tag:blogger.com,1999:blog-86839724554540190082024-03-13T16:39:06.118-03:00Shanghai ExpressNews, comments, discussions, information and analyses about the emerging Orient, that is, Asia Pacif, and especially China, and their most relevant economic and diplomatic developments. A space to follow the dynamics and the riches of an entire world, which was, in the past, the most developed region in the planet, and is prone to regain a renewed importance in world affairs.Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.comBlogger560125tag:blogger.com,1999:blog-8683972455454019008.post-11695356541993134402012-12-05T02:58:00.001-02:002012-12-05T02:58:11.578-02:00The Dragon Dance: U.S.-China Security Cooperation - James M. Acton
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<h3>
The Dragon Dance: U.S.-China Security Cooperation</h3>
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<span class="author">By:
<a href="http://carnegieendowment.org/experts/?fa=expert_view&expert_id=434">James M. Acton</a>
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<span class="date">Thursday, November 29, 2012</span>
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<em>China’s nuclear modernization concerns the United States and its
Asian allies, but Washington has largely failed to engage Beijing
effectively on nuclear strategy. The failure stems at least in part from
China’s view that engagement narrowly focused on nuclear issues is a
losing proposition. To make progress in his second term, President Obama
should offer a broader vision for strategic cooperation that includes
reducing nuclear risks by restraining competition in the conventional
realm. </em><br />
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<a href="http://carnegieendowment.org/experts/?fa=expert_view&expert_id=434">James M. Acton</a></h5>
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<span class="title">Senior Associate<br />Nuclear Policy Program</span>
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<strong>More from Acton...</strong>
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<a href="http://carnegieendowment.org/2012/10/10/beyond-treaties-immediate-steps-to-reduce-nuclear-dangers/e08n" title="Beyond Treaties: Immediate Steps to Reduce Nuclear Dangers">Beyond Treaties: Immediate Steps to Reduce Nuclear Dangers</a></h6>
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<li><h6>
<a href="http://carnegieendowment.org/2012/06/21/transparency-and-strategic-stability/c3x9" title="Transparency and Strategic Stability">Transparency and Strategic Stability</a></h6>
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Over the last ten or fifteen years, the possibility of a conflict
with China has become an ever more important focus of U.S. defense
planning. With long-running wars in Afghanistan and Iraq, preparing for
such a contingency has not always been the highest-profile item on the
Pentagon’s agenda. But, the Obama administration’s “pivot” to Asia is
clear evidence of where it believes the risk of interstate warfare,
defined in terms of both likelihood and consequence, is greatest.<br />
Sino-American military competition primarily plays out in the
conventional domain, and escalation to nuclear use in a U.S.-Chinese
conflict is thankfully much less likely than it was during the
U.S.-Soviet standoff. Yet both Washington and Beijing still plan for a
nuclear war—the ultimate in low-probability, high-consequence
catastrophes. For this reason more than any other, the administration of
Barack Obama, like the George W. Bush administration before it, has
sought to manage the risk by engaging China in a strategic dialogue. The
administration is virtually certain to continue these efforts in
Obama’s second term.<br />
Certainly, the Obama administration is also driven in part by a
desire to create political and security conditions that would enable
deep reductions in nuclear weapons, eventually leading to their
abolition. One of these conditions is the integration of China’s nuclear
arsenal into an arms control framework. However, other reasons to
engage China on nuclear deterrence command broader political support.
China is slowly expanding and modernizing its nuclear forces, sparking
concern in both the United States and among Washington’s Asian allies,
most notably Japan. These concerns are exacerbated by Beijing’s refusal
to provide information about the size and structure of its arsenal. As
long as these trends continue, all U.S. administrations—Democratic and
Republican—are likely to try to press Beijing to be more transparent and
to explain its motivations and intentions for modernization.<br />
<blockquote>
The Obama administration’s “pivot” to Asia is clear evidence of where it believes the risk of interstate warfare is greatest.</blockquote>
As part of this modernization, China is in the process of deploying
road-mobile missiles and developing submarine-launched ones to replace
its older silo-based weapons, thereby significantly enhancing the
survivability of its nuclear forces. It is also developing technologies
to defeat U.S. ballistic missile defenses in an attempt to ensure that,
should these missiles ever be used, their warheads would reach their
targets.<br />
China is also slowly expanding its nuclear forces. In 2002, the U.S.
Department of Defense estimated that China had twenty intercontinental
ballistic missiles (ICBMs) capable of reaching the continental United
States,<sup>1</sup> and in 2010, a report placed that number between 30 and 35.<sup>2</sup>
In addition, China is developing the capability to place multiple
warheads on a single missile. If Beijing deployed this technology, it
could rapidly expand its nuclear forces, but there is no evidence it has
yet done so.<br />
So far, U.S. efforts to engage China on nuclear strategy have had
limited success. Part of the reason may be that, given the United
States’ huge qualitative and quantitative advantages in nuclear forces,
China appears to view engagement narrowly focused on nuclear issues as a
zero-sum game that it will likely lose. Strategic cooperation might
appear more obviously mutually beneficial if it were based on a broader
strategy of reducing nuclear risks by restraining competition in the
conventional realm. Of course, there is a real possibility that an
ambitious U.S. proposal to expand cooperation would be rebuffed by
China. But, if Beijing does engage, the United States and China could
make real progress toward managing a genuinely existential threat to
both of them.<br />
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<h3>
A Decade of Limited Progress</h3>
American efforts to engage China—at both the official and
nongovernmental levels—have often attempted to separate nuclear
deterrence from the rest of the bilateral relationship. The aim has been
to discuss it either completely by itself or, occasionally, alongside
other “strategic” issues, such as cybersecurity, space weapons, and
missile defense. Most obviously, U.S. officials believe—and regularly
and publicly exhort Beijing to understand—that greater transparency
about China’s nuclear arsenal would, on its own, help stabilize the two
states’ nuclear relationship.<br />
This belief has influenced the way Washington has attempted to engage
Beijing in private. The Bush administration sought a dialogue with
China focused solely on nuclear strategy. Only one round of this
dialogue was ever conducted, and that was in April 2008. The Obama
administration’s efforts appear to have been somewhat broader but are
still tightly focused compared to the full range of issues in the
bilateral military relationship. Specifically, the United States and
China held two rounds of a “strategic security dialogue” in May 2011 and
May 2012. Very little information about the discussions is available,
but the meetings seem to have originated with a suggestion made in
January 2011 by Secretary of Defense Robert Gates to his counterpart,
General Liang Guanglie, that the two states should engage on “nuclear,
missile defense, space, and cyber issues.” Whatever its agenda, the
absence of information about this dialogue suggests it is at a fairly
nascent stage.<br />
<blockquote>
Strategic cooperation might appear more obviously mutually
beneficial if it were based on a broader strategy of reducing nuclear
risks by restraining competition in the conventional realm.</blockquote>
At a marginally more advanced stage is a dialogue between the five
nuclear-weapon states recognized by the Nuclear Non-Proliferation
Treaty, including both China and the United States. Formally, this
dialogue is focused on topics covered by the treaty (disarmament,
nonproliferation, and nuclear energy), not bilateral U.S.-Chinese
strategic issues. But, China has agreed to lead work on a glossary of
nuclear terminology, which could help promote understanding during
future bilateral discussions on nuclear deterrence.<br />
In short, a decade’s worth of U.S. efforts to engage China on nuclear
deterrence has led to three rounds of intermittent dialogue and a
commitment to develop a glossary: hardly impressive progress. Rightly or
wrongly, China apparently does not share the U.S. belief that narrowly
focused engagement on nuclear issues would be mutually beneficial.<br />
Why China has been reluctant to engage on nuclear issues is a matter
for legitimate debate. Virtually all Chinese and many American
analysts—particularly those who have studied Chinese documents—believe
that Beijing’s policy is driven, to a significant degree, by a perceived
threat from the United States. They argue that Beijing is genuinely
concerned that, in a deep crisis, the United States might attempt to
eliminate China’s nuclear arsenal with a preemptive “first strike” and
that greater transparency could further undermine the survivability of
its nuclear forces. In 2003, for instance, Chinese analyst Li Bin wrote
that:<br />
<em>The survivability of [China’s] current ICBM force . . . relies on
ambiguity surrounding numbers. Because China will not confirm or deny
reports on the number of its ICBMs, other states cannot have confidence
in any estimates. An attacker considering launching a first strike
against China would be uncertain of China’s retaliatory capacity. This
is how China’s nuclear deterrent works today.<sup>3</sup></em><br />
By contrast, other U.S. analysts believe that China’s opacity and its
modernization program are geared toward unilateral gain. They worry
Beijing has concluded that a more robust Chinese nuclear arsenal would
deter the United States from intervening in a regional conflict, thus
undermining U.S. defense commitments in East Asia.<br />
While less discussed, it is also possible that internal
considerations, not just external ones, shape Chinese policy
significantly. After all, U.S. and Soviet/Russian nuclear weapons
decisions—particularly over procurement—were not based solely (or
perhaps even mostly) on cold-blooded cost-benefit calculations. They
were shaped by bureaucratic and political factors. The administration of
John F. Kennedy, for example, increased defense spending, which
included the construction of more nuclear weapons, to stimulate the U.S.
economy. Meanwhile, according to an authoritative study of Soviet
nuclear policy based on interviews with senior decisionmakers conducted
just after the collapse of communism, Soviet acquisitions policy was
largely driven by the defense-industrial sector’s use of “its political
clout to deliver more weapons than the armed services asked for and even
to build new weapon systems that the operational military did not
want.”<sup>4</sup> While the specific internal factors at play in China
may be rather different, there is little reason to suppose that they are
absent.<br />
Whatever the reason for China’s recalcitrance, there are advantages
to presenting Beijing with an agenda for strategic cooperation that is
more attractive than the one currently on offer. If China’s policy is
defensively orientated, it might respond positively to a proposed agenda
that is more obviously mutually beneficial. If engagement is currently
being stymied by internal factors, a more attractive agenda might
motivate it to overcome political or bureaucratic roadblocks. By
contrast, Beijing’s refusal to engage with a more attractive offer would
provide some evidence that Chinese policy is offensively orientated,
which would be a potentially valuable insight—although such evidence, it
must be recognized, would hardly be conclusive.<br />
<h3>
The Inseparability of Nuclear and Conventional Security Dynamics</h3>
Conventional weapons that are not usually deemed “strategic” can be
inextricably linked to nuclear dynamics. At the most general level, the
overall state of the conventional balance can significantly affect
nuclear doctrine. Many nuclear-armed states facing a conventionally
stronger adversary—including the United States during the Cold War and
Russia and Pakistan today—have openly advertised their nuclear weapons
as an offset for their weakness.<br />
China has been an exception in this regard because it has pledged not
to use nuclear weapons first, although there is a debate within the
United States about the credibility of this commitment. In particular,
some analysts believe that China would resort to the use of nuclear
weapons to avoid defeat in a major conventional war. This debate aside,
however, it is possible that if China fails in its current efforts to
close the United States’ conventional advantage in the western Pacific,
it may openly place a greater emphasis on nuclear weapons. Conversely,
if China succeeds in gaining a meaningful conventional advantage, the
United States might revert to a much greater role for nuclear weapons in
fulfilling defense commitments to its allies.<br />
Beyond these high-level dynamics, there are some much more direct—and
pernicious—linkages between conventional and nuclear weapons in the
U.S.-Chinese relationship. There is a vigorous conventional competition
in the western Pacific, with the United States seeking to retain the
ability to project power throughout the region and China seeking to deny
it the ability to do so. In turn, Chinese efforts to deter and defeat
U.S. power-projection capabilities are leading the United States to
develop “strategic conventional” capabilities, which Beijing argues are
forcing it to expand and modernize its nuclear forces.<br />
To be concrete, China is developing both anti-satellite weapons and
anti-access/area-denial capabilities. By using the former to destroy
American communications, guidance, and reconnaissance satellites, China
might hope to deny or impede the United States’ ability to project
power. Chinese anti-access/area-denial capabilities are designed to
hinder U.S. access to the western Pacific and its freedom of movement
within the region. The highest-profile Chinese system designed to
contribute to these operations is an anti-ship ballistic missile, the
DF-21D. Chinese military writings suggest that its primary target would
be U.S. aircraft carriers.<br />
Both anti-satellite weapons and anti-access/area-denial capabilities
constitute important arguments within the United States for developing
long-range, very fast conventional weapons in a program known as
Conventional Prompt Global Strike (CPGS). Two commanders of U.S.
Strategic Command have, in public testimony before Congress, stated that
CPGS weapons could be used to prevent further attacks in the event that
China destroys a U.S. satellite. Meanwhile, the 2010 Quadrennial
Defense Review lists experimenting “with conventional prompt global
strike prototypes” among its efforts to develop long-range strike
capabilities to combat anti-access/area-denial threats.<br />
Whether Chinese defense strategists concerned with
“counterintervention” (as they term anti-access/area-denial operations)
view CPGS as a particular threat is unclear. However, Chinese officials
and analysts working on nuclear deterrence issues have expressed deep
worries about the effect that CPGS could have on the survivability of
China’s nuclear arsenal. In fact, Chinese concerns about the effect of
advanced conventional capabilities on the nuclear balance may be more
acute than more documented concerns about ballistic missile defense.<sup>5</sup><br />
<blockquote>
Chinese concerns about the effect of advanced conventional
capabilities on the nuclear balance may be more acute than more
documented concerns about ballistic missile defense.</blockquote>
Moreover, U.S. missile defense deployments in East Asia are driven,
at least in part, by Chinese conventional regional ballistic missiles,
which include not only the DF-21D but also land-attack weapons that
could be used to target U.S. and allied assets in Taiwan, Japan, and
Guam. In public, U.S. officials have stressed the threat from North
Korea in justifying recent plans to expand missile defenses in the
region. Yet, the presence of missile defense assets in Taiwan is clear
evidence that missiles from North Korea are not the only ones that the
United States seeks to defeat. Indeed, in an oblique reference to a
conflict with China, Secretary of Defense Leon Panetta has acknowledged
that missile defense is designed to help “forward-deployed U.S. forces.”<br />
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Chinese analysts and officials certainly assume this to be the case.
Li Bin, for example, has argued that the locations of planned U.S. radar
installments provide evidence that Chinese ballistic missiles are
targets for American defenses.<sup>6</sup> However, Chinese concerns are
not limited to the impact that these defenses may have on its arsenal
of regional missiles. Beijing is also concerned that U.S. defenses could
eventually be able to counter intercontinental ballistic missiles armed
with nuclear warheads, thus undermining China’s nuclear deterrent.
There is little doubt that this concern partly motivates well-connected
Chinese analysts’ criticism of U.S. plans to expand missile defenses in
East Asia.<br />
<h3>
The Security Dilemma</h3>
These dynamics may be manifestations of a burgeoning “security
dilemma.” A security dilemma is created when a state procures weapons
for defensive purposes, inducing an adversary, who fears the buildup
might be offensively oriented, to do likewise. The adversary’s buildup
can, in turn, spark a countervailing reaction in the first state,
resulting in an arms race.<br />
Almost by definition, it is impossible for a state with a security
dilemma to definitively identify it as such at the time. Washington
cannot know for sure that China’s nuclear modernization or lack of
transparency is a defensive reaction to a perceived first strike threat
from the United States. For that matter, Beijing cannot be certain that
U.S. strategic conventional weapons programs, not to mention the pivot,
are defensively oriented and geared toward preventing China from using
force to change the status quo. But it is clear that the United States
and China have a shared interest in creating a process that will allow
each to test the other’s intentions. Such cooperation could help
mitigate the security dilemma, if indeed there is one.<br />
For its part, Beijing would benefit from calming the U.S. security
concerns that are helping to drive American programs that it finds
threatening—including CPGS and ballistic missile defense. Because these
programs might be catalyzing Chinese modernization efforts and
precluding transparency, Washington has an interest in easing Chinese
concerns.<br />
<blockquote>
It is clear that the United States and China have a shared
interest in creating a process that will allow each to test the other’s
intentions.</blockquote>
These negative feedback loops are already creating friction in the
extremely complex U.S.-China relationship. If left unchecked, they could
create a qualitative or quantitative nuclear arms race. The U.S.
Congress has already held hearings on—and expressed concern
about—China’s nuclear modernization program. If this program continues
unabated it could become a powerful domestic argument in the United
States for the development of new nuclear warheads (if for no other
reason than to symbolize that the United States still takes nuclear
deterrence seriously). China’s modernization program is also creating
concern that it seeks numerical parity with the United States and
Russia, complicating further U.S.-Russian arms control—something that
China certainly benefits from, even if it is not a party to any
agreement. Both Beijing and Washington have a mutual interest in
preventing these outcomes, the latter for reasons of cost if nothing
else given the state of the U.S. budget.<br />
<h3>
Broadening the Agenda</h3>
A broadened agenda for U.S.-China strategic cooperation that includes
the conventional domain should be viewed by leaders in both states as
attractive. The basic principle of turning a perceived zero-sum game
into a mutually beneficial one by linking issues is common to all areas
of negotiation, from labor relations to nuclear arms control. That said,
addressing the whole range of interlinked military issues in the
U.S.-Chinese relationship is truly daunting—impossibly so for the time
being.<br />
Over the long term, it might be possible—through treaty or
restraint—to develop a durable balance of conventional forces so that
each state is confident in its ability to protect its vital interests
without nuclear weapons. But profound political change will be needed to
achieve such an outcome, much like in Europe toward the very end of the
Cold War. NATO and the Warsaw Pact were only able to negotiate limits
on conventional forces that effectively precluded the possibility of a
surprise attack by either party after Moscow had started the process of
internal reform that led to a thawing of the Cold War (and, ultimately,
the Soviet Union’s demise). Today, realistically speaking, the United
State and China should identify more modest steps that could help
mitigate some of the most risky interactions between conventional and
nuclear weapons.<br />
For example, while the linkage between Chinese
anti-access/area-denial capabilities, particularly the DF-21D anti-ship
ballistic missile, and the U.S. CPGS program could produce a potentially
destabilizing buildup cycle, it could also be leveraged to enable
strategic cooperation. The two states could inform one another about the
number of weapons they intend to procure and deploy each year for, say,
the next five years. A data exchange like this could help mitigate
tendencies to base procurement on worst-case intelligence assessments.<br />
Chinese involvement in this kind of transparency arrangement would
not be as unprecedented as widely believed. In 1997, for instance,
China, Russia, and three Central Asian Republics negotiated an agreement
on conventional force limitations near their borders. This extremely
long and detailed document (it runs to over 17,000 words in English)
contains extensive provisions for data exchange and demonstrates that
Beijing will agree to transparency measures if it views them to be in
its interests.<br />
Much more ambitiously, the United States and China could enact a ban
on the encryption of diagnostic data, known as telemetry, transmitted
during tests of agreed-upon long-range high-precision conventional
weapons (such as the DF-21D and a U.S. CPGS system) to allow for more
accurate capability assessments. Clearly, such a ban would require a
substantial degree of trust to be built first and so cannot be a
short-term ambition. But, the U.S.-Soviet agreement to ban telemetry
encryption as part of the 1991 Strategic Arms Reduction Treaty (START)
demonstrates that, over time, confidence building on the necessary scale
is possible.<br />
One particular advantage of broadening the scope of strategic
cooperation to include conventional forces is that it becomes possible
to pair roughly symmetric capabilities. China’s nuclear arsenal is much
smaller and less sophisticated than that of the United States,
complicating efforts to persuade Beijing that it is in China’s interest
to become more transparent. By contrast, while the DF-21D is less
sophisticated than any of the systems being developed under the CPGS
program, it is at a significantly more advanced stage of development.
This rough symmetry makes confidence-building measures involving these
capabilities more obviously beneficial to both parties.<br />
Other linkages—such as the connection between Chinese regional
ballistic missiles and U.S. regional missile defenses—could also be
exploited for strategic cooperation. Crucially, however, a necessary
prerequisite to any progress in this direction is an official
Sino-American dialogue broad enough to encompass all the relevant
strategic interactions. The existing strategic security dialogue, while a
step in the right direction, probably does not go far enough. While it
appears to include nuclear weapons, missile defense, and space, it
leaves out a number of critical pieces of the puzzle in the form of
conventional U.S. power-projection capabilities and various Chinese
efforts to defeat them.<br />
Analysts and some government officials (particularly in Russia) have
recently discussed bringing China into negotiations toward a
multilateral arms control treaty. While this is a desirable long-term
goal (that discussions among nuclear-armed states at both an official
and unofficial level can advance), it is also a premature one. For
multilateral arms control to have any chance of success, the dynamics
that are driving Chinese modernization must be addressed. To the extent
that these dynamics are related to Sino-U.S. strategic competition they
must be addressed bilaterally.<br />
Moreover, there are still large quantitative and qualitative gaps
between U.S. and Chinese nuclear forces. For example, while China has 30
to 35 missiles, each armed with a single warhead, capable of reaching
the United States according to the most recent detailed estimate from
Department of Defense, the United States has over 1,000 deployed
warheads capable of reaching China. Efforts by the United States in
cooperation with Russia are needed to close this gap before China can
reasonably participate in the negotiation of a limitations treaty.<br />
The asymmetry between U.S. and Chinese nuclear forces also argues
strongly against attempting to import the Cold War arms control
framework wholesale into the U.S.-China relationship. While U.S.-Soviet
and U.S.-Russian treaties can provide useful ideas, such as the ban on
telemetry encryption, the United States needs to take a novel approach
to have a reasonable chance of receiving the reassurance it wants about
China’s modernization.<br />
<h3>
Prospects for Success</h3>
It would be naïve to believe that expanding the scope or depth of
strategic cooperation between the United States and China would be
anything other than extremely difficult. While there is a compelling
case to be made that expanded cooperation would be mutually beneficial,
there is also the potential for significant resistance. Within the
United States and among its allies, there would unquestionably be
opposition to any form of cooperation that requires the United States to
provide China with valuable information about U.S. plans and
programs—even though China would be required to provide equally valuable
information in return. Indeed, confidence-building measures that
connect, for instance, Chinese regional ballistic missiles to U.S.
regional missile defenses would probably be harder to “sell” than
confidence-building measures purely within the nuclear realm. There is
also absolutely no guarantee that Beijing will agree to participate; it
might doubt U.S. sincerity, be unable to circumvent domestic obstacles,
or, conceivably, view cooperation as fundamentally undesirable.<br />
<blockquote>
The potential benefits of trying to start wide-ranging strategic cooperation with China dwarf the downside risks.</blockquote>
That said, the potential benefits of trying to start wide-ranging
strategic cooperation with China dwarf the downside risks. Strategic
competition between the United States and China is not only expensive
but adds friction to the bilateral relationship—a relationship that
simultaneously holds more promise and carries more risk than any other.
