21 October, 2010

Middle Class - Chinese

Todayonline - The heir apparent and China's middle class

By Peter Foster
The writer is The Daily Telegraph's China Correspondent. He moved to Beijing in 2009.

From behind the walls of a faceless government building in west Beijing came the news this week that China's mandarins have identified the man who will, in all probability, lead their country after 2012.

It was delivered through a typically obfuscatory communique from the official Xinhua news agency, which said the individual in question had been promoted to a job on the commission that oversees China's armed forces. By such signals do we come to know the identity of the man who will take the helm of the world's second-largest economy.

Mr Xi Jinping, a 57-year-old technocrat with degrees in chemical engineering and law, also happens to be the son of one of China's revolutionary leaders: A "princeling".

What he stands for is far more difficult to divine. Some say he's an economic reformer, or at least presume so since Mr Xi made his name pushing through economic development in the coastal provinces in the 1990s. His success may have something to do with that revolutionary lineage - his father Xi Zhongxun was a communist guerrilla fighter who was purged during the Cultural Revolution, but rehabilitated under Mr Deng Xiaoping.

Perhaps, say the rune readers, this makes Mr Xi the son more liberal-minded when it comes to political reform. Equally, say others, having suffered during the Cultural Revolution himself, Mr Xi is burdened with that same deep fear of political chaos that has made China's top leadership so resistant to change.

The truth is that nobody knows: There has been no manifesto, no hustings, no televised cross-examination, just the coded announcement that Mr Xi will become the leader of an organisation and a country that plays its cards disconcertingly close to its chest.

Perhaps it is a mistake to try and decipher the man. Like the current President, Mr Hu Jintao, he is almost anti-charismatic, a deliberately faceless embodiment of the consensus that rules China. (His wife, a folk singer popular with the over-50s, is far better known.)

Understandably, after the madness of the Mao years, big personalities are no longer welcome in Chinese politics; instead Mr Xi stands at the apex of a labyrinthine network of committees set up to inch China forward, step by step, towards a socialist nirvana with Chinese characteristics.

And therein lies the problem: While China's rulers are dealing in increments - "crossing the river by feeling the stones", as Mr Deng put it - the country they govern is plunging into the turbulent waters of the future.

When Mr Hu stepped out of the shadow of Mr Jiang Zemin in 2003, China had 190? million mobile phones. Today, it has over 800?million. Only 50?million were online; today, it is 420?million. During the same period, China's share of global GDP doubled to 8 per cent, and by 2019 - the mid-point of Mr Xi's putative reign - China could account for nearly 15 per cent.

Such momentous material advances are changing the social fabric of China at a far greater pace than the ruling party is adapting to meet the people's expectations. China's middle classes increasingly want to know why they can't afford to buy a house or why their children can't find jobs after graduation, just as its millions of migrant working classes want to know why, when they live and work in a city, they don't have the right to send their children to school there.

Increasingly, China's individuals think they know their rights and are prepared to defend them against rent-seeking officials, bullying commercial interests that cover up their mistakes and damage public health, and bent policemen and courts that put the interests of the party over the constitutional rights they pledged to uphold.

It is this changing reality that Mr Liu Xiaobo, the Nobel Peace laureate, was reflecting when he wrote Charter 08, a document that offered a blueprint for gradual reforms that would bring basic rights and freedoms - of expression, association, religion and property ownership - within the grasp of ordinary Chinese.

Those demands are arguably the natural consequence of the economic and social development that the party has engineered. But whenever faced with pressure to take the next step, China's leaders have suffered from a 20-year attack of political vertigo, of which Mr Liu's 11-year jail sentence is but the latest expression. As Mr Sun Liping, a sociology professor who was Mr Xi's PhD supervisor, has written in an essay much read on the Chinese Internet, the result of this has been "social decay" - which has its origins in the uncontrollable power of the party that Mr Xi looks set to lead.



"The system of government in China will change. It will change in Korea, Taiwan, Vietnam. It is changing in Singapore. But it will not end up like the American or British or French or German systems. What are we all seeking? A form of government that will be comfortable, because it meets our needs, is not oppressive, and maximises our opportunities. And whether you have one-man-one-vote, or some-men-one-vote or othermen-two-votes, those are forms which should be worked out. I'm not intellectually convinced that one-man-one-vote is the best. We practise it because that's what the British bequeathed us ... "- Lee Kuan Yew

For the foreseeable future, the centre holds; but the tension created by political paralysis, by the ruling party's refusal to submit to checks and balances, to explain itself and even argue its case to a society increasingly expecting explanations, is not going to abate.

