Hounshell, an interesting tidbit has emerged from former Treasury Secretary Hank Paulson's forthcoming memoir:

Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.

China rejected the idea, but some are still calling it an alarming case of "economic warfare" considering the Russian gambit was reportedly hatched during (or just before) the war with Georgia. Daniel Drezner cautions about reading too much into it before all the facts are out.

Posted by Greg Scoblete at 9:46 AM | Email Author | Permalink

Over on Real Clear Politics, there has been plenty of speculation on the effect Scott Brown's election has had on domestic politics. However The Hindu reports that shock waves may be felt as far away as India. Both India and China are allegedly rethinking their decision to sign the Copenhagen Accord:

Prime Minister Manmohan Singh has written to UN Secretary General Ban Ki-moon seeking a number of clarifications on the implications of the accord that India -- with five other countries -- had negotiated in the last moments of the Copenhagen climate summit in December, the officials said, speaking on condition of anonymity.

“That letter, and the defeat of the Democrats in the Massachusetts bypoll, has forced the UN to postpone the deadline indefinitely,” an official said. “With the Democrats losing in one of their strongholds, the chances of the climate bill going through the US senate have receded dramatically.

“So if the US is not going to reduce its greenhouse gas emissions by 17 percent, which was a very weak target anyway, why should we make any commitment even if it does not have any legal teeth?” the official said.

I'm a treaty skeptic, especially of ones as difficult to enforce as carbon emissions. It seems highly probable that the Massachusetts Republican's victory is just an excuse for India and China to withdraw and blame it on a faction in the United States. Oddly, this could be a sign that China and India at least take these treaties seriously, since they are unwilling to sign if it would actually put them at a relative disadvantage to the United States.

(AP Photo)

Posted by David Benson at 5:35 AM | Email Author | Permalink

That China and Google are still in the news tells you that this story is more significant than perhaps originally thought:

Part of the reason this story may have such long legs could be the fact that Google is such a powerful corporation. However, more tellingly, instead of backing off and denying everything, the Chinese Communist Party has decided to double down on their control of the internet. This is potentially significant for two reasons: 1. the party views its control of the internet as critical to its survival, meaning that China may not be as stable as many currently perceive, or 2. China now believes that its power vis-à-vis the United States is great enough that it can forge its own path in the international community,meaning that China's heretofore peaceful rise may have been ephemeral.

For more videos on international subjects check out the RCW Videos page.

Posted by David Benson at 11:13 AM | Email Author | Permalink

An interesting finding from Angus Reid:

People in the United States want their government to take human rights and minority rights into account when it deals with China, according to a poll by Angus Reid Public Opinion. 51 per cent of respondents feel this way, while 21 per cent would prefer to focus on the trading relationship.

The full poll on China is available here. (pdf) Among its other notable findings:

Half of Americans (50%) think their country should do less business with China; 28 per cent say it should maintain the current amount of business, and only one-in-ten people (10%) say it should increase trade ties with the Asian country....

The implications of doing less business with China would almost certainly mean more poverty in China. And that wouldn't exactly help much in the human rights department.

(AP Photo)

Posted by Greg Scoblete at 11:07 AM | Email Author | Permalink

Reuters reports that the United States Trade Representative (USTR) is "mulling" (great word!) a challenge to China's internet restrictions - the humorously-named-but-not-actually-funny-at-all "Great Firewall of China":

U.S. trade officials have asked for more information as they weigh whether to pursue a case against Chinese Internet restrictions that impede Google and other companies, an attorney for a U.S. free speech group said on Friday.

"They've asked us for more detail about it. We are trying to put that together right now," said Gilbert Kaplan, a partner at King and Spalding, which represents the First Amendment Coalition, a nonprofit advocacy group...

The U.S. free speech group, known then as the California First Amendment Coalition, first approached the U.S. Trade Representative's office in late 2007 with the idea of challenging China's barriers to Internet access at the World Trade Organization.

It gave the trade office, run at the time by the Republican administration of former President George W. Bush, "a very extensive white paper, or memo, describing the WTO violations that the 'Great Firewall' caused, and that were actionable in our view under the WTO, and a request that USTR begin a WTO case against China regarding the Firewall," Kaplan said.

Although no case was filed, Kaplan said U.S. trade officials never ruled out that possibility.

"We're continuing to request that they start that case. That dialogue is continuing," Kaplan said.

A spokeswoman for the U.S. trade representative's office had no immediate comment.

A study by the Brussels-based think tank ECIPE in November called government censorship the biggest trade barrier that Internet companies face.

Many countries censor the Internet for political or moral reasons. China has developed one of the most pervasive methods. In Cuba, all unauthorized surfing is illegal, while many Western countries limit access to child porn sites.

A WTO case could help "clarify the circumstances in which different forms of censorship are WTO-consistent," ECIPE said....

China agreed as part of its commitments to join the WTO in 2001 that U.S. service companies would have the same access in China as their own companies.

"We believe that applies to the Internet and Internet companies," Kaplan said.

China's web restrictions in effect force U.S. Internet companies to "put servers and hardware in China, rather than doing what they do everywhere else in the world, which is use their U.S. base," Kaplan said.

"If we try to serve the Chinese market from the U.S. or anywhere outside the Great Firewall, our Internet access is so slow that no one will use our sites," he said.

WTO rules also require countries to follow transparent and understandable procedures, he said.

Instead, China "is very randomly stopping our Internet companies and our Internet access with no prior notice and no set of regulations," Kaplan said.

Continue reading "Could the WTO Tear Down China's Great Firewall?" »

Posted by Scott Lincicome at 8:13 AM | Email Author | Permalink

The daily Nezavisimoye Voyenno Obozreniye - Independent Military Review - published a scathing assessment on the state of Russian Army preparedness in the strategically-important Far East.

The data is crucial for several reasons: 1. The Russian military establishment views "eastern direction" as a source of potential threat (read, China, but don't say it aloud, as is the current modus operandi in Moscow); 2. Russia just inaugurated a major oil pipeline to feed much-needed energy for China's ever-increasing demand. Defense of energy networks that now criss-cross Eastern Siberia and the Far East are key to Russian economic security; 3. the criticism of the Russian military preparedness are becoming more and more public across the Russian Federation.

"Last week the MOD Commission checked the status of combat training in the Far East. The preliminary results are disappointing. According to the First Deputy Defense Minister of the Russian Army General Nikolai Makarov, the combat training of troops in the Far Eastern Region (DVO) and the Pacific Fleet (TOF) is assessed as unsatisfactory. Meanwhile, Far East and the Pacific Fleet in combat power and the number of troops make up almost 40% of the capacity of the Russian Army and Navy. General Makarov said that the final conclusions on the audit readiness of troops in the region will be made by the end of January. However, he said that during this test, "the high demand placed on a new image of the troops and their leaders do not allow individual military units and commanders to deliver a positive evaluation."

Continue reading "Russia in the Far East" »

Posted by Yevgeny Bendersky at 11:23 AM | Email Author | Permalink

(AFP Photos)

The past week's headlines are significant for highlighting the two potential manifestations of China's growing global clout. First, China announced that it had successfully tested anti-missile technology. Four days later, after Haiti was devastated by a magnitude-7.0 earthquake, China announced that it would provide $4.4 million worth of aid to support the global effort.

China watchers, for at least a decade now, have been arguing over the path that China will ultimately traverse in international relations. Will it develop into a responsible member of the international community, or will it eventually decide to take on U.S. military dominance in hopes of controlling the international system?

The events of the last seven days suggest an ambiguous answer to that question.

On the one hand, the PRC sent significant aid -- the amount noted above plus another $1 million via the government-controlled Red Cross Society of China -- and personnel to assist one of only 23 countries that still recognize Taiwan as an independent nation. In the past, China established the pattern of not dealing with or assisting nations that recognized Taiwan. And if the Chinese tried to sign an agreement with one of these states, then it usually stipulated a breaking of diplomatic ties with Taipei. Therefore, China's quick response to Haiti's disaster without any strings attached, despite Haitian recognition of Taiwan, signifies a PRC that is more concerned with playing its part and building confidence with the international community.

On the other hand, on Jan. 11, China publicly announced the success of a missile test in which it shot down another missile in mid-flight while it was in space. This is something that, until now, only the U.S. has successfully achieved, making it a significant step in military development. Moreover, this is evidence that China's pumping increasingly more money into the military -- particularly its maritime, space, and electronic -- capabilities is paying off in quality, not just quantity. Certainly, if it were planning on a purely cooperative future, China wouldn't need such capabilities, defensive or not.

These two futures are not mutually exclusive, of course. Conceivably, the PRC could be showing the world that it wants to be constructive while simultaneously hedging its bets on a world that, largely, does not trust its military intentions. But how much does such a strategy reinforce doubts amongst some in the international community?

Yet, it is not a Catch-22. What China needs to do is to use -- and please excuse the cynicism -- crises, such as Haiti, as opportunities for much more significant confidence building. With all of its foreign reserves and new military wherewithal, China could be playing a much more significant role in international humanitarian efforts, particularly during disasters, in which politics can usually be evaded. Imagine if China were to have sent $50 million and 1,000 aid workers to a country with which it didn't even have diplomatic relations. This would have been a clear sign that China is here to play a positive role in the world.

As it uses its newfound power to make more significant contributions, the PRC doesn't necessarily have to stop developing defensive capabilities. (America certainly does both.) But without matching the growing might of its military arsenal with diplomatic and humanitarian might, to many around the world, China's intentions will remain in doubt.

Kevin Slaten was a junior fellow in the China Program at the Carnegie Endowment for International Peace. Now, he lives in Taiwan on a Fulbright Grant. His opinions in no way reflect the views of the State Department or Foundation for Scholarly Exchange. He blogs at www.kevinslaten.blogspot.com.

Posted by Kevin Slaten at 5:41 AM | Email Author | Permalink

The New York Times' David Sanger and John Markoff report that the U.S. is keeping mum on the Google/China dust-up in part because of the severity of the cyber-intrusion that sparked Google's decision:

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....

...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.

There is growing body of argument (see Jordan Calinoff in FP today) that the Google contretemps is the culmination of a Chinese policy to make the country less hospitable to foreign corporations. That may indeed be the case, but this particular incident sounds more like run-of-the-mill spying to me, not industrial policy.

(AP Photos)

Posted by Greg Scoblete at 6:56 AM | Email Author | Permalink

By Patrick Chovanec

An important news story is unfolding today in China. In the wee hours of this morning (Beijing time), David Drummond, Google’s 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, 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 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

1. 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
2. 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.

(AP Photos)
------------
Patrick Chovanec is a professor at Tsinghua University's School of Economics and Management in Beijing, China. He blogs at http://chovanec.wordpress.com/

Posted by RCW Staff at 2:46 PM | Email Author | Permalink

The Atlantic's James Fallows, who has spent I believe the last three years living in and reporting on China, offers his thoughts on the news:

But there are also reasons to think that a difficult and unpleasant stage of China-U.S. and China-world relations lies ahead. This is so on the economic front, as warned about here nearly a year ago with later evidence here. It may prove to be so on the environmental front -- that is what the argument over China's role in Copenhagen is about. It is increasingly so on the political-liberties front, as witness Vaclav Havel's denunciation of the recent 11-year prison sentence for the man who is in many ways his Chinese counterpart, Liu Xiaobo. And if a major U.S. company -- indeed, Google has been ranked the #1 brand in the world -- has concluded that, in effect, it must break diplomatic relations with China because its policies are too repressive and intrusive to make peace with, that is a significant judgment.

Ryan Tate, however, smells something fishy:

The timing of Google's aversion to censorship is telling. As admitted in Drummond's post, Google has bowed to the censorious demands of the Chinese regime for years, reasoning (conveniently) that the Chinese people were better off with Google than without it; Google even allowed its own censors to be profiled in the New York Times.

Only now, amid executive turnover at Google China and a continued failure to best their state-sponsored competitor there, and after Chinese hackers have endangered the company's interests globally, does Google get firm on the issue of human rights. It's a clever way to dress up a security breach — and an embarrassing attempt to partner with China's authoritarian leaders — as an act of nobility and courage.

It would be grievous indeed if Google is trying to turn an act of corporate CYA into an international rebuke of China. Even Hillary Clinton is weighing in on this now.

Meanwhile, the Daily Telegraph's Peter Foster reports from Beijing that many Chinese bloggers would be upset at the loss of Google.

(AP Photos)

Posted by Greg Scoblete at 9:52 AM | Email Author | Permalink

Andrew Sullivan writes:

The obvious aim, it seems to me, of the Revolutionary Guards is not to nuke al-Aqsa, but to use a nuclear capacity to immunize their terrorism in the region, to balance Israel's nuclear monopoly, to scare the crap out of the Saudis and Egyptians, and to shore up their control at home. I see this as an inevitable coming-of-age of Iran as a regional power, and although there is an obvious and acute danger that nuclearization could entrench some of the worst elements of the regime (and they don't get much worse than Ahmadinejad), the brutal truth is: we do not have the tools to stop it. One day, a nuclear Iran, if led by men and women legitimately elected by the people of Iran, could be our friend, not enemy - and a much more reliable and stable friend than the Sunni Arab autocracies we are currently shoring up. I believe, in short, that in my lifetime we will see a democratic Iran, led by the generation that took to the streets this year. And I believe vigilant containment is the only realistic way at this point to get there.

Why is it that no one talks extensively about human rights in North Korea, or China or Russia? Why does it make sense that Burma's military junta would pursue a nuclear weapons program?

The answer is rather simple: security. As Andrew points out, the likelihood of Iran actually using one of these weapons should they even attain the capability is slim. The problem is that the very possession of these weapons allows Iran into an unspoken club of hush, hush humanitarianism. Sure, we all know bad things go on in the aforementioned countries, but what can we actually do about it?