If strategic cooperation does nothing more than curb some pernicious
aspects of this competition it would be worthwhile. If it catalyzes a
co-evolutionary process in which deep cooperation builds strategic trust
and strategic trust enables deeper cooperation, it could usher in a sea
change.<br />
<br />
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<sup>1</sup> Department of Defense, “Annual Report on the Military Power of the People’s Republic of China,” 2002, <a href="http://www.defense.gov/news/Jul2002/d20020712china.pdf">www.defense.gov/news/Jul2002/d20020712china.pdf</a>, 27.<br />
<sup>2</sup> Department of Defense, “Military and Security Development Involving the People’s Republic of China,” 2010, <a href="http://www.defense.gov/pubs/pdfs/2010_cmpr_final.pdf">www.defense.gov/pubs/pdfs/2010_cmpr_final.pdf</a>, 66. If weapons capable of reaching Alaska are included, the number rose from about 30 in 2002 to between 45 and 65 in 2010.<br />
<sup>3</sup> Li Bin, “China and Nuclear Transparency,” in <em>Transparency in Nuclear Warheads and Materials: The Political and Technical Dimensions</em>, edited by Nicholas Zarimpas (Oxford: Oxford University Press for SIPRI, 2003), 55.<br />
<sup>4</sup> John G. Hines, Ellis M. Mishulovich, and John F. Shull, <em>Soviet Intentions</em> 1965–1985, Volume I, <em>An Analytical Comparison of U.S.–Soviet Assessments During the Cold War</em> (McLean, Va.: BDM Federal, 1995), 24–25, available from <a href="http://www.gwu.edu/%7Ensarchiv/nukevault/ebb285">www.gwu.edu/~nsarchiv/nukevault/ebb285</a>.<br />
<sup>5</sup> Lora Saalman, <em>China and the U.S. Nuclear Posture Review</em>, Carnegie Paper (Beijing: Carnegie-Tsinghua Center for Global Policy, 2011), <a href="http://carnegieendowment.org/files/china_posture_review.pdf">http://carnegieendowment.org/files/china_posture_review.pdf</a>, 9.<br />
<sup>6</sup> Li Bin, “China and the New U.S. Missile Defense in East Asia,” <em>Proliferation Analysis</em>, Carnegie Endowment for International Peace, September 6, 2012, <a href="http://carnegieendowment.org/2012/09/06/china-and-new-u.s.-missile-defense-in-east-asia/drth">http://carnegieendowment.org/2012/09/06/china-and-new-u.s.-missile-defense-in-east-asia/drth</a>.<br />
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Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-77033164114828560072012-11-30T03:47:00.001-02:002012-11-30T03:47:20.873-02:00The coming crash of construction industry in China - Foreign Affairs<h1 class="title">
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<a href="http://www.foreignaffairs.com/author/lynette-h-ong">Lynette H. Ong</a> </div>
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<span class="date-display-single">Foreign Affairs, November 27, 2012</span> </div>
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<span class="field-content"><a href="http://www.foreignaffairs.com/articles/136963/patrick-chovanec/chinas-real-estate-bubble-may-have-just-popped">China's Real Estate Bubble May Have Just Popped</a></span>
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<span class="field-content"><a href="http://www.foreignaffairs.com/author/patrick-chovanec">Patrick Chovanec</a></span>
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China's real estate market
has overheated in the past. But Beijing has repeatedly said it would
"cool" things down; it never did. Now, as the market corrects itself, a
large part of the country's economy is convulsing, while sending
shockwaves through the global economy.<br />
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<img alt="" height="255" src="http://www.foreignaffairs.com/files/images/Ong_Indebted_411_0.jpg" style="vertical-align: top;" width="411" /><em>Construction workers install scaffolding on the top of a building in Shanghai. (Aly Song / Courtesy Reuters)</em><br />
For four decades, the Chinese economy has grown by between seven and
ten percent each year. It is the envy of the world, despite its
relatively sluggish recent performance. Visitors to Beijing, Shanghai,
and other major Chinese cities are quickly awed by impressive
skyscrapers, glittering shopping malls, new highways, and high-speed
rail lines, all of which leave the impression that China is a developed
economy -- or at least well on its way to becoming one. Even in some
smaller cities in inland provinces, government buildings make those in
Washington and Brussels appear meager. In an area of Anhui Province that
is officially designated an "impoverished county," the government
office block looks exactly like the White House, only newer and whiter.<br />
Underwriting the impressive facade, however, is an incredibly risky
strategy. Governments borrow money using land as collateral and repay
the interest on their loans using funds they earn from selling or
leasing the same land. All this means that the Chinese economy depends
on a buoyant real estate market to keep grinding. If housing and land
prices fall dramatically, a fiscal or banking crisis would likely soon
follow. Meanwhile, local officials' hunger for land has displaced
millions of farmers, leading to 120,000 land-related protests each year.<br />
RISKY BUSINESS<br />
The recklessness can be traced to two things: First, local Chinese
officials are evaluated for promotions and other rewards based on how
well the economy they manage performs. Construction and real estate
activities are among the most straightforward ways to stimulate growth.
White-elephant construction projects thus offer eager officials a
perfect opportunity to impress their political superiors, even if
massive developments do not necessarily make any economic sense. Take,
for example, the city of Ordos in Inner Mongolia: Its elaborate urban
infrastructure and its sea of new flats and office blocks are nearly all
unoccupied, making it China's largest ghost city.<br />
Another factor was China's fiscal recentralization reform of 1994, in
which the central government raised its own revenue by taking back
power from local governments to levy some major taxes. The move lowered
local governments' revenues but left their financial responsibilities --
providing education, health care, subsistence allowances, and pensions
-- unchanged. So local officials had to find other ways to generate
money.<br />
In the wake of the tax reform, sales and business taxes on
construction, real estate, and other service industries became the main
source of tax revenue for municipal governments. Not surprisingly, in
the 1990s, local authorities started to engineer real estate and
construction booms. According to Chinese law, collectively owned
farmland must be converted to state ownership before it is leased to
private developers. Local governments were thus able to expropriate
farmland from villagers and then rent it to private commercial ventures
such as factory owners and real estate companies. According to a 2011
survey by Landesa, a Seattle-based nonprofit organization, local
governments earn on average $740,000 per acre of land. That is <a href="http://bit.ly/A3ajwx" target="_blank"><strong>40 times the average amount</strong></a> they pay to displaced farmers.<br />
The involvement of municipal governments in land sales goes beyond
leasing. To entice property developers, officials also invest in
infrastructure. Although they sometimes finance that development
directly with land transfer revenue, more often they simply use the land
as collateral to borrow from state-owned banks. They generally work
through local-government-incorporated urban development and investment
companies (UDICs, or chengtou gongsi) and local government financing
platforms to skirt laws prohibiting such borrowing. To service interest
payments, local governments typically draw from land transfer revenue,
taxes, or user fees and charges.<br />
Using bank loans to finance infrastructure investment is not
necessarily bad or unusual. It has been common practice in the United
States for years, and tax experts say it is a fair and efficient way of
building public infrastructure. The problem with China's approach is
that the local-government financing platforms are not regulated or
subject to any disclosure standards. And although the law formally
prohibits local governments from borrowing recklessly, the central
government's financing practices encourage them to do so in a roundabout
way.<br />
SHOW XI THE MONEY<br />
Until Beijing started conducting audits in mid-2009, neither the
central government nor the banking regulator knew how much debt local
governments had racked up. Since then, official estimates by the
National Audit Office, the People's Bank of China, and the China Banking
Regulatory Commission have put the size of local government debt at 5
trillion to 14.4 trillion yuan (803 billion to over two trillion
dollars) 13 to 36 percent of GDP -- as of the end of 2010. Private
analysts often put the number much higher: between 50 and 100 percent of
GDP, depending on whether local governments' contingent liabilities or
indirect debts (debts owed by government-owned and government-related
entities) are included.<br />
On the surface, banks' balance sheets have remained healthy despite
these debts, since banks tend to roll over or "ever green" loans by
issuing new loans to help borrowers "repay" old ones. In addition, local
governments have been able to make their interest payments using their
land as collateral.<br />
The banks' accounting tricks treat only a symptom of the problem.
Eventually, banks will become unable to roll over loans because they
will run out of fresh money. And officials' ability to pay off loan
interest depends on the continued rise of real estate prices and a
buoyant economy, neither of which can be taken for granted. Some
analysts are already saying that <a href="http://fam.ag/ulhLzl" target="_blank"><strong>China's real estate bubble has burst</strong></a>. That could be terrible, but as I have <a href="http://bit.ly/TaqYTq" target="_blank"><strong>argued elsewhere</strong></a>,
Beijing cannot and will not let banks that hold the savings of ordinary
people go under. Bank runs would send millions of depositors into a
panic and lead to widespread social unrest.<br />
OUTSIDE THE BUBBLE<br />
Even before it pops, China's real estate bubble is causing social
harm. An inevitable effect of state-led urbanization is that farmers are
forced to vacate their land. Close to 300,000 peasants are removed from
their villages every year to make room for the construction of
airports, highways, and buildings. Since 1980, more than 60 million
peasants, roughly the population of the United Kingdom, have been moved.<br />
The displaced are not usually consulted before relocation.
Governments frequently force them to leave by suspending the supply of
utilities, such as electricity, to their homes. Increasingly, local
governments are even hiring or colluding with gangsters to intimidate
villagers who refuse to move. Tellingly, in some villages, these
mobsters are known as the "second government."<br />
Compensation to farmers who do move is often inadequate, because
negotiations over the value of their land take place without them. The
opacity allows authorities to line their own pockets with funds meant
for farmers. It is no surprise, then, that in a recent Landesa survey of
nearly 1,800 rural households across 17 provinces, about 20 percent of
the displaced (which made up 43 percent of the survey's sample) had not
received any compensation. Of those who had received remuneration, 53.4
percent reported that they were "very dissatisfied" or "dissatisfied"
with it, compared with 25 percent who were either "satisfied" or "very
satisfied." When asked why, 80 percent complained of inadequate
compensation, 47 percent said it was determined without their input,
38.4 percent said payment was insufficient to maintain their previous
standard of living, 28.6 percent said they were unable to find
nonagricultural income after having their land taken away, and 25
percent reported that compensation had been intercepted by local
officials.<br />
For Chinese farmers, farmland is both a livelihood and a form of
social insurance. In bad times, when temporary work or factory jobs dry
up in cities and towns, migrant workers can return to subsistence living
in villages. By way of comparison, urban residents are entitled to
state-provided social welfare, namely, subsistence allowance,
unemployment insurance, and pensions.<br />
Unsurprisingly, demolition, relocation, and land expropriation have
become the leading causes of social unrest in China. Discontented
peasants typically try to air their grievances using China's petition
system, but when efforts through official channels prove futile, they
take to the streets: The number of "mass incidents" in China continues
to rise.<br />
Given slower growth rates and falling real estate prices this year,
the frequency of land expropriation is slowing down. But the truth
remains that much of urbanization in China is a state-driven phenomenon,
using resources drawn from the financial sector. Although the central
government recognizes the seriousness of the problem, it seems to lack
any real resolve to tackle the issue head on. Muddling through seems to
be so much easier. So until a major slowdown in the economy happens, the
Chinese real estate market will continue on its current course.
Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com1tag:blogger.com,1999:blog-8683972455454019008.post-86042091727293654052012-10-13T16:27:00.004-03:002012-10-13T16:27:57.306-03:00Huawei in America - John Gapper (Financial Times)<span style="font-family: Arial, Helvetica, sans-serif; line-height: 18px;"><span style="font-size: medium;">Financial Times </span></span><span style="color: #777777; font-family: Arial, Helvetica, sans-serif; font-size: 12px; line-height: 18px;">October 10, 2012 7:23 pm</span><span style="font-family: Arial, Helvetica, sans-serif; font-size: 16px; line-height: 18px;"><br /></span><br />
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<h1 style="clear: both; font-size: 32px; font-weight: normal; line-height: 36px; margin: 0px 280px -2px 0px; padding: 0px;">
Too late for America to eliminate Huawei</h1>
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<img alt="John Gapper" src="http://im.ft-static.com/content/images/6254a102-0950-11e1-8e86-00144feabdc0.img" style="display: block; float: left; height: 35px; margin-top: -10px; padding-right: 15px; width: 45px;" /><span style="margin-left: -5px;">By John Gapper</span></div>
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To read the scathing <a href="http://video.ft.com/v/1886221395001/Huawei-v-US" style="color: #2e6e9e; text-decoration: none;" title="Huawei v US - FT.com">condemnation of Chinese telecoms equipment suppliers</a> fired from Washington this week, you would think we still lived in another world. In that world, telecoms networks were built by national monopolies such as <a class="wsodCompany" data-symbol="us:T" href="http://markets.ft.com/tearsheets/performance.asp?s=us:T" style="border-bottom-color: rgb(46, 110, 158); border-bottom-style: dotted; border-bottom-width: 1px; color: #2e6e9e; text-decoration: none;">AT&T</a>, <a class="wsodCompany" data-symbol="fr:FTE" href="http://markets.ft.com/tearsheets/performance.asp?s=fr:FTE" style="border-bottom-color: rgb(46, 110, 158); border-bottom-style: dotted; border-bottom-width: 1px; color: #2e6e9e; text-decoration: none;">France Telecom</a> and <a class="wsodCompany" data-symbol="uk:BT.A" href="http://markets.ft.com/tearsheets/performance.asp?s=uk:BT.A" style="border-bottom-color: rgb(46, 110, 158); border-bottom-style: dotted; border-bottom-width: 1px; color: #2e6e9e; text-decoration: none;">British Telecom</a>, and outsiders stayed away.</div>
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But we don’t.</div>
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More</h3>
<h4 style="font-size: 10px; margin: 0px 0px 3px; padding: 0px; text-transform: uppercase;">
ON THIS STORY</h4>
<ul style="list-style: none; margin: 0px 0px 16px; padding: 0px;">
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;"><a href="http://www.ft.com/cms/s/0/9e20c558-1165-11e2-a637-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">US brands Chinese groups security threat</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;"><a href="http://www.ft.com/cms/s/0/50ad88c2-112b-11e2-a637-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">Huawei’s emergence from shadows backfires</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;">Lex video <a href="http://video.ft.com/v/1886221395001/Huawei-v-US" style="color: #2e6e9e; text-decoration: none;">Huawei v US</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;">Lex <a href="http://www.ft.com/cms/s/3/74954af0-115c-11e2-9c94-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">Huawei – obstacle race</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;"><a href="http://www.ft.com/cms/s/0/675c1dd4-1074-11e2-87cc-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">US companies are urged to shun Huawei</a></li>
</ul>
<h4 style="font-size: 10px; margin: 0px 0px 3px; padding: 0px; text-transform: uppercase;">
JOHN GAPPER</h4>
<ul style="list-style: none; margin: 0px 0px 16px; padding: 0px;">
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;"><a href="http://www.ft.com/cms/s/0/615af5a4-0c9b-11e2-a776-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">Innovation drives America’s reinvention</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;"><a href="http://www.ft.com/cms/s/0/d829bb8a-0704-11e2-92b5-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">Looser listing won’t help start-ups win investors</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;">John Gapper <a href="http://www.ft.com/cms/s/0/35238708-019c-11e2-83bb-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">BAE’s self-inflicted wounds</a></li>
<li style="font-size: 12px; line-height: 15px; margin: 0px 0px 7px; padding: 0px 1px 0px 0px;"><a href="http://www.ft.com/cms/s/0/05f75c44-fc3c-11e1-ac0f-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;">Incentives for banks to stray will persist</a></li>
</ul>
</div>
<div style="padding: 0px 0px 20px;">
You know things have come to a pretty pass when US politicians throw their weight behind a French company because the alternative is worse. That would be the effect of barring Huawei and <a class="wsodCompany" data-symbol="hk:763" href="http://markets.ft.com/tearsheets/performance.asp?s=hk:763" style="border-bottom-color: rgb(46, 110, 158); border-bottom-style: dotted; border-bottom-width: 1px; color: #2e6e9e; text-decoration: none;">ZTE</a> from the US market on the grounds that they are shifty front organisations for the Chinese government and the People’s Liberation Army.</div>
<div style="padding: 0px 0px 20px;">
It would aid <a class="wsodCompany" data-symbol="fr:ALU" href="http://markets.ft.com/tearsheets/performance.asp?s=fr:ALU" style="border-bottom-color: rgb(46, 110, 158); border-bottom-style: dotted; border-bottom-width: 1px; color: #2e6e9e; text-decoration: none;">Alcatel-Lucent</a>, the troubled 2006 merger of the French company with Lucent, descended from Western Electric of Cleveland, Ohio, which was bought by AT&T in 1881. Things have since moved on and Huawei Technologies and ZTE of Shenzhen in southern China are the new Western Electrics.</div>
<div style="padding: 0px 0px 20px;">
The US House of Representatives intelligence committee, with its <a href="http://www.ft.com/intl/cms/s/0/eaaf5312-1228-11e2-b9fd-00144feabdc0.html" style="color: #2e6e9e; text-decoration: none;" title="Targeting Huawei - FT.com">demand to bar Huawei</a> or ZTE from gaining US contracts or merging with US companies, is living in the past. The time to declare telecoms a strategic, protected industry like defence, was 20 years ago; now is the time to make a deal.</div>
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“Huawei and ZTE represent something new: a former third-world country producing first-world technology. The American corporate psyche finds this difficult to handle,” says John Quelch, dean of the China Europe International Business School in Shanghai.</div>
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It was obviously tough on the House intelligence committee, which has thrown many accusations at both companies, in particular Huawei, which has grown to share industry leadership with Ericsson of Sweden since it was founded in 1987 by a former PLA officer.</div>
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This sounds dodgy, given the PLA’s ambitions in cyber espionage and mass efforts by Chinese hackers to acquire US military and industrial secrets. Former executives of Nortel Networks, the Canadian group that was Huawei’s rival until it went into Chapter 11 bankruptcy protection in 2009, complained of constantly being hacked from China in the 2000s.</div>
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“A number of states are engaged in economic espionage and China is the most prolific,” says Mike McConnell, a former head of the US National Security Agency who is vice-chairman of Booz Allen Hamilton, the consultancy. “Research and development costs a lot and it is cheaper to steal it.”</div>
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The chief accusation is that, if permitted to build networks for operators such as AT&T and Verizon, Huawei would build traps into the software and hardware. Its friends in the Communist party could then use them to hack databases or to bring the networks down in a war.</div>
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It is foolish to ignore the potential security holes in telecoms networks. The NSA has itself been accused of spying on US and foreign internet traffic by monitoring traffic passing over American networks.</div>
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But barring Chinese companies does not solve it. Alcatel-Lucent has a venture in China with Shanghai Bell and much of the equipment used by Ericsson and others is made in China. If the party and the PLA wanted to be sneaky they would tamper with these components.</div>
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Nor is there direct evidence of malfeasance against Huawei and ZTE in the report, although one section is classified. Meanwhile, the committee alleges that the companies breach patents and enjoy support from China in the form of soft loans.</div>
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Both could be true but they are the stuff of trade and intellectual property disputes rather than an intelligence concern. The committee undermines its case by sounding as if it seeks any excuse to exclude Chinese competitors.</div>
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The companies have not helped themselves. Huawei is a reclusive outfit that did not publish the names of its directors until a few years ago. Sun Yafang, its chairwoman, is reported to have once worked at the Ministry of State Security and, like other companies, it has an internal Communist party committee whose exact purpose is mysterious.</div>
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Yet Huawei is not easily categorised as a state stooge. It is not state-owned (ZTE has closer links with Guangdong province) and was among start-ups that flourished in Shenzhen’s economic zone in the 1990s. It is still private and claims to be wholly employee-owned. “Huawei is an independent, quite arrogant, company,” says Duncan Clark, a Beijing-based consultant.</div>
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In some ways, it is a symbol of the very China the west has an interest in encouraging. China’s government declared in 2006 that telecoms was one of seven strategic industries over which state-owned enterprises should retain “absolute control” yet Huawei was built by an entrepreneur who admires Silicon Valley.</div>
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Huawei seized 20 per cent of the global market, according to Bernstein Research, by producing equipment at lower prices than western rivals, triggering a wave of consolidation. In the US, where competition has been effectively curbed, Ericsson and Alcatel-Lucent have a duopoly.</div>
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The best thing for US consumers would be to admit Huawei and ZTE with safeguards. In the UK, Huawei’s equipment is examined by former staff of GCHQ, the UK intelligence service, before being used by BT. The US and Australia, which has barred Huawei from a planned network, could go further.</div>
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The US might require Huawei to list in London or New York to illuminate who owns the company; submit technology to the NSA; and separate its US division like a defence group. It could even demand the dissolution of its Communist party committee. What it cannot do is recreate the past.</div>
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Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-7696314097894090012012-07-04T23:50:00.004-03:002012-07-04T23:50:53.519-03:00A Monetary History of China - Peng Xinwei (book review)<br />
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><span class="s1"><a href="http://eh.net/">EH.NET</a></span> BOOK REVIEW ------</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Title: A Monetary History of China</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Published by <a href="http://eh.net/"><span class="s2">EH.Net</span></a> (July 2012)</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Peng Xinwei, <i><b>A Monetary History of China</b></i>. Bellingham, WA: Center for East Asian Studies, University of Western Washington, 1994. (Translation by Edward H. Kaplan of <i>Zhongguo huobi shi</i>, third edition, Shanghai, 1965.) xlix + 929 pp. (2 volumes) $50 (paperback), ISBN: 0914584812. </span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Reviewed for <a href="http://eh.net/"><span class="s2">EH.Net</span></a> by Kurt Schuler, Center for Financial Stability.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Anyone who claims to know the history of civilization must know something of the history of China. Even so, Peng Xinwei’s monumental book, published almost half a century ago in Chinese and almost two decades ago in English translation, has remained obscure among economists. The translation, the only version likely to be accessible to most readers outside of China, seems never to have been reviewed in any economics journal or Web site, though it is known to historians and numismatists who specialize in China. I am therefore writing to call attention to a work that has few peers as a feat of scholarship in monetary history.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Peng Xinwei (1907-1967) studied economics at the London School of Economics and apparently also studied or lived in Japan at some point. Before the communist takeover of China in 1949 he worked as a banker; afterwards, he taught economics at Fudan University in Shanghai. The first edition of his book appeared in 1954. He finished revising the third edition in 1962 and it was published in 1965. He died as one of the hundreds of thousands of victims of Mao’s great bonfire of Chinese civilization, the Cultural Revolution. Edward Kaplan (1936-2006), the translator, was an associate professor of history at Western Washington University. The translation, an impressive feat of scholarship in its own right, was published by the university’s Center for East Asian Studies, from which it remains available.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The book spans the whole of Chinese monetary history from centuries before the birth of Christ to the end of imperial rule in 1911. Had Peng written about the republican period, his life might have been cut short even sooner. Peng sprinkled some Marxist catch phrases about feudalism, imperialism, and colonialism into his writing, but they are merely protective coloration and do not affect his analysis, which is far more influenced by Carl Menger than by Karl Marx.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The book is divided into eight parts, corresponding to major Chinese dynastic periods. Within each part, Peng covers the monetary systems, purchasing power of money, monetary thought, and credit institutions of a period. To understand how large a task Peng set for himself, one must understand that China’s huge size and population make it in many respects more like a continent than a country. China has frequently had multiple monarchies within its current borders, and even when under a single government has had wide provincial or local variations in monetary arrangements.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Certain historical motifs strike the reader. One is the persistence of copper rather than gold or silver as the basis of most everyday monetary transactions. Another is the resort to depreciation, fiat paper money, and relatively high inflation by dying dynasties trying to finance their governments. The dynasties that replaced them extinguished the old currency and followed sounder monetary policies until they too got themselves into financial difficulty. Yet another theme is the paucity of Chinese monetary thought, inferior to European monetary thought well before Europe’s scientific revolution. Finally, there is the interplay between the government and the private sector. The government frequently failed in providing an adequate supply of coinage or a trustworthy paper currency. The private sector, to the extent it was allowed to do so or could evade the law, sought to fill the gaps, but often met with hostility from government officials that was counterproductive to China’s economic development.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">China was the first country to have coins, or the first along with Lydia in Asia Minor; the first to have paper currency, free banking (competitive issue of notes), and a government monopoly of paper currency; perhaps the first to have a kind of currency board (circa 1270); and a pioneer in some fairly sophisticated forms of exchange control. By 1700, though, it had fallen behind European financial practice, and it was slow to adopt more modern forms of organization and banking technique. After adopting them, it then discarded them for a while under communism, which was what turned Peng himself from banking to an academic career.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">I am a reader of Chinese monetary history but, knowing no Chinese, not a scholar of the subject. Among those who are scholars, the book continues to be cited in English and, I am told, in Chinese. Like other works of its kind, it has been superseded in many particulars. The reason for its continuing value is the flavor of the intellect that could produce a work of such scale and scope — an intellect rare enough in any time or place that it merits notice even decades belatedly.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Kurt Schuler is Senior Fellow in Financial History at the Center for Financial Stability in New York. He is the editor of<i>Historical Financial Statistics</i>, a free, online data set at the Center. These are his personal views.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Copyright (c) 2012 by <a href="http://eh.net/"><span class="s2">EH.Net</span></a>. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the <a href="http://eh.net/"><span class="s2">EH.Net</span></a> Administrator (<a href="mailto:administrator@eh.net"><span class="s1">administrator@eh.net</span></a>). Published by <a href="http://eh.net/"><span class="s2">EH.Net</span></a> (July 2012). All <a href="http://eh.net/"><span class="s2">EH.Net</span></a> reviews are archived at <a href="http://www.eh.net/BookReview"><span class="s1">http://www.eh.net/BookReview</span></a>.</span></div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-21284329491249497952012-06-04T21:48:00.005-03:002012-06-04T21:48:51.209-03:00Princelings and paupers - John Garnaut<b><a href="http://www.theage.com.au/world/princelings-and-paupers-20120525-1za5n.html"><span style="font-family: Georgia, 'Times New Roman', serif; font-size: x-large;">Princelings and paupers</span></a></b><br />