The world can only hope that out of its secret huddles and conclaves, the party has found a leader in Mr Xi with the ability to manage the consequences.

THE DAILY TELEGRAPH

21 October 2010

19 October, 2010

Free Flow II

Paul Krugman - Rare and Foolish

Comments:

Bill Pieper

Taiwan
October 18th, 2010
12:13 pm
While the behavior of the PRC government may well be despicable, one almost has to admire how they consistently school western “barbarian” nation, especially the oafish Americans, at nearly every turn. This time they might have overreached, but so what. They have gotten what they want and can sit back while the US officials wring their hands, desperate not to upset their mighty corporate pay masters with a response deemed too harsh. The hand wringers will of course be fully supported by an army of allied ideological warriors from DC think tanks, universities, federal regulatory sleeper cells and elected/selected members of Congress on both sides of the aisle.

The Chinese are masters of two classic strategic and tactical policies used in concert and with complimentary effects. One is divide and conquer, that is, pitting nations which should be naturally allied against the PRC to instead quarrel with one another. This is frequently accomplished by pitting the US exporters and financiers against their European counterparts for example. The other is to exploit an opponent’s weakness, using it as a weapon. In the case of United States, the weakness would be the American slavery to an ideology of “free” trade and unrestricted capital flow; an ideology that provides a near perfect cover for unfettered greed on the part of the nation’s political and financial class. In a hyper-financialized oligarchy such as the US, this fanatic devotion to ideology has benefited a handful of players enormously, while contributing greatly to the ongoing decimation of the middle class.

After the epidemic of tainted products from China, toys poisoning children, toxic drywall, pet food, bad baby formula (presumably none of which reached American shores) etc., etc., a responsible government would have simply imposed a flat out ban of any product that can be consumed, worn or used to build homes until the Chinese government can demonstrate that it has the ability and the will to police its own manufacturing industries. If the US had a government that cared about its people and actively worked in their long term interests, such a ban would have been in place years ago. As far as I can tell it would be perfectly legal within the framework of WTO and other international trade agreements to do so, since public safety interests trump trade deals. In fact, I imagine that if the shoe were on the other foot and US companies had routinely shipped tainted and dangerous products to the Chinese, the PRC would have stepped in and halted such trade until the US can prove it is a responsible trading partner.

The REE debacle illustrates an alarming trend that has been going on for decades. The loss of REE processing resources will take years to replace, so even if mining commences tomorrow, the ore cannot be processed until the plant and expertise is in place. But it is not just rare earths that should concern Americans. When a nation loses its ability to create things, even non-strategic industries will decline over time because there is a lot to learn by making stuff.

Even when products are produced using high level design, creation and engineering talent located in the US, many innovations in process and design are taking place in the locations that actually manufacture the products. The US is losing the “culture” of manufacturing, a culture that contributes to improvements of the products being produced. In addition to this, there is an enormous amount of technological transfer and outright theft of intellectual property from western companies going on, especially in China where western companies are forced to partner with local operations to produce at least some components. These local partners will flat out steal patented technology, even highly sensitive defense related technology, all while being protected by political allies in the PRC. The western companies go along with these risks and costs because they either feel they have no choice in order to remain competitive, or they are eyeing the alluring and thus far illusive carrot of a billion person market. Some companies are finding out too late that it has simply not been worth the cost. But the C-level managers who made the decisions to go to China in the first place - as well as their eager financier partners - have long since made their millions and care not a bit about the costs to their home countries and fellow countrymen.


Paul Cohen

Hartford, CT
October 18th, 2010
12:34 pm

Paul,

There are already too many conflicts around the world that could embroil everyone. We are fighting two endless wars to protect our access to oil, without which, our mighty military machine would collapse. Now you want to escalate tensions with China because they won’t share their rare-earth materials? Let’s throw in Panda Bears. And hey, they have the Great Wall for tourism too. We need to end our colonial foreign policy, not extend it. The greed and selfishness (the ever escalating concentration of wealth flowing to the top) of Corporate executives is the reason we export jobs to exploit cheap labor. If there were a more equitable distribution of wealth in this country, Americans could support demand without having to cut jobs and the opportunity for amassing wealth would still flourish. I’m a bit surprised at the hawkish tone of this piece.



19 October 2010