If Iran acquires a nuclear weapon the regional dynamic, as Sullivan concedes, would immediately change. In order to offset a regional arms race, the United States would essentially need to cover the entire Middle East in its so-called nuclear umbrella. Strategy would shift from engagement to containment. And this is the important point: when you seek to simply contain, you are accepting losses within already compromised boundaries. In this instance, that lost territory is the Islamic Republic of Iran.

I hope--and pray--to see a free and democratic Iran in my lifetime, just as Andrew does. But the chances of that happening should this awful and rotten regime get a nuclear weapon would be rather slim. If the casual observer thinks this government is oppressive now, just wait until it is intoxicated with the impunity of the nuclear womb.

Moreover, any hopes of resurrecting nuclear nonproliferation can get kissed goodbye. As I wrote earlier this month, what Obama is trying to do here is admirable--that being, restore some semblance of international order and process for dealing with rogue states that seek nuclear weapons. If the policy toward nuclear Iran is mere containment, then Iran has already won.

What then will be the strategy for the next nuclear aspirant? Containment? War? Something else? The fact that there's no viable answer to those questions is the problem, and it will only get worse if Tehran gets the bomb.

Posted by Kevin Sullivan at 12:53 PM | Email Author | Permalink

Ray Takeyh writes:

The modest demands of establishment figures such as Ali Akbar Hashemi Rafsanjani, including for the release of political prisoners and restoring popular trust (via measures such as respecting the rule of law and opening up the media), was dismissed by an arrogant regime confident of its power.

Disillusioned elites and protesters who had taken to the streets could have been unified, or their resentment assuaged, by a pledge by Supreme Leader Ayatollah Ali Khamenei for the next election to be free and fair, for government to become more inclusive or for limits to be imposed on President Mahmoud Ahmadinejad's prerogatives. Today, such concessions would be seen as a sign of weakness and would embolden the opposition. The regime no longer has a political path out of its predicament.

I believe Takeyh is mostly right here. The problem however is that the Green Movement has lacked a political option from the get-go--hence the demonstrations and the unrest. Both sides have the option of violence, but that's a leap I don't think the Green Movement is prepared to take. As Takeyh notes, the regime has been mostly reserved and cautious in how it has handled the demonstrations, leaving it in a kind of uncertain limbo: it won't fully crackdown, nor will it capitulate.

He goes on to say:

The Obama administration should take a cue from Ronald Reagan and persistently challenge the legitimacy of the theocratic state and highlight its human rights abuses. The notion that harsh language militates against a nuclear accord is false. At this juncture, the only reason Tehran may be receptive to an agreement on the nuclear issue is to mitigate international pressures while it deals with its internal insurrection. Even if the regime accommodates international concerns about its nuclear program, the United States must stand firm in its support for human rights and economic pressure against the Revolutionary Guards and other organs of repression.

Let's keep in mind that Tehran, to date, has balked at even the most modest of uranium transfer arrangements, all the while withstanding demonstrations and internal unrest. These are men who cut their teeth during the war with Iraq, while at the same time fighting violent insurgents at home. None of this is new to them.

And "standing firm" requires a key commodity: leverage. Reagan had the leverage to simultaneously talk and talk tough because he had a stockpile of nuclear weapons and missiles to back up that talk. Were Obama to follow Takeyh's advice, and premise nuclear negotiations on human rights violations in Iran, then he'd essentially be removing all options but one from the proverbial table: attack.

Russia and China will not back a negotiating strategy intended to support the Green Movement. Thus, the United States will be left--once again--unilaterally lecturing a regime, and with only one remaining option to make good on that lecturing.

So are we prepared in 2010 to take that leap? Do we toss multilateral pressure on the scrapheap and ready for another war? This is the inevitable path if we lose sight of how fragile the international coalition is on Iran.

UPDATE: It's also, I would add, important to take note of the folks who are embracing Takeyh's suggestion. Some are what I would call the usual suspects, and they dragged us into one war based on false pretenses and then attempted to re-package it as a humanitarian endeavor. We know where they fall on the attack or talk question, but where then do their unlikely bedfellows reside?

(AP Photo)

Posted by Kevin Sullivan at 7:08 AM | Email Author | Permalink

By Patrick Chovanec

I’ve come to learn that when something is banned in China, it’s probably well worth checking out. That's proven to be the case with a new hit TV series called woju 蜗居, which goes by the English name “Dwelling Narrowness”. The series, which aired on Beijing and Shanghai TV, focuses on the difficulties facing average Chinese people in an environment of spiraling apartment prices and official corruption. One blog calls it “without question one of the most influential television series to have aired in China,” and it must have touched some raw nerves, because it was yanked from the airwaves and ordered back to the edit room to be “recensored.” If anything, its abrupt cancellation has generated even more interest among Chinese viewers, who can still download it illicitly online.

The main story revolves around the two Guo sisters, who live in Shanghai. The elder, Haiping, and her husband are graduates of Fudan University, and together live on a typical “local” combined salary of RMB 9,000 (US$1,300) per month. In order to scrimp and save every penny, they rent an cheap one-room apartment and live apart from their young daughter, who is being raised by Haiping’s parents. Frustrated by their earlier decision not to purchase an apartment when prices were far cheaper, they are obsessed with buying one as soon as possible, even though they can barely afford it. They end up buying a place with a mortage of RMB 6,000 per month, 2/3 their income.

The younger sister, Haizou, is a pretty and naive girl who lives with her kind and loyal boyfriend, Xiao Bei. She works for a somewhat slimey property developer who relies on her to help entertain important contacts, one of whom is Secretary Song, an official in the city government who passes along valuable advice and information. Song is facing a bit of a midlife crisis, and is attracted to Haizao’s youth and innocence. Pressed by her elder sister to provide some of the cash she needs to buy an apartment, Haizao grows closer to Secretary Song, eventually becoming his mistress.

Continue reading "China's Desperate Homeowners" »

Posted by RCW Staff at 11:44 AM | Email Author | Permalink

There's been a lot of focus on U.S. foreign policy in Russia's "near abroad." Well, move over America:

With one flick of a switch today, Russia's long-standing dominance and near monopoly over Central Asian natural-gas exports officially came to an end.

The massive Turkmenistan-China pipeline, which will carry natural gas from eastern Turkmenistan through Uzbekistan and Kazakhstan into China's northwestern Xinjiang region, went on line today during an inauguration ceremony attended by regional leaders. It marks the first time in more than a decade that a pipeline has been constructed to pump gas out of the region, and the biggest-ever effort to export Central Asian gas without using Russian routes...

...Observers see RWE's activities as the first steps in securing Turkmen gas for Nabucco. And for Nabucco shareholders and supporters, the example of the new Turkmenistan-China going online demonstrates with certainty that it is possible to build a high-volume pipeline that avoids Russia.

The great game is on.

(AP Photos)

Posted by Greg Scoblete at 4:46 PM | Email Author | Permalink

The blogosphere has been rumbling over two recent op-eds in the Financial Times - a generally free market publication - arguing against China's currency policies and warning of these policies' economic harms.

The first, and more hysterical, op-ed came from University of Chicago(!) economist Robert Aliber who argues that drastic protectionism is needed to force China to appreciate its currency (the RMB) and thus correct the "unsustainable US-China trade imbalance." This is pretty startling coming from an economist from the free market U.Chicago. Fortunately, Cato's Dan Ikenson gives Aliber's op-ed a proper fisking, so all I need to do there is point you to Dan's great blogpost.

Martin Wolf's op-ed is more thoughtful, but no less alarming. He sees four serious problems with China's currency regime:

First, whatever the Chinese may feel, the degree of protectionism directed at their exports has been astonishingly small, given the depth of the recession. Second, the policy of keeping the exchange rate down is equivalent to an export subsidy and tariff, at a uniform rate – in other words, to protectionism. Third, having accumulated $2,273bn in foreign currency reserves by September, China has kept its exchange rate down, to a degree unmatched in world economic history. Finally, China has, as a result, distorted its own economy and that of the rest of the world. Its real exchange rate is, for example, no higher than in early 1998 and has depreciated by 12 per cent over the past seven months, even though China has the world’s fastest-growing economy and largest current account surplus.

Like many others, I often, all so easily, fall into the camp that the Chinese exchange MUST still be undervalued, and cite the reserves fact and its growth as evidence, but I am not so sure when I really analyse it. We have a model for estimating fair values for many currencies, our so called GSDEER, and it did used to suggest that the CNY was undervalued. However as a result of the approximate 20pct appreciation of the past 4 years, and higher prices than many other countries, our model suggests it is no longer so clear. Now FX models are FX models, and having spent so much of my career on them, I know only too well that it is subject to even more risks for somewhere like China. But when I see our own- objective -model saying things like this, observe surveys showing that Mexico is now back to being the no 1 place to produce heavy industrial goods, and China’s imports rising much more sharply than exports, I stop to question my underlying tendency. On top of this, and Martin, as many others, never seems to address this, China’s current account surplus this year is going to be close to about half what it was a year ago amidst lots of evidence that domestic demand, especially consumption, is roaring away. Yesterday, we got news that in November, Chinese auto sales rose by 92pt year on year. They are so strong, that they are now importing some directly from overseas. You see similar evidence when you look at LCD TV sales and almost anything else. As some Chinese policymakers point out, this is almost definitely more important than the exchange rate issue that so many are still rather perhaps excessively focused on.

It just ain't that easy.

Scott Lincicome is an international trade lawyer in Washington, DC. He blogs at http://lincicome.blogspot.com/.

Posted by Scott Lincicome at 8:00 AM | Email Author | Permalink

By Patrick Chovanec

When President Obama arrives in Shanghai tonight, one of the hottest issues on the table will be the exchange rate between the U.S. Dollar and China’s Renminbi. In the past few weeks, commentators like New York Times columnist Paul Krugman have argued that Obama’s top priority should be to pressure China into strengthening its currency, in order to “rebalance” the global economy. I disagree. A more flexible exchange rate – and the stronger Renminbi that would likely result – would be a step in the right direction. But it’s not a silver bullet, and would have little effect in the absence of more substantive economic reforms. In my view, the focus on currency is a huge distraction from far more pressing issues.

Krugman is correct that a rebalancing needs to take place. The current situation, in which China runs larger and larger trade surpluses, and lends the proceeds back to fuel ever-rising consumption in the United States, is not sustainable indefinitely, especially as the Chinese economy grows to rival America’s in size.

According to conventional economic theory, flexible exchange rates play a vital role in correcting such imbalances. When a Chinese exporter sells a product to the U.S., it receives dollars in return. Those dollars don’t just disappear; they stay in China until someone wants them to buy products from America or invest in American assets. For quite some time now, China sells more than it buys from the U.S., and brings in more capital than it invests abroad, which means that there aren’t enough people who want to use all the dollars that keep flowing in. Just like any other market, when the supply of something – in this case dollars – outstrips demand, its price should drop. The dollar depreciates, making U.S. goods cheaper and more attractive to Chinese consumers, while the Renminbi appreciates, making Chinese goods more expensive in America, eventually closing the gap in trade.

The Chinese government, though, isn’t letting that happen. Instead of letting those excess dollars sell for a lower price in Renminbi, it steps in and buys them at the current exchange rate, and holds them as reserves. By keeping the Renminbi artificially cheap, Krugman and other critics contend, China gains an unfair trade advantage. If only the Chinese would stop interfering, and allow the dollar to find its true level, American products would become more competitive and this dangerous imbalance would correct itself.

Sounds good, but the problem is we’ve been here before. In the early 1980s, Japan was running a chronic trade surplus with the United States, and accumulating dollar reserves on a massive scale. Economists argued that an undervalued Yen was to blame. So in September 1985, the central banks of the U.S., Japan, Britain, France, and West Germany agreed on what became known as the Plaza Accord. Over the course of the next two years, they intervened heavily in global currency markets to bring the value of the dollar down by over 50% against the Yen, from around 250 JPY/USD to 125.

The outcome baffled and frustrated economists. While the cheaper dollar had a significant effect in reducing America’s trade deficit with Europe, Japans’ trade surplus with the U.S. barely budged – in fact, it grew. How could this be? Why didn’t the new exchange

Continue reading "U.S. & China: Exchange Rates Aren't the Problem" »

Posted by RCW Staff at 9:39 AM | Email Author | Permalink

By Patrick Chovanec

To my mind, the most underreported story of China’s October 1st “National Day” anniversary was the emergence of Ai Weiwei as the most outspoken critic of China’s ruling regime.

For those who are not familiar, Ai Weiwei was the designer of the “Bird’s Nest” stadium that served as the main venue for the 2008 Beijing Olympics. A big bear of a man with a grizzly beard, he is known for his gruff and eccentric manners and his avant garde antics as a performance artist (his most notorious work was the F*** Off” exhibit, which featured photos of Ai giving the finger to the White House and Tiananmen Square, and smashing real — and priceless — Ming vases).

Ai_WeiweiAi, whose father was a poet exiled to Xinjiang to clean toilets during the Cultural Revolution, has never been shy in expressing his contempt for China’s Communist Party leadership, usually in the form of blunt and quotable asides. Authorities have long seen him as a “disruptive element”. But recently, Ai has really stepped it up a notch. He has played an active role in organizing investigation petitions by parents in Sichuan whose children were killed when many schools collapsed in late year’s earthquake, allegedly due to substandard materials and construction attributable to official corruption. On a recent trip to Sichuan, to witness the trial of one of his fellow activists charged with “inciting subversion of state power,” police broke into Ai’s hotel and walloped him over the head, causing cranial injuries that later required emergency brain surgery in Germany.