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">John <span class="s1">Garnaut</span><br />The Age, <a href="http://www.theage.com.au/world/princelings-and-paupers-20120525-1za5n.html">May 25, 2012</a></span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">WHEN the kingmaker of Chinese politics, Zeng Qinghong, asked to see the quintessential Australia, his diplomatic minders treated him to jugs of beer and an oversized fillet steak at Brisbane's Breakfast Creek Hotel. Next stop was Sydney, where he dropped in to Rupert Murdoch's Fox studios and was introduced to Nicole Kidman and Ewan McGregor on the set of <i>Moulin Rouge</i>. "He had a grin from ear to ear," says a source who accompanied him at the time.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng was then taken for a leisurely early dinner at Lachlan Murdoch and Sarah O'Hare's mansion in Wolseley Road, Point Piper. Rupert Murdoch was accompanied by his new wife, Wendi Deng, who performed as Zeng's guide and translator and took the lead in persuading him why News Corporation's Star TV should be beamed into China. ''Wendy was definitely running the show,'' the chaperone says.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">One of Sydney's finest restaurants was closed for the day so its chefs could prepare Zeng's seafood extravaganza, featuring huge green-lip abalone, to be consumed as the sun set over the Sydney Opera House and Harbour Bridge.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng had clearly enjoyed rolling up his sleeves and bantering with the punters at the Breaky Creek Hotel, but he was even more impressed with the Murdochs' stunning harbour views. In 2008, just after he had brokered the deal that installed Xi Jinping next president and Communist Party secretary, Zeng's son paid $32 million for a home with an identical harbour vista, diagonally across the road.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The century-old mansion, Craig-y-Mor, used to be the home of Australia's most famous insider trader, Rene Rivkin. The Chinese purchase did not attract attention until 2010, when Zeng Wei applied to Woollahra Council for approval to knock it down and build something more expansive. Zeng Wei won the council battle and demolition workers are expected soon. But he is rarely home, as there is still too much money to be made in China.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">As the lure of the market grows ever greater and the Communist Party refuses to fetter its administrative powers or subject itself to any laws, ambitious officials and entrepreneurs have found it difficult to accumulate wealth and impossible to defend it without currying the favour of princelings or others welded into the party-state. They gravitate to the ''princeling'' children of leading revolutionaries, like Zeng Qinghong, and grand princelings, like Zeng Wei, knowing that doors open for them and officials or competitors won't dare disturb their interests.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Four years after Zeng Wei's purchase - which remains the most egregious confirmed example of Communist Party princelings flaunting their wealth - China's leaders are again grappling with being unable or unwilling to control the privileges that flow towards their relatives. The reformist advocacy of Premier Wen Jiabao has long been discounted because of his wife and son's aggressive uses of family status to pursue private business opportunities. And now the purged Politburo member Bo Xilai also stands exposed to allegations of great hypocrisy as foreign journalists pore over his family's financial dealings.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">While Bo Xilai was reviving Maoist nostalgia on his official's salary of about $US1600 a month, his son was renting a presidential-style suite at Oxford and driving a Porsche in the United States. Bo Xilai's elder brother adopted an alias to control $US10 million worth of shares at the Hong Kong-listed subsidiary of a state-owned bank. Two sisters of Bo's wife control business interests worth $US126 million, according to what a Bloomberg investigation could identify. And his wife, Gu Kailai, stands accused of murdering an English friend, Neil Heywood, after they fell out over money.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng Qinghong, Bo Xilai and Wen Jiabao are all immensely capable individuals, engaging and at ease in any company. Zeng and Bo, who were born into the heart of the communist aristocracy, are far more interested in accumulating power and defending the regime than acquiring the trappings of wealth. In today's China, however, even simple living and apparently idealistic leaders have found it difficult to deny their families access to the power and largesse that naturally flow their way.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Of the nine members of the current Politburo Standing Committee, at least six have children who have profited handsomely from their family status. Since the tragedy of Tiananmen, leaders have collectively failed to find a way of limiting each other's family privileges without fracturing the solidarity between them. It is becoming a regime-threatening vulnerability.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The Communist Party has not seriously tackled corruption among its princeling children since 1986, when the country was poor and tentatively opening itself to the power of the market. The reformist party chief, Hu Yaobang, fought to limit the privileges of leaders' children and even empowered his security apparatus to arrest the son of a Politburo member, Hu Qiaomu, over an embezzlement and pornography racket. Many party elders were disturbed by his audacity, given they also had children who were engaged in murky business dealings. Hu Yaobang's attempt to limit princeling corruption was a factor in him being purged in 1987, according to one of his children.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Nepotism, corruption and specifically the fortunes of leading princeling children fanned the popular outrage that became the Tiananmen protests after the trigger of Hu Yaobang's death. Hu's reformist successor, Zhao Ziyang, moved to respond to protester demands by proposing to have his own family assets investigated, but he himself was purged. When Zhao's successor, Jiang Zemin, was flown in by helicopter from Shanghai to piece the party back together, he brought with him the princeling powerbroker Zeng Qinghong.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The mission was no longer to limit princeling largesse but to manage egos, ambitions and jealousies within that rarefied world in order to optimise the political support that flowed from it. Zeng became the go-to man for favours, positions and advice. He managed, cajoled and manipulated China's most powerful princelings. But his prodigious powers of persuasion stopped at his own front door. He could not control his own son.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">In 1993, as head of the party's General Office, a post akin to cabinet secretary, Zeng asked a friend to place his son, Zeng Wei, in a Melbourne university, because he had been unable to gain a place in China's intensely competitive system. ''Let him go out and work, in a restaurant, don't let him lean on others,'' said the father, according to a source familiar with the conversation. Zeng's friend found a sponsor in the Chinese community and arranged university entry and accommodation. But 25-year-old Zeng Wei never turned up.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng Qinghong proudly explained to his friend that his son had decided instead to become an ordinary businessman, engaged in laboriously selling real things that people needed, and had even delivered his father a truckload of watermelons to prove it. Neither the father or the friend had any inkling that within one year after Zeng Wei's no-show in Melbourne, he had progressed from selling melons to promoting multimillion-dollar events. The friend recalls seeing Zeng Wei in a corporate box at the Workers' Stadium in 1994 for an exhibition soccer match between the Beijing soccer team and AC Milan, and embarrassing himself by trying to make an introduction with the CITIC boss, Wang Jun.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">''Wang Jun said, 'I know him well, this game is sponsored by Zeng Wei, he invited AC Milan','' recalls the friend. ''He went from study, to watermelons, to this!''</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">By the time Zeng Qinghong was planning his trip to Sydney in 1999, his son was a wealthy man. Ambitious businessmen across the country, including many princeling children of his father's friends, were falling over themselves to cut deals and be seen to be close to the son of China's most important political powerbroker. ''Talking about all these princelings taking positions in government and wealth in the private sector, I think it's quite natural and may not be a bad thing,'' says the Chinese head of a foreign investment bank in China, who counts himself as a friend of Zeng Wei. ''If it's not them making money it will be somebody else.''</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Rupert Murdoch had been fast to grasp the potential of the Chinese market and that his fortunes there would depend on Chinese politicians. When he heard about Zeng's visit his staff peppered Australian diplomats with phone calls until he had carved out a large slice of the Sydney itinerary. At the mansion in Point Piper, Murdoch brought in singer-guitarist Jimmy Little to perform and arts consultant Jean Battersby to hang the finest of his Australian works on the walls.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The next year Zeng returned the hospitality by hosting Murdoch and Deng at the Chinese opera in Beijing. (In the end Murdoch's lobbying efforts failed and he pulled out of the market.)</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">In 2002, Zeng was promoted to the Politburo Standing Committee and then to vice-president, while his patron Jiang bowed out from front-line duties. Ambitious politicians, officials and entrepreneurs continued their efforts to cultivate ties. Zeng's brother, based in Hong Kong, earned a reputation for aggressively muscling into business opportunities and facilitating compromises with Hong Kong businesspeople who encountered regulatory problems on the mainland.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng Wei, meanwhile, was working on an altogether bigger plane. In the 1990s, Zeng Wei became close friends with the deputy chairman of the Securities Regulatory Commission, Wang Yi, according to a Zeng family friend and business associates of Zeng Wei. The friendship blossomed at a time when the regulator was discovering that it had access to valuable information about state-owned companies that were seeking to list shares on China's nascent stock exchanges. It also had the power to make or break fortunes by providing private companies with listing approvals.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Wang Yi fancied himself as a composer and a composition under his name became the anthem of the Shenzhen Stock Exchange and later a staple of the China National Symphony Orchestra. The friendship turned disadvantageous when Wang was detained by party investigators in a probe into securities market violations, although he was later jailed on unrelated corruption charges.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">In 2007 investigative reporters at <i>Caijing Magazine</i> found that 92 per cent of the shares in the power-generating company Luneng, with net assets valued at 74 billion yuan, had been transferred to two unknown private companies for 3.7 billion yuan. A follow-up magazine edition was recalled. Sources close to the Zeng family and the investigation reveal Zeng Wei was involved in the multibillion-dollar transfer of government assets.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng Wei also teamed up with coal barons from Shanxi province, who were searching for protection from the risk of having their assets appropriated by entrepreneurs and officials further up the food chain. One of his partners hosted the wedding of his daughter at a beach resort in March, where the dowry alone was reported to consist of six Ferraris.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Zeng Wei became very close to a Hong Kong property developer, Renhe Commercial, which made its money by streamlining military approval processes and converting bomb shelters into shopping centres in southern China. The company president, Dai Yong'ge, joined Zeng and wife Jiang as directors of a company in Australia, shortly before Renhe listed on the Hong Kong stock exchange.</span></div>
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<b><span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">THE blurring of state and private interests that took place with the early princelings in the '80s looks trifling compared with the melding of politics and business today.</span></b></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Some of China's most respected public intellectuals are warning that the society and economy are being held hostage to the wealth-maximising requirements of the political elite. Such warnings are being echoed privately in business circles, too.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The private wealth of the party's princelings is usually well concealed, including through the use of multiple identities. But they provide key bridges between politics and the market. Many are joining or establishing investment vehicles and have inserted themselves as agents to lubricate or clog the arteries of private-sector wealth. Stock exchanges double as vehicles for converting family political capital into cash, which can be reconverted into political power. State-owned enterprises can allocate massive contracts in their favour and entrepreneurs split their profits with them in exchange for regulatory protection.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">In investment banking and private equity circles, the best known princeling entrepreneurs are Winston Wen, son of Premier Wen Jiabao; Li Tong, daughter of the propaganda chief; and Wilson Feng, whose father-in-law heads the National People's Congress and has responsibility for state-owned enterprises. Other children of China's top nine leaders are said to be aggressively pursuing opportunities. They include:</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">■ Jia Jianguo, son of the head of the party's ''united front'' work (involved in one of Beijing's most controversial developments, at Dongzhimen Station);</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">■He Jintao, son of the party's anti-corruption chief and former Organisation Department head (facilitated a complicated restructuring of the Guangdong Investment Trust and Investment Corporation, which left creditors frustrated);</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">■Zhou Bin, son of oil czar and security chief Zhou Yongkang (contracting with China's big oil companies).</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The business operations of all six princelings relate to the portfolios of their fathers (or father-in-law, in the case of Wilson Feng).</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">China's army of propaganda officials ensure that the private dealings of cadre children never make it into mainstream Chinese media. Nevertheless, even China's official mouthpieces acknowledge the public's growing discontent when it suits them, as they did shortly after the purge of Bo Xilai. ''The spouses and children of some cadres have taken advantage of their power to seek personal gains, disregarding the law, thus stirring public outcry,'' said Xinhua on April 14.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The hypocrisy of Communist Party leaders using socialist ideals to justify their dictatorship, while allowing their children to make millions, is not only alienating ordinary citizens, it is splitting the princelings. Many believe the recent crop of leaders has betrayed and may yet destroy the Communist Party their parents spilled blood for. These descendants of revolutionary leaders reject the term ''princelings'' for its aristocratic connotations and draw a line between themselves and children of ''mere bureaucrats'', such as those listed above.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">''In recent years we've heard about the second-generation bureaucrats (guanerdai) but we are not - we are the red successors (hongerdai),'' says Hu Muying, the daughter of Mao's long-time speech writer, Hu Qiaomu, who runs a large ''red successor'' organisation. ''My father's generation worked for the interest of the people, but officials today work to become officials, not serving the people but striving for their own power and interests while their children make huge profits from their parents' power.''</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The Communist Party's ''red successors'' speak as if they would do anything to rid the nation of corruption. But their determination stops at the family home. What Hu Muying did not say was that it was her brother, Hu Shiying, who the reformist party boss Hu Yaobang had jailed for corruption in 1986. She has never forgiven Hu Yaobang.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Political analysts see the families of Zeng Qinghong, and his patron Jiang Zemin, as the pioneers of modern princeling business.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Since brokering a deal that saw him hand the vice-presidency to his princeling associate, Xi Jinping, at the 17th Party Congress in 2007, Zeng has confined his political activities to advising former president Jiang. According to a friend, his son's business dealings had contributed to his decision to decline even honorary positions, as they provided too much ammunition to his political enemies.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">It seems the lasting legacy of Zeng Qinghong's visit to the Murdoch Point Piper mansion was his son's decision to begin the process of business migration to Australia. Zeng Wei wants his two sons to be educated in Australia, far from the white-knuckle adventures of Chinese politics and business. Regulatory scrutiny has also motivated Zeng to find an overseas refuge, should it be required, but the Communist Party has proven over 25 years that it hasn't got the stomach to discipline its own children.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><b>John </b><span class="s1"><b>Garnaut</b></span><b> is writing a book on China's princelings. A version of this story will also appear at </b><span class="s2"><b><a href="http://foreignpolicy.com/">foreignpolicy.com</a></b></span></span></div>
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A<a href="http://www.foreignpolicy.com/articles/2012/05/30/a_family_affair"> Family Affair</a></h1>
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China's princelings are running amok. And Bo Xilai is just the tip of the iceberg.</h2>
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<span id="by-line" style="background-color: transparent; border: 0px; font-weight: bold; margin: 0px; outline: 0px; padding: 0px 10px 0px 0px;">BY JOHN GARNAUT </span><span id="byline-pubdate-separator" style="background-color: transparent; border: 0px; margin: 0px; outline: 0px; padding: 0px 10px 0px 0px;">|</span> <span id="pub-date" style="background-color: transparent; border: 0px; margin: 0px; outline: 0px; padding: 0px;"><a href="http://www.foreignpolicy.com/articles/2012/05/30/a_family_affair">MAY 30, 2012</a></span></h3>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-23273673120745853602012-05-26T20:34:00.001-03:002012-05-26T20:34:22.596-03:00Bear in a China shop - Arthur Kroeber (Foreign Policy)<br />
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<a href="http://www.foreignpolicy.com/articles/2012/05/22/bear_in_a_china_shop" style="border: 0px; font-size: 28px; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" title="Bear in a China Shop ">Bear in a China Shop</a></h1>
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It's not the booming economy that's about to burst -- it's bigger than that. Social discontent and, yes, income inequality could rip China apart at the seams.</h2>
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<span id="by-line" style="border: 0px; font-weight: bold; margin: 0px; outline: 0px; padding: 0px 10px 0px 0px;">BY ARTHUR KROEBER</span> <span id="byline-pubdate-separator" style="border: 0px; margin: 0px; outline: 0px; padding: 0px 10px 0px 0px;">|</span> <span id="pub-date" style="border: 0px; margin: 0px; outline: 0px; padding: 0px;">MAY 22, 2012</span></h3>
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Time and again, China has defied the skeptics who claimed its unique mixed model -- an ever-more market-driven economy dominated by an authoritarian Communist Party and behemoth state-owned enterprises -- could not possibly endure. Today, those voices are louder than ever. Michael Pettis, a professor at Peking University's Guanghua School of Management and one of the most persistent and well-regarded skeptics, <a href="http://www.mpettis.com/2012/03/30/the-economist-sees-and-raises/" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">predicted in March</a> that China's economic growth rate "will average not much more than 3% annually over the rest of the decade." Barry Eichengreen, an economist at the University of California, Berkeley, warned last year that <a href="http://www.nber.org/papers/w16919.pdf" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">China is nearing a wall</a> hit by many high-speed economies when growth slows or stops altogether -- the so-called "middle-income trap."</div>
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No question, China has many problems. Years of one-sided investment-driven growth have created obvious excesses and overcapacity. A weaker global economy since the 2008 financial crisis and rapidly rising labor cost at home have slowed China's vaunted export machine. Meanwhile, a massive housing bubble is slowly deflating, and the latest economic data is discouraging. Real growth in GDP slowed to an annualized rate of less than 7 percent in the first quarter of 2012, and April saw a sharp slowdown in industrial output, electricity production, bank lending, and property transactions. Is China's legendary economy in serious trouble?</div>
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Not just yet. The odds are that China will navigate these shoals and continue to grow at a fairly rapid pace of around 7 percent a year for the remainder of the decade, overtaking the United States to become the world's biggest economy around 2020. That's a lot slower than the historical average of 10 percent, but still solid. Considerably less certain, however, is whether China's secretive and corrupt Communist Party can make this growth equitable, inclusive, and fair. Rather than economic collapse, it's far more likely that a decade from now China will have a strong economy but a deeply flawed and unstable society.</div>
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China's economic model, for all its odd communist trappings, closely resembles the successful strategy for "catch-up growth" pioneered by Japan, South Korea, and Taiwan after World War II. The theory behind catch-up growth is that poor countries can achieve substantial convergence with rich-country income levels by simply copying and diffusing imported technology. In the 1950s and 1960s, for instance, Japan reverse-engineered products such as cars, watches, and cameras, enabling the emergence of global firms like Toyota, Nikon, and Sony. Achieving catch-up growth requires an export-focused industrial policy, intensive investment in enabling infrastructure and basic industry, and tight control over the financial system so that it supports infrastructure, basic industries, and exporters, instead of trying to maximize its own profits.</div>
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China's catch-up phase is far from over. It has mastered the production of basic industrial materials and consumer products, but its move into sophisticated machinery and high-tech products has only just begun. In 2010, China's per capita income was only 20 percent of the U.S. level. By most measures, China's economy today is comparable to Japan's in the late 1960s and South Korea's and Taiwan's around 1980. Each of those countries subsequently experienced another decade or two of rapid growth. Given the similarity of their economic systems, there is no obvious reason China should differ.</div>
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For catch-up countries, growth is mainly about resource mobilization, not resource efficiency, which is the name of the game for lower-growth rich countries. Historically, about two-thirds of China's annual real GDP growth has come from additions of capital and labor. Mainly this means moving workers out of traditional agriculture and into the modern labor force, and increasing the amount of capital inputs (like machinery and software) per worker. Less than a third of growth in China comes from greater efficiency in resource use.</div>
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In a rich country like the United States -- which already has abundant capital resources and employs all its workers in the modern sector -- the reverse is true. About two-thirds of growth comes from efficiency improvements and only one-third from additions to labor or capital. Conditioned by their own experience to believe that economic growth is mainly about efficiency, analysts from rich countries come to China, see widespread waste and inefficiency, and conclude that growth must be unsustainable. They miss the larger picture: The system's immense success in mobilizing capital and labor resources overwhelms marginal efficiency problems. </div>
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All developing economies eventually reach the point where they have moved most of their workers into the modern sector and have installed roughly as much capital as they need. At that point, growth tends to slow sharply. In countries that fail to make the tricky transition from a mobilization to an efficiency focus (think Latin America), real growth in per capita GDP can virtually grind to a halt. Such countries also find themselves stuck with high levels of income inequality, which tends to rise during the resource mobilization period and fall during the efficiency phase. Some worry that China -- which for the last decade has had by far the highest capital spending boom in history -- is already on the edge of this precipice. But the data do not support this pessimistic view. First, much surplus agricultural labor remains. Just over one-third of China's labor force still works in agriculture; the other northeast Asian economies did not see their growth rates slow noticeably until the agricultural share of the workforce fell below 20 percent. It will take about a decade for China to reach this level.</div>
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And despite years of breakneck building, China's stock of fixed capital -- the total value of infrastructure, housing, and industrial plants -- is not all that large relative to either the economy or the population. Rich countries typically have a capital stock a bit more than three times their annual GDP. For China, the figure is about two and a half. And on a per capita basis, China has about as much fixed capital as Japan did in the late 1960s and less than a third of what the United States had as long ago as 1930. Further large-scale investments are still required. So China's economy can continue to grow in part based on capital spending, though a gradual transition to a consumer-led economy does need to begin soon.</div>
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One illustration of China's enduring capital deficit is housing. Scarred by the catastrophic U.S. housing bubble, many observers see an even scarier property bubble in China. Robert Z. Aliber, who literally <a href="http://www.amazon.com/gp/product/0230365353/ref=as_li_ss_tl?ie=UTF8&tag=fopo-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0230365353" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">wrote the book</a> on financial manias, called China's housing boom "<a href="http://finance.fortune.cnn.com/2012/01/23/china-real-estate-crash/" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">totally unsustainable</a>" this January. And it's true: Since 2005, land and housing prices have rocketed, and the outskirts of many cities are dotted by blocks of vacant apartment buildings.</div>
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But China's housing situation differs dramatically from that of the United States. The U.S. bubble started with too much borrowing (mortgages issued at 95 percent or more of a house's supposed market value), which caused a rise in housing prices far beyond the well-established trend of the previous 40 years and sparked the construction of far more houses than there were families to buy them. In China, mortgage borrowing is modest; price appreciation was mainly a one-off growth spurt in an infant market, rather than a deviation from established trend; and there is a desperate shortage of decent housing.</div>
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Since 2000, the average house in China has been bought with around 60 percent cash down, according to <a href="http://research.gavekal.com/content.php/4824-DG-Urbanization-Special-Two-Views-of-a-Housing-Boom" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">research by my firm, GK Dragonomics</a>, and the minimum legal down payment has been something in the range of 20 to 30 percent -- a far cry from the subprime excesses of the United States. House prices rose rapidly, but that's partly because they were artificially low before 2000, when state-owned enterprises allocated most of the housing and there was no private market. Much of the home-price appreciation of the last decade was simply a matter of the market catching up with underlying reality. And despite <a href="http://www.time.com/time/photogallery/0,29307,1975397,00.html" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">articles about "ghost cities"</a> of empty apartment blocks, the bigger truth is that urban China has a housing shortage -- the opposite of what typically happens at the end of a bubble.</div>
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Nearly one-third of China's 225 million urban households live in a dwelling without its own kitchen or toilet. That's like the entire country of Indonesia living in factory dormitories, temporary shelters on construction sites, basement air-raid shelters, or shanties on city outskirts. Over the next two decades, if present trends continue, another 300 million people -- equivalent to nearly the entire population of the United States -- will move from the countryside to China's cities. To accommodate these new migrants, alleviate the present shortage, and replace dilapidated housing, China will need to build 10 million housing units a year every year from now to 2030. Actual average completions from 2000 to 2010 were just 7 million a year, so China still has a lot of building to do. The same goes for much basic infrastructure such as power plants, gas and water supplies, and air cargo facilities. </div>
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Yet the housing market also illustrates China's true problem: not that growth is unsustainable, but that it is deeply unfair. The overall housing shortage coexists with an oversupply of luxury housing, built to cater to a new elite. Although most Chinese have benefited from economic growth, the top tier have benefited obscenely -- often simply because of their government or party connections, which enable them to profit immensely from land grabs, graft on construction projects, or insider access to lucrative stock market listings. A <a href="http://research.gavekal.com/content.php/5779-DG-China-Economic-Quarterly-2010-Q4" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">2010 study</a> by Chinese economist Wang Xiaolu found that the top 2 percent of households earned a staggering 35 percent of national urban income. A handful of giant state firms, secure in monopoly positions and flush with cheap loans from state banks, has almost unlimited access to moneymaking opportunities. The state-owned banks themselves earned a staggering <a href="http://www.reuters.com/article/2012/02/19/china-banks-profits-idUSL4E8DJ01220120219" style="background-color: transparent; border: 0px; color: #003366; font-weight: bold; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;" target="_blank">$165 billion</a> in 2011. Yet private firms, which produce almost all of China's productivity and employment gains, earn thin margins and suffer pervasive discrimination.</div>
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At the root lies a political system built on a principle of unfairness. The Communist Party ultimately controls the allocation of all resources; its officials are effectively immune to legal prosecution until they first undergo an opaque internal disciplinary process. Occasionally a high official is brought down on corruption charges, like former Chongqing party secretary Bo Xilai. But such cases reflect elite power struggles, not a determined effort to end corruption. In a few years' time, China will likely surpass the United States as the world's top economy. But until it solves its fairness problem, it will remain a second-rate society.</div>
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</div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-65859054016533121152012-04-08T21:21:00.005-03:002012-04-08T21:21:52.755-03:00The Revenge of Wen Jiabao - John Garnaut (Foreign Policy)<br />