But it was his public statements on and around October 1st which have truly propelled him into untested and potentially dangerous territory. He published a prominent op-ed in TIME Magazine calling for democratic accountability and describing the 60th Anniversary celebrations as “the final hurrah of a dying system.” In an interview with Al Jazeera, he violated one of the country’s most sensitive political taboos by saying “China would be much better off” if Mao’s Communists had lost to Chiang Kai-shek in 1949. Elsewhere, he openly compared China’s ruling Party to a Mafia crime family (something he has done before, but without quite the same global audience to hear it). None of these comments would seem that shocking coming from pundits or activists outside of China. But coming from a Chinese citizen, on the incredibly sensitive occasion of an anniversary marking the Communist Party’s 60-year hold on power, China’s leaders are likely to view them as virtual treason.

Obviously Ai Weiwei is making a conscious bid for the role of China’s dissident-in-chief. The interesting question is how China’s authorities will respond as he grows more and more provocative. True, Ai does not have a large public following — most people in China know him for the Bird’s Nest and know nothing of his politics. I personally find some of his countercultural antics a bit childish. But his TIME article, in particular, was a measured and eloquent expression of precisely the social trends and political ideas that the Party fears most. Ai’s gutsy words will be seen as both an affront and a threat.

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Patrick Chovanec is an associate professor at Tsinghua University’s School of Economics and Management in Beijing, China, where he teaches in the school’s International MBA Program. He blogs at http://chovanec.wordpress.com/

(AP Photos)

Posted by RCW Staff at 4:29 AM | Email Author | Permalink

There was a time when Chen Shui-bian was a rising political star of Asia. He was a masterful campaigner, an astute politician and viewed by some as the champion of the oppressed.

Twice, he won the presidency of the Republic of China, against the better-funded, more-organized Kuomintang (KMT) despite long odds. In 2000, he led the upstart Democratic Progressive Party (DPP) into power in the island's second democratic election, taking advantage of an internal split in the KMT. Four years later, he won by a razor-thin margin aided by a mysterious assassination attempt just two days before the election.

While president, Chen also proved to be incredibly corrupt.

On Friday, Chen was sentenced to life in prison for embezzling $15 million U.S. during his presidency. He had an elaborate setup where he involved family members, including his wife, with a money laundering scheme that'd make the mob proud.

During his second term as president, Chen was busy putting money away while Taiwan's economy went into the tank. His party was routed in the 2008 legislative election, becoming a marginal minority party with fewer than a quarter of the seats. As Chen was barred by the constitution to run for a third term, his successor was beaten soundly by the KMT's Ma Ying-jeou in last year's presidential election.

In his final years in office, as he was trying to cover up the paper trail, Chen unleashed a series of political maneuvers designed to shift the attention of the public: Flogging the corpse of Chiang Kai-shek and stirring up conflict between the islanders and mainlanders; provoking China with frequent rhetoric of Taiwan "independence"; advocating Taiwan's re-admission into the U.N. by holding referendums, all the while knowing it was a purely political stunt.

Chen was dragged out of the office, kicking and screaming. He still has die-hard supporters, who insist on his innocence not because of any shred of evidence but because of their loyalty to a charismatic chameleon, who sold out his principles in exchange for a lucrative retirement. Had Taiwan's judicial authority not detained him swiftly, he surely would've fled, never to return.

The South China Morning Post calls it a tragedy for Taiwan:

The verdict marks the fall of the man once hailed as "Son of Taiwan", the child of a poor farmer who rose to the top, but now dubbed the "shame of Taiwan". As Taiwan's second democratically elected president, he came to power as a leader of some stature, a man seen to embody the hopes of Taiwanese with strong feelings of local identity. Indeed, it was on the back of their support that he became president. He projected the image of an incorruptible champion of Taiwanese nationalism and independence, whose anti-mainland rhetoric froze relations with Beijing.

He is now seen to have betrayed their faith by using his position for personal gain. The question now is how much damage his fall from grace has inflicted on the opposition Democratic Progressive Party and the independence movement in Taiwan. There was already a lot of disillusionment with the DPP over its performance in office after it came to power in 2000. Its reign was marked by internal bickering, administrative incompetence and corruption. Because Taiwan had experienced the dictatorship of the Kuomintang regime for so long, many people were prepared to give the DPP the benefit of the doubt. This fund of goodwill was depleted, however, as the party struggled to come to grips with the responsibilities of office.

This is the ultimate tragedy of Chen's conviction. In order to have a viable and vibrant democracy there needs to be a viable opposition capable of credibly contesting power and testing the government. Chen's disgrace of the island's highest office and his party will make it much more difficult for the DPP to recapture power.

(AP Photos)

Posted by Samuel Chi at 8:28 AM | Email Author | Permalink

By Patrick Chovanec

China Daily, the Chinese government’s official English-language newspaper, had an interesting report yesterday. Apparently the Chinese chicken industry is getting creamed by U.S. import competition, and is begging the government for protection. This is sort of a “man bites dog” story, in that normally all you hear about is Chinese imports wiping out higher-cost U.S. industries. In this case, imports from America actually seem to be beating domestic Chinese chickens on price, of all things:

From 2006 to 2008, the broiler imports from the US accounted for 68, 66 and 73 percent of the total Chinese broiler imports. The figure jumped to 89 percent during the first half of this year.

According to an investigation by the animal agriculture association into six major Chinese broiler companies whose output volume made up for 20 percent of the total, the ratio of output to capacity was 79 percent from 2006 to 2008. It dropped to 66 percent during the first half of this year.

“Price is the key reason behind the shift, as consumers have become more sensitive to it during the financial crisis,” said Ma.

In 2008, China’s broiler meat was priced at an average of 10,482 yuan per ton. It was 9,823 yuan per ton for the US product over the same period, 659 yuan lower.

Of course, nothing appears in China Daily without some point to it. The story draws an implicit but clear link between the Chinese government’s pending decision on protecting domestic chicken producers and President Obama’s upcoming decision whether or not to impose special tariffs on Chinese-made tires. China has vowed to retaliate if Obama goes ahead with the tariffs, and it’s not hard to guess what they might have in mind.

Okay, it’s a terrible pun, but if President Obama signs onto sanctions against Chinese tires, the chickens may literally come home to roost.

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Patrick Chovanec is an associate professor at Tsinghua University’s School of Economics and Management in Beijing, China, where he teaches in the school’s International MBA Program. He blogs at http://chovanec.wordpress.com/ where this post first appeared.

Posted by RCW Staff at 9:08 AM | Email Author | Permalink

When in doubt, throw a temper tantrum.

It matters not that China has the world's third largest economy, perhaps the second-most powerful military and is the only potential global rival to the hegemon that is the United States. You can still count on China acting like a third-rate despot with all the delicacies of a bull in a, well, china shop.

So the Dalai Lama decided to visit Taiwan, in an oh-so transparent political maneuver designed to poke and get a rise out of China. Did China take the bait?

At first, Beijing acted only irritated, which was a good move and showed considerable restraint. It absolved Taiwan's beleaguered President Ma Ying-jeou and laid the blame entirely on the opposition and independence-minded Democratic Progressive Party (DPP).

That would've been fine. It'd be better had China just acted like the Dalai Lama didn't exist and ignored the visit entirely. Why give the Tibetan spiritual leader and the DPP the satisfaction?

But after thinking it over, Communist China's mandarins couldn't help themselves. They sunk their teeth in it. Hook, line and sinker.

Never mind that Ma's Kuomintang (KMT) had just sent a kowtow party to Beijing last week to explain themselves. Ostensibly, they told the Chinese that given Ma's weakened political state, they couldn't afford another big brouhaha.

Brushing the KMT aside,

China has canceled or postponed at least two planned visits to Taiwan, and nixed ceremonies meant to mark the expansion of direct air service, said KMT spokeswoman Chen Shu-rong. China had already said its delegation would not join Saturday's opening ceremony for the Deaf Olympics in Taipei.

That last move was so classically clever, it sure would resolve to win over the hearts and minds of the skeptical Taiwanese. In a rare opportunity to host an international athletic event, Taiwan now will get snubbed by its cross-Strait brethren. These deaf Chinese athletes, instead of being celebrated as goodwill emissaries for vastly improving relations between the mainland and Taiwan, are now mere ventilators in the latest Chinese temper tantrum.

But what did you expect from a regime, despite its power and size, that has the diplomatic maturity of a 3-year-old?

Posted by Samuel Chi at 7:21 AM | Email Author | Permalink

By Patrick Chovanec

Reuters reports that the Chinese city of Harbin wants to host the 2018 Winter Olympic Games. Its request to put in a bid must first be approved by China’s cabinet, the State Council. Even if permission is granted, China’s sports minister says that winning the bid would be “difficult” given stiff competition from better-known contenders like Geneva and Munich.

Nevertheless, I’m thrilled, and hope China’s leaders give Harbin the go ahead. It’s a fantastic city and would benefit immensely from hosting the Winter Olympics.

Harbin is located in the far northeast of China, near the border with Siberia. Founded by the Russians in 1898 as an important junction on the Trans-Siberian Railroad, Harbin is famous for old colonial architecture, bitterly cold weather, and 150-proof grain alcohol. It hosts an incredible festival every winter featuring huge snow and ice sculptures, including life-size castles and churches. It’s also home to a Siberian tiger reserve where the ”entertainment” includes feeding live chickens to the tigers.

When cities like Paris, New York, or London bid to host the Olympics, I have to wonder what they are thinking. Those cities already possess the attractions and facilities they need to bring in visitors, and the Olympics add nothing but security headaches and costly over-investment. The 2008 Beijing Games served as a big coming-out party for China, a focus for national pride–but for the city itself they were pretty much a bust. Beijing actually ended up attracting fewer visitors than normal last summer, and most of the venues now lie empty.

For Harbin, on the other hand, the Olympics would be a golden opportunity. The northeast, where the city is located, has run up on hard times. The region was home to many of China’s state-owned industries that collapsed in the 1990s, throwing millions of people out of work. It has struggled to develop replacement sources of income, such as winter tourism. The area’s ski resorts are promising but primitive, and poorly known even within China. Construction of new world-class recreation facilities, and the massive positive exposure that hosting the Olympics would bring, are just what Harbin needs to jump-start its future–and maybe even give those poor tigers and chickens a break. The benefits would endure long after the Games.

It’s true that Harbin may need help in preparing its bid. It lost previous bids to host next February’s 2010 Winter Olympics (to Vancouver) and the 2012 Winter Youth Olympic Games (to Innsbruck), probably due to inexperience. But if China’s central government put its weight behind the effort, there’s no doubt in my mind that Harbin could put together a more persuasive case.

The Olympics can be an excessive indulgence for already world-famous cities, or they can be a chance to introduce new and exciting places onto the world stage, and give struggling cities a shot at rejuvenation. Harbin is a great place to start.

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Patrick Chovanec is an associate professor at Tsinghua University’s School of Economics and Management in Beijing, China, where he teaches in the school’s International MBA Program. He blogs at http://chovanec.wordpress.com/ where this post first appeared.

Posted by RCW Staff at 5:40 AM | Email Author | Permalink

The ethnic riots in China's Xinjiang Autonomous Region has so far claimed 140 lives with 800-plus injured, according to official figures. In reality, those numbers could be much higher.

The majority Uighurs in the Xinjiang region, in China's far-flung northwest corner, have resented the hardline rule of the Chinese Communists and the growing influx of ethnic Han Chinese since the People's Liberation Army entered the area in 1949. The latest incident began as a group of Uighur students protested Chinese discrimination against ethnic minorities.

According to the South China Morning Post, the leading English-language newspaper in Hong Kong, the origins of the events that led to the protest may have been fanned by an internet hoax:

Provincial police yesterday detained a man accused of spreading false rumours of rape over the internet that sparked a deadly ethnic brawl at a Hong Kong-owned toy factory in the northern Guangdong city of Shaoguan at the weekend.

Xinhua reported that the former worker posted a message on a local website claiming, "Six Xinjiang boys raped two innocent girls" at the factory, which is owned by Early Light International (Holdings).

Police said the unfounded claim was behind the massive brawl on Friday night between a group of Han and Uygur workers from the northwestern Xinjiang region who had been recruited to the factory. Some 800 migrant workers were employed from Shufu county, under the jurisdiction of Kashgar.

The Xinjiang region may be even more volatile than Tibet, which has given authorities fits intermittently since Communist Chinese occupation began in 1951. But Chinese leadership won't hesitate to unleash a harsh reprisal in Xinjiang, as there is little international support for the Uighurs' plight. A number of central Asian nations, and Russia, view the Uighur Muslims as potential troublemakers in the region and an Islamic terrorist threat.

Recently, when the Obama administration released a handful of Uighur detainees from the Guantanamo Bay detention facility, it had a difficult time placing them because repatriating them back to China would have resulted in harsh treatment (if not death) for these individuals, considered separatist terrorists by Beijing.

The riot in Xinjiang may be short-lived, as Chinese authorities will have no qualms about shutting down media access and springing a bloody crackdown. Alim Seytoff, head of the Uighur American Association, told the Chinese-language World Journal that the authorities responded with 1,000-plus riot police as soon as the protest emerged and "we've been told, they began randomly shooting into the crowd. ... We don't know how many people actually died, but at least hundreds were injured."

He went on to refute the Chinese government's assertion that the riot was premeditated by expatriate Uighur organizations, calling it a "smokescreen."

Posted by Samuel Chi at 8:33 AM | Email Author | Permalink

An old axiom points to the perverse nature of high debt: When you owe the bank a million dollars, the bank owns you. But when you owe the bank a billion dollars, you own the bank.

At this point, the United States debt to China is approaching a trillion dollars, with no end in sight. And U.S. Treasury Secretary Timothy Geitner is in China now attempting to calm restlessness over seemingly out-of-control fiscal deficits while wheedling reforms out of the Chinese economy at the same time.

The biggest concern, of course, is that China will begin to scale back its purchase of U.S. government debt or, in a scenario feared by many conservatives, use the threat to "dump" U.S. securities as leverage over the United States. Either scenario could be economically devastating to the U.S., as decreased demand for U.S. debt would increase the costs of borrowing by driving interest rates upward while at the same time causing strong inflationary pressures as the Federal Reserve "monetized" the deficit by in essence creating new money with which to buy U.S. debt from itself.

But while these concerns over the impact of creating more U.S. debt than the global market can absorb are valid, the scenario of China as the Potter-esque banker foreclosing on U.S. government debt are probably overblown. China simply cannot credibly threaten to undermine the value of U.S. securities without destroying its own economy. The following comment by a Chinese finance official is revealing: "We hate you. We hate you. But we will buy your bonds."

Continue reading "Chimerica: Owning The Bank That Owns Us" »

Posted by Jason Steck at 7:46 AM | Email Author | Permalink

Views of President Obama’s first 100 days in office have been positive overall in the Chinese-language media. The Global Times, a subsidiary of the Chinese government’s official newspaper, People’s Daily, published the comments below from Wu Xinbo, Associate Dean of Fudan University’s International Relations and Public Affairs Institute:

Upon Obama’s assumption of office, Sino-U.S. relations underwent a stable transition and embarked on a new development track. This never happened in the past. At the outset of the Clinton and Bush presidencies, Sino-U.S. relations experienced great turmoil. However, it is different with Obama. This is primarily because the Obama administration sees China as part of the solution to the problem rather than as part of the problem itself. This is a positive sign.

An editorial in the Sing Tao Daily, Hong Kong’s second largest newspaper, has this to say about Obama’s foreign policy:

Obama’s “smart power” diplomacy has shattered Bush’s militaristic unilateralism. This has been regarded favorably worldwide. He laid out a clear timetable for troop withdrawal from Iraq and even drew a clear line between himself and some of the Bush administration’s policies that violated human rights and ethics. This included closing down the Guantanamo detention center in Cuba and publicizing information about prisoner abuse.”

Singapore’s largest Chinese-language newspaper, Lianhe Zaobao, feels that Obama’s “rock-star quality” is a valuable political resource for the U.S.:

Wherever he goes he is like a rock star: people go crazy and the media swoon for him. … For Obama, no matter how opposing one’s ideological stance may be, people generally admit that he is a sincere person. This kind of packaging practically speaking is a very valuable political resource. No matter whether domestic or international, the public feels that he is a rare leader and is willing to give him a chance. Especially in light of the mess that Bush left behind, people are even more willing to sympathize with the new president.

Posted by James Chen at 1:59 AM | Email Author | Permalink

Jackie Chan speaks at the "Creative Asia" panel discussion in the Boao Forum (Source: Xinhua)

Action movie star Jackie Chan caused a stir in the Chinese-speaking world with his remarks at the China-hosted Boao Forum last week. During the “Creative Asia” panel discussion, Chan was asked a question related to the Chinese government’s restrictions on filmmaking. He responded with the following (a video of a portion of his remarks can be found here):

Recently I’ve felt that in these 10 years since Hong Kong returned [to China] – I grew up in Hong Kong, and from its return until today, I’ve slowly come to see – I don’t know whether it is good to have freedom, or is it good to not have freedom? I am really confused now. Too much freedom will create a situation like the way Hong Kong is today – very chaotic. Furthermore, it will create a situation like Taiwan – also very chaotic. I’ve slowly come to realize that we Chinese need to be controlled after all. [laughter and applause from the audience] Once control is gone and there is an opening up, we will end up doing whatever we want without restraint.

The foreign media has focused on the outrage sparked by Chan’s remarks in China, Hong Kong, and Taiwan. Although the public mood in Hong Kong and Taiwan generally seems to be one of resentment and anger, there are also voices that are more sympathetic towards the actor. The nature of responses in the Chinese-language media seems to track how favorable an outlet is towards a greater Chinese identity in general and the Beijing government in particular.

Continue reading "Chinese Sphere: Jackie Chan and Freedom" »

Posted by James Chen at 6:16 AM | Email Author | Permalink

This slide show has the ominous feel to it - the pictures are form the recent auto show in Shanghai. China's domestic car makers were in full force, showcasing their latest models - from compact to small-sized sedans to luxury brands. Looking at the pictures, the apparent similarity of Chinese models to Toyota, Honda - even Bentley - is all too clear.

Bottom line is that these cars were made at a fraction of the cost of their American competitors. And they look just like what the market demands - small, sleek, compact sedans and cross-overs. The big question is when these cars are going to be sold in the United States. Once that happens, the car market here is going to go from cut-throat to down-right thermonuclear. The American consumer would win, of course, but at what price? That remains to be seen.

Posted by Yevgeny Bendersky at 8:17 PM | Email Author | Permalink

There is an old Russian proverb - "Vsyo volka ne kormi, a on na les smotrit"- "No matter how much you would feed the wolf, he still looks at the forest." This applies to the existing and evolving Russian relationship with China - no matter how many public statements are made about the strength and mutual benefit of a Moscow-Beijing alliance, China is inching further and further ahead of Russia on all criteria that signify a great power - economy, high-tech development, international reputation. And military strength.

The last item already makes Moscow nervous, even if outwardly it shows no signs of concerns. This entry at a popular daily online magazine Lenta.ru discusses China's recent development of a ballistic missile, based on its Dong-Feng 21 rocket (possibly nuclear-tipped) that can sink a large moving target (presumably a US aircraft carrier): "It is easy to assume against whom, and for what purpose, this new Chinese weapon is fielded. First, the modern aircraft carrier is the only target that a given country would not mind using a nuclear weapon on. ... Secondly, only the U.S. military fleet has so many aircraft carriers that justify a creation of new types of ballistic missiles. And third, the American ships of this class are a deterrent to China, a country that does not conceal its aggressive intentions against, for example, neighboring Taiwan."

The analysis further brings up evidence that USSR has been developing a similar missile in the 1960s and 1970s - whose purpose was to presumably sink American carriers - but ended up not fielding the actual missile due to a variety of domestic and international factors. "In any case, Russia has abandoned the development of such weapons for the last several decades, and the U.S. did not seriously expect that ballistic missiles capable of striking major moving maritime targets may be fielded by a likely opponent. In short, while the two superpowers were flexing their muscles, a third power - while only gaining momentum - was looking far into the future."

Russia sold China mass amounts of modern military technology in the 1990s and even recently - everything from small arms to the modern Su-27 jet fighter to submarines and naval vessels. Given China's determination to develop and field its own modern military, these purchases from Russia went into further developing and modernizing one of the largest militaries in the world.

Given Russia's emphasis on its nuclear deterrent, Moscow so far avoided a "What If?" discussion about the time when China's military could eventually surpass its Russian counterpart. However, a sobering and realistic assessment is already necessary: "We cannot say with confidence if this weapon (anti-ship ballistic missile) was indigenously developed in China. Most likely Beijing has once again carried out a competent and quiet "information leak" with the purpose of demonstrating the potential of China's military power and its future development. But if this Chinese rocket is not pure propaganda, then it's not just the United States that would soon have to develop technology that can neutralize such a weapon."

Posted by Yevgeny Bendersky at 4:36 AM | Email Author | Permalink

The big news in China last week was the unveiling of the government's healthcare reform plan that would seek to provide "safe, effective, convenient, and affordable" health services to the entire population by 2020. The government is planning to spend 850 billion yuan (US$124 billion) towards building new rural hospitals and clinics and will regulate the prices of "essential" medicines. Different tiers of health insurance will be set up to cover citizens according to their employment status and whether they are urban or rural.

This is significant because affordable healthcare is not in the reach of the vast majority of Chinese citizens. As a result, families tend to save more in case a health emergency should occur. American economists who complain about Chinese currency manipulation have long called for the Chinese Communist Party (CCP) government to implement measures to lower the national savings rate and stimulate domestic consumption (see this Senate hearing testimony from the Peterson Institute for Intenational Economics for an example). This healthcare reform plan seems to be an answer to their wishes.

In the Southern Metropolis Daily, one of China's leading commercial newspapers, Beijing-based economist Chen Qinglan writes that this plan is a step in the wrong direction:

True healthcare reform must have a clear direction, and that should be to stimulate the supply of healthcare services and products. This is the path towards truly solving the healthcare system's problems. Specifically, we should: 1. Cancel restrictions on the inflow of private and foreign capital and open up the market. Encourage private capital to purchase stock and buy up public hospitals. Completely open up the healthcare market no matter whether it is for non-profit or for-profit hospitals. Allow private capital and public interest organizations to freely participate; 2. Cancel regulation of drug prices and let the market determine the prices of medicine and healthcare services. This would rationalize the allocation of healthcare resources; 3. Break the monpolistic and privileged position of public hospitals. The tasks of managing and supervising public hospitals by government health departments should be separated; 4. Open up the health insurance market; 5. Open up the establishment of privately-run medical schools and training organizations to stimulate the cultivation and supply of healthcare professionals.

By marching out under the banner of "public interest" and denying marketization, the government is comprehensively intervening in public healthcare services and returning to the planned model of the past. We will definitely be beset by inadequate supply of healthcare services, subpar service quality, non-proactive doctors, slowdown of technical innovation, and other old problems, once again falling into a vicious cycle. Once this model fails, it will be the people who pick up the bill.

Chen's criticism is timely in light of the fact that last month, Chang Gung, a hospital group founded by late-Taiwanese entrepreneur Wang Yung-ching, was forced to scale back its plans to expand into two more Chinese cities because its flagship hospital in Xiamen was having trouble hiring sufficient doctors and nurses and running at a profit. The Chinese government does not allow Chang Gung to register as a non-profit entity, so it does not enjoy the tax breaks and subsidies that are available to local public hospitals. The CCP's healthcare reform proposal does not seem to address this problem.

Posted by James Chen at 1:41 AM | Email Author | Permalink

Chinese President Hu Jintao visits an exhibition marking the 50th Anniversary of Democratic Reform in Tibet, at the Cultural Palace of Nationalities in Beijing. (Xinhua)

This year marks the 50th anniversary of the Tibetan uprising against Chinese Communist rule in the region. Throughout this month, the Chinese government has been imposing a lockdown in areas with large Tibetan populations and banning foreign journalists from those areas. Yesterday, seemingly in an attempt to negate the anniversary of the uprising and further solidify Chinese Communist party (CCP) rule over Tibet, the government designated March 28 to be Serfs’ Emancipation Day to commemorate the freeing of Tibetans from serfdom under the Dalai Lama. Here is the official view from China Daily:

More than 1 million serfs were freed in Tibet in 1959, eight years into the region's peaceful liberation and shortly after a failed uprising of its feudalistic upper class.

Earlier, about 95 percent of Tibet's 1.14 million population were serfs, owning no more than 5 percent of the social resources. The local upper class, comprising only 5 percent of the region's population, ran a brutal, theocratic rule.

In January, Tibet's 382 legislators, mostly with a serf background, unanimously endorsed a bill, declaring March 28 as Serfs' Emancipation Day during the local people's congress' annual session in Lhasa.

A People’s Daily editorial calls this a triumph of “democratic reform:”

Democratic reform is yet another great contribution that the new China has made to the work of global human rights. The darkness and cruelty of the old Tibet was heartless and ruthless towards humanity and human dignity. The carving out of eyeballs, breaking of joints, cutting off of feet, and other cruel punishments inflicted upon serfs and slaves were absolutely horrifying. Democratic reform shattered the system which divided people into castes. It abolished the old Tibet’s laws and barbaric punishments. It liberated a million serfs and slaves from inhuman oppression. Through the national constitution and laws, it provided guarantees of dignity and rights accorded to citizens. From this time forth, a people’s democratic political system was established. The shackles that obstructed the democratic political development were utterly broken.

An editorial in Sing Tao Daily, the second largest newspaper in Hong Kong, does not see any hope for any forward movement in relations between the CCP and the Dalai Lama:

Beijing and the Dalai Lama’s representatives have not been able to make progress in talks. The root problem is that though the Dalai Lama does not insist upon Tibetan independence, his proposal for a high level of autonomy for a greater Tibetan region is difficult for Beijing to accept. The Dalai was born in Qinghai, and many of his protectors who fled with him are from Tibetan regions in Sichuan. The government-in-exile cannot ignore their interests. This greater Tibetan region encompasses a quarter of China’s territory. It is impractical to demand that Beijing make such a concession.

In an op-ed in the Apple Daily, one of the largest newspapers in Taiwan, former deputy secretary-general of Taiwan’s National Security Council Antonio Chiang sees the Chinese government’s handling of Tibet as ultimately harming the national interest:

The CCP’s hostility towards the Dalai Lama has deepened. Hope for reconciliation between the two sides has shattered. The situation has deteriorated and each side has become further radicalized. This is in no way beneficial for China’s peace and stability.

There is an abundance of talent in the ranks of overseas Tibetans. Their experience in exile has trained them extremely well, especially in the areas of diplomacy, public relations, lobbying, and international organizations. They have also cultivated much talent in the political, cultural, and educational fields…

The Dalai Lama will not remain cooped up for the long-term in India’s northern mountainous regions. His habit of traveling around the world will not change. Wherever he goes, that country and China will experience very unpleasant tensions. This is an acute irony in China’s desire to cultivate the image of a great nation.

To the CCP, the Tibet issue is inextricably tied up with its notion of Chinese sovereignty. Practically speaking, if Tibetans were granted the autonomy that is called for by the Dalai Lama, how seriously would that compromise China’s national security? It is hard to imagine that India would seek to exploit Tibetan autonomy in order to advance territorial claims.