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<span class="s1"><b><a href="http://www.foreignpolicy.com/articles/2012/03/29/the_revenge_of_wen_jiabao"><span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">The Revenge of Wen Jiabao</span></a></b></span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">John Garnaut</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;"><i>Foreign Policy</i>, March 29, 2012</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">The ouster of Chongqing boss Bo Xilai was 30 years in the making -- a long, sordid tale of elite families and factions vying for the soul of the Chinese Communist Party.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">If Premier Wen Jiabao is "China's best actor," as his <a href="http://www.cnngo.com/hong-kong/banned-book-sale-hong-kong-grandpa-wen-criticised-chinas-best-actor-122787"><span class="s3"><b>critics allege</b></span></a>, he saved his finest performance for last. After three hours of eloquent and emotional answers in his final news conference at the National People's Congress annual meeting this month, Wen uttered his public political masterstroke, reopening debate on one of the most tumultuous events in the Chinese Communist Party's history and hammering the final nail in the coffin of his great rival, the now-deposed Chongqing Communist Party boss Bo Xilai. And in striking down Bo, Wen got his revenge on a family that had opposed him and his mentor countless times in the past</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Responding to a gently phrased question about Chongqing, Wen foreshadowed <a href="http://www.economist.com/node/21550309"><span class="s3"><b>Bo's political execution</b></span></a>, a seismic leadership rupture announced the following day that continues to convulse China's political landscape to an extent not seen since 1989. But the addendum that followed might be even more significant. Indirectly, but unmistakably, Wen defined Bo as man who wanted to repudiate China's decades-long effort to reform its economy, open to the world, and allow its citizens to experience modernity. He framed the struggle over Bo's legacy as a choice between urgent political reforms and "such historical tragedies as the Cultural Revolution," culminating a 30-year battle for two radically different versions of China, of which Bo Xilai and Wen Jiabao are the <a href="http://cmp.hku.hk/2012/03/15/20395/"><span class="s3"><b>ideological heirs</b></span></a>. In Wen's world, bringing down Bo is the first step in a battle between China's Maoist past and a more democratic future as personified by his beloved mentor, 1980s Communist Party chief Hu Yaobang. His words blew open the facade of party unity that had held since the massacres of Tiananmen Square.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">This October, the Communist Party will likely execute a once-in-a-decade leadership transition in which President Hu Jintao and Premier Wen hand over to a new team led by current Vice President Xi Jinping. The majority of leaders will retire from the elite Politburo Standing Committee, and the turnover will extend down through lower tiers of the Communist Party, the government, and the military. Wen hopes his words influence who gets key posts, what ideological course they will set, and how history records his own career.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Wen Jiabao and Bo Xilai have long stood out from their colleagues for their striking capacities to communicate and project their individual personalities and ideologies beyond the otherwise monochromatic party machine. The two most popular members of the Politburo, they are also the most polarizing within China's political elite. They have much in common, including a belief that the Communist Party consensus that has prevailed for three decades -- "opening and reform" coupled with uncompromising political control -- is crumbling under the weight of inequality, corruption, and mistrust. But the backgrounds, personalities, and political prescriptions of these two crusaders could not be more different.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Bo has deployed his prodigious charisma and political skills to attack the status quo in favor of a more powerful role for the state. He displayed an extraordinary capacity to mobilize political and financial resources during his four and a half year tenure as the head of the Yangtze River megalopolis of Chongqing. He transfixed the nation by smashing the city's mafia -- together with uncooperative officials, lawyers, and entrepreneurs -- and rebuilding a state-centered city economy while shamelessly draping himself in the symbolism of Mao Zedong. He sent out a wave of revolutionary nostalgia that led to Mao quotes sent as text messages, government workers corralled to sing "red songs," and old patriotic programming overwhelming Chongqing TV.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">From his leftist or "statist" perch, Bo has been challenging the "opening and reform" side of the political consensus that Deng Xiaoping secured three decades ago. Wen Jiabao, meanwhile, who plays the role of a learned, emphatic, and upright Confucian prime minister, has been challenging the other half of Deng consensus -- absolute political control -- from the liberal right. He has continuously articulated the need to limit government power through rule of law, justice, and democratization. To do this, he has drawn on the symbolic legacies of the purged reformist leaders he served in the 1980s, particularly Hu Yaobang, whose name he recently helped to "rehabilitate" in official discourse. As every Communist Party leader knows, those who want a stake in the country's future must first fight for control of its past.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Until last month Bo appeared to hold the cards, with his networks of princelings -- the children of high cadres -- and the gravitational force of his "Chongqing Model" pulling the nation toward him, while Wen's efforts had produced few practical results. Bo earned his reputation as a rising star <a href="http://www.nytimes.com/2012/03/20/world/asia/bo-xilai-accused-of-interfering-with-corruption-case.html?_r=1&pagewanted=all?src=tp"><span class="s3"><b>until Feb. 6</b></span></a> when his police chief and right-hand man, Wang Lijun, drove to an appointment at the local British consulate to shake his official minders and then veered off and fled for his life down the highway into the U.S. Consulate in Chengdu. He carried with him allegations of sordid tales of Bo family criminal behavior including in relation to the death of British businessman Neil Heywood, according to Western government officials. In Beijing's eyes, this was the highest-level known attempted defection in 40 years, and it occurred on Bo's watch. Wang "betrayed the country and went over to the enemy," said President Hu Jintao, according to a Chinese intelligence official.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Wen, the son of a lowly teacher, saw his family constantly criticized and attacked during the Cultural Revolution, and rose to power by impressing a series of revolutionary veterans. Bo, in contrast, was born to rule. The son of revolutionary leader Bo Yibo, he studied at the nation's most prestigious middle school, Beijing No. 4. Bo had not yet turned 17 when a rift between the princeling children and those with "bad class backgrounds" erupted into class warfare. In June 1966, in the early months of the Cultural Revolution, one of Bo's school mates invented the rhyming ditty that became the anthem for the princelings that led the early Red Guard movement: "The father's a hero, the son's a brave lad; the father's a reactionary, the son's a bastard."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">The student red guards at Beijing No. 4 turned an old eating hall into a gruesome incarceration chamber for the teachers and other reactionaries they captured. They painted the popular slogan "Long live the red terror" on the wall, in human blood.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Within months, however, Mao directed his Cultural Revolution toward his comrades-in-arms and unleashed a coterie of lesser-born red guards against the old "royalist" ones. Bo Xilai spent six years in a prison cell. His father, Bo Yibo, was tortured. Red Guards abducted Bo's mother in Guangzhou and murdered her, or she committed suicide; if any records exist, they remain sealed.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Since former leader Deng Xiaoping's 1981 "Resolution on History," the Cultural Resolution has officially been a "catastrophe," but the Communist Party never explained what happened. It was left as little more than a name, signifying bad but unknown things. By raising the specter of the Cultural Revolution, Wen Jiabao has opened a crack in the vault of Communist Party history: that great black box that conceals the struggles, brutality, partial truths and outright fabrications upon which China has built its economic and social transformation. Beneath his carefully layered comments is a profound challenge to the uncompromising manner in which the Chinese Communist Party has always gone about its business. And to grasp what the Cultural Revolution means to Wen Jiabao requires taking a journey through the life of his mentor, the 1980s reformist leader Hu Yaobang who ran the Communist Party in its most vibrant era.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Yaobang was struck down from his job at the helm of the Communist Youth League on Aug. 13, 1966, five days before Chairman Mao presided over the first mass rally of the Cultural Revolution. Detained for six weeks, Red Guards beat and abused him and forced him to stand for hours with a huge wooden placard hanging from his neck and his arms wrenched behind his back. Six weeks later, as they retired for their national holidays, they called Hu's eighteen year-old son Hu Dehua to pick him up. "I cried when I saw his appearance," Hu Dehua told me. "He told me 'don't be such a good-for-nothing, let's go home, it doesn't matter.'"</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Yaobang was already back at work when Mao died, in 1976, and the Communist Party united behind the idea of moving on from the Cultural Revolution but lacked any further road map. Appointed head of the powerful Organization Department, Hu led a crusade to "seek truths from facts" -- for ideology to yield to reality -- and to rehabilitate fallen comrades. Deng, who by 1980 had secured his position as paramount leader, elevated Hu to general secretary of the Communist Party.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">By the early 1980s the Communist Party was rapidly retreating from everyday social life. As the economy grew, Chinese people began to enjoy a degree of personal freedoms, but the essential norms of internal party politics remained unchanged. At crucial junctures there were no enforceable rules, no independent arbiters, only power.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">In 1985, while most elders had been appointing each other or each other's children to important positions, Hu Yaobang recruited Wen Jiabao, the teacher's son, to run his Central Office -- a position akin to cabinet secretary. The following year Hu Yaobang's elder son, Hu Deping, spoke in terms uncannily similar to Wen Jiabao's of two weeks ago. "The Cultural Revolution was a tragedy," he said to the <a href="http://books.google.com/books/about/Toward_a_democratic_China.html?id=SmRNTfW8UWkC"><span class="s3"><b>then propaganda minister,</b></span></a> at a time when his father was at the height of his power. "It will not appear again in the same form, but a cultural revolution once or even twice removed cannot be ruled out from once again recurring."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Perhaps he had an inkling of what was coming. By 1986 the tensions between an increasingly market-oriented economy and more liberal social environment began to clash with Communist Party elders' demand for absolute political control. Hu Yaobang tried to limit corruption among the elders' children, studiously ignored conservative ideological campaigns, and tolerated student protests. By the end of that year the elders had had enough.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Then, as during the Cultural Revolution, and as remains the case today, no rules governed Hu Yaobang's downfall; just a group of backstage power brokers who judged that he had gone too far. In January 1987, 21 years after his purging in the Cultural Revolution, party elders subjected Hu to a torrid five-day criticism and humiliation session called a "Democratic Party Life meeting." The harshest of Hu's critics was Bo Xilai's father.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Dehua, the youngest son, lives at home with his wife in the same large but rundown courtyard home, just west of Beijing's closed-off leadership district Zhongnanhai, where he has lived nearly all of his life. His recollections about what the Cultural Revolution meant to his family and his father, Hu Yaobang, informs the story that Wen Jiabao is telling today.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Dehua tells how his father was pained, but not surprised, when Communist Party elders used his own political demise to drive an "anti-bourgeois liberalization" campaign across China. Party apparatchiks instructed Hu Dehua to show his ideological opposition to his own father's political platform, but he refused.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">"It was the same as 1966. If someone was said to be 'liberalized', then everyone would line up to criticize them," Hu Dehua said. "The country was turning back at a time when it should be have been democratizing and transitioning to rule of law."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Dehua told his father how pessimistic he felt about his country's future. Hu Yaobang agreed that the methods and ideologies of the 1987 anti-liberalization movement came straight from the Cultural Revolution. But he told his son to gain some historical perspective, and reminded him that Chinese people were not joining in the elite power games as they had 20 years before. He called the anti-liberalization campaign a "medium-sized cultural revolution" and warned that a small cultural revolution would no doubt follow, Hu Dehua told me. As society developed, Hu Yaobang told his son, the middle and little cultural revolutions would gradually fade from history's stage.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">It is fortunate, perhaps, that Hu Yaobang could not see how his death in April 1989 triggered an outpouring of public grief at Tiananmen Square, as Chinese students held him up his honesty and humanity in contrast to their perception of other leaders of the time. The protests morphed into a mass demonstration for liberalization and democratization and against growing corruption among children of the political elite.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Wen Jiabao remained in charge of the Communist Party Central Office, now working for Hu Yaobang's increasingly reformist successor, Zhao Ziyang. A <a href="http://www.forbes.com/2009/06/08/wen-jiabao-tiananmen-communist-party-china.html"><span class="s3"><b>famous photo</b></span></a> shows Wen standing behind Zhao's shoulder as his boss declared the haunting words "I've come too late" to students who refused to leave the square. Shortly afterward, Deng and the party elders ordered in the tanks, triggering another Cultural Revolution-style convulsion and adding a new bloody file to the Communist Party's vault of history. Bo Yibo moved to have Wen purged, according to a source whose father was a minister at the time, but other elders were impressed with how <a href="http://en.wikipedia.org/wiki/The_Critical_Moment_%E2%80%93_Li_Peng_Diaries#cite_note-5"><span class="s3"><b>Wen shifted his loyalty</b></span></a> from Zhao (who spent the rest of his life under house arrest) and supported martial law. Wen played by the rules of a ruthless system, his family -- especially his wife and son -- leveraged his official status for their own business interests, while his career progression resumed.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Yaobang was largely airbrushed from official history after his purge in 1987. But because he did not publicly challenge the Communist Party, he maintained his legacy and his supporters, including all of the current and likely future party chiefs and premiers: Hu Jintao, Wen Jiabao, Xi Jinping, and Li Keqiang. All four regularly visit the Hu family home during Spring Festival. But only Wen Jiabao has publicly honored his mentor's legacy.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Two years ago, on the 21st<span class="s4"><sup> </sup></span>anniversary of Hu Yaobang's death, <a href="http://paper.people.com.cn/rmrb/html/2010-04/15/nw.D110000renmrb_20100415_1-02.htm?div=-1"><span class="s3"><b>Wen penned an essay</b></span></a> in the<i>People's Daily</i> that was remarkable in a nation whose leaders rarely give any public hint of their personal lives. "What he taught me in those years is engraved on my heart," wrote Wen. Of the four top leaders who regularly pay homage to Hu Yaobang's old home, Wen Jiabao has the warmest connection with Hu Yaobang's widow and four children.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu taught his children to resist the idea, wired into the Communist Party psyche, that they had any particular hereditary right to high office. Nevertheless the eldest son, Hu Deping, rose to vice minister rank in the United Front Department. And last year he used his princeling heritage and networks to organize and say things that would have banished lesser-born men to jail. He published a book about his father, with a forward written by Wen. He organized a series of closed-door seminars for leading intellectuals and other princeling children of reformist leaders to try and build a consensus for reform.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">The first and most low-key seminar, in July, ignited what became a raging public debate about Bo Xilai's "Chongqing Model" versus its possible antidote, the more liberal "<a href="http://www.economist.com/node/21540285"><span class="s3"><b>Guangdong Model</b></span></a>." The second, in August, celebrated the 35th anniversary of the arrest of Mao's radical "Gang of Four," which slammed the door shut on the Cultural Revolution just weeks after Mao's death in August 1976. <a href="http://www.smh.com.au/world/chinas-princelings-break-their-silence-20111016-1lrkh.html"><span class="s3"><b>The third, in September</b></span></a>, explored the 30th anniversary of the 1981 Resolution on History, which had confirmed the Cultural Revolution as a catastrophe that must never occur again.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">It was at the September gathering that Hu Deping set down the themes that Wen later referred to in his press conference, and<a href="http://www.hybsl.cn/zt/jinian30/30/2011-11-14/27513.html"><span class="s3"><b> published his comments on a website</b></span></a> dedicated to chronicling the life and times of his father: "The bottom line is making sure to adopt the attitude of criticizing and fundamentally denouncing the Cultural Revolution ... In recent years, for whatever reason, there seems to be a 'revival' of something like advocating the Cultural Revolution. Some people cherish it; some do not believe in the Cultural Revolution but nevertheless exploit it and play it up. I think we must guard this bottom line!"</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">The subtext, only barely concealed, was that Bo Xilai must be stopped from dragging Communist Party back toward its most radical, lawless past. How, one could be forgiven for asking, could Bo grasp for power by praising a movement that killed his own mother?</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Deping honed in on the need to forge mechanisms to institutionalize the power games between party leaders. He told his princeling and intellectual friends in the seminar audience that the remnants of feudal aristocracy -- old fashioned despotic power -- might again emerge as the party had said it had during the Cultural Revolution. He foreshadowed the ructions that are now taking place:</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">"If we really want to carry out democratization of inner-party political life, the cost is going to be enormous. Do we have the courage to accept that cost? If we do it now, there is a cost certainly. Do we dare to bear the cost? Is now the right time? I cannot say for sure. However, I think it might create some 'chaos' in some localities, some temporary 'chaos', and some localized 'chaos'. We should be prepared."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Deping has been stepping forward, with some reluctance, to draw on his father's legacy to help shape China's future. He is a member of the standing committee of one of China's two representative-style bodies and mixes with senior leaders. He discussed the Cultural Revolution with both President Hu Jintao and his expected successor, Xi Jinping, not long before Wen Jiabao's news conference and Bo Xilai's demise, according to a source familiar with those conversations. China's politically engaged population is watching the battle now under way within the Politburo to frame the downfall of Bo Xilai and set the lessons that will shape China's future.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">"So far we cannot identify whether Wen Jiabao is representing himself or representing a group," says a recently retired minister-level official, who had confidently predicted Bo's sacking to me 10 days before it happened. "Maybe it's 80 percent himself and 20 percent the group. We still have to watch."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">It remains far from clear whether the Communist Party's webs of patronage and knots of financial and bureaucratic interests can be reformed. But with China's leftist movement decapitated by the purge of Bo Xilai, and Bo's critics now talking about his reign of "red terror" after daily revelations of political and physical brutality under his command, Wen has begun to win over some of his many detractors.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">"In the past I did not have a fully positive view of Wen Jiabao, because he said a lot of things but didn't deliver," says a leading media figure with lifelong connections to China's leadership circle. "Now I realize just to be able to say it, that's important. To speak up, let the whole world know that he could not achieve anything because he was strangled by the system."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Yaobang's most faithful protégé, who carried his funeral casket to its final resting place, is building on the groundwork laid by Hu and his children ostensibly to prevent a return of the Cultural Revolution. Wen Jiabao is defending the party line set by Deng Xiaoping's 1981 historical resolution against attack from the left. Between the lines, however, he is challenging the Communist Party's 30-year consensus from the liberal right.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Hu Dehua, the youngest son, spelled out the gulf between these positions in a rare <a href="http://www.isunaffairs.com/?p=3594"><span class="s3"><b>Chinese media interview</b></span></a> one month ago: "The difference between my father and Deng is this: Deng wanted to save the party; my father wanted to save the people, the ordinary people."</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Wen Jiabao sees Bo's downfall as a pivotal opportunity to pin his reformist colors high while the Communist Party is too divided to rein him in. He is reaching out to the Chinese public because the party is losing its monopoly on truth and internal roads to reform have long been blocked. Ironically, he is doing so by leading the public purging of a victim who has no hope of transparent justice, because the party to which he has devoted his life has never known any other way.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;"><i>John Garnaut is China correspondent for the </i>Sydney Morning Herald<i> and the </i>Age<i>. He is writing a book on the princelings shaping China's future.</i></span></div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-41714749526831355152012-02-29T16:36:00.003-03:002012-02-29T16:36:50.504-03:00Political reform in China - Stratfor<br />
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<b>China: Reform in a Resilient Political System</b></div>
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Stratfor, February 29, 2012</div>
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<b>Summary</b></div>
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A spate of recent articles in Chinese state-run media has raised speculation that the country's leadership may address the issue of political reform. Though the issue is by no means a new one, slowing economic growth, a widening income gap and public alienation from the political system are all threatening to undermine the Communist Party's claim to legitimacy, lending a new urgency to the problem. In order to head off the kind of unpredictable or even violent change that could accompany a political crisis, CPC leadership will try to introduce reforms from the top down, but because the current business and political elite have a disproportionate stake in the status quo, this will be easier said than done. </div>
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<b>Analysis</b><span class="s1"> </span></div>
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Over the past week several Chinese state-owned media agencies, including the People's Daily and Xinhua, have commented extensively on the need for political reform. One People's Daily article published Feb. 23, while highlighting the challenges political reform would entail, suggested that failing to enact reforms would have a far more dire consequence: a full-blown political crisis. The following day, semi-state owned Global Times ran an article entitled "Reform Is a Consensus, The Path Is In Debate," which echoed the People's Daily article and laid out a conservative discussion of political reform and China's path forward. </div>
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For the Communist Party of China (CPC), the need for political reform is not up for debate. Since 1978, the CPC has staked its legitimacy on economic growth, but this is showing signs of diminishing returns as growth slows amid the global downturn and as the inefficiencies of China's export-dependent model become more apparent. CPC leadership realizes that to stay in power, the regime will have to implement political reform to address the country's many social and economic inequities. However, top-down political reform has always been difficult to implement because it challenges the interests of people benefitting most from the current system, while bottom-up political change in China historically has taken the form of revolution. To pre-empt rapid or even violent change that would threaten the current system and the party's hold on power, CPC leadership will introduce political reform slowly and incrementally.</div>
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<b>Reform in a Chinese Context</b> </div>
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Rhetoric over political reform in China is not as alien as some may think, especially in the years since China's economic opening under former leader Deng Xiaoping. Chinese Premier Wen Jiabao and several high-ranking officials have in recent years repeatedly made high-profile statements about reforms, accompanied by increasing public discourse about the need for political reform. However, no explicit policy prescriptions have accompanied these statements, leaving many to doubt how -- and whether -- reform will be enacted. </div>
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The renewed calls through state media organs therefore have raised public expectations about reform. While no substantial steps could be taken until the 2012 leadership transition is complete and incoming leaders have consolidated their power, some believe that the new generation of leaders, many of whom are considered more liberal than the leaders in the current generation, may actively pursue reform. Nevertheless, even if the individuals in charge sincerely desire political reform, systemic hindrances -- not personalities -- will prove the biggest obstacle to the reform agenda. </div>
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The timing of recent heightened rhetoric is not coincidental. Economically, the imperative for change is clear. After years of rapid growth, the Chinese economy is slowing, and Beijing expects that economic growth will continue to slow over the next few years. Economic restructuring in this context is needed to address corruption, the widening income gap and unequal access to political power, in order to preserve the CPC's legitimacy. </div>
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Thus far, the CPC has paradoxically addressed the issue by further centralizing power and control over the economy, while attempting to promote wealth distribution and increased domestic consumption. But this centralization has been employed in a political system in which the business and political elite play a disproportionately large role in shaping economic policy. This could strengthen their already strong position at a time when their disproportionate wealth and power is starting to stoke feelings of unfairness in the rest of the population. </div>
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As the CPC has evolved, an oligarchy has consolidated within the Party, forming a powerful bureaucracy and controlling the majority of the country's resources and wealth. Princelings, or the descendants of the original CPC elite, have risen to prominent positions in the CPC and in China's many state-owned enterprises. These moves have reinforced an already powerful political-economic network. </div>
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The social environment in China also reveals the need for reform. China's economy is large, but its wealth disparity is immense: Around 0.2 percent of the Chinese population controls 70 percent of the country's wealth. This inequality has led to social frustration and has called into question the CPC's legitimacy. </div>
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Empowering the middle class could help China maintain its dynamic growth by encouraging increased consumption, but the middle class is shrinking, due in part to economic hardship. This has distilled in the middle class a degree of distrust of the government, which came to the fore in urban political demonstrations, including China's Jasmine gatherings. By themselves these demonstrations posed little threat to the CPC, but they had the potential to unify citizens at the grassroots level to form larger movements, evidenced by the so-called Wukan model.</div>
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<b>Systemic Challenges</b> </div>
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Those calls for political reform have generated little momentum. They were substantially quelled, with the central government in turn employing a more conciliatory political approach or enforcing security crackdowns. Still, the issue remains the biggest threat to the government's sustainability. </div>
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Governing China requires a strong central government. Centralized power characterizes the CPC today much as it characterized China's early dynasties. When the CPC came to power, its legitimacy flowed from sentiments opposing nationalism and Japanese imperialism, as well as from communist ideology. These sustained the Party even through the Great Leap Forward and the Cultural Revolution but were not enough to unify the country after those disasters. It was not until Deng promised economic betterment that the CPC found a new way to preserve its centrality. </div>
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The CPC is beginning to understand that the current phase is untenable, since large segments of the country clearly have not realized economic betterment. While the general population today is better off than were its grandparents, there is a demonstrable and systemic wealth gap favoring the CPC elite and those associated with them. This phenomenon has occurred due to, not in spite of, the centrality of the CPC. The ruling party can and has instituted economic and social reforms in the past, but such reforms will have negligible effects without accompanying political reforms. </div>
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While the CPC's decision-making process is more democratic than it has been in the past, only a small number of Party members participate. The general population knows that cronyism is still practiced. Demands from the bottom are increasing, as reflected by the rising public outcry against corruption and the increased airing of social grievances, which the Jasmine gatherings, among other political movements, sought to harness. </div>
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The challenges of economic and social management now are moving beyond the control of the current CPC leadership structure. The central authority has weakened and can no longer dictate the terms of the economy. The CPC needs to redefine itself in order to avert a bottom-up movement for regime change, and to do so it must enact political reforms. The problem is that such reforms could risk either the collapse of the entire structure or the loss of power by CPC leaders. </div>
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Political reform could come in the form of a major break within the Party that forces change from the inside, but the CPC desperately wants to avoid the kind of political instability this sort of split could bring; indeed, the whole point of instituting reform from the top is to avoid a political crisis. Any efforts undertaken toward political reform will thus be introduced slowly and incrementally in order to prevent putting the government's hold on power at risk.</div>
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</tbody></table>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-74922967726710438752012-01-08T22:05:00.003-02:002012-01-08T22:05:46.082-02:00Ian Buruna on China - Le Monde<br />
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">"Le modèle chinois ébranle les certitudes américaines"</span></h1>
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<span style="font-family: Georgia, 'Times New Roman', serif;">LE MONDE CULTURE ET IDEES | 07.01.12 | 17h08 • Mis à jour le 08.01.12 | 09h15</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">par Propos recueillis par Sylvain Cypel</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;"><img alt="Des employées d'une ligne de production dans l'entreprise de matériel électronique Suzhou Etron à Suzhou, en Chine." border="0" src="http://s2.lemde.fr/image/2011/11/28/540x270/1610011_3_c2b6_des-employees-d-une-ligne-de-production-dans.jpg" style="border-bottom-width: 0px; border-color: initial; border-image: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-width: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="Des employées d'une ligne de production dans l'entreprise de matériel électronique Suzhou Etron à Suzhou, en Chine. | Reuters/© Aly Song / Reuters" /></span></div>
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<strong style="display: inline-block; line-height: 16px; padding-bottom: 5px; padding-left: 8px; padding-right: 8px; padding-top: 5px;"><span style="font-family: Georgia, 'Times New Roman', serif;">Des employées d'une ligne de production dans l'entreprise de matériel électronique<a class="listLink" href="http://www.lemonde.fr/sujet/ca91/suzhou-etron.html" style="color: black; cursor: text; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Suzhou Etron</a> à Suzhou, en Chine.<span style="margin-left: 5px;">Reuters/© <a class="listLink" href="http://www.lemonde.fr/sujet/57d2/aly-song.html" style="color: black; cursor: text; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Aly Song</a> / Reuters</span></span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif; font-size: small;"><span class="origine_article" style="font-weight: bold; text-transform: uppercase;">NEW YORK, CORRESPONDANT - </span>Installé depuis 2005 à <a class="listLink" href="http://www.lemonde.fr/sujet/ee94/new-york.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">New York</a>, <a class="listLink" href="http://www.lemonde.fr/sujet/dabd/ian-buruma.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Ian Buruma</a> est devenu l'un des intellectuels les plus en vue aux Etats-Unis. Il collabore à la <em>New York Review of Books</em>, au <em>New York Times</em> et au <em><a class="listLink" href="http://www.lemonde.fr/sujet/d0df/new-yorker.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">New Yorker</a></em>. Polyglotte (néerlandais, anglais, allemand, chinois, japonais et français, quoi qu'il en dise), il a été l'éditeur des pages culturelles de la <em><a class="listLink" href="http://www.lemonde.fr/sujet/2050/far-eastern.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Far Eastern</a> <a class="listLink" href="http://www.lemonde.fr/sujet/835e/economic-review.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Economic Review</a>, </em>à Hongkong, et de <em><a class="listLink" href="http://www.lemonde.fr/sujet/4f7d/the-spectator.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">The Spectator</a>, </em>à Londres. Aujourd'hui professeur de démocratie, droits de l'homme et journalisme à l'université Bard - <em>"façon de <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=dire" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">dire</a> que j'enseigne ce que je veux, c'est le charme du système universitaire américain"</em>, dit-il en riant -, il est un auteur polyvalent et prolifique. Nous avons interrogé cet intellectuel à focale large, prix Erasmus 2008, sur sa spécialité initiale : la Chine et l'Extrême-Orient.</span></h2>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Votre itinéraire vous place au carrefour de l'Asie, de l'Europe et de l'Amérique. En quoi cela influence-t-il votre regard sur le monde ? </span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Mon père est néerlandais, ma mère anglaise d'origine juive allemande. L'Asie puis l'Amérique se sont ajoutées un peu par hasard. Très jeune, étudiant en langue et littérature chinoises, j'étais un cinéphile. Un jour, j'ai vu à Paris <em>Domicile conjugal</em>(1970), de <a class="listLink" href="http://www.lemonde.fr/sujet/185d/francois-truffaut.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">François Truffaut</a>. Le personnage d'<a class="listLink" href="http://www.lemonde.fr/sujet/9e26/antoine-doinel.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Antoine Doinel</a> y tombe amoureux de la Japonaise... et moi aussi ! A l'époque, <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=aller" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">aller</a> en Chine était impossible. Je me suis donc tourné vers le Japon, où j'ai étudié le cinéma et participé à la troupe de danse Dairakudakan. L'Amérique est venue à moi tardivement, quand on m'a proposé d'y<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=enseigner" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">enseigner</a>. Je me sens toujours plus européen qu'américain. Un Européen marié à une Japonaise et parfaitement chez lui à New York, la ville de la mixité.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Vous êtes progressiste et un produit typique du multiculturalisme. Pourquoi dénoncez-vous la "courte vue" des progressistes sur l'islam ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Je ne suis pas "progressiste". C'est ce pays tellement conservateur que sont les Etats-Unis qui m'a beaucoup poussé à gauche ! Je l'étais moins en Europe et en Asie. Je n'ai jamais admis les complaisances de gens de gauche pour toutes sortes de potentats sous le prétexte d'<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=accepter" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">accepter</a> les différences. Et je suis opposé à l'idéologie du multiculturalisme. Lorsque le terme décrit une réalité, il me convient. Sur le plan factuel, je suis multiculturel. Mais l'idée que les gens doivent impérativement <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=pr%C3%A9server" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">préserver</a> toutes leurs racines est absurde. Dans le cas célèbre d'un crime d'honneur commis en Allemagne, où le juge avait estimé que le criminel avait des circonstances atténuantes en raison de sa culture d'origine, je considère qu'il a tort.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Il y a des choses plus importantes que la culture. Je n'admets pas l'argument culturel pour <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=justifier" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">justifier</a> l'excision. En même temps, je suis plus tolérant que la loi française pour l'affichage des symboles religieux. Qu'une policière ou une enseignante soit interdite de <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=porter" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">porter</a> le niqab dans ses fonctions, oui. Une personne dans la rue, non. Ce type d'interdiction n'est qu'une façon de <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=dissuader" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">dissuader</a> des gens impopulaires d'<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=adh%C3%A9rer" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">adhérer</a> à une religion impopulaire.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">La peur des Japonais était très forte il y a vingt-cinq ans aux Etats-Unis. Comment expliquez-vous qu'un même phénomène soit aujourd'hui dirigé contre la Chine ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Les deux phénomènes ne sont pas similaires. Ce qui faisait peur aux Américains il y a une génération, c'était la visibilité des Japonais : Mitsubishi rachetait le<a class="listLink" href="http://www.lemonde.fr/sujet/8d5d/rockefeller-center.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Rockefeller Center</a>, Toyota déboulait, etc. Leurs marques étaient très visibles. De plus, dans l'histoire américaine, les Japonais sont suspects. Aujourd'hui, les Américains se disent que, si les Chinois parviennent à la puissance qu'avaient les Japonais, ils seront bien plus dangereux. Mais, sur le fond, la menace nipponne avait été grandement exagérée et la menace chinoise l'est tout autant. D'abord, l'absence de liberté intellectuelle en Chine reste un obstacle très important pour son développement. Ensuite, l'intérêt des deux parties à <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=pr%C3%A9server" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">préserver</a> des liens l'emportera sur les forces poussant au conflit.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Quelle est la part de réalité et de fantasme dans cette tension montante ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Par fantasmes, vous entendez peur. Elle est fondée : la montée en puissance de la Chine ne pourra que <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=r%C3%A9duire" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">réduire</a> le <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=pouvoir" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">pouvoir</a> et l'influence américaine dans le monde. Après 1945, les Etats-Unis sont devenus le gendarme de l'Asie. Ce n'est plus le cas. Des peurs populistes sont également fondées sur des motifs socio-économiques. Mais je ne pense pas qu'elles atteignent le niveau des peurs antinippones de la fin des années 1980. Et les craintes de l'influence économique chinoise sont surtout concentrées dans les Etats de la vieille économie, où l'industrie lourde est en déclin.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Un sondage de l'<a class="listLink" href="http://www.lemonde.fr/sujet/d46f/institut-pew.html" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">Institut Pew</a> a montré que les Américains croient que la Chine est devenue la première puissance économique mondiale. Or elle reste loin des Etats-Unis. C'est un fantasme typique... </span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">C'est une combinaison d'ignorance et de peurs, exploitées par des chroniqueurs de radios dans le but de <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=bl%C3%A2mer" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">blâmer</a> Barack Obama. Mais je le répète : le déclin des Etats-Unis est un fait, comme la montée en puissance économique de l'Asie. Ce déclin génère un choc, dont il ne faut pas s'<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=alarmer" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">alarmer</a> inconsidérément. Au début du XX<sup style="line-height: 0; position: relative; top: 0.5ex;">e</sup>siècle, l'invention du personnage de Fu Manchu <em>(sorte de génie du Mal incarnant le "péril jaune")</em> avait provoqué un arrêt de l'immigration sino-nipponne en Amérique qui avait même eu un impact en Europe. A suivi la menace communiste, qui était, pour les Etats-Unis, loin d'<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=%C3%AAtre" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">être</a> aussi réelle qu'on l'a présentée. Mais même la CIA y a sincèrement cru.</span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Les Etats-Unis sont un pays qui vit sous la peur constante de puissances extérieures qui menaceraient de <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=faire" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">faire</a> <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=dispara%C3%AEtre" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">disparaître</a> son espace sécurisé. Ce pays a bâti et a été bâti par une société d'immigrés mais, dans le même temps, il pourchasse ces immigrés pour se <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=prot%C3%A9ger" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">protéger</a>. Comme la France, du reste. Et, comme les Français, les Américains s'estiment porteurs d'une mission civilisatrice universelle. Or le "modèle chinois" ébranle leurs certitudes.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Est-ce parce que les Américains fondent leur économie sur l'idée que la liberté est le meilleur garant du succès, alors que les Chinois ont une croissance très supérieure avec un régime dictatorial ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">C'est exactement ça. Ce mélange chinois réussi de capitalisme et d'Etat fort est plus qu'une remise en cause, il est perçu comme une menace. Je ne vois pourtant pas <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=monter" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">monter</a> une atmosphère très hostile à la Chine dans l'opinion. Depuis un siècle, les Américains ont toujours été plus prochinois que pronippons. Les missions chrétiennes ont toujours eu plus de succès en Chine qu'au Japon. Pour la droite fondamentaliste, ça compte. Et, dans les années 1980, des députés ont détruit des Toyota devant le Capitole ! On en reste loin.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Et le regard des Chinois sur les Etats-Unis, comment évolue-t-il ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Tout dépend de quels Chinois on parle, mais, pour <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=r%C3%A9sumer" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">résumer</a>, c'est attirance-répulsion. Surtout parmi les classes éduquées qui rêvent d'<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=envoyer" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">envoyer</a> leurs enfants dans les universités américaines et en même temps peuvent <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=%C3%AAtre" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">être</a> emplies de ressentiment à l'égard d'une Amérique qu'elles perçoivent comme hostile, pour beaucoup à cause de la propagande de leur gouvernement. Du communisme comme justificatif du <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=pouvoir" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">pouvoir</a> il ne reste rien. Le nouveau dogme est un nationalisme fondé sur l'exacerbation d'un sentiment victimaire vis-à-vis du Japon et des Etats-Unis. En Chine, à Singapour, en Corée du Sud, on constate une forte ambivalence typique de certaines élites, par ailleurs fortement occidentalisées, pour qui le XXI<sup style="line-height: 0; position: relative; top: 0.5ex;">e</sup>siècle sera asiatique. Dans les années 1960, au Japon, a émergé une nouvelle droite ultranationaliste, dont les représentants les plus virulents étaient professeurs de littérature allemande ou française. Ils voulaient se <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=sentir" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">sentir</a> acceptés, légitimes en termes occidentaux, et se sentaient rejetés. C'est ce que ressentent aujourd'hui les nationalistes chinois.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">En 2010, vous avez écrit que la Chine est restée identique sur un aspect essentiel : elle est menée par une conception religieuse de la politique. Serait-elle politiquement soumise à l'influence du confucianisme, comme l'espace musulman le serait par le Coran ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;"><strong></strong>Dans le cas chinois, il ne s'agit pas que de confucianisme ; le maoïsme était identique. Il n'y a aucune raison pour que les musulmans ne puissent <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=acc%C3%A9der" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">accéder</a> à la démocratie tout en préservant leur religion. La Turquie, l'Indonésie l'ont fait. La Chine le pourrait tout autant. Des sociétés de culture sinisante comme Taïwan ou la Corée du Sud ont montré qu'un changement est possible. L'obstacle à<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=surmonter" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">surmonter</a>, en Chine, est que le confucianisme rejette la légitimité du conflit. L'harmonie est caractérisée par un ordre social ou règne l'unanimité. Donc la plus petite remise en cause apparaît instantanément menaçante.</span></div>
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<strong><span style="font-family: Georgia, 'Times New Roman', serif;">Qu'est-ce qui pourrait <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=d%C3%A9clencher" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">déclencher</a> un processus démocratique en Chine ?</span></strong></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Le plus grand obstacle est l'alliance entre les élites urbaines et le Parti communiste. Les deux ont peur de l'énorme masse paysanne ignorante. Ces élites ont une telle histoire récente de violence et une telle peur d'un retour du chaos qu'elles préfèrent un ordre qui leur assure la croissance, au risque d'<a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=avancer" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">avancer</a> vers la démocratie. Pour le <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=pouvoir" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">pouvoir</a>, la grande faiblesse de ce système est que, le jour où l'économie cesse de <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=cro%C3%AEtre" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">croître</a> et que l'enrichissement des élites urbaines s'arrête, l'édifice s'écroule. Dans ce cas, tout pourrait <a class="listLink" href="http://conjugaison.lemonde.fr/conjugaison/search?verb=advenir" style="color: black; cursor: text; outline-color: initial; outline-style: initial; outline-width: 0px; text-decoration: none;" target="_blank">advenir</a>, d'une alliance entre démocrates, ressortissants des nouvelles élites, et une fraction du parti, jusqu'à un coup d'Etat militaire.</span></div>
</div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-53701275472055789962012-01-08T21:22:00.000-02:002012-01-08T21:22:42.670-02:00China's booming cities: lessos for Europe? - NYTimes<br />
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OPINION</h6>
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<nyt_headline type=" " version="1.0">What China Can Teach Europe</nyt_headline></h1>
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<span style="color: #333333; font-family: georgia, 'times new roman', times, serif;"><img alt="" border="0" height="330" src="http://graphics8.nytimes.com/images/2012/01/08/sunday-review/08CHINA/08CHINA-articleLarge.jpg" width="600" /></span><div class="credit" style="color: #909090; font-family: arial, helvetica, sans-serif; font-size: 0.9em; line-height: 1.223em; margin-bottom: 3px; text-align: right;">
China Photos/Getty Images</div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">Farmers cover vegetable plants with plastic film in the Chongqing municipality in China in April 2008.</span></div>
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<nyt_byline style="background-color: white; font-size: 10px; line-height: 15px; text-align: left;"><h6 class="byline" style="font-size: 1em; font-weight: normal; line-height: 1.2em; margin-bottom: 2px; margin-left: 0px; margin-right: 0px; margin-top: 2px;">
<span style="font-family: Georgia, 'Times New Roman', serif;">By DANIEL A. BELL</span></h6>
</nyt_byline><span style="background-color: white; color: #333333; font-family: georgia, 'times new roman', times, serif; font-size: 10px; line-height: 15px; text-align: left;"></span><h6 class="dateline" style="background-color: white; font-family: arial, helvetica, sans-serif; font-size: 1em; font-weight: normal; line-height: 1.2em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; text-align: left;">
The New York Times, January 7, 2012</h6>
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Shanghai</div>
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Times Topic: <a href="http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html" style="color: #666699; font-size: 1em; text-decoration: none;">China</a></h6>
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The New York Times</h6>
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FROM the outside, <a class="meta-loc" href="http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html?inline=nyt-geo" style="color: #666699;" title="More news and information about China.">China</a> often appears to be a highly centralized monolith. Unlike Europe’s cities, which have been able to preserve a certain identity and cultural distinctiveness despite the homogenizing forces of globalization, most Chinese cities suffer from a drab uniformity.</div>
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But China is more like Europe than it seems. Indeed, when it comes to economics, China is more a thin political union composed of semiautonomous cities — some with as many inhabitants as a European country — than an all-powerful centralized government that uniformly imposes its will on the whole country.</div>
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And competition among these huge cities is an important reason for China’s economic dynamism. The similar look of China’s megacities masks a rivalry as fierce as that among European countries.</div>
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China’s urban economic boom began in the late 1970s as an experiment with market reforms in China’s coastal cities. Shenzhen, the first “special economic zone,” has grown from a small fishing village in 1979 into a booming metropolis of 10 million today. Many other cities, from Guangzhou to Tianjin, soon followed the path of market reforms.</div>
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Today, cities vie ruthlessly for competitive advantage using tax breaks and other incentives that draw foreign and domestic investors. Smaller cities specialize in particular products, while larger ones flaunt their educational capacity and cultural appeal. It has led to the most rapid urban “economic miracle” in history.</div>
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But the “miracle” has had an undesirable side effect: It led to a huge gap between rich and poor, primarily between urban and rural areas. The vast rural population — 54 percent of China’s 1.3 billion people — is equivalent to the whole population of Europe. And most are stuck in destitute conditions. The main reason is the hukou (household registration) system that limits migration into cities, as well as other policies that have long favored urban over rural development.</div>
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More competition among cities is essential to eliminate the income gap. Over the past decade the central government has given leeway to different cities to experiment with alternative methods of addressing the urban-rural wealth gap.</div>
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The most widely discussed experiment is the “Chongqing model,” headed by Bo Xilai, a party secretary and rising political star. Chongqing, an enormous municipality with a population of 33 million and a land area the size of Austria, is often called China’s biggest city. But in fact 23 million of its inhabitants are registered as farmers. More than 8 million farmers have already migrated to the municipality’s more urban areas to work, with a million per year expected to migrate there over the next decade. Chongqing has responded by embarking on a huge subsidized housing project, designed to eventually house 30 to 40 percent of the city’s population.</div>
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Chongqing has also improved the lot of farmers by loosening the hukou system. Today, farmers can choose to register as “urban” and receive equal rights to education, health care and pensions after three years, on the condition that they give up the rural registration and the right to use a small plot of land.</div>
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While Chongqing’s model is the most influential, there is an alternative. Chengdu, Sichuan’s largest municipality, with a population of 14 million — half of them rural residents — is less heavy-handed. It is the only city in China to enjoy high economic growth while also reducing the income gap between urban and rural residents over the past decade.</div>
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Chengdu has focused on improving the surrounding countryside, rather than encouraging large-scale migration to the city. The government has shifted 30 percent of its resources to its rural areas and encouraged development zones that allow rural residents to earn higher salaries and to reap the educational, cultural and medical benefits of urban life.</div>
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I recently visited a development zone composed of small firms that export fiery Sichuan chili sauces. Most farmers rented their land and worked in the development zone, but those who wanted to stay on their plots were allowed to. So far, one-third of the area’s farmland has been converted into larger-scale agricultural operations that have increased efficiency.</div>
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Times Topic: <a href="http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html" style="color: #666699; font-size: 1em; text-decoration: none;">China</a></h6>
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More than 90 percent of the municipality’s rural residents are now covered by a medical plan, and the government has introduced a more comprehensive pension scheme. Rural schools have been upgraded to the point that their facilities now surpass those in some of Chengdu’s urban schools, and teachers from rural areas are sent to the city for training.</div>
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Empowering rural residents by providing more job opportunities and better welfare raises their purchasing power, helping China boost domestic consumption. And in 2012, Chengdu is likely to become the first big Chinese municipality to wipe out the legal distinction between its urban and rural residents, allowing rural people to move to the city if they choose.</div>
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Chengdu’s success has been driven by a comprehensive, long-term effort involving consultation and participation from the bottom up, as well as a clear property rights scheme. By contrast, Chongqing has relied on state power and the dislocation of millions to achieve similar results. If Chengdu’s “gentle” model proves to be more effective at reducing the income gap, it can set a model for the rest of the country, just as Shenzhen set a model for market reforms.</div>
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There are fundamental differences, of course: Chengdu’s land is more fertile and its weather more temperate, compared to Chongqing’s harsh terrain and sweltering summers. Life is slower in Chengdu; even the chili is milder. What succeeds in one place may fail elsewhere.</div>
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Ultimately, the central government will decide what works and what doesn’t. And that’s not a bad thing; it encourages local variation and internal competition.</div>
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European leaders ought to take note. Central authorities should have the power not just to punish “losers” as Europe has done in the case of Greece, but to reward “winners” that set a good example for the rest of the union.</div>
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Daniel A. Bell is a professor at Shanghai’s Jiaotong University and Beijing’s Tsinghua University, and co-author of “The Spirit of Cities.”</div>
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A version of this op-ed appeared in print on January 8, 2012, on page SR5 of the New York edition with the headline: What China Can Teach Europe.</h6>
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</div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-54923785197611905852011-10-23T20:02:00.002-02:002011-10-23T20:02:23.857-02:00Deng, the man, and his work, in and on China - Ezra F. Vogel<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span class="Apple-style-span" style="background-color: white; color: #333333;"></span></span><br />
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">The New York Times Book Review, October 21, 2011</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><nyt_headline type=" " version="1.0">How Deng Did It</nyt_headline></span></h1>
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By JONATHAN MIRSKY</h6>
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DENG XIAOPING AND THE TRANSFORMATION OF CHINA</div>
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By Ezra F. Vogel</div>
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Illustrated. 876 pp. The Belknap Press/Harvard University Press. $39.95.</div>
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Two mighty rhetorical questions conclude this enormous biography of <a href="http://topics.nytimes.com/top/reference/timestopics/people/d/deng_xiaoping/index.html" style="color: #000066; text-decoration: underline;">Deng Xiaoping</a> (1904-97): “Did any other leader in the 20th century do more to improve the lives of so many? Did any other 20th-century leader have such a large and lasting influence on world history?” The answers emerge from this comprehensive, minutely documented book, but not as predictably as Ezra F. Vogel, a Harvard University emeritus professor of social sciences, assumes.</div>
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After Mao’s death in 1976, Deng became the champion of the economic reforms that transformed the lives of many, but not most, Chinese. (Vogel observes that Mao’s immediate successor, Hua Guofeng, was the initiator of the reforms.) Deng had long been a central figure in the Communist Party. Vogel rightly says that “for more than a decade before the Cultural Revolution” — 1966-1976 — “no one had greater responsibility for building and administering the old system than Deng Xiaoping.” Yet, most of Deng’s life and career takes up only a quarter of Vogel’s 714 pages of narrative.</div>
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By 1978, Deng had become <a class="meta-loc" href="http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html?inline=nyt-geo" style="color: #000066; text-decoration: underline;" title="More news and information about China.">China</a>’s “paramount leader.” It follows, therefore, that apart from his long period of house arrest and banishment during the years 1967-73, and during another year in 1976-77, when Mao again removed him from the political scene, Deng must share the blame for much of the agony Mao inflicted on China and the Chinese. He certainly bears the major responsibility for the Tiananmen Square killings in 1989.</div>
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It is a curiosity of “Deng Xiaoping and the Transformation of China” that Deng the man is almost invisible. There is a well-known list of his personal characteristics: he played bridge; liked bread, cheese and coffee; smoked; drank and used spittoons. He was unswervingly self-disciplined. Though Deng left no personal paper trail, Vogel ably relates what is known.</div>
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Deng came from a small-landlord family in Sichuan Province, yet his formal education, apart from his time at a local school when he was a child, consisted mainly of a single year, 1926, of ideological indoctrination at Sun Yatsen University in Moscow. For five years before that, he lived in Paris, where he received a practical, and enduring, education inside the infant Chinese Communist Party, serving under the leadership of the young Zhou Enlai.</div>
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After Paris and Moscow, Deng went back to China, and before long had ceased being “a cheerful, fun-loving extrovert.” He commanded a small force against warlords, was defeated and may have run away. Eventually, he joined the “Mao faction,” rising and falling with its inner-party fortunes. During the Long March of 1934-35 Deng attended the meeting where Mao took supreme power, and after the Communist triumph in 1949, he served as party commissar for the army that occupied Tibet, although he seems not to have set foot there. In the southwest Deng organized the land reform program of 1949-51 “that would wipe out the landlord class.” Mao praised Deng “for his success . . . killing some of the landlords.” (As part of a national campaign in which two million to three million were killed, “some” seems an inadequate word.) In 1957, Deng oversaw the “anti-rightist campaign,” a “vicious attack on 550,000 intellectual critics” that “destroyed many of China’s best scientific and technical minds.” As for the Great Leap Forward of 1958-61, when as many as 45 million people starved to death, Vogel provides no evidence that Deng objected to Mao’s monomaniacal policies. Frank Dikötter’s well-documented book “Mao’s Great Famine,” however, shows that Deng ordered the extraction of grain from starving peasants for the cities and export abroad.</div>
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In late 1966, Vogel tells us, Deng was accused of “pursuing the capitalist road.” Under house arrest in Beijing until 1969, he was transferred to Jiangxi Province to work half days in a factory. Red Guards harassed his five children, and the back of one of his sons was broken when he may have jumped from a window after the guards frightened or bullied him. Mao permitted Deng to return to Beijing in 1973.</div>
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Vogel contends that during his internal exile Deng concluded that something had gone systemically wrong with China: it was economically backward and isolated from the international scene; its people were poorly educated. China under Deng became an increasingly urban society. And following Deng’s view that corruption crackdowns limit growth, many officials, Vogel writes, “found ways not only to enrich China, but also to enrich themselves.” The result, he says, is that China is more corrupt than ever and its environment more polluted.</div>