However, in the same way that the CCP has framed the issue of Taiwan and Xinjiang, they have all become part of a “national myth” of Chinese sovereignty and identity, and the CCP has staked its legitimacy upon nothing less than the maximalist goal of establishing its unchallenged rule over these areas. It is a high stakes zero-sum game, and anyone who deals with Beijing in these sensitive issues must be cognizant of this and plot his strategy accordingly.

Posted by James Chen at 2:23 AM | Email Author | Permalink

If you haven't read Harold James' article on the front page - "Is China the New America?" - it's well worth your time.

Read it, then ponder this:

China in 2008 surpassed the United States to become the world’s second largest auto-making nation, and in 2009 is set to displace Japan as the planet’s largest car producer, according to iSuppli Corp.

China in 2008 manufactured 9.3 million cars, while the United States built 8.7 million. In 2009, China will build 8.7 million autos, compared to 7.6 million for Japan.

Posted by Greg Scoblete at 7:45 AM | Email Author | Permalink

Last week China’s Ministry of Commerce announced its decision to block Coca-Cola’s acquisition of Huiyuan Group, China’s largest privately-owned beverage company. The proposed buyout raised alarm that not only would Coke gain a monopolistic position in China’s beverage market, but also that a well-known domestic brand would be eliminated by a foreign company. This was the first such case that was decided according to China’s two year-old Anti-Monopoly Law.

The Commerce Ministry’s official announcement states:

Upon investigation, the Commerce Ministry has determined that this consolidation would have a negative influence on competition. The Coca-Cola Company would possibly use its dominant position in the carbonated beverage market to tie up fruit juice sales or implement other business conditions of an exclusionary nature to consolidate and limit competition in the juice beverage market. This would lead to consumers being forced to pay higher prices for fewer selections. Concurrently, due to the effect of current brands restricting market entry, it would be difficult for potential competition to eliminate these competitive restrictions. Also, consolidation would also squeeze the survival space of domestic small and medium-sized beverage companies. This would have an adverse influence on the competitive state of the Chinese juice beverage market.

In a commentary in the Southern Metropolis Daily, one of China’s leading commercial newspapers, lawyer and economist Ma Guangyuan asserts that 80% of Chinese netizens were opposed to the deal. It is unclear how he came up with that figure, but it cannot be denied that the case was controversial. As a result, the Commerce Ministry’s decision was not made solely according to the merits of the case:

In my estimation, the [reasons] provided by the Commerce Ministry lack direct evidence for how a marriage between Coca-Cola and Huiyuan would influence other people’s livelihoods. Instead, their reasoning is based on indirect judgments. This is probably the hidden danger that will cast doubt on this decision for days to come. The ministry’s official announcement revealed a detail that supports this point: the Commerce Ministry … requested that Coca-Cola provide a proposal for a possible solution, but Coca-Cola’s preliminary and revised proposals failed to obtain the ministry’s approval.

Because the announcement did not give any specifics, we do not know anything about the recommendations given by the ministry. We also do not know anything about the alternate proposals provided by Coca-Cola. However, according to external sources, the Commerce Ministry wanted Coca-Cola to give up the Huiyuan trademark after the acquisition. If that is true, than it implies that the merger would not have set up any competitive obstacles or restrictions. The problem still seems to be wrapped up with the preservation of national brands and other non-legal issues.

Posted by James Chen at 4:17 AM | Email Author | Permalink

Guy Sorman at City Journal gives us the Navy's view on why it's necessary to patrol the Pacific:

How dangerous and unstable would Asia become without the Seventh Fleet? The Navy points to two different threats. The first is China, which has territorial claims against most of its neighbors. Taiwan comes immediately to mind, of course, but the Chinese government is also disputing ownership of the oil-rich Spratly Islands with Vietnam and the Philippines. If North Korea were to collapse, moreover, the Chinese Army could take over its territory before South Korea or the U.S. had time to intervene. China is building a very large deepwater fleet—the first in its history. (South Korea and Japan are similarly increasing their naval power.) Thus far, this Chinese fleet seldom moves far from China’s territorial waters, something that surprises the Seventh Fleet leadership. The lack of a high-seas tradition, perhaps?

The other peril comes from Islamic terrorism: a loose network of al-Qaida affiliates operating in East Java, northern Sumatra, the southern Philippines, and southern Thailand.

One of the conversations we're going to need to start having as China becomes more powerful is whether we're defending Pacific sea lanes for China or from China. Right now, it sounds like the latter. That's clearly going to become untenable as China's power grows.

Territorial disputes notwithstanding, China also benefits from global trade, and particularly trade with Japan and Taiwan. They have a strong interest in the free flow of goods through the Pacific, so the ideal situation is to have the U.S. Navy make room for a China that recognizes itself as a stakeholder in the current international system, and not as the vanguard of a new one. This would not only improve Pacific security, but defray its costs, which today are born exclusively by the U.S. taxpayer.

Of course, the Chinese may not be interested in a shared responsibility and may view Asia as an exclusive sphere. They may view U.S. policing efforts as containment measures - which will, in turn, invest their territorial disputes with new found geopolitical meaning. Then we're going to have to decide which of China's territorial claims are worth opposing with American blood and treasure.

--
Photo via SqueakyMarmot under a Creative Commons license.

Posted by Greg Scoblete at 9:14 AM | Email Author | Permalink

The Chinese government wrapped up its annual dual legislative sessions last week with 97.4% of the 2,898 representatives voting their approval for Premier Wen Jiabao’s work report that set an economic growth rate for 2009 of 8%. Although largely seen as rubber stamp parliaments, the Chinese Communist Party (CCP) has in recent years tried to play up their credentials as the voices of the people in response to citizens’ desires to have a greater say in public affairs. In the Southern Metropolis Daily, one of China’s leading commercial newspapers, an op-ed written by a professor at the China University of Political Science and Law criticizes the sub-optimal quality of the briefings given by government leaders. From these criticisms, one can get an idea of what these legislative sessions can be like:

Continue reading "Chinese Sphere: Rubber Stamp and Baseball" »

Posted by James Chen at 1:22 AM | Email Author | Permalink

Chinese Premier Wen Jiabao is worried about the U.S. economy. That makes two of us. Still, his worries carry a tad more weight considering the $1 trillion in U.S. debt Jiabao's government owns. That figuring is staggering, the largest debt holding in the world, according to the Times, and many smart minds are trying to wrap themselves around the geopolitical implications of it.

Is this a matter of what some could rightly call America's domestic irresponsibility (spending immensely more than we earn) having serious foreign policy implications? Our debt fueled spending spree placing us in a position of weakness vis-a-vis a potential rival? Or is it a useful dynamic that will solidify a peaceful (if occasionally tense) relationship between the U.S. and China?

I lean toward the latter. The U.S. and China are locked in what Larry Summers has dubbed "a financial balance of terror." As with the nuclear balance of terror, both sides would suffer immense losses if direct hostilities broke out. This balance gives both nations a strong interest in not upsetting the applecart through, among other things, a shooting war. (The Taiwanese just announced an end to military conscription, so perhaps they buy into the theory too.)

That's not to say that the U.S. should sink deeper into debt to advance world peace. Just that America's substantial debt to China might not be so detrimental to U.S. security interests as it initially appears.

Of course, Norman Angell said as much of Britain and the Germany in 1913, and if memory serves, that didn't work out so well.

Photo via Yonanimus under a Creative Commons License.

Posted by Greg Scoblete at 11:41 AM | Email Author | Permalink

The recent near-violent confrontation on the South China Sea between the Chinese navy and a U.S. navy reconnaissance ship brought back memories of the 2001 showdown over the crash landing of an American recon plane on Hainan Island. History has a funny way of repeating itself.

The Chinese intention is pretty clear - it wants to test a new American president who is even more of a rookie at international affairs than George W. Bush was in April 2001. But more important, the Chinese really would want to know how its navy stacks up against the world's premier sea power.

China's adventure into the Horn of Africa region last year was but a thinly disguised attempt to flex its new naval muscles. A land power throughout its history, China in recent years has made a concerted effort to bolster its maritime capabilities. It needs a stronger navy to provide safe passage for its growing number of freight and merchant ships - the backbone of the world's second-largest exporter.

But there is another aim at work. China may not be spoiling for a fight with the U.S. Navy, but it wants to make sure it won't be totally overwhelmed if a confrontation becomes inevitable. Of course, much of this has to do with Taiwan - China knows if it must take the island by force, a thousand missiles and a hundred divisions of the PLA won't get the job done if they can't get across the Taiwan Strait.

And there's the matter of the South China Sea, which has long been considered a "lake" by the Chinese, who claims ownership of all of the potentially oil-rich (on par with Kuwait by one estimate) Spratly Islands. Hainan Island serves as the hub of China's budding submarine fleet, a force that has undergone rapid modernization and is quickly becoming the second-strongest in the world.

So when an American ship crept nearby, it became a golden opportunity for China to fire a shot across the bow of USS Barack Obama. The new president's reaction, or the absence of, will give China important clues it's looking for.

Posted by Samuel Chi at 12:59 PM | Email Author | Permalink

Last week the Chinese government held its annual meetings of what, on paper, are its highest consultative and legislative bodies, the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress (NPC). They are largely viewed as rubber stamp parliaments by foreigners. However, the central government in recent years has tried to play up their credentials as representatives of the people. The People’s Daily, the government’s official newspaper, launched the “E-Two Sessions” website last week where netizens can submit, discuss, and vote on proposals for new laws. An editorial uses some pretty lofty rhetoric in describing the website as a major step forward in participatory government:

This is a witness to the ever-increasing maturity of Chinese netizens. Using their mouse clicks to express their wishes for the motherland, using their keyboards to type out their hopes for the revival of the people, our netizens have become more mature. Their outlooks have become broader. Their attitudes have become more rational. They offer advice for the nation through their writings. They consciously assert their identities as citizens and incorporate social justice and national affairs into their outlooks. This reflects their passion for bearing the responsibility for the nation and participating in the political process. The popularity of the “E-Two Sessions” website is the best witness to netizens’ growing sense of civic consciousness and increasing rationality in expressing their opinions.

And what are the top five proposals with the most votes? As of this writing, they are:
1. Government and party officials of county-level and lower should not have their own special drivers.
2. Cancel requirements for private businesses to apply for licenses in order to increase employment.
3. Distribute subsidies for senior citizens.
4. Crack down heavily on corruption.
5. Enable those who have lost their jobs through reform of state-owned enterprises to also enjoy the benefits of economic reform.

Note that those are just the titles of the proposals. All of them link to separate web pages which contain comprehensive descriptions as well as sections for leaving comments and voting. How much this website will actually affect the proceedings of the Two Sessions is uncertain. And with the Internet in China, one should always approach whatever content, especially that coming from government channels, with a measure of skepticism.

Posted by James Chen at 3:34 AM | Email Author | Permalink

One of the Chinese Communist Party’s (CCP) key challenges in preserving its ruling position and maintaining domestic stability is carrying out political reform to correct for the excesses and imbalances of the past 30 years of economic growth. The CCP has ruled out Western-style democracy, so it must search for other ways to fight corruption, improve efficiency, and strengthen local governance capacities. A few weeks ago, a People’s Daily editorial called for government officials to be willing to withstand scrutiny by the country’s 300 million netizens. Last week, a National People’s Congress delegate from Guangzhou called for video feeds of the city government’s meetings to be accessible by the Internet (article in Chinese here). An editorial in the Yangcheng Evening News, one of China’s largest circulating newspapers, voiced its approval:

In practice, televising the government’s decision-making process on the TV or Internet would better protect the public’s right of knowledge, participation, expression, and monitoring. It would contribute to reducing policymaking mistakes and decrease the costs associated with policymaking and implementation. … TV or Internet video feeds of the decisionmaking process for policies affecting people’s livelihoods demonstrate the government’s openness, democratic nature, and resolve to eliminate conflict of interests.

These calls for using the Internet to foster an open government do not sound much different from what some citizens in the U.S. have been advocating. It will be interesting to see how significant a role the CCP allows the Internet to play in making politicians more transparent and accountable.

Controversy over the possibility of Taiwan signing a Comprehensive Economic Cooperation Agreement (CECA) with China intensified last week with opposition parties threatening to launch an impeachment effort against the president if it goes through. Government officials have described it as a free trade agreement that Taiwan needs to sign in order to remain competitive after China, Japan, and South Korea enter into free trade agreements with ASEAN over the next few years. However, none of the agreement’s details have been made available to the public, and the government will only submit it to the legislature for review after it has been signed. The Apple Daily, one of the leading newspapers in Taiwan, weighs in on this situation:

[President Ma] has indicated that the CECA would immediately take effect after signing and would then be sent to the legislature for review. This drew the immediate criticism from both the KMT and DPP. In terms of democratization, this is without a doubt a step backwards. The Constitution grants the president the authority to enter into agreements with foreign countries. However, it also grants the legislature the authority to review the signing of agreements. It is the norm in democracies for the parliament to perform an ante hoc review rather than a post hoc ratification – only the rubber-stamp National People’s Congress of China “enjoys” the right of post hoc ratification. Is Taiwan’s legislature a local branch of the National People’s Congress?

What President Ma is exercising is somewhat equivalent to the Fast Track negotiating authority that U.S. presidents used to enjoy before it expired in 2007. The root problem, however, is not really over procedure, but the fact that he is signing a CECA with China. It also does not help that the CECA name sounds similar to CEPA, the Closer Economic Partnership Agreement signed between Hong Kong and China. Now, if the Ma administration was about to enter into an FTA with the U.S., there would not be nearly as much suspicion and controversy.

Posted by James Chen at 2:54 AM | Email Author | Permalink

While Secretary of State Clinton’s visit to China has grabbed the headlines of the mainstream media, Chinese netizens on the free-for-all discussion forums like Tianya have been abuzz with talk over the sinking of a Chinese cargo ship by the Russian Coast Guard near Vladivostok. About half of the crew of 16 are missing at sea. Russia claims the cargo vessel was smuggling items and refused to stop after Coast Guard ships fired warning shots. China’s foreign ministry has lodged protests with the Russian government and demanded an investigation.

The sinking has generated thousands of messages on the international relations section of the Tianya discussion forums. Most of them, understandably, seethe with rage, like this post which has been viewed over 15,000 times and received over 360 responses:

One can see the Russian frigate firing upon the Chinese cargo vessel from the video footage. At the moment when the ship was struck and causing shards to fly through the air, sounds of mocking laughter can be heard. One can see from the camera angle that the video was taken by a soldier on the Russian frigate. In another shot, besides the cameraman one can also see two other Russian frigates sailing in the waters. In other words, three armed Russian frigates had surrounded the cargo vessel. There was no way a cargo vessel could have broken their net and escaped, but the Russian frigates still fired 500 rounds – and the Russians even got a good laugh out of it. If this is not unacceptable, than what is?

Other posts like this one call for calm:

In the face of the Russian sinking of our cargo vessel, the Chinese government has been consistent in maintaining a calm attitude. Everyone complains about how China shows weakness when encountering international conflicts, but it is exactly this “weakness” that has given us a stable lifestyle and enabled the Chinese economy to develop rapidly.

Meanwhile, last Wednesday the Taiwanese government announced that with an 8% fall in GDP during the fourth quarter of 2008, the nation was officially in a state of recession. This was the largest ever single-quarter decline in GDP in Taiwan’s history. This also gives Taiwan the dubious distinction as one of the worst-performing industrial economies in the world according to The Economist.

An editorial in the Liberty Times, a leading pro-Taiwan independence newspaper, writes:

Every country has been hit by the global financial crisis. However, The Economist states that out of the 55 countries it tracks Taiwan has been hurt the most. Why is this? The reason is Taiwan’s economy relies heavily upon exports, and these exports and investments rely heavily upon China. Once exports to China steeply decline, Taiwan’s economy will sink into contraction. Last December’s exports to China dropped nearly 54%, resulting in the shocking 8.36% drop in GDP in the fourth quarter. January exports to China dropped nearly 59%, so we should not be surprised to see more depressing economic figures for the first quarter. … Taiwan still suffers from a China-dependence blood disease that other countries do not have to worry about.

Taiwan president Ma Ying-jeou has been resolute in pressing ahead with signing a Comprehensive Economic Cooperation Agreement (CECA) with China, which would further liberalize trade and capital flows between the two sides of the Taiwan Strait. This has generated controversy in Taiwan due to fears that not only would it increase Taiwan’s dependence on the Chinese economy, but that it would also send a signal to the world that the agreement is paving the path for political integration.

Posted by James Chen at 12:34 AM | Email Author | Permalink

Hillary Clinton gave a speech at the Asia Foundation last Friday to set the stage for her upcoming visits to Japan, South Korea, Indonesia, and China. This will be her first overseas trip as Secretary of State, and it is notable that she has chosen Asia as her destination. In her remarks, Clinton brought up climate change as one of the potential areas of cooperation between the U.S. and China:

We will work hard with the Chinese to create partnerships that promote cleaner energy sources, greater energy efficiency, technology transfers that can benefit both countries, and other strategies that simultaneously protect the environment and promote economic growth. While in Beijing, I will visit a clean thermal power plant built with GE and Chinese technology. It serves as an example of the kind of job-creating, bilateral, public-private collaboration that we need so much more of.

A commentary in the Southern Metropolis Daily, one of China’s leading commercial newspapers, also thinks this is a good idea:

The U.S. led the way in two technological revolutions. The first was with the atomic bomb, which revolutionized warfare. The next was with computer networks which revolutionized telecommunications. Everyone has witnessed how these revolutions have fundamentally changed the face of the world. Would it be possible for China to play a part in a revolution in the much discussed area of energy technology? This will only take place if there is deep cooperation between China and the U.S.

With regards to bearing responsibility for reducing global emissions, China obviously has its own circumstances, interests, and positions. The importance of the “Roadmap for U.S.-China Cooperation on Energy and Climate Change” lies in the realistic path it provides for achieving a win-win result through dialogue and negotiations. The roadmap emphasizes that technological revolution in the areas of energy and the environment not only requires the cooperation of our two countries, but also for the government, private enterprise, and the general public to work together. This point is particularly interesting for China. … China can continue its path of development as well as become a model of a low-carbon economy for the world. This is a goal worth pursuing.

The Bush administration did not place a high priority in addressing the climate change issue. When it rejected the Kyoto Protocol in 2001, one of the main reasons cited was that developing nations like China were not required to make any reductions. Since then, the climate change community has been hoping that the largest emitters of the developed and developing world can work together to tackle the issue.

It appears that Secretary Clinton is taking the first step in this direction. She is bringing along special climate change envoy Todd Stern with her on this trip, so this may be her attempt to place her imprint on the U.S.-China relationship. Climate change would be a new front in this bilateral relationship that, up until recently, has largely revolved around trade, human rights, Taiwan, and North Korea. It will be interesting to see what effect adding climate change to the mix will have on the other issues.

Posted by James Chen at 1:18 AM | Email Author | Permalink

The People’s Daily, the Chinese government’s official newspaper, published an interesting commentary titled, “Learn to Listen to Public Opinion from the Internet.” Penned by an associate professor at the Central Party School, the country’s premier institution for the training of future CCP cadres, it addresses the recent “human flesh search” phenomenon, how it has led to the downfall of certain government officials, and the attempts of one city to ban them:

The development of the Internet is not just an information revolution. It is also an essential part of the development process of political democracy. Through this important bridge to public opinion, the party and government can, with the help of the people, perfect the management mechanism of cadres, the disciplinary mechanism of party members, and the enforcement mechanisms of the judiciary.

Today, there are quite a few officials who are feeling more pressured, that it’s tough to be an official because there are countless eyeballs keeping close watch over them. If you are carrying out your duties responsibly, what do you have to be afraid of? Some people feel pressured because they cannot abuse their power and engage in under-the-table transactions any longer. Now there are many officials who have changed their behavior, become more disciplined, and do not dare to exceed their authority.

Is the Chinese government allowing the Internet to develop into a kind of civil society? Or is this an attempt by the central government to keep the local government in line?

While room for expression seems to be expanding in China, journalists in Hong Kong working beats in China are finding their activities coming under tighter restrictions. Ming Pao, the leading newspaper in Hong Kong, laments this recent development:

Today the Hong Kong and Macao Affairs Office of the State Council announced the “Regulations for Hong Kong and Macao Journalists Reporting in the Mainland.” The key portion of those regulations is that journalists in the Mainland must carry and be ready to produce at all times a press pass issued by the Liaison Office of the Central People’s Government on behalf of the All-China Journalists Association. This is a restrictive rule which only adds to the obstacles faced by Hong Kong and Macao reporters operating in China. This very clearly goes against the trend of the Mainland opening up. Also, there needs to be strengthened communication and increased understanding in order to speed up integration between the Mainland and Hong Kong and Macao. These new rules will most certainly hinder that vision from coming true.

The restrictions may be due to the Chinese government’s wariness over the abundance of sensitive political anniversaries this year, such as the 20th anniversary of the Tiananmen Square Incident.

The gloomy outlook for the Chinese economy has caused much worry in Taiwan where exports to China dropped nearly 40% last year. The Liberty Times, one of Taiwan’s leading newspapers, sounds an alarm over the island’s over-dependence upon its neighbor:

It can be said that in the face of the global financial tsunami, China is already drowning and is in no position to help others. This is not surprising. Recently China’s leader reiterated that China could only take care of itself and was not able to save the world. This statement clearly tells us that Taiwan’s economy cannot rely on China. It’s a dead end. Regretfully, President Ma, who continues to relax restrictions on investments in China, seems to be totally oblivious. ...

Wen Jiabao stated that it would be difficult for China to maintain an 8% GDP growth rate. Anyone who is sensitive towards the Chinese economy will easily detect the warning signs of deterioration in the Chinese economy from Wen’s remarks. At this present moment what the government should be doing is maintaining a safe distance from China.

Taiwan President Ma Ying-jeou has been expending a lot of political capital in efforts to reduce tensions with China through closer economic exchanges, which were largely supported, and scaling back efforts to increase Taiwan’s international space, which was much more controversial. Now that it appears that the economic links are not going to deliver the goods in the near term at least, the Ma administration has been trying to put a positive spin on its cross-strait policy. However, it will be hard-pressed to tout any accomplishments in enlarging Taiwan’s international space because there simply are none. Even when presented with an opportunity recently to re-establish diplomatic relations with Malawi, the Ma administration has chosen to decline out of unwillingness to displease China. With this kind of foreign policy, one wonders what occupies the time these days of Taiwan’s Ministry of Foreign Affairs?

Posted by James Chen at 4:17 AM | Email Author | Permalink

The Chinese world spent most of the past week celebrating the lunar new year and has started returning to the work of pushing the economy forward bit by bit. At the World Economic Forum in Davos, Chinese premier Wen Jiabao optimistically predicted that his nation's GDP growth would hit the magic 8% mark this year, popularly considered to be the rate China would need to reach in order to continue to provide employment for current and new workers.

Apart from doubts over the accuracy of officially reported statistics, there are indications that China's economy is being hit hard by the global financial crisis. Many Taiwanese businessmen originally posted to China have been recalled to Taiwan or laid off. Millions of migrant workers are also finding themselves without a job to return to after the new year.

Lan Weiwei, the deputy editor-in-chief of Southern Metropolis Weekly, shares on his widely read blog about his experience returning to his hometown for the new year:

This year's winter will probably be even longer than expected. Everybody wishes that it could be like previous years where after the fifth or sixth day of the Chinese new year they would be rushing back to the city to work. The situation this year is a lot different. Although the official day to start work this year has moved up a day earlier than previous years, it seems like people are not in such a hurry to get back to work. ... Before, there were people who were indispensable to the factories or companies they worked for. This year, they have become idle.

This is especially the case for my relatives and childhood friends who have been working in Guangdong. Most of them do not know whether they will have jobs this year. Some of them who worked at factories were told to return home and wait there until they received notification to go back to work. They realize, however, that the notification this year will arrive later than usual.

Posted by James Chen at 4:52 AM | Email Author | Permalink

For Chinese communities around the world, this week marks the beginning of a week-long holiday to mark Chinese New Year, or Spring Festival as it is usually called. The significance of the holiday is on the same level as Christmas for the Western world and also involves family reunions in one’s hometown. One of the phenomena associated with the Spring Festival is the massive outflow of people from the cities where they work back to their hometowns. Even in an island as small as Taiwan, every time Chinese New Year rolled around there would be massive traffic jams on the highways with hundreds of thousands of people leaving Taipei for their hometowns down south. The scale of the travel situation in China is even more mind-boggling where you have an estimated 188 million people making the journey home, and that is only for the railways.

A blog posting in China comparing the differences between how holiday travel is handled in the U.S. and China has struck a chord, receiving over 100,000 views and 1,100 comments. Popular novelist and former Atlantic Council senior fellow Yang Hengjun attributes China’s travel problems to two main factors: 1. The inability of regular citizens to change their official residence (known as hukou in Mandarin) which greatly limits the social services that migrant workers and their families can access outside of their hometown. This often ends up separating parents from their children who can only receive schooling in their hometowns. 2. Train and airplane tickets are snatched up by those with special connections to the government.

Yang writes, “Unlimited authority, abuse of power, an unfair system, monopolistic corporations, social inequality, and corruption has made the Chinese New Year travel rush not a transportation problem, but a social and political one. That is what causes so many people to get angry! … In the U.S., apart from a small minority of government officials who are traveling for business dealing with national interests, those who are traveling for personal reasons are all treated the same in the purchasing of tickets. Even if you were traveling on business for your company or the government, you need to go through the same process as an illegal immigrant worker in a Chinese restaurant: purchase tickets online or line up at the counter, first come first serve. … In China, one’s level in society basically determines whether you are able to get a ticket, and the highest level is, obviously, the ‘servants of the people.’ Have you ever heard any public servant or their family members complain about not being able to get tickets?”

For Taiwanese businessmen working on the other side of the Strait, the new year usually means either getting on a plane back home or flying one’s wife and kids out to China. However, the global financial crisis has changed this dynamic this year. An article in Commonwealth, the leading general affairs magazine in Taiwan, explains how economic difficulties in China have affected cross-strait travel: “The Fu-hsing Travel Agency pointed out that in the past there would always be tons of people flying to the mainland to visit relatives or go on tours, and demand for seats outstripped supply. This year that demand has decreased significantly. ‘There are already airline companies that are selling direct flights to Shenzhen for an extremely low price of NT$7,000 [approx. US$212], but this still hasn’t attracted any buyers,’ a representative from the travel agency said.

This year, China-based Taiwanese businessmen will have a particularly cold Spring Festival. Those who are unlucky have been laid off and sent back to Taiwan. Some are temporarily unable to reunite with their family.

Mr. Chen, who has been ‘recalled’ to Taiwan, said with a note of sarcasm, ‘This year it’s my turn to go back to Taiwan to see my family. During the past decade, whether Taiwanese businessmen spent their Chinese new year in Taiwan or China was an indicator of which location was more attractive. Mr. Chen plans to see how things go in Taiwan for the next year or two, and then make a decision once the economy recovers.

‘It’s hard to say whether I’ll return to the mainland. After this shuffling of the deck, I think new opportunities will appear on both sides,’ Chen said optimistically.”