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While Deng believed that science and technology were important — as have many Chinese reformers since the late 19th century — he feared that the humanities and social sciences could be seedbeds of heterodoxy; he never hesitated in punishing intellectuals, whose divergent views could “lead to demonstrations that disrupt public order.” It is telling that for Deng perhaps the worst development in the Communist world after Tiananmen was the execution on Dec. 25, 1989, of the Romanian dictator Nicolae Ceausescu and his wife. Ceausescu was the only Eastern European leader whose troops had fired on civilians.</div>
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Vogel calls Tiananmen a “tragedy,” and quotes Deng brushing aside doubts from colleagues that using troops to smash the uprising would disturb foreigners; “Westerners would forget.” Actually, it is young Chinese for whom the demonstrations in over 300 cities are a dim fact absent from their history lessons. Vogel’s account of the crackdown is largely accurate, although he omits the shooting down on Sunday morning of many parents milling about at the edge of the square, searching for their children. In this, as in other parts of this narrative, Vogel could have spoken with journalists who were there, and not just read their accounts. (I declare an interest; I saw these events.) What is disappointing is Vogel’s comments about why “the tragedy in Tiananmen Square evoked a massive outcry in the West, far greater than previous tragedies in Asia of comparable scale.”</div>
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Part of the answer, Vogel correctly says, citing another scholar, was the real-time television in Tiananmen. Then he perplexingly adds that viewers “interpreted” what they saw “as an assault on the American myth that economic, intellectual and political freedom will always triumph. Many foreigners came to see Deng as a villainous enemy of freedom who crushed the heroic students.” Furthermore, Vogel contends, for foreign reporters the Tiananmen uprising “was the most exciting time of their careers.” Such comments are unworthy of a serious scholar. He states flatly that “Deng was not vindictive.” If he means Deng didn’t order his adversaries and critics killed, that is true — as far as individuals are concerned. But Deng never shrank, either in Mao’s time or his own, from causing the murder of large numbers of anonymous people.</div>
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The most valuable part of Vogel’s account is his survey of Deng’s economic reforms; they made a substantial portion of Chinese better-off, and propelled China onto the international stage. But the party has obscured the millions of deaths that occurred during the Maoist decades. In the end, what shines out from Vogel’s wide-ranging biography is the true answer to his two questions: for most of his long career Deng Xiaoping did less <em>for</em>China than he did <em>to</em> it.</div>
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Jonathan Mirsky is a journalist and historian specializing in China.</div>
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<span class="Apple-style-span" style="background-color: white; color: #aaaaaa; line-height: 14px;">A version of this review appeared in print on October 23, 2011, on page BR18 of the Sunday Book Review with the headline: On the Capitalist Road.</span></span>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-55325307052382567752011-10-23T19:50:00.000-02:002011-10-23T19:50:05.349-02:00The Rape of Nanjing - a (true historical) novel<br />
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<nyt_headline type=" " version="1.0"><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: large;">Recreating the Horrors of Nanjing</span></nyt_headline></h1>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: small;">By ISABEL HILTON</span></h6>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: small;">The New York Times Book Review, October 21, 2011</span></h6>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Ha Jin has a talent for first lines. Consider these, from his latest novel, “Nanjing Requiem”: “Finally Ban began to talk. For a whole evening we sat in the dining room listening to the boy.”</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: small;">Jerry Bauer</span></h6>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Ha Jin</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">NANJING REQUIEM</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">By Ha Jin</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">303 pp. Pantheon Books. $26.95.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">We do not know who Ban is, why he should have taken so long to speak or why his story has so compelled his as yet unknown audience. As he tells that story, we plunge abruptly into the horrors of the Japanese occupation of Nanjing, then the capital of China’s Nationalist government. It is December 1937. Ban is a Chinese teenager, a boy seized while on an errand for his American employer and forced to serve as coolie to a band of Japanese soldiers who are looting, pillaging and murdering their way across the city, with Ban a terrified witness to their atrocities.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Equally abruptly, the novel then takes us back to the previous month, to the frantic preparations for an evacuation of the government to Chongqing, following the retreating forces of Chiang Kai-shek. For the civilians who will be left behind, a safety zone is hastily organized. Madame Chiang’s piano is loaded into a truck and left for safekeeping in the institution at the heart of Ha Jin’s narrative, Jinling Women’s College.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">This is fiction, but fiction that draws heavily on the historical record and in which many of the characters actually lived the events described. The narrator, Anling, a middle-aged Chinese woman, may be Ha Jin’s invention, but she serves as assistant to a well-documented real-life character, Minnie Vautrin, an American missionary from Illinois who served as acting head of Jinling College. Vautrin also figures in Iris Chang’s best-selling account, <a href="http://www.nytimes.com/books/97/12/14/reviews/971214.14schellt.html" style="color: #004276; text-decoration: underline;">“The Rape of Nanking,”</a> one of the inspirations for Ha Jin’s portrait of the doomed city.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">When Chiang Kai-shek abandoned Nanjing to the Japanese, a few Western nationals chose to remain. The Americans who stayed were mostly missionaries, among them the formidable Minnie Vautrin. Also present was John Rabe, the German representative of Siemens in Nanjing, a member of the Nazi party who led the extraordinary effort to set up the safety zone in which Jinling College and similar institutions became refugee camps, tenuously protected by the presence and personal courage of a tiny group of foreigners. It is to them that we largely owe the documentation of the rape, pillage, arson and murder that followed.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">As a novelist, Ha Jin brings a cool, spare documentary approach to this rich trove of material. His narrative centers on Jinling, an attractively landscaped campus in the heart of the city. The college itself becomes a character, the early hope of its founders that it would be a premier seat of learning as much despoiled by the war as are the lives of those who love and labor within it. The college represents humanity and civilization, repeatedly violated and nearly destroyed.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Ha Jin begins with a fast-moving accumulation of horrors as some 10,000 refugees cram into Jinling, which was prepared to receive around 2,500. The safety it offers is fragile: Chinese citizens are dragged off and killed by marauding Japanese troops, and young women are attacked on the campus itself. The occupants of the college struggle to find enough food, fuel and shelter for everyone in need, living in constant fear that the Japanese will overrun the place.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">The Nanjing Massacre remains a highly controversial topic. Some in Japan still deny or play it down, and its re-emergence in the 1990s as a prime example of wartime barbarity has been used by the Chinese government as it constructs a highly nationalist version of its history. But Ha Jin is more interested in nuance than polemic. He shows us the Christian Japanese officer who brings supplies for the refugees; the Nazi who saves a quarter of a million Chinese; the Chinese worker who admits that, under torture, he made a false accusation of collaboration against two Americans from the Red Cross; the Chinese doctor, consumed by self-loathing because of his association with the Japanese, who helps Vautrin rescue Chinese prisoners.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Ha Jin also shows us how the family of Anling, the narrator, is torn apart — with a son-in-law fighting in the Nationalist army, a husband who still admires the Japan in which he once studied, an only son drawn into serving in the army of occupation because of his love for a Japanese woman.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Ha Jin also reminds us that heroism carries its own heavy price. Minnie Vautrin was to die by her own hand, burdened with guilt over those she had failed to save. This emotional turmoil is personified in the character of Yulan, a young woman who goes mad after being raped by the Japanese and accuses the missionaries of collaboration. Vautrin’s struggle to rescue Yulan doubles as a struggle for her own sanity.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">The novel does contain some awkward phrasing. Ha Jin writes in his second language, English, a remarkable achievement but one that demands editorial vigilance. The reader is surprised at times to find contemporary slang in the mouths of Chinese characters speaking more than 70 years ago. Early on, for example, a Chinese man seeking shelter for his family is offered a job at the college and blurts out, “For real?”</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">This is the sort of misstep that can provide an unfortunate distraction in the course of an otherwise fine novel, a book that renders a subtle and powerful vision of one of the 20th century’s most monstrous interludes. The closing section, “The Grief Everlasting,” underscores Ha Jin’s message. There will be no happy ending here, and precious little healing.</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Isabel Hilton edits the bilingual news, environmental and analysis Web site Chinadialogue.net. Her most recent book is “The Search for the Panchen Lama.”</span></div>
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<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: small;">A version of this review appeared in print on October 23, 2011, on page BR23 of the Sunday Book Review with the headline: In Harm’s Way</span></h6>
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</div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-361695296121882632011-10-16T18:20:00.003-02:002011-10-16T18:21:18.612-02:00Cradle of Confucianism - Shanghai Daily<span class="Apple-style-span" style="background-color: white; color: #555555; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"></span><br />
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Cradle of Confucianism</h1>
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<span class="Apple-style-span" style="background-color: white;"><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">By Mark Melnicoe | 2011-10-17 | <img align="absmiddle" src="http://www.shanghaidaily.com/images/Tango/22/internet-news-reader.png" style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /> NEWSPAPER EDITION</span></span></div>
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<span class="Apple-style-span" style="background-color: white;"><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Shanghai Daily, October 16, 2011</span></span></div>
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The entrance to the Confucius Temple.</div>
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</span><span class="Apple-style-span" style="background-color: white; color: #555555; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 12px; line-height: 14px;">TO begin to understand Confucius, one really should visit Qufu, where the sage was born, died, and taught his philosophy that would shape China. Mark Melnicoe makes the pilgrimage.<br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />Everyone knows Confucius. The philosopher/teacher/sage is pre-eminent among China's ancient thinkers, and his teachings have profoundly impacted the development of Chinese history and left a deep imprint on the national psyche. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />To really get to know Confucius, one should make a pilgrimage to Qufu, Shandong Province. For it is here that the master was born, died and spent most of his 73 years, including the decisive period when he preached to his disciples, who then carried forward his ideas. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />To honor its former resident, Qufu boasts three main sites - the Confucius Temple, Kong Family Mansion and Confucius Cemetery - which together take most of a day to see. In 1994 they were added to the UNESCO list of World Heritage sites for their outstanding historical, cultural, scientific and artistic value. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />Beyond these, vestiges left by Confucius can be found all over Qufu. He was born about 20 kilometers away in Nishan, grew up in the area, preached his philosophies at the Xingtan Pavilion, also known as the Alter of Apricot (part of today's temple), got involved politically and became an official in the ancient state of Lu, and was buried by the Zhu River. Lining the roads in the old city are shops and stalls selling Confucius trinkets and replicas - wooden statues, fans, screens, coins, vases, boxes, canisters, paintings, stones, tablets and more. If you want any kind of souvenir related to Confucius, you will find it here. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />Confucius Temple<br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />The temple, the oldest and grandest of more than 2,000 Confucian temples worldwide, is really the heart of Qufu. Lying within the impressive old city wall, it started as a humble establishment two years after Confucius' death in 471 BC. Though the master's ideas were not so grandly received in his day, Confucius' many disciples were committed to his ideals and built the temple not far from where he was buried. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />Over the dynasties, it was expanded by succeeding rulers, gradually mushrooming into the second-largest historical building complex in China. Only Beijing's Forbidden City is bigger. In fact, the temple's appearance is not unlike that of the Forbidden City, as its last major revision took place during the Ming Dynasty (1368-1644) after a fire in 1499. The temple has 466 rooms aligned along a north-south axis that is more than a kilometer long, and contains nine courtyards. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />Within are countless trees, beautiful halls containing paintings, tablets and sculptures, and stone bridges crossing tiny waterways and gardens. Historic tablets, numbering some 1,000 of various kinds - small ones, towering ones, oddly shaped ones, some crumbling, some in remarkably good condition - lie throughout the temple complex. These tablets, along with manuscripts, contain much written information about ancient China and are still used by scholars today. <br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" /><br style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;" />Going through the temple from the entrance, one gets the feeling of going backward in time. That's because the entrance is near the "youngest" part of the temple complex, and as you go further in, you head through the dynasties. Thus you enter through Qing (1644-1911) and Ming dynasty stone gates, find Ming architecture everywhere, come upon Song Dynasty (960-1279) halls such as Tong Wen Gate and Kuiwen Pavilion, then hit the huge Hall of Integration, built in the Tang Dynasty (618-907), before coming to the oldest, ancient areas of the complex. Most buildings have been built and rebuilt over the ages because of fires or deterioration.</span>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-41511872146774138412011-10-16T17:46:00.004-02:002011-10-16T17:46:58.905-02:00Investindo em portos, na China e no Brasil: covardia comparar...Para mim, a matéria, e mais ainda, o esforço em atrair esses investimentos chineses, são altamente representativos de quão patético é o Brasil no plano do investimento internacional.<br />
Nós somos verdadeiros caipiras.<br />
Sorry folks, mas é verdade.<br />
Paulo Roberto de Almeida<br />
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<b>Brasil tenta atrair investimentos chineses em portos</b></div>
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<b>Seminário organizado pelo Itamaraty em Xangai apresentou projetos em Pará, Espírito Santo, Bahia e Amazonas</b></div>
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FABIANO MAISONNAVE<br />
ENVIADO ESPECIAL A XANGAI da FSP, 15/10/2011</div>
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No porto de Santos, a licença ambiental para o terminal Embraport, ainda em obras, levou oito anos para ficar pronta. Em Xangai, o porto de Yangshan, que movimenta dez vezes mais contêineres do que o congênere brasileiro, foi construído em apenas dois anos e meio.<br />
A comparação desanimadora é de um dos integrantes da comitiva do porto de Santos após visita a Yangshan (28 milhões de contêineres/ano).<br />
Ontem, o grupo participou de um seminário organizado pelo Itamaraty em Xangai para atrair investidores chineses a portos brasileiros.<br />
"O porto aqui fica numa ilha que tinha 2,5 km2. Aumentaram para 15 km2 com aterro e construíram uma ponte de 32 km em dois anos e meio. A licença ambiental ficou pronta em seis meses. Em Santos, foram oito anos de espera para a licença ambiental de apenas um terminal", disse o presidente do Conselho de Autoridade Portuária do Porto de Santos, Sérgio de Aquino.<br />
O diretor-presidente do porto de Santos, José Roberto Serra, disse que uma das explicações para a diferença é que o governo chinês detém todo o poder de decisão na área de infraestrutura. No Brasil, diz, há o fracionamento das autorizações entre diversas instâncias.<br />
"Os investidores perguntam sobre o modelo brasileiro e ficam assustados com o prazo da Lei de Licitações, que é de um ano e meio."<br />
<b>O executivo disse que a China tem uma presença crescente em Santos: desde o ano passado, é o país que mais movimentou cargas no porto. No cais, praticamente todo o maquinário foi comprado da ZPMG. E duas empresas do gigante asiático prestam serviços de dragagem e implosão de pedras.<br />
</b>No seminário de ontem foram apresentados projetos em quatro Estados: Pará, Espírito Santo, Bahia e Amazonas. Realizado num hotel, <b><span class="Apple-style-span" style="color: red;">o seminário reuniu cerca de cem pessoas, com </span></b><span class="s1"><b><span class="Apple-style-span" style="color: red;">uma presença maior de brasileiros do que de chineses</span></b>.</span></div>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-88017380692500076542011-10-10T15:17:00.000-03:002011-10-10T15:17:03.551-03:00The Rise of the Renminbi as International Currency : Historical Precedents - Jeff Frankel<span class="Apple-style-span" style="background-color: white; font-family: Helvetica, Arial, Verdana, sans-serif; font-size: 14px;"></span><br />
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<span style="color: blue; font-size: medium;">The Rise of the Renminbi as International Currency : Historical Precedents</span></div>
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<span class="post-info"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif; font-size: 7.5pt;">Oct 6th, 2011 by</span></span><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif; font-size: 7.5pt;"> </span></span><span class="post-info"><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif; font-size: 7.5pt;"><a href="http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/author/jfrankel/" title="Posts by jfrankel"><span lang="EN-US" style="color: #790000;">jfrankel</span></a></span></span><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif; font-size: 7.5pt;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"></span></div>
<span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">All of a sudden, the renminbi is being touted as the next big international currency. Just in the last year or two, the Chinese currency has begun to internationalize along a number of dimensions. A RMB bond market has grown rapidly in Hong Kong, and one in RMB bank deposits. Some of Chinas international trade is now invoiced in the currency. Foreign central banks have been able to hold RMB since August 2010, with Malaysia going first. </span></span><br />
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<span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">Some are now claiming that the renminbi could overtake the dollar for the number one slot in the international currency rankings within a decade (especially Subramanian 2011a, p.19; 2011b). The basis of this prediction is, first, the likelihood that the Chinese economy will surpass the US economy in size and, second, the historical precedent when the dollar overtook the pound sterling as the number one international currency during the period after World War I. </span></span></div>
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<span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">It used to be thought that international currency status was subject to much inertia (e.g., Krugman, 1984). There was said to have been a long lag between the date when the US economy had passed the UK economy with respect to size (1872, by the criterion of GNP) and the time when the dollar had passed the pound (1946, by the criterion of shares in central banks holdings of reserves). </span></span></div>
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<span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">The new view, represented in particular by<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.economist.com/node/17956749"><span lang="EN-US" style="color: #790000;">Eichengreen (2011)</span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">and Eichengreen and Flandreau (2010), is that the lag was in fact rather short. It took until World War I for the dollar to fulfill the criteria of an international currency. Furthermore, the date when the dollar is said to have come to rival the pound in importance has now been moved up to the mid-1920s. The first point is right. If trade is the measure of size, the US first caught up with the UK during World War I. The US did not even have a permanent central bank until 1913. The other important<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/PALGCUT2.ON$.PDF"><span lang="EN-US" style="color: #790000;">criteria</span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">came soon thereafter: creditor status for the country; the perceived prospects for the currency to remain strong in value; and deep, liquid, open financial markets. (I have discussed the criteria in earlier papers. Chinn and Frankel, 2007, evaluate them econometrically and give further references.) The second point seems a matter of whether or not one wants to distinguish between the concept of coming to rival / catching up with the pound (1920s) versus the phenomenon of definitively pulling ahead / displacing the pound (1945). Under either interpretation, the dollars initial rise as an international currency was indeed rapid, once the conditions were in place. </span></span></div>
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<span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">The dollar is one of three national currencies to have attained international status during the 20th century. The other two were the yen and the mark, which became major international currencies after the breakup of the Bretton Woods system in 1971-73. (The euro, of course, did so after 1999.) In the early 1990s, both were spoken of as potential<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/RESCURR$.FA5.PDF"><span lang="EN-US" style="color: #790000;">rivals of the dollar</span></a></span><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">for the number one slot. It is easy to forget it now, because Japans relative role has diminished since then and the mark has been superseded. In retrospect, the two currencies shares in central bank reserves peaked as the 1990s began.</span></span></div>
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<span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">The current RMB phenomenon differs in an interesting way from the historical circumstances of the rise of the three earlier currencies. The Chinese government is actively promoting the international use of its currency. Neither Germany nor Japan, nor even the US, did that, at least not at first. In all three cases, export interests, who stood to lose competitiveness if international demand for the currency were to rise, were much stronger than the financial sector, which might have supported internationalization. One would expect the same fears of a stronger currency and its effects on manufacturing exports to dominate the calculations in China.</span></span></div>
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<span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">In the case of the mark and yen after 1973, internationalization came despite the reluctance of the German and Japanese governments. In the case of the United States after 1914, a tiny elite promoted internationalization of the dollar despite the indifference or hostility to such a project in the nation at large. These individuals, led by Benjamin Strong, the first president of the New York Fed, were the same ones who had conspired in 1910 to establish the Federal Reserve in the first place.</span></span></div>
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<span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">It is not yet clear that Chinas new enthusiasm for internationalizing its currency includes a willingness to end financial repression in the domestic financial system, remove cross-border capital controls, and<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/ChinaRMB$VoxEU2010Apr11.doc"><span lang="EN-US" style="color: #790000;">allow the RMB to appreciate</span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, thus helping to<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/On%20the%20Yuan%20proofs.pdf"><span lang="EN-US" style="color: #790000;">shift</span></a></span><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">the economy away from its export-dependence. Perhaps a small elite will be able to accomplish these things, in the way that Strong did a century earlier. But so far the government is only promoting international<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/RMBintztnParis2011Jan.ppt"><span lang="EN-US" style="color: #790000;">use of the RMB</span></a></span><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">offshore, walled off from the domestic financial system. That will not be enough to do it.</span></span></div>
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<span style="font-size: small;"><em><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">[This</span></em><span class="apple-converted-space"><i><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></i></span><em><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.rieti.go.jp/en/special/p_a_w/index.html"><span lang="EN-US" style="color: #790000;">perspective</span></a></span></em><span class="apple-converted-space"><i><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></i></span><em><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">note summarizes the argument in "</span></em><em><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/RMBinternatliztnhistoryCFR2011.doc"><span lang="EN-US" style="color: #790000;">Historical Precedents for the Internationalization of the RMB</span></a></span></em><em><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">," a paper that I have written for a workshop directed by Sebastian</span></em><span class="apple-converted-space"><i><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></i></span><em><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.cfr.org/experts/economics-energy-energy-security/sebastian-mallaby/b4452"><span lang="EN-US" style="color: #790000;">Mallaby</span></a></span></em><em><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, organized by the</span></em><span class="apple-converted-space"><i><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></i></span><em><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.cfr.org/experts/economics-energy-energy-security/sebastian-mallaby/b4452"><span lang="EN-US" style="color: #790000;">Council on Foreign Relations</span></a></span></em><span class="apple-converted-space"><i><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></i></span><em><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">and the China Development Research Foundation.]</span></em><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"></span></span></div>
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<span style="font-size: small;"><strong><u><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">References</span></u></strong><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"></span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.ssc.wisc.edu/~mchinn/"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Chinn</span></span></a></span><span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, Menzie, and Jeffrey Frankel , 2007, </span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/Euro&$ResChinn&F2007.pdf"><span lang="EN-US" style="color: #790000;">Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency</span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">? in <span class="apple-converted-space"> </span><em><span style="font-family: Verdana, sans-serif;">G7 Current Account Imbalances: Sustainability and Adjustment</span></em>,<span class="apple-converted-space"><b> </b></span>edited by Richard Clarida (University of Chicago Press). </span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.exorbitantprivilege.net/abouttheauthor.html"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Eichengreen</span></span></a></span><span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, Barry, 2011,<span class="apple-converted-space"> </span></span><em><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.exorbitantprivilege.net/"><span lang="EN-US" style="color: #790000;">Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System</span></a></span></em><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">(Oxford University Press).</span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.econ.berkeley.edu/~eichengr/"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Eichengreen</span></span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">, Barry, and Marc Flandreau, 2010, The Federal Reserve, the Bank of England and the Rise of the Dollar as an International Currency, 1914-39, BIS WP no. 328, Nov.</span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/Preschool1956back5&middlerow9.jpg"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Eichengreen, Barry, and Jeffrey Frankel</span></span></a></span><span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, 1996,<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.hks.harvard.edu/fs/jfrankel/SDRCIDwp.3JF.PDF"><span lang="EN-US" style="color: #790000;">The SDR, Reserve Currencies, and the Future of the International Monetary System</span></a></span><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">in<span class="apple-converted-space"> </span></span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.imf.org/EXTERNAL/PUBS/CAT/longres.cfm?sk&sk=1548.0"><em><span lang="EN-US" style="color: #790000; font-family: Verdana, sans-serif; text-decoration: none;">The Future of the SDR in Light of Changes in the International Financial System</span></em></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, edited by M.Mussa, J.Boughton, and P.Isard (International Monetary Fund).</span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.pkarchive.org/"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Krugman</span></span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><span style="font-size: small;">, Paul, 1984, The International Role of the Dollar: Theory and Prospect, in<span class="apple-converted-space"> </span><em><span style="font-family: Verdana, sans-serif;">Exchange Rate Theory and Practice</span></em>, edited by J.Bilson and R.Marston (University of Chicago Press), 261-78.</span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.iie.com/staff/author_bio.cfm?author_id=488"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Subramanian</span></span></a></span><span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, Arvind, 2011a, </span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.iie.com/publications/interstitial.cfm?ResearchID=1918"><span lang="EN-US" style="color: #790000;">Renminbi Rules: The Conditional Imminence of the Reserve Currency Transition</span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, (</span><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://www.piie.com/"><span lang="EN-US" style="color: #790000;">Petersen Institute for International Economics</span></a></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">), September. </span></span></div>
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<span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://ideas.repec.org/e/psu108.html"><span lang="EN-US" style="color: #790000;"><span style="font-size: small;">Subramanian</span></span></a></span><span style="font-size: small;"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">, Arvind, 2011b ,<span class="apple-converted-space"> </span></span><em><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"><a href="http://bookstore.piie.com/book-store/6062.html"><span lang="EN-US" style="color: #790000;">Eclipse: Living in the Shadow of Chinas Economic Dominance</span></a></span></em><span class="apple-converted-space"><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;"> </span></span><span lang="EN-US" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #333333; font-family: Verdana, sans-serif;">(Petersen Institute for International Economics), September.</span></span></div>
</span>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-62363823961839966872011-09-10T18:23:00.002-03:002011-09-10T18:23:34.929-03:00China's Economic Dominance (3) - Arvind Subramanian
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<span class="Apple-style-span" style="background-color: white; color: #cc6600; font-family: Georgia; font-size: 19px; font-weight: bold; line-height: 22px;"><a href="http://nextbigfuture.com/2011/08/economist-arvind-subramanian-has-new.html"><span style="color: #cc6600;">Economist Arvind Subramanian has a new book Eclipse
Living in the Shadow of China’s Economic Dominance</span></a></span></div>
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<span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><span class="Apple-style-span" style="color: black; font-family: Times;"><span lang="PT-BR" style="font-family: 'Times New Roman';">Next Big Futre, </span></span></span><span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><a href="http://nextbigfuture.com/2011/08/ECONOMIST-ARVIND-SUBRAMANIAN-HAS-NEW.HTML"><span class="Apple-style-span" style="color: black; font-family: Times;"><span lang="PT-BR" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #999999; font-family: Georgia; letter-spacing: 2.4pt; text-transform: uppercase;">AUGUST 26, 2011</span></span><o:p> </o:p></a></span></div>
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<span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><br /></span></div>
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<span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><span style="color: #5588aa;"><a href="http://nextbigfuture.com/2011/01/peterson-institute-senior-fellow.html">Peterson Institute for International Economics scholar Arvind
Subramanian</a></span><span class="apple-converted-space"> </span>has
recently put out analysis that China's economy has already surpassed the
economy of the United States on a purchasing power parity GDP basis.<span class="apple-converted-space"> </span><a href="http://blogs.wsj.com/chinarealtime/2011/08/25/eight-questions-living-in-chinas-shadow/"><span style="color: #5588aa;">Arvind has a new book “Eclipse: Living in the Shadow of
China’s Economic Dominance”.</span><span class="apple-converted-space"><span style="color: #5588aa; text-decoration: none; text-underline: none;"> </span></span></a><br />
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<i><span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">1. He sees the probability of U.S. needing an IMF loan as a
10% or 20% possibility by say 2021.<br />
<br />
PPP is an important concept, but it has a small weight in my overall formula of
economic power. Arvind believe that the resources a country brings to the power
table includes resources that are internationally traded and resources that
involve people. If the U.S. were to fight against China and 100 Chinese
soldiers faced 100 US soldiers, would you say that because the 100 Chinese
soldiers earn one 20th of what an American soldier earns that the value of a
Chinese soldier is 1/20th the value of American?</span></i></div>
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<i><span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2. The way economic convergence between the U.S. and China is
evolving, the fact that China will catch up is inevitable. At end of 20 years,
China will have a GDP per capita of only 40-50% of the U.S. But China has four
times the population of the U.S., so the Chinese economy will be much larger
overall. The arithmetic is undeniable.<br />
<br />
China will have an economic crisis over the next 20 years, no doubt. But it
will recover and return to some decent level of growth.<br />
<br />
If China has a big economic shock, it has the policy space [including the
ability to broadly stimulate the economy] to prevent one or two years of
negative growth from translating into many years of slow growth.<br />
<br />
3. China has the ability to exercise its power in slightly unbenign ways. Look
at what’s happening today on exchange rate. [By keeping its currency
undervalued] China is pursuing a beggar–they- neighbor policy and nobody can
stop them. That’s sign of dominance.<br />
<br />
The U.S. is totally powerless to stop China because U.S. companies have so much
at stake in China that China can call the shots. Asia won’t do it because Asian
economies are part of a value-added chain with China. Africa won’t do it
because China has made so much investment there..<br />
<br />
Imagine what happens when the numbers [denoting the size of the economy]
diverge even more between China and the U.S.<br />
<br />
4. There are different kinds of dominance. There is dominance of the U.S. – a
leader that’s democratic and pursues international values and which inspires
followship. Maybe China won’t have that. But it could exercise a negative form of
dominance, either through its exchange rate policy or by buying up commodities
[to corner markets].<br />
<br />
5. What’s the biggest threat to China’s rise to economic dominance? A political
shock to system. Then all bets are off.<br />
<br />
6. All countries must work together to negotiate and bind China to a
multilateral system. If every country tries to make its own deal with China, no
one will have any leverage.<o:p></o:p></span></i></div>
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<span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><a href="http://www.viet-studies.info/kinhte/FA_China_Inevitable_Superpower.pdf"><span style="color: #5588aa;">There is an eight page</span></a><span class="apple-converted-space"> </span>paper -<span class="apple-converted-space"> </span><a href="http://www.foreignaffairs.com/articles/68205/arvind-subramanian/the-inevitable-superpower"><span style="color: #5588aa;">Foreign Affairs - The Inevitable Superpower</span></a><span class="apple-converted-space"> </span>- Why China’s Dominance Is a Sure
Thing (also by Arvind Subramanian)<o:p></o:p></span></div>
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<span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><a href="http://www.iie.com/publications/papers/FA-subramanian201108.pdf">http://www.iie.com/publications/papers/FA-subramanian201108.pdf</a>
<o:p></o:p></span></div>
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<i><span lang="PT-BR" style="background: white; color: #333333; font-family: Georgia; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Broadly speaking, economic dominance is the ability of a
state to use economic means to get other countries to do what it wants or to
prevent them from forcing it to do what it does not want. Such means include
the size of a country's economy, its trade, the health of its external and
internal finances, its military prowess, its technological dynamism, and the
international status that its currency enjoys. My forthcoming book develops an
index of dominance combining just three key factors: a country's GDP, its trade
(measured as the sum of its exports and imports of goods), and the extent to
which it is a net creditor to the rest of the world. GDP matters because it
determines the overall resources that a country can muster to project power
against potential rivals or otherwise have its way. Trade, and especially
imports, determines how much leverage a country can get from offering or
denying other countries access to its markets. And being a leading financier
confers extraordinary influence over other countries that need funds,
especially in times of crisis. No other gauge of dominance is as instructive as
these three: the others are largely derivative (military strength, for example,
depends on the overall health and size of an economy in the long run), marginal
(currency dominance), or difficult to measure consistently across countries
(fiscal strength).<span class="apple-converted-space"> </span><br />
<br />
I computed this index going back to 1870 (focusing on the United Kingdom's and
the United States' economic positions then) and projected it to 2030 (focusing
on the United States' and China's positions then).The projections are based on
fairly conservative assumptions about China's future growth, acknowledging that
China faces several major challenges going forward. History suggests that
plenty of economies -- Germany, Japan, Singapore, South Korea, and Taiwan --
grew at the pace I project for China after they reached China's current level
of development. Meanwhile, I assume that the U.S. economy will grow at about
2.5 percent per year, as it has over the last 30 years.<br />
<br />
The upshot of my analysis is that by 2030, relative U.S. decline will have
yielded not a multipolar world but a nearunipolar one dominated by China. China
will account for close to 20 percent of global GDP (measured half in dollars
and half in terms of real purchasing power), compared with just under 15
percent for the United States. At that point, China's per capita GDP will be
about $33,000, or about half of U.S. GDP. In other words, China will not be
dirt poor, as is commonly believed. Moreover, it will generate 15 percent of
world trade -- twice as much as will the United States. By 2030, China will be
dominant whether one thinks GDP is more important than trade or the other way
around; it will be ahead on both counts.<br />
<br />
What is more, the gap between China and the United States will be far greater
than expected. In 2010, the U.S. National Intelligence Council assessed that in
2025, "the U.S. will remain the preeminent power, but that American
dominance will be much diminished." This is unduly optimistic. My
projections suggest that the gap between China and the United States in 2030
will be similar to that between the United States and its rivals in the
mid-1970s, the heyday of U.S. hegemony, and greater than that between the
United Kingdom and its rivals during the halcyon days of the British Empire, in
1870. In short, China's future economic dominance is more imminent and will be
both greater and more varied than is currently supposed.<br />
<br />
A resurgent United States might be able to slow down that process, but it will
not be able to prevent it. Growing by 3.5 percent, rather than 2.5 percent,
over the next 20 years might boost the United States' economic performance,
social stability, and national mood. But it would not make a significant
difference in its position relative to China in the face of, say, a seven
percent growth rate there.<br />
<br />
China's incentives might be very different in the future. Ten years on, China
might be less wedded to keeping the yuan weak. If it continues to slowly
internationalize its currency, both its ability to maintain a weak yuan and its
interest in doing so may soon disappear. And when they do, China's power over
the United States will become considerable. In 1956, the United Kingdom's
financiers were dispersed across the public and private sectors. But the
Chinese government is the largest net supplier of capital to the United States:
it holds many U.S Treasury bonds and finances the U.S. deficit. Leverage over
the United States is concentrated in Beijing's hands.</span></i></div>
<!--EndFragment-->Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-69079275276739452852011-09-10T18:15:00.000-03:002011-09-10T18:15:39.300-03:00China's Economic Dominance (2) - Wall Street Journal
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<span lang="PT-BR" style="font-family: "Times New Roman";">China
real Time Report, Wall Street Journal, </span><span style="background: white; color: #666666; font-family: Arial; font-size: 7.5pt; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; text-transform: uppercase;">AUGUST 25,
2011, 8:05 PM HKT</span><span style="background: white; color: #999999; font-family: Arial; font-size: 7.5pt; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; text-transform: uppercase;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="background: white; color: black; font-family: Georgia; font-size: 21.0pt; mso-ansi-language: EN-US; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 18.0pt;"><a href="http://blogs.wsj.com/chinarealtime/2011/08/25/eight-questions-living-in-chinas-shadow/">Eight Questions: Living in China’s Shadow</a><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">In his new book,
“<b>Eclipse: Living in the Shadow of China’s Economic Dominance</b>,” scheduled to be
published in September, Peterson Institute for International Economics scholar
Arvind Subramanian starts with a nightmare scenario: It’s 2021 and the U.S. president
heads across own to the International Monetary Fund to sign a rescue loan
package negotiated by the IMF’s Chinese managing director. “The handover of
world dominance is complete,” Mr. Subramanian, a former IMF researcher, writes.
China is now the world’s leading economic power.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Parts of “Eclipse”
read like a wonky version of “Rising Sun,” Michael Crichton’s 1992 novel of
Japanese dominance over the U.S. when Tokyo was seen as speeding toward number
one. But Mr. Subramanian is a first-class economist who uses his book to
discuss provocatively U.S.-Chinese relations and the nature of economic power.
He was interviewed in Washington DC by the Wall Street Journal’s Bob Davis.
Below is an edited transcript<o:p></o:p></span></div>
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<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Do you
really think the U.S. eventually will have to turn, hat-in-hand to the IMF for
aid?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">I wrote it that way
partly to shock and make people pay attention. But there is a real possibility
of the U.S. being in such a dire economic situation that it might have to turn
to the IMF.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">How could it
happen? The combination of a credible rising power in China, with which we have
to cooperate and also be wary of. And broad economic weakness in the U.S.,
including slow growth, fiscal weakness, political paralysis and a middle class
with diminishing prospects.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">The probability of
U.S. needing an IMF loan isn’t 80% but it’s not 2% or 5% either. It’s a 10% or
20% possibility.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">By some
of the measures you use, China already is a larger economy than the U.S. But
haven’t you picked economic statistics that play to China’s advantage? For
example relying on purchasing power parity to measure GDP. (Purchasing power
parity, or PPP, is a statistical device that tries to take account of the
different prices of goods and services in different countries.)</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">PPP is an important
concept, but it has a small weight in my overall formula of economic power.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">I believe that the
resources a country brings to the power table includes resources that are
internationally traded and resources that involve people. If the U.S. were to
fight against China and 100 Chinese soldiers faced 100 US soldiers, would you
say that because the 100 Chinese soldiers earn/20th of what an American soldier
earns that the value of a Chinese soldier is 1/20th the value of American? I
don’t think so. (PPP tries to account for such anomalies.)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">You
also say that China will be a far larger economic power than the U.S. by 2020
or certainly 2030, even if China’s growth rate falls significantly or the U.S’s
rises significantly. Why is that?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">The way economic
convergence between the U.S. and China is evolving, the fact that China will
catch up is inevitable. At end of 20 years, China will have a GDP per capita of
only 40-50% of the U.S. But China has four times the population of the U.S., so
the Chinese economy will be much larger overall. The arithmetic is undeniable.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">China will have an
economic crisis over the next 20 years, no doubt. But it will recover and
return to some decent level of growth.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">If China has a big
economic shock, it has the policy space [including the ability to broadly
stimulate the economy] to prevent one or two years of negative growth from
translating into many years of slow growth.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">What’s
the significance of China as number one?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Potentially, China
has the ability to exercise its power in slightly unbenign ways. Look at what’s
happening today on exchange rate. [By keeping its currency undervalued] China
is pursuing a beggar–they- neighbor policy and nobody can stop them. That’s
sign of dominance.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">The U.S. is totally
powerless to stop China because U.S. companies have so much at stake in China
that China can call the shots. Asia won’t do it because Asian economies are
part of a value-added chain with China. Africa won’t do it because China has
made so much investment there..<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Imagine what
happens when the numbers [denoting the size of the economy] diverge even more
between China and the U.S.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Still,
China would be a relatively poor country compared to the U.S. How can a poor
country exercise power internationally?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Very poor countries
can’t dominate. There’s now no way to project power abroad because the problems
at home are so deep. But so-called middle income countries like China may be
different.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">There are different
kinds of dominance. There is dominance of the U.S. – a leader that’s democratic
and pursues international values and which inspires followship. Maybe China
won’t have that. But it could exercise a negative form of dominance, either
through its exchange rate policy or by buying up commodities [to corner markets].<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">WSJ:
What’s the biggest threat to China’s rise to economic dominance?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">A political shock
to system. Then all bets are off.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">A political
transition [to a more democratic system] hasn’t occurred. It’s a cloud that
hangs over everything. There’s class divide, geographic divide, lack of
political freedom. If they wind up in conflagration, things could go really
bad.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">In your
book, you talk about the importance of tethering China to a multilateral
system. Why should China be interested if it’s inevitably number one?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">We need to bind
China today to the multilateral system so a kind of habit and incentive builds
up. Then repudiation of the system would be more difficult. We need to do this
before China becomes a hegemon<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Everyone has to
come together to do this well. If every country tries to make its own deal with
China, no one will have any leverage.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Think about
exchange rates. If the world came together now and said let’s do a deal on
exchange rates, China would be more likely to participate. It doesn’t want to
be seen as deviant from international system. The opprobrium of the world is
the biggest carrot and stick to use with China.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">One of
your main policy recommendations is to start a China round of trade
negotiations. What could that accomplish?</span></b><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">When China joined
World Trade Organization in 2001, people said we tied China to the global
economic system (because of the commitments it made to open its markets and
follow international rules). But through its exchange rate policy, China has
unraveled parts of its commitments. What that signifies is that Chinese leaders
at the time were overreaching in terms of domestic political support.
Evidently, WTO accession wasn’t politically sustainable internally.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 18.0pt; margin-bottom: 12.0pt; margin-left: 6.0pt; margin-right: 6.0pt; margin-top: 0cm;">
<span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US;">Over time, China
will move away from mercantilism. They would then have an incentive to make a
deal. A deal could involve government procurement – other countries opening
their bidding for China—as well as commitments by China involving control of
natural resources and the exchange rate.<o:p></o:p></span></div>
<span lang="PT-BR" style="font-family: "Times New Roman"; font-size: 12.0pt; mso-ansi-language: PT-BR; mso-bidi-language: AR-SA; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast;"><a href="http://blogs.wsj.com/chinarealtime/2011/08/25/eight-questions-living-in-chinas-shadow/">http://blogs.wsj.com/chinarealtime/2011/08/25/eight-questions-living-in-chinas-shadow/</a></span><!--EndFragment-->
Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-26250569737250055362011-09-10T18:13:00.000-03:002011-09-10T18:13:05.021-03:00China's Economic Dominance (1) - The Economist
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<br />
<div class="MsoNormal">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Charts, maps and infographics<o:p></o:p></span></b></div>
<div class="MsoNormal">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;"><a href="http://www.economist.com/blogs/dailychart"><span style="color: #184058; text-decoration: none;">Daily chart</span></a></span></b><span style="color: #4d636f; font-family: "Times New Roman"; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 21.0pt; margin-bottom: 3.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="font-family: 'Times New Roman';"><span class="Apple-style-span" style="font-size: large;">Global economic
dominance</span><span class="Apple-style-span" style="color: #535353;"><o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="line-height: 27.0pt; margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Spheres of influence<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Sep 9th 2011, 15:14 by The Economist online<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">By 2030 China's economy could loom as
large as America's in the 1970s</span></b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">A NEW book, discussed in <a href="http://www.economist.com/node/21528591"><span style="color: #184058;">this
week's Economics focus</span></a>, by Arvind Subramanian of the Peterson
Institute for International Economics argues that China’s economic might will
overshadow America’s sooner than people think. Mr Subramanian combines each
country’s share of world GDP, trade and foreign investment into an index of
economic “dominance”. By 2030 China’s share of global economic power will match
America’s in the 1970s and Britain’s a century before. Three forces will
dictate China’s rise, Mr Subramanian argues: demography, convergence and “gravity”.
Since China has over four times America’s population, it only has to produce a
quarter of America’s output per head to exceed America’s total output. Indeed,
Mr Subramanian thinks China is already the world’s biggest economy, when due
account is taken of the low prices charged for many local Chinese goods and
services outside its cities. China will be equally dominant in trade,
accounting for twice America’s share of imports and exports. That projection
relies on the “gravity” model of trade, which assumes that commerce between
countries depends on their economic weight and the distance between them.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 21.0pt; margin-bottom: 3.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="color: #e62e25; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Economics focus<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 27.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">The celestial economy<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 21.0pt; margin-bottom: 5.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">By 2030 China’s
economy could loom as large as Britain’s in the 1870s or America’s in the 1970s<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Sep 10th 2011 | from the print edition</span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="4" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 442.8pt;" valign="top" width="443">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<b><span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Economic Dominance: Top Three
countries by economic dominance<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">%
share of global economic power (weighted by world GDG, trade and net
capitals)<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">1870<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">1973<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">2010<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">2030<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">UK:
16,4<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">USA:
18,6<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">USA:
13,3<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">China:
18,0<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Germany:
9,3<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Japan:
8,0<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">China:
12,3<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">USA:
10,1<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">France:
8,3<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Germany:
8,0<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Japan:
6,9<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 110.7pt;" valign="top" width="111">
<div align="center" class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">India:
6,3<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 442.8pt;" valign="top" width="443">
<div class="MsoNormal">
<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Source: Arvind Subramanian, </span><span style="background: white; color: black; font-family: Arial; font-size: 10.0pt; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Eclipse: Living in the
Shadow of China’s Economic Dominance, Peterson Institute for International
Economics</span><span style="font-family: Times; font-size: 10.0pt; mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
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<span class="Apple-style-span" style="color: #535353; font-family: 'Times New Roman';"><br /></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">IT IS perhaps a measure of America’s
resilience as an economic power that its demise is so often foretold. In 1956
the Russians politely informed Westerners that “history is on our side. We will
bury you.” In the 1980s history seemed to side instead with Japan. Now it
appears to be taking China’s part<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">These prophesies are “self-denying”,
according to Larry Summers, a former economic adviser to President Barack
Obama. They fail to come to pass partly because America buys into them, then
rouses itself to defy them. “As long as we’re worried about the future, the
future will be better,” he said, shortly before leaving the White House. His
speech is quoted in “Eclipse”, a new book by Arvind Subramanian of the Peterson
Institute for International Economics. Mr Subramanian argues that China’s
economic might will overshadow America’s sooner than people think. He denies
that his prophecy is self-denying. Even if America heeds its warning, there is
precious little it can do about it.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Three forces will dictate China’s rise,
Mr Subramanian argues: demography, convergence and “gravity”. Since China has
over four times America’s population, it only has to produce a quarter of
America’s output per head to exceed America’s total output. Indeed, Mr
Subramanian thinks China is already the world’s biggest economy, when due account
is taken of the low prices charged for many local Chinese goods and services
outside its cities. Big though it is, China’s economy is also somewhat
“backward”. That gives it plenty of scope to enjoy catch-up growth, unlike
Japan’s economy, which was still far smaller than America’s when it reached the
technological frontier.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Buoyed by these two forces, China will
account for over 23% of world GDP by 2030, measured at PPP, Mr Subramanian
calculates. America will account for less than 12%. China will be equally
dominant in trade, accounting for twice America’s share of imports and exports.
That projection relies on the “gravity” model of trade, which assumes that
commerce between countries depends on their economic weight and the distance
between them. China’s trade will outpace America’s both because its own economy
will expand faster and also because its neighbours will grow faster than those
in America’s backyard.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Mr Subramanian combines each country’s
share of world GDP, trade and foreign investment into an index of economic
“dominance”. By 2030 China’s share of global economic power will match
America’s in the 1970s and Britain’s a century before (see chart). Those
prudent American strategists preparing their countrymen for a “multipolar”
world are wrong. The global economy will remain unipolar, dominated by a “G1”,
Mr Subramanian argues. It’s just that the one will be China not America.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Mr Subramanian’s conclusion is
controversial. The assumptions, however, are conservative. He does not rule out
a “major financial crisis”. He projects that China’s per-person income will
grow by 5.5% a year over the next two decades, 3.3 percentage points slower
than it grew over the past two decades or so. You might almost say that Mr
Subramanian is a “China bear”. He lists several countries (Japan, Hong Kong,
Germany, Spain, Taiwan, Greece, South Korea) that reached a comparable stage of
development—a living standard equivalent to 25% of America’s at the time—and
then grew faster than 5.5% per head over the subsequent 20 years. He could find
only one, Nicolae Ceausescu’s Romania, which reached that threshold and then
suffered a worse slowdown than the one he envisages for China.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">He is overly sanguine only on the
problems posed by China’s ageing population. In the next few years, the ratio
of Chinese workers to dependants will stop rising and start falling. He
dismisses this demographic turnaround in a footnote, arguing that it will not
weigh heavily on China’s growth until after 2030.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Both China and America could surprise
people, of course. If China’s political regime implodes, “all bets will be
off”, Mr Subramanian admits. Indonesia’s economy, by way of comparison, took
over four years to right itself after the financial crisis that ended President
Suharto’s 32-year reign. But even that upheaval only interrupted Indonesia’s
progress without halting it. America might also rediscover the vim of the 1990s
boom, growing by 2.7% per head, rather than the 1.7% Mr Subramanian otherwise
assumes. But even that stirring comeback would not stop it falling behind a
Chinese economy growing at twice that pace. So Americans are wrong to think
their “pre-eminence is America’s to lose”.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">Bratty or benign?</span></b><span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">If China does usurp America, what kind
of hegemon will it be? Some argue that it will be a “premature” superpower.
Because it will be big before it is rich, it will dwell on its domestic needs
to the neglect of its global duties. If so, the world may resemble the headless
global economy of the inter-war years, when Britain was unable, and America
unwilling, to lead. But Mr Subramanian prefers to describe China as a
precocious superpower. It will not be among the richest economies, but it will
not be poor either. Its standard of living will be about half America’s in
2030, and a little higher than the European Union’s today.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">With luck China will combine its
precocity in economic development with a plodding conservatism in economic
diplomacy. It should remain committed to preserving an open world economy.