Posted by James Chen at 3:59 AM | Email Author | Permalink

Some Q4 numbers from China:

China's GDP for the fourth quarter of 2008 plunged, in the latest indication that the impact of the global financial crisis on China has worsened, AP reported. Economic growth came in at 6.8% compared to a year earlier, according to data released today by the National Bureau of Statistics (NBS). This compares to 9% growth in the previous quarter and 10.6% in the first quarter. The economy grew by 9% for the full year, marking the slowest annual growth since 2001, and down significantly from the 13% growth seen in 2007. Exports fell by 2.8% in December, following a 2.2% drop in November.

So, will a declining economy spur domestic unrest? If China's leadership is unable to deliver economic gains commensurate with the past few years, will they go abroad in search of demons to slay?

Photo via Gene Zhang under a Creative Commons license.

Posted by Greg Scoblete at 12:55 PM | Email Author | Permalink

During President Bush’s final press conference last week, he was asked indirectly about his views of America’s damaged “moral standing.” Bush defended himself spiritedly saying, “I strongly disagree with the assessment that our moral standing has been damaged. It may be damaged amongst some of the elite, but people still understand America stands for freedom, that America is a country that provides such great hope.” He went on to name some parts of the world where the U.S. was still held in high regard, and China was one of those countries.

So how does China, or, more specifically, members of the Chinese media feel about Bush’s legacy? A commentary in the Southern Metropolis Daily, one of China’s leading commercial newspapers, mentions how Truman left office with very low approval ratings, but his legacy was later on vindicated. The writer pins Bush’s place in history squarely upon the Iraq war and comes up with a measured assessment: “People say that history often repeats itself, and it’s hard to say that it will not do the same for Bush in how his stature may be revised the same way that Truman’s was. However, the difference is that the emergence of Europe and Japan along with the end of the Cold War serve as the basis for Truman’s place in history. The basis for Bush’s legacy has yet to be determined.

"Moreover, what makes it even more uncertain is the promotion of his Middle East democracy strategy in Muslim countries where there lies a wide gap between them and Western ideals. If Iraq is able to continue moving forward in the development of its democracy and rule of law and go on to influence other Middle Eastern countries, there will be greater hope of a comprehensive realization of Bush’s Middle East democracy project. However, if Iraq goes backwards in democracy and its sects are unable to cooperate, leading to widespread chaos with global effects, than history will render a judgment that Bush will not like. But that is the impartial judgment that he has no choice but to accept.”

The People’s Daily, the official newspaper of the Chinese government, casts U.S.-China relations in a guardedly optimistic light in an editorial titled, “Sino-U.S. Cooperation Leads to World Peace.” Although Bush is not mentioned directly, his administration’s policy of encouraging China to become a “responsible stakeholder” is discussed. The timing and nature of the article also indicates that it was written in response to Bush’s oncoming departure.

“In recent years, amidst the efforts of the international community to resolve problems of a global nature, the fruits of the Sino-U.S. ‘global relationship’ are gradually being seen. Room for cooperation and opportunity has continuously growing larger, and mutual trust has also been increasingly strengthened. It can be said that the harder the global problem, the more it shows the necessity and importance of Sino-U.S. cooperation. … The Sino-U.S. relationship is made up of the world’s largest developing country and the largest developed country. They have the common responsibility for the peace and development of mankind.”

The absence of criticism and forward-looking nature of this editorial seems to indicate that the Chinese government has been pleased with how the Bush administration has conducted its dealings with them and hopes that they will see the same from the Obama administration.

Posted by James Chen at 2:25 AM | Email Author | Permalink

In 2008, the world saw both impressive demonstrations of China’s rising power and capabilities as well as increasingly bolder and complex challenges to the Chinese Communist Party’s (CCP) control over the nation.

In May, a 7.9 magnitude earthquake hit the Sichuan Province that left over 87,000 people dead or missing. The central government went all out in its disaster response with Premier Wen Jiabao flying to the affected area to personally oversee relief efforts. Foreign observers praised the massive scale of the logistical operation and its overall effectiveness as well as the government’s openness in disseminating information and accepting foreign assistance.

The fact that one of the largest-scale Olympic games could still be held just three months after the earthquake struck further underlined the resilience and governance capabilities of the CCP. On August 8, the Beijing Olympics opened with a display of fireworks and choreographed performances whose mammoth scale took the breath of virtually the entire global audience. Combined with the eye-catching architectural designs of Olympic venues, the surprisingly successful effort to reduce air pollution in one of the most polluted cities in the world, and beating out the United States to capture the most gold medals while coming in a close second in the overall medal count, Chinese could hold their heads high and show the world that they had, indeed, arrived, and they were a force to be respected and reckoned with.

Continue reading "China: 2008 in Review" »

Posted by James Chen at 3:11 AM | Email Author | Permalink

On December 15, Taiwan and China officially launched direct airline, shipping, and postal links between each side. Ever since 1949 when the Communists evicted the Nationalists from China, forcing them to set up a government-in-exile in Taiwan, the Taiwan Strait maintained a distinct bumpiness in a world that was going flat. Up until last Monday, all air and shipping activity between the two sides had to be routed through Hong Kong and Macau (air) or Okinawa (sea). The cutting out of the middleman, so to speak, will significantly reduce costs and travel times as a quick look at a map of the region would show.

The Southern Metropolis Daily, a commercial newspaper based in southern China, sees this as a positive development and looks forward to seeing the three links shorten not only the travel distance between the two sides of the Strait, but also the relational: “A change in the nature of economic activity will ultimately lead to a change in people’s hearts. Through closer interaction, there will be mutual understanding of each other’s thinking, a sharing of each other’s markets, and a sharing of common responsibilities. … Although differences still exist over politics, enhanced people-to-people contact can gradually temper the residual effects of ideology.”

In Taiwan, there is a guarded optimism. The Taiwan-based China Times writes, “Whether you are a cabinet official or industry titan, this is the time to think of the best way to make use of this rare historical opportunity and retool industrial competitive strategy. For example, government policymakers should think about how to take advantage of the mainland’s efforts to expand domestic consumption, how to attract Taiwanese businessmen to set up their operating headquarters in Taiwan, and how to develop Taiwan into an operational and logistics center. Now that the three links have been opened, strategies for addressing these issues should be developed without delay.”

Hong Kong stands to lose a significant amount of business from this further integration of China and Taiwan’s economies. Sing Tao, one of Hong Kong’s leading dailies, writes, “Hong Kong has already made plans early on for the opening of direct flights. Affected businesses have also prepared themselves to face this situation. However, the arrival of the financial crisis this year has made Hong Kong’s economic outlook even grimmer. During November, the peak pre-Christmas period for shipping companies, Chinese exports fell from their levels one year ago, the first drop in seven years. In addition to that, Hong Kong’s airport cargo shipping fell 18.7%. Passenger traffic fell 5.56%, the fourth consecutive declining month. Now that Taiwanese businessmen do not need to travel through Hong Kong with the three links in effect, the statistics for Hong Kong may get even worse.”

Posted by James Chen at 3:03 AM | Email Author | Permalink

Amidst reports of the ongoing back-and-forth arguments that took place in the U.S.-China Strategic Economic Dialogue over the strength of the Chinese currency, an interesting news item surfaced in the Southern Metropolis Daily, one of China's leading commercial newspapers. In remarks to the paper, Major General Jin Yi'nan, the head of the PLA National Defense University's Institute of Strategy, advocated dispatching the Chinese Navy over to the Gulf of Aden to take care of the Somali pirates. Just last month the pirates hijacked of a Chinese fishing boat and took 15 Chinese hostages.

While Jin was quick to dispel "China threat" concerns, he made clear that the overall message of such a mission went beyond a simple piracy fighting action: "If the Chinese Navy were to rescue hostages and protect the passage of commercial vessels, it would in no way be an economic issue. Rather, it would be an issue of national image. In fact, sending out a naval group is not just to target the Somali pirates. The Chinese Navy would sail from Hainan, through the Malacca Straits, enter the Indian Ocean, draw near to the Red Sea, and take position in the Gulf of Aden. This would be a sign to the world that China will be resolute, determined, and capable of mobilizing its Navy to protect its maritime interests, regional security, and the safety of shipping lanes and passages. That is the most important point."

In a Ming Pao op-ed, convener of Hong Kong's Executive Council CY Leung ponders how Hong Kong can maintain a position of importance in China and the world: "We need to integrate two primary demands: the first is for foreign financial organizations to develop their business in mainland China; the second demand is for mainland China to develop its own sustainable domestic financial industry with the help of Hong Kong. If we are unable to meet both of these demands, the financial center of Hong Kong will lose its 'international' nature and become just like Shanghai. We will also lose our 'Chinese' nature and become just like Singapore. ... If we can carry out this project, we can secure the position of the next generation of Hong Kong residents as well Hong Kong's place in the country."

The closer that Taiwan president Ma Ying-jeou tries to bring the country to China, the more his administration seems to take on facets of its authoritarian neighbor. Police treatment of protesters during the Chinese envoy's visit last month elicited notices from Freedom House, the International Federation for Human Rights (FIDH), and most recently Amnesty International, a dubious distinction that Taiwan has not had since the days when it was a martial law dictatorship. Now Ma has stated that it would not be in the "national interest" to welcome the Dalai Lama, who had expressed a desire to visit Taiwan in 2009. The Dalai Lama last visited Taiwan in 2001 when the current opposition Democratic Progressive Party was in power.

In an editorial, the Taiwan-based China Times writes, "Cross-Strait relations are, indeed, important to Taiwan, and everybody wishes for harmony between the two sides. However, cross-Strait relations should in no way be equated with the national interest. A free economy, democracy, human rights, and national stature are absolutely of greater importance. ... For a long time the message we have given to the international community was that Taiwan stood on the side of democracy, freedom, and human rights and faced suppression from Communist China. Every country, out of consideration for its 'national interest' and Chinese pressure, has sacrificed Taiwan.

"However, there are many international friends who are still concerned about Taiwan's plight. Now that we have rejected the Dalai Lama, have we not just shot ourselves in the foot? Moreover, if we ourselves are unable to withstand pressure from Communist China, how can we ask the international community to support Taiwan?"

Posted by James Chen at 2:33 AM | Email Author | Permalink

The Mumbai terrorist attacks figured prominently in the international sections of Chinese language newspapers. In the Southern Metropolis Daily, one of China’s leading commercial newspapers, Zhuang Liwei asserts that while outside groups may have aided the attackers, their primary motivation should be attributed to longstanding discrimination against Muslims in India’s predominantly Hindu society: “Before this Mumbai attack occurred, incidents of Muslim villages being burned, Muslims being murdered, and Muslims being evicted from their homes were occurring on a regular basis. Although the Indian government had made efforts to restrain Hindu radicals, they were of only limited effect because of Hindu’s political influence.

"Overall, Muslim radicals who found themselves disadvantaged had no choice but to resort to a strategy of bloody attacks in order to carry out a balanced resistance. At the same time, the intervention of external Islamic forces also enabled the Indian Muslims to obtain support and resources to continue their hardened resistance against the Hindu camp.” Zhuang goes on to forecast a round of revenge attacks and counterattacks between India’s Hindus and Muslims.

In the Liberty Times, one of Taiwan’s leading dailies, Lee Cheng-hong believes that India’s attribution of the attacks to external forces is a way of covering up its internal contradictions: “India may choose to take the more attractive American path and call the Mumbai attacks India’s 9-11 and put the finger on Pakistan as the mastermind. Thus, India’s next step would be to raise tensions with Pakistan and perhaps even engage in armed conflict. The logic for this course of action is simple and it would work towards sidestepping internal political crises and shift the focus outwards.” Lee also sees this as President-elect Obama's first major foreign policy test.

An editorial in Lianhe Zaobao, Singapore’s leading Chinese-language daily, interestingly blames India’s democracy for the attacks: “Many things about India tell us that oftentimes this ‘world’s largest democratic country’ is confounded by democracy itself. Even today it has still been unable to transform the benefits of democratic theory into reality for managing the nation and improving people’s lives. Instead, certain political forces and special interest groups force the nation’s political machinery to a standstill in pursuing their own interests. This renders the government unable to enact or execute policy, and the natural result in the end is that interests of the majority and all of society are harmed.

"With regards to the Mumbai incident, people cannot assign the entire blame to the lack of efficiency in India’s political system, but there is one point that cannot be denied: if a nation’s policymaking and execution functions are weak and powerless, or are constantly paralyzed, than it would naturally become an easy ‘soft target’ for terrorist organizations or other evil forces to attack. For India, this should be a lesson. For other countries, should this also not be a warning?”

Posted by James Chen at 2:47 AM | Email Author | Permalink

At the outset of the financial crisis, many China-based media commentators were exuding a sense of self-satisfaction toward the troubles the U.S. economy was going through and looking forward to a reconfigured international order with a weakened U.S. and stronger China. However, with recent news this past week of rising unemployment and factory closures in China, the media has dialed back its triumphal declarations and is, instead, calling for businesses to do the right thing and keep their workers on the dole.

In an editorial titled, “Committing to No Layoffs Is an Expression of Corporate Social Responsibility,” the Chinese government’s official Xinhua News Agency writes, “In the face of economic crises, corporations, especially privately-run businesses, can choose to layoff workers in order to reduce risk and costs and achieve the goal of self-preservation. This is a common approach taken by corporations in developed Western nations. However, a responsible corporation should look after the overall interests of the nation and society. It should tightly tie its own fate to that of the nation and the people. … The greater the crisis, the tougher will be the test of a corporation’s moral fiber and social responsibility.”

With Singapore now officially in a recession and one of its largest banks announcing layoffs, leading Chinese-language daily Lianhe Zaobao is also using similar language in pleading for businesses to go easy on the layoffs: “Corporations may pursue profit, but they must also be socially responsible. They should care for the welfare of their employees and their families. … In the midst of the rapidly deteriorating global economic situation, it would be unrealistic to expect companies not to engage in any layoffs at all. … However, we sincerely hope that during these difficult times company managers will be able to think carefully and long-term. Value and respect the labor-management-government tripartite negotiation channels and make use of its special advantages. Adopt a ‘tripartite’ approach in dealing with issues such as crisis response and employee lay-offs in order to set a good example of a manager.”

An economic policy consisting of entreaties to businesses to refrain from taking measures perfectly consistent with free market principles would be received with ridicule in Taiwan, so the government can only hope to use fiscal measures to soften the impact of the global economic downturn. However, President Ma Ying-jeou’s administration has resorted to a curious combination of both massive government spending and large tax cuts in hopes to stimulate the economy.

The Taiwan-based China Times writes, “Cutting taxes is like smoking opium. In some situations tax cuts may have a stimulatory effect, but they also have very obvious negative consequences: they decrease government revenue, worsen the nation’s financial state, add to the debt burden of future generations, seep away funds for infrastructure development, and weaken the investment environment. Overall, it causes long-term damage to economic fundamentals. Short-sighted political hacks get caught up in the applause over tax cuts, but they ignore the after-effects of shocks to government debt and infrastructure development. … When our government officials wish to adopt the most appealing policies of America’s Democratic and Republican parties by both increasing spending and cutting taxes, does President Ma not feel the least bit of discomfort? Is there such a thing as a free lunch?”

Posted by James Chen at 5:31 AM | Email Author | Permalink

On the heels of the announcement of the Chinese government’s massive stimulus plan, many domestic newspapers weighed in with commentary on the global financial crisis and its potential effect on the nation. The official government newspaper, People’s Daily, sees in the crisis an opportunity to test and strengthen Chinese business enterprises and government officials that survive this crisis. It also sees a vindication of China’s development path:

“Socialism with Chinese characteristics is unprecedented in the history of mankind. We acknowledge that our social structure is not perfect and contains all sorts of inadequacies and problems. However, it does not follow that we should question the path we have taken, nor should we automatically regard the Western model as superior. … We must get past the fallacious notion that ‘all that is Western is advanced,’ and face others with objectivity and rationality. We must be practical and sensible in taking stock of ourselves, forgo superstition, and not blindly follow the crowd.”

Singapore’s leading Chinese-language daily, Lianhe Zaobao, sees China advancing in international stature through this crisis: “In the midst of the bleak outlook surrounding the global economy, the unveiling of Beijing’s market bailout plan has shown that it marches to the beat of a different drummer. China perhaps feels that it needs to let the world know once more that not only is it able to take care of itself, but that the nation’s stability and development is its most concrete contribution to the world economy. Consequently, in the international economic order of the future, China has reason to occupy an important role.”

Meanwhile, Taiwanese society is reverberating from the aftershocks of protests surrounding the November 3rd visit of a Chinese official and last week’s detention of former president Chen Shui-bian on corruption charges. Chen joins seven other current and former government officials, all members of the opposition Democratic Progressive Party (DPP), who have either been arrested or detained during the past few months on separate charges, raising suspicions that government prosecutors have been solely targeting opposition figures.

In an editorial, the Apple Daily, a popular tabloid in Taiwan, writes, “It is a fact clearly witnessed by all that the judiciary has only been going after [opposition party members] and ignoring [ruling party members.] Consequently, the judiciary has gained for itself the unsavory reputation of a political hit man. This has seriously affected the independence and dignity of the law. When the law is unable to remain politically neutral, it will deepen social fissures, lead to further polarization, and betray its mission as society’s arbiter.”

While it may be a stretch to conclude that the judiciary is being controlled by the ruling Chinese Nationalist Party (KMT), it is even more difficult to attribute the one-sidedness of these recent prosecutions to mere coincidence.

Posted by James Chen at 5:23 AM | Email Author | Permalink

As with the rest of the world’s media, the Chinese-language press weighed in on what changes, if any, President-elect Obama would bring to US foreign policy. There seems to be an overall sense of appreciation for the historical significance of the election, but also some trepidation over whether an Obama administration would upset the relatively stable relationship that currently exists between the US and China, attested by the fact that the topic of these relations barely came up during the course of the campaign.

In Hong Kong’s Ming Pao, Dong Sheng writes, “In general, there is always bound to be a degree of uncertainty when the US changes presidents. Nevertheless, if the Sino-US relationship was able to emerge from the shadow of the (Yugoslavia) embassy bombing and spy plane incident and develop into what today appears, at least on the surface, to be one based primarily on cooperation, than in the near term there will be no dramatic changes in US-China relations.” The writer is still concerned, however, over how Obama will handle the financial crisis, especially with relation to his expectations of the Chinese government’s role.

Over in Singapore, leading Chinese language daily Lianhe Zaobao expresses concerns over Obama’s trade policies. “Traditionally, the US Democratic Party has a protectionist image, and in the midst of this financial and economic situation those protectionist feelings can be easily stirred up. Consequently, as the guardian of market economics, America needs to continue to speak out for free trade and attack protectionism.”

Taiwan is also nervous about the incoming Democratic administration because the party is seen to be more accommodating to China than the Republicans. The Taiwan-based China Times states, “Obama’s election win has given Taipei some cause for concern for the future development of US-Taiwan relations. This is completely understandable because Obama is a center-left liberal, and this will also be the ideology of his officials who will take over the handling of the US-China-Taiwan relationship. It is likely that in their consideration of US national interests that those of Taiwan's would be neglected.”

An op-ed column in the Chinese government’s official newspaper, People’s Daily, drips with scorn for Obama’s declaration of change. “Obama is a typical American political hack. There is no difference between his thinking and that of the members of the US Congress. If anyone thinks he will change America, he will probably be sorely disappointed.” One of the examples the writer gives is Obama’s conception of America’s role in foreign affairs. “America’s interference around the world will not change. Intervening in the Kashmir issue is part of Obama’s platform. His reasoning, unbelievably, is to enable Pakistan to focus its efforts on fighting terrorism. Americans are still making up reasons to reach their hands into all sorts of places. Sometimes there will not be any valid reason, so they will make something up to convince themselves and ignore what others think. Obama and Bush are the same. Democrats and Republicans are the same. They think America should be in charge of everything that goes on in this world.” The writer concludes, “In seeking out peaceful coexistence and prosperity for mankind, one should not place their hopes upon any country or even any particular leader. People need to work together so that a multipolar world can constrain rogue nations, and universal values can curb unilateral policies.”

Posted by James Chen at 1:55 AM | Email Author | Permalink

There has been a significant thawing of relations between China and Taiwan ever since Ma Ying-jeou assumed the presidency of Taiwan back in May. Formal channels of communication between the two sides, dormant for eight years during the administration of Ma's predecessor Chen Shui-bian, have suddenly been revived.

The key difference has been that Ma has hewn to his Chinese Nationalist Party's (KMT) traditional stance towards the status of Taiwan, which is that the island is a part of China, and the rightful ruler of China is the Republic of China (ROC) government. Disagreement over the "rightful ruler" part notwithstanding, this is good enough for the government of People's Republic of China, which prefers Ma's stance much more than Chen's past insistence on upholding Taiwan's sovereignty and independence.

The topic of cross-Strait relations has been a hot topic in the Chinese-language media this past week, especially in anticipation of Chen Yunlin's Monday visit to Taiwan. Chen is the chairman of the Association for Relations across the Taiwan Straits (ARATS), the body in charge of conducting relations with Taiwan. The visit will be of particular historical significance because he will be the highest-level Chinese official to set foot on the island. An agreement is expected to be signed that would clear the way for direct air, shipping, and postal links between the two sides as well as the creation of a food safety mechanism.

Singapore's leading Chinese-language daily, Lianhe Zaobao, is very upbeat on this meeting. An October 29th editorial states, "From an objective standpoint, this pragmatic cooperation will most certainly bring about tremendous and long-ranging benefits for the two sides of the Strait. It will especially inject vitality into Taiwan which has limited room for development. This kind of mutually beneficial win-win cooperation is also helpful for maintaining stability and peace in the Taiwan region."

However, not everyone in Taiwan is happy about the rapprochement with China. Taiwan's main opposition party, the Democratic Progressive Party (DPP), staged a protest on October 25th which generated a surprisingly large turnout of 600,000. In the October 30th edition of Apple Daily, one of Taiwan's largest circulating tabloids, Lee Wen-chung writes, "Over the course of 12 years of Lee Teng-hui and eight years of Chen Shui-bian's presidencies, Taiwan completed its transition to a democracy in the midst of hardship and formed a shared community. No matter whether your preference is for 'Taiwan' or 'Republic of China,' the names all refer to this land and its people; the dispute over the future of Taiwan can be handled through a democratic process. However, the Ma administration's disregard and concessions over national sovereignty has severely undermined the consensus over this community."

The "concessions" that the writer is referring to include Ma's referral to Taiwan as a "region" in an interview and his willingness to allow Chen Yunlin to address him as "Mr. Ma" instead of "President Ma." The October 30th editorial of the Taiwan-based China Times newspaper declares, "If the Chinese Communist authorities truly understood the Taiwanese people, they should know that there is nothing that can take the place of dignity. Furthermore, if Chen Yunlin is unable to address Ma Ying-jeou as 'president' when they meet, than there is no need, nor is it appropriate for the two men to meet. Ma Ying-jeou is the leader chosen by ballots cast by the people of Taiwan. He is a representative of our national sovereignty. If he is not able to be properly addressed in his own country and is even willing to be called 'Mr. Ma' or other substitute titles, than not only is that a personal insult, but it is also an insult to Taiwan's sovereignty."

The controversy over titles stems from the Chinese government's refusal to acknowledge Taiwan as an independent country. Therefore, Taiwan is always referred to as "the Taiwan region" and its president is referred to as the "leader" in the Chinese media. An op-ed column by Chien Han-sun in the overseas edition of the People's Daily, the Chinese government's official newspaper, gives an example of this: "Ever since Mr. Ma Ying-jeou assumed the leadership of the Taiwan region, cross-Strait relations have been developing in a positive direction."

Along the same vein as the Lianhe Zaobao editorial mentioned above, the writer plays up the economic benefits that closer economic integration will bring to the two sides. His conclusion, however, would not only worry independence supporters in Taiwan, but also the majority that just wishes to keep the status quo of the relationship between Taiwan and China: "I often hear that the 'status quo' should be maintained in the cross-Strait relationship. This simply does not make any logical sense because the 'status quo' changes with time. Yesterday's 'status quo' is different from today's, and todays 'status quo' will be different from tomorrow's. For every single day of the past eight years the DPP had tried every which way to shift Taiwan's 'status quo' closer towards 'Taiwan independence.' Now that the KMT is in power, I hope that every day they will pull the 'status quo' back upon the path of peaceful unification. It is only in this way that the 'status quo' will be meaningful. Otherwise, we will fall into the 'Taiwan independence' trap."

Posted by James Chen at 1:57 AM | Email Author | Permalink

As is the case in Europe and many other parts of the world, the U.S. presidential election has attracted great interest in the Chinese-language media. Every major newspaper in China, Taiwan, Hong Kong, and Singapore provides daily updates of the race, virtually tracking and explaining whatever the American press is focusing on including poll numbers, campaign contribution hauls, and even Joe the Plumber. Xinhua and the People's Daily, the Chinese government's official news agency and newspaper, as well as Ming Pao, one of Hong Kong's leading dailies, have entire websites devoted to news and analysis of the presidential race.

As alluded to in Nicholas Kristof's latest column, the race element in this year's election is an area of fascination. Many Chinese have a perception of American society as fraught with racial tension. When I was working in Taiwan, one of the most common questions I would be asked was whether as an Asian-American I had ever encountered racial prejudice. In Lianhe Zaobao, Singapore's largest Chinese-language daily, Zhong Bu writes that in the remaining days of the election, three factors will determine the winner: turnout of new voters, how undecided voters cast their ballots, and the Bradley Effect. Zhong states, "American race relations will be tested by whether the Bradley Effect reappears." In the China Times, a pro-China paper in Taiwan, Kuo Chenlung is even more pessimistic, arguing, "The race factor that this election has inflamed will leave a deep scar in American political history. Even if Obama gets elected, it would not eliminate racial prejudice in white people once and for all. And if Obama loses, black people would certainly not accept the results quietly."

In China, the government-controlled media's views of the candidates and the overall democratic process are tepid at best. In the China Youth Daily, the official paper of the Communist Youth League, Li Hongwen complains about how a Reuters article stated that since the only experience Chinese people have with democracy is through a homegrown version of the American Idol singing contest, they do not understand American elections. Li responds, "The writer is the one who does not understand. Chinese people approach serious issues with a trivial attitude, and sometimes they have a serious attitude when handling trivial issues. ... It is not that Chinese people do not understand the American election, it is that they do not want to waste time on other people's affairs." Li concludes with, "Elections are not always about making the best choice. It's more often about making what appears to be the least worst choice. That is what this election is all about."

Earlier this month, the Chinese Communist Party's official biweekly magazine, China Comment, ran a piece written by Feng Ju, a Chinese national working in Silicon Valley. Feng gives a blistering critique of Western democracy with a focus on how it is done in the U.S. Some arguments could find themselves right at home in McCain or Obama talking points -- outsized influence of special interests, irresponsible fiscal policies, and the absence of gun control. However, the author reserves the sharpest criticism for the American judicial system: "The failure of the American judicial system stems from the flaws of American-style democracy: it overemphasizes process at the expense of results; it overemphasizes fairness for the criminal and neglects fairness for the victim; it overemphasizes the rights of the criminal and neglects the rights of victims and their family members. Radical U.S.-style democracy has only resulted in absolute inequality." The writer concludes, "Western democracy is not a silver bullet. Pick the system that works best for you."

It is telling that in this condemnation of the judicial system Feng uses the term "criminal" instead of "defendant" or "the accused."

Posted by James Chen at 4:23 AM | Email Author | Permalink