Indeed, its commitment may run deeper than America’s, because its ratio of
trade to GDP is far higher.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 20.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;">China’s dominance will also have limits,
as Mr Subramanian points out. Unlike America in the 1940s, it will not inherit
a blank institutional slate, wiped clean by war. The economic order will not
yield easily to bold new designs, and China is unlikely to offer any. Why use
its dominant position to undermine the very system that helped secure that
position in the first place? In a white paper published this week, China’s
State Council insisted that “China does not seek regional hegemony or a sphere
of influence.” Whether it is precocious or premature, China is still a
tentative superpower. As long as it remains worried about the future, its
rivals need not worry too much.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Times New Roman"; mso-ansi-language: EN-US;"><br /></span></div>
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<span style="color: #535353; font-family: "Times New Roman"; mso-ansi-language: EN-US;">from the print edition | Finance and
economics</span></div>
<!--EndFragment-->Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-35882246605286852922011-07-14T23:47:00.000-03:002011-07-14T23:47:00.711-03:00Why is China afraid of the Dalai Lama? - Fred Hiatt (WP)<b><a href="http://www.washingtonpost.com/opinions/why-is-china-afraid-of-the-dalai-lama/2011/07/14/gIQAd5gyEI_story.html?tid=wp_ipad">Why is China afraid of the Dalai Lama?</a></b><br />
By Fred Hiatt<br />
The Washington Post, <a href="http://www.washingtonpost.com/opinions/why-is-china-afraid-of-the-dalai-lama/2011/07/14/gIQAd5gyEI_story.html?tid=wp_ipad">Thursday, July 14, 9:14 PM</a><br />
<br />
“If China overnight adopted a democratic system, I might have some reservations.. . . If central authority collapsed, there could be a chaotic situation, and that’s in no one’s interest.”<br />
<br />
The words of caution might have come from a Communist Party leader, once again lecturing the West not to push too hard on human rights. But, no; this was the party’s nemesis, the Dalai Lama, the exiled leader of Tibet, explaining in an interview Thursday why he favors “gradual change.”<br />
<br />
Listening to his moderate, sensible advocacy of step-by-step democratization, it was impossible not to marvel at the fear that leads Beijing to view this 76-year-old Buddhist leader as such a mortal threat — not to mention the confusion he seems to cause within the Obama administration, which once again was declining to answer the seemingly simple question of whether the president and the Dalai Lama would meet during the Dalai Lama’s 10-day visit to Washington.<br />
<br />
We talked in a room in the bowels of Verizon Center. Above us, thousands of Buddhists from around the world were making their way into the stands for a religious teaching. But before the day’s lesson would begin, their spiritual leader, alternately serious and jolly, had some political thoughts to impart.<br />
<br />
He chortled as he pointed to Lobsang Sangay, 43, the former Harvard Law School researcher who was recently elected prime minister by Tibetans in exile. “This young man,” the Dalai Lama said gleefully, “he took my power.”<br />
<br />
Unlike the Dalai Lama in his monk’s robes, the prime minister-elect was dressed in a politician’s sober dark suit, a symbol of the serious point beneath the Dalai Lama’s ribbing: After four centuries, Tibet has separated spiritual from political authority. The Tibetan government is democratizing. The Chinese Communist Party, the Dalai Lama is too polite to say explicitly, might do well to follow suit.<br />
<br />
Born in 1935, and having fled Communist China in 1959, the Dalai Lama takes a long view. Initially, he said, he believed that the Communists, who took power in 1949, had principles — that they were “dedicated to the people.” But Mao Zedong’s emphasis on ideology proved “unrealistic” — a tactful understatement of policies that led to the starvation of tens of millions — and Mao’s successor, Deng Xiaoping, realized that China had to embrace capitalism and allow people to improve their living standards.<br />
<br />
So today’s China, he continued, is entirely different from Mao’s. The economy is thriving and connected with the world. Thousands of Chinese have studied abroad.<br />
<br />
But capitalism without an independent judiciary or a free press, the Dalai Lama said, brings a “very bad side effect: corruption.” And rising power without transparency breeds fear and suspicion among China’s neighbors.<br />
<br />
“They always say, ‘We have no intention to expand,’ ” he said. “I tell my Chinese friends, if everything is transparent and policy is open, there is no need to keep saying that. And if everything is a state secret, then you can 1,000 times deny such intentions, and still no one will believe you.”<br />
<br />
The upshot: The United States and other free countries were right to open trade with China and help bring it into the mainstream of global commerce. “Now the free world has a responsibility to bring China into the mainstream of world democracy.”<br />
<br />
But, he said, it makes sense to start by urging gradual progress: legal reform, and an end to internal censorship.<br />
<br />
You might think President Obama would be interested in discussing these matters with his fellow Nobel peace laureate (the Dalai Lama was awarded his in 1989), but it’s not so simple. Obama declined to meet with him in October 2009, then welcomed him to the White House four months later; this week, administration officials have declined to say whether another meeting will take place. The absence of clarity only encourages Beijing’s bullying and discourages other world leaders from engaging with the Tibetan leader.<br />
<br />
Meanwhile, a half-century of exile has not tempered his optimism. Noting that even Chinese Premier Wen Jiabao has talked about the need for political reform, the Dalai Lama said that intellectuals and party members understand the contradictions in the current state of affairs. “Things will change,” he said.<br />
<br />
<a href="mailto:fredhiatt@washpost.com">fredhiatt@washpost.com</a>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-83473234558776956642011-07-13T19:39:00.000-03:002011-07-13T19:39:31.247-03:00Dissident Chinese Writer Flees to Germany - Liao Yiwu (NYT)<b>Dissident Chinese Writer Flees to Germany</b><br />
By ANDREW JACOBS<br />
<i>The New York Times</i>, July 12, 2011<br />
<br />
BEIJING — After being denied an exit visa 17 times, yanked off planes and trains by the police and threatened with yet more prison time, one of China’s most persecuted writers, Liao Yiwu, slipped across the border into Vietnam last week and then made his way, via Poland, to Germany, where he promptly declared himself an exile.<br />
<br />
“I’m ecstatic, I’m finally free,” he said in a telephone interview from Berlin on Monday morning before plunging into a day of interviews and photo shoots. “I feel like I’m walking through a dream.”<br />
<br />
Of course, his escape — arranged by friends whom he declined to name — has not brought unadulterated joy. By fleeing his homeland, Mr. Liao, 52, made the difficult decision to abandon the wellspring of his work, much of it journalistic explorations of China’s downtrodden: the political outcasts, impoverished farmers, death row inmates and others who have been traumatized by famine and Communist-inspired zealotry, then cast aside during the nation’s manic embrace of material wealth and collective amnesia.<br />
<br />
He also leaves behind his family in southwestern Sichuan Province, including his mother, his son, two siblings and a girlfriend. “I’m trying to convince myself that I won’t be away from China very long, that things will change sooner than later,” he said.<br />
<br />
In the West, Mr. Liao is best known for “The Corpse Walker: Real-Life Stories, China from the Bottom Up,” which was banned in China soon after it was published in Taiwan in 2001. The book, a collection of interviews with people he encountered in prison and during wanderings in the southwest, tells the unadorned stories of 27 people, among them a public toilet attendant, a persecuted landlord, and the men, known as corpse walkers, whose job it is to transport the dead back to their hometowns for burial.<br />
<br />
After it was published, his already strained relationship with the authorities worsened. He was barred from traveling to literary festivals in Germany, Australia and the United States, and was forced last spring to sign a vow to cease publishing outside China. Breaking the pledge, he was warned cryptically, would bring even greater torment.<br />
<br />
Given the predicament of his friend Liu Xiaobo, the Nobel Peace Prize winner and writer who is serving an 11-year sentence for subversion, Mr. Liao knew what might await him. The threat gained greater urgency with the impending publication in the United States of “God Is Red,” a book by Mr. Liao about Chinese Christians, and a memoir about his time in jail, “The Witness of the 4th of June.” The memoir, whose title refers to the military suppression of the Tiananmen Square protests in 1989, has been delayed several times by skittish publishers in Germany and Taiwan.<br />
<br />
His most recent travails are part of a wholesale stifling of creative expression and dissent by the ruling Communist Party. Rattled by turmoil in the Arab world, the government began cracking down on scores of activists and rights lawyers in February. The most prominent victim has been Ai Weiwei, the caustic artist and social critic.<br />
<br />
“I think Liao Yiwu’s decision to leave really reflects the extreme unease that writers in China are facing right now,” said Larry Siems, the director of international programs at the PEN American Center, an advocacy group. “It’s a shame, because he is one of China’s most interesting writers, and he has his eyes on some of the great human dramas that accompany China’s emergence as an economic power. China should be unleashing the imagination of its writers instead of trying to restrain and control them.”<br />
<br />
The Chinese government has yet to respond to news of his escape. The public security bureau in his hometown would not discuss his case; calls and e-mails to the Chinese Embassy in Berlin were not returned.<br />
<br />
Like many of his generation, Mr. Liao has endured a numbing cascade of hardships. He nearly starved to death as an infant during Mao’s disastrous Great Leap Forward, when famine killed more than 20 million people. When he was a child, he and his classmates were forced out of school by the Cultural Revolution, the decade in which education was maligned as a bourgeois indulgence. Much of what he learned came from his father, a teacher of Chinese literature, and his mother, a music instructor.<br />
<br />
“As a boy, my dad would make me stand high up on a table and not allow me to come down until I finished reciting the classics,” he said.<br />
<br />
As early as 1987, he drew the ire of cultural bureaucrats for poetry, printed in official journals, that was condemned as too pessimistic and anti-establishment. After the Tiananmen crackdown, he experienced the stinging limits on free expression. Inspired by Allen Ginsberg and by Dante’s “Inferno,” he and five friends circulated poems recited on video that lamented the bloodshed in Beijing. Mr. Liao called the piece “Massacre.”<br />
<br />
Not long afterward, in 1990, he and the others were jailed as “counterrevolutionaries.” His four years of confinement were characterized by torture and the terror of watching 20 inmates be dragged out for execution. Twice, he said, he tried to kill himself.<br />
<br />
But it was in jail that Mr. Liao met many of the characters who would fill “The Corpse Walker.” It was also where he learned to play the xiao, an ancient flutelike instrument that sustained him as a street musician during long bouts of joblessness after his release. Those were bitter years, he said, when friends and even his wife found him politically radioactive.<br />
<br />
“I never imagined they would distance themselves from me as if I were the plague,” he said. “From this, I concluded that people’s memories can be easily erased.”<br />
<br />
Since then, Mr. Liao has devoted himself to collecting the memories of people on the margins of society. For “God Is Red,” he sought out Christians in rural Sichuan and Yunnan Provinces who had endured years of official persecution.<br />
<br />
Mickey Maudlin, the executive editor of HarperOne, described it as refreshingly devoid of polemics. “Liao isn’t trying to score ideological points,” Mr. Maudlin said by phone from San Francisco. “He’s just trying to describe how people survived in an environment that is not very friendly.”<br />
<br />
Mr. Liao said that since he reached Germany, he has been too overwhelmed and excited to eat or sleep much. Having arrived with no money, he is relying on the generosity of friends, his German publisher and, he hopes, royalties from his forthcoming books. He speaks neither German nor English, and said he was unsure whether to plunge into learning a new language.<br />
<br />
“Germany, the U.S. and Australia have all welcomed me,” he said. “But the place I really want to be is China.”<br />
<br />
<i>Li Bibo contributed research.</i>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-73348263742906436032011-07-13T19:11:00.000-03:002011-07-13T19:11:56.684-03:00(Non) Democracy in China - The Economist<b>Democracy v China<br />
What China challenges</b><br />
by M.S.<br />
Blog Democracy in America, <i>The Economist</i>, July 11th 2011, 13:54<br />
<br />
MY COLLEAGUE at Free exchange <b><a href="http://www.economist.com/blogs/freeexchange/2011/07/political-economy">made a series of good points</a></b> in arguing that the rise of China shouldn't really challenge our certainty that in order for countries to become and remain wealthy, they need to be democratic. He's quite right that an overwhelming majority of wealthy countries are democratic, and that China isn't wealthy yet. I think there are two questions here. The first is whether China is in the long run going democratic as it gets rich. The second is whether, if it doesn't, this implies anything broader about the inevitability of democracy in other wealthy modern countries.<br />
<br />
My views on this subject are influenced by having lived for many years in the world's other fast-growing capitalist communist confucian country, Vietnam, and watching predictions that rising wealth leads to democratisation fail to bear any but the most modest of fruit. China and Vietnam have structures and cultures of governance that are about as similar as one can expect for cross-country comparisons. And what's striking in both countries is the remarkable absence of any serious challenge to Communist Party domination of every corner of political life. Both countries have dissidents aplenty; but these dissidents have no public organisations, and, at the first hint that organisations are beginning to form, they're quickly dismantled through arrest and intimidation.<br />
<br />
Of course, many autocracies are competent at attacking and dismantling political threats. Fewer repressive autocracies have been able to produce well-founded economic growth for decades in a row, though there, too, there are success stories. But what sets China and Vietnam apart is the ability of their governing institutions to carry out long-term stable political succession. The communist parties of Vietnam and China are very different from the relatively flimsy and short-lived governing parties of most single-party dictatorships, usually constructed around a single personality and his relatives and cronies. Since the late 1970s, they have managed transitions to new generations of leadership every five years with very little disruption. In part this is due to mechanisms and traditions within these parties that provide for some level of internal democracy, or at least of peaceful factional competition. But the ability to recruit new cadres, allow them to rise through the system, assume top leadership positions, and then push them into retirement, without being overwhelmed by nepotism or personality cults, makes this type of autocracy markedly different from the weak family-run shell parties or military fronts that have run or are running autocratic shows in Indonesia, South Korea, Syria, Iraq, Chile, Spain, Burma and so on. And, obviously, China and Vietnam no longer have to worry about the great weakness that doomed single-party rule in most of the ex-communist world, ie pointless and crippling state-socialist economic policies.<br />
<br />
The combination of smooth political succession and strong economic growth helps explain why China is more stable than the USSR was at a similar level of development. In 1990, just before its collapse/democratic transition, the USSR had a PPP-adjusted per-capita GDP of just under $7,000 (in 1990 Geary-Khamis international dollars), according to Angus Maddison, whose research everybody seems to use on this. Mr Maddison put China at $4,800 (same units) in 2003; since then its economy has grown by 8-10% a year, suggesting it's now richer than the USSR ever was. Having spent a few months in the USSR in 1990, I wouldn't be surprised if this were the case. (Though Chinese PPP conversions are controversial. IMF and World Bank figures put Chinese incomes lower than Mr Maddison's. But others warn the IMF/WB figures are based on 2005 price surveys that were too high, which would mean current Chinese per capita GDP is 21% of America's, and China will become the world's largest economy in 2012, not 2016 as the IMF estimates. This ADB paper suggests China is now as rich as the USSR was even as a percentage of contemporaneous US per-capita income, but it puts that figure at almost 30%, which seems absurdly high.) Anyway, China appears to be hitting income levels where other countries have experienced democratic transitions without any sign of a plausible challenge to CPC rule.<br />
<br />
Why would that be? Political scientists looking at the relative stability of different autocracies break the category up into subgroups with varying characteristics. For example, a recent paper by Krister Lundell, delivered at what sounds like a truly awesome panel in February in Sao Paulo (“Bad Guys, Good Governance? Varieties of Capitalism in Autocracies”), runs through a bunch of different categorisation schemes in trying to sort out what characteristics might distinguish autocracies that go democratic (or "hybrid", ie part of the way towards democracy) from those that remain permanent autocracies. He doesn't come up with much. Income levels, interestingly, don't seem to be that important. The oil-exporting factor is important, as my colleague mentions. Islamic countries are more likely to stay autocratic, but that's confounded by the oil-export factor so it's not clear how important it is. Another significant factor is that autocratic countries that are large, especially in terms of land area, are less likely to cease being autocratic than small ones. And military dictatorships are pretty short-lived, while single-party states and monarchies last longer. China, obviously, is a very large one-party state. But I feel the variables on offer here don't do justice to the uniqueness of the Chinese and Vietnamese systems. The combination of successful capitalist economies with monopoly parties that can successfully manage non-fatal non-nepotistic leadership transitions six times in a row is new. It's a big deal.<br />
<br />
Now, maybe the Chinese and Vietnamese communist parties will fail to manage economic growth to truly developed levels, or will be torn apart by the stresses of increased demand for participation from empowered, educated, wealthy middle classes. Maybe they're too slow and unwieldy for the modern media environment, as James Fallows writes about the silly internet censorship surrounding rumours of Jiang Zemin's death. But then again, maybe not. Maybe this morally troubling type of rule, in which the responsibility and privileges of governance are essentially assigned to a guild or corporation with internal but not external competition and mainly informal, not formal, accountability to the broader population, is a sustainable model of governance for a modern society. Or maybe it's only viable in East Asia, for cultural reasons; anyway, China isn't seeking to export it anymore, and it's hard to see how any other country could start to build such a model in an era when peasant revolutions seem to be a thing of the past.<br />
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I confess I can't really imagine what a fully developed wealthy society with a single-party state would look like. But a few years back I visited the then-leader of Singapore's tiny opposition party in his apartment, where he was under house arrest. He was under house arrest because he was unable to pay his debts, and he was in debt because the state had convicted him of slander and fined him hundreds of thousands of dollars for saying, in effect, that Singapore is not a democracy. Which is a nice little manoeuvre. People in Singapore are, in my experience, even more afraid of talking about these kinds of issues than people in Vietnam are. But Singapore is extremely well-governed on most dimensions, and it's not clear when a transition in power is ever going to occur. Singapore is also significantly richer than the United States. All of which is why it's often cited as a model by Vietnamese and Chinese political elites. Many people feel this system of government can't be scaled up from an island city-state like Singapore to a large country like Vietnam or China, which is perhaps why my colleague restricted his survey of wealthy countries to those with populations over 10m. But the thing is, political-science researchers widely conclude that small countries, and especially islands, are more likely to be democracies, not less.<br />
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But granting for the sake of argument that China could become as wealthy as Singapore, or at least Spain, without becoming a democracy. So what? Would this say anything about democracy in the modern world overall, or would it just say something about China? Obviously, there is zero risk of a single-party takeover in any developed multiparty democracy in the world. This isn't the 1930s; it's not even the 1970s.<br />
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Rather, I'd phrase the risk this way. My broad feeling is that representative democratic institutions are not functioning right now as they did 20 or 30 years ago. When we look at countries trying to make the transition to stable democratic rule, such as Thailand or Russia, we see that they're trying to institutionalise democracy as it exists in the early 21st century, and that it's very hard to do, because the forces enlisted are often too powerful to be contained by institutional restraints. Just like wealthy democracies these days, they have personality-driven political campaigns fueled by wealthy donors who fund or control integrated media empires, candidacies shaped by professional consultants, and internet/flashmob street rallies and self-branded grassroots movements ("colour" movements, tea-party groups and so on). The "Daily Me" phenomenon simultaneously organises and polarises partisan participants into angry camps who can barely understand each others' language. It often seems impossible for contestants for power to win and consolidate legitimacy, because it's easy to build resistance to legitimacy and the rewards are high. It feels to me like there's a relationship between the "birther" phenomenon and the years of Yellow Shirt refusal to accept Shinawatra legitimacy, between the "Not a cent for Greece" brinksmanship of the Party for Freedom and the no-taxes debt-ceiling brinksmanship of the tea-party GOP, between constant filibusters in the Senate, the record-length coalition negotiations in Belgium and the rash of hung parliaments recently in Westminster systems.<br />
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I think this has to do with the way democracy functions in the current communications environment. Democracy is supposed to build public legitimacy for governance. I think there's a legitimacy deficit because of the way communications work nowadays. Democracy is also supposed to communicate problems to government so that government can respond. I think the constant crisis-atmosphere contrarianism of the current media and internet environment overwhelms the signal-to-noise ratio there, and preoccupies government with addressing blaring non-issues. And I think this has all weakened the advantage that democracies have generally enjoyed over autocracies in addressing real problems and in generating public support for fixing them. I think the result of that could well be that an increasing number of important policymaking issues are gradually shifted to non-democratic institutions, while political democracy increasingly devolves into a form of reality-TV contest.<br />
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Or maybe I'm just contributing to the blaring non-issue alarmism here. Thailand has recently taken a strong turn back towards democracy; maybe the Red Shirt/Yellow Shirt years were just growing pains, no worse than what France went through on its way to democracy in the 19th century, and a lot less bloody. The Arab world has just seen a bunch of autocratic regimes fall, and if some of those countries move towards democracy while others don't, that'll be par for the historical course. Here in America, well, if we throw away a perfectly good 200-year-old credit rating, that'll be pretty dumb, but nobody's killing each other yet. And American politics were often mean and stupid in the old days too, long before the internet arrived. But what I would say is that we should not be comfortably sure of anything. We're not in an era when fascism is on the march, but we are in an era when democracy is not generally showing its best governing face. What that means, I think, is that people who believe in democracy on moral grounds should make the case, again, on moral grounds, rather than relying on a comfortable assumption that countries will naturally go democratic as they get richer. And I think the fact that autocracies sometimes enjoy real advantages in policymaking should remind us of the need to behave responsibly in democratic activity and to make sure that our representative institutions are actually capable of governing, and are not paralysed by political brinksmanship.<br />
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As for my other colleague's comments, I pretty much agree with everything he says. He's probably right that increasing the role of automatic stabilisers would actually be a move towards enhancing democracy by letting political debate focus on deep public issues of what our society should look like, rather than short-term issues of the interaction between unemployment, inflation, private liquidity preference and government spending that Congress really isn't well equipped to handle agilely.Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-3150460487559912252011-07-13T19:00:00.000-03:002011-07-13T19:00:15.303-03:00O modelo chines de desenvolvimento - Rubens Antonio Barbosa<b>O modelo chinês de desenvolvimento</b><br />
Rubens Barbosa<br />
<i>O Estado de S.Paulo</i>, 12 de julho de 2011<br />
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O crescimento médio de 9% da China nos últimos 30 anos tem despertado a atenção de todo o mundo, em especial dos países em desenvolvimento. Qual é o fundamento do modelo chinês? O êxito econômico da China não decorre apenas da aplicação de políticas econômicas stricto sensu, mas de alguns princípios inspirados no pragmatismo de Deng Xiaoping, chefe do governo chinês nos anos 70: a importância da inovação, a rejeição a medir o desenvolvimento pelo crescimento do PIB e da renda per capita, a busca de melhoria na qualidade de vida e a crença na autodeterminação e soberania.<br />
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Recentemente Stefan Halper, no livro O Consenso de Pequim, procurou mostrar como o modelo chinês, classificado como "autoritarismo de mercado", começa a ganhar adeptos entre países em desenvolvimento. Embora sendo discutível se esse modelo pode ser replicado em outros países com o mesmo êxito, o sistema chinês oferece uma alternativa ao Consenso de Washington, que enfatizava a prevalência do mercado e da austeridade econômica doméstica, mas ficou associado às condicionalidades impostas pelas instituições financeiras internacionais, como o Banco Mundial e o Fundo Monetário Internacional (FMI).<br />
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Segundo o economista chinês Ping Chen - que esteve há algum tempo na FGV em São Paulo -, o que ocorre na China não configura o aparecimento de um modelo de desenvolvimento econômico porque o país está em constante experimentação e mudança com o objetivo de se ajustar a um mundo em transformação. O Congresso do Povo está permanentemente modernizando leis e regulamentos, úteis no passado, mas obsoletos no presente. Ao contrário do Consenso de Washington, o modelo chinês parte do pressuposto de que cada país enfrenta desafios diferenciados e por isso não pode aceitar soluções padronizadas. Nas últimas três décadas a China descartou as barreiras ideológicas e históricas e testou as mais diferentes ideias, implementando-as e corrigindo os erros cometidos.<br />
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Não chega a ser surpresa constatar a forte presença do Estado, uma das características dos regimes comunistas, como o aspecto fundamental do modelo. O capitalismo de Estado é a sua marca registrada, combinado com a abertura a investimentos externos, com transferência de tecnologia e associação compulsória com empresas estatais e com o câmbio congelado.<br />
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Dada a natureza controvertida dos comentários apresentados por Chen, pareceu-me útil resumi-los, sem questionar suas premissas, pela limitação de espaço.<br />
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Refletindo as peculiaridades do sistema político e social chinês, Chen alinhou nove princípios responsáveis pelo êxito da China num mundo de incertezas e complexidades:<br />
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Buscar oportunidades para o crescimento da economia e adotar reformas ousadas para aproveitá-las. Nos países em desenvolvimento, os governos têm mais capital e recursos humanos do que o setor privado para ativar um mercado pouco sofisticado. A economia neoliberal tem pouca experiência nos países mais pobres e por isso frequentemente recomenda práticas de mercados desenvolvidos, de forma equivocada, aos mercados emergentes.<br />
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Necessidade de manter um sistema dual para a estabilidade e a inovação. A dualidade é representada pela atuação do governo e do setor empresarial. As regulamentações são adotadas por consenso entre a liderança política, empresários e a comunidade.<br />
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Clara divisão de trabalho entre o governo central e o local. O governo central é responsável pela segurança nacional e pela coordenação regional. O governo local lidera as experiências institucionais e de desenvolvimento. A experiência de descentralização é o motor das inovações, não a imposição de regras de cima para baixo por conselheiros externos.<br />
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Para o desenvolvimento regional a liderança política é mais importante do que o capital, recursos e infraestrutura.<br />
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Economias mistas (capitalismo de Estado) oferecem financiamentos públicos para favorecer reformas e desenvolvimento sustentável. Políticas liberais nunca funcionam em países com grande população, poucos recursos e frequentes desastres naturais. O setor estatal e coletivo serve de anteparo para os ciclos de negócios.<br />
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A disciplina da economia chinesa é alicerçada na competição em todos os níveis, e não na negociação com grupos de interesse, no estilo ocidental. A democracia na China não é uma competição verbal, mas uma corrida por ações concretas. A legitimidade do governo não deriva do eleitorado, mas dos resultados políticos e econômicos.<br />
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A coordenação entre governos, homens de negócios, trabalhadores e setor agrícola tende a gerar uma nova parceria.<br />
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Os governos podem criar e orientar o mercado, mas não devem ser conduzidos por ele. A condição fundamental é o fator humano.<br />
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As ações do governo devem focalizar o desenvolvimento econômico interno, sem perder de vista as turbulências externas.<br />
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Segundo Chen, a alternativa asiática de desenvolvimento é representada por valores compartilhados pelo governo e pelos cidadãos, tendo como pano de fundo crescentes pitadas de ensinamentos de Confúcio. O Consenso de Pequim, baseado no apoio familiar, na edificação da nação e no governo central que interage com a população, é a alternativa ao sistema ocidental, fundado no individualismo, no consumismo e no equilíbrio entre os grupos de interesse.<br />
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Para países como o Brasil, não se trata de tentar replicar o capitalismo de Estado, mas de reconhecer a influência da China no processo produtivo global e procurar melhorar a competitividade da economia para poder enfrentar o grande desafio que esse país coloca hoje ao setor produtivo nacional, sobretudo o industrial.<br />
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Temos de superar a visão ingênua derivada da percepção equivocada das vantagens que a China oferece e definir nossos próprios interesses.<br />
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<b>PRESIDENTE DO CONSELHO DE COMÉRCIO EXTERIOR DA FIESP </b>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-54405714150776126712011-07-13T18:24:00.000-03:002011-07-13T18:24:01.238-03:00American entrepreneur finds US an underdeveloped country, compared to ChinaOPINION <br />
<b>China vs. America: Which Is the Developing Country?</b><br />
By ROBERT J. HERBOLD<br />
<i>The Wall Street Journal</i>, JULY 9, 2011<br />
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From new roads to wise leadership, sound financials and five-year plans, Beijing has the winning approach.<br />
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Recently I flew from Los Angeles to China to attend a corporate board-of-directors meeting in Shanghai, as well as customer and government visits there and in Beijing. After the trip was over, in thinking about the United States and China, it was not clear to me which is the developed, and which is the developing, country.<br />
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Infrastructure: Let's face it, Los Angeles is decaying. Its airport is cramped and dirty, too small for the volume it tries to handle and in a state of disrepair. In contrast, the airports in Beijing and Shanghai are brand new, clean and incredibly spacious, with friendly, courteous staff galore. They are extremely well-designed to handle the large volume of air traffic needed to carry out global business these days.<br />
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In traveling the highways around Los Angeles to get to the airport, you are struck by the state of disrepair there, too. Of course, everyone knows California is bankrupt and that is probably the reason why. In contrast, the infrastructure in the major Chinese cities such as Shanghai and Beijing is absolute state-of-the-art and relatively new.<br />
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The congestion in the two cities is similar. In China, consumers are buying 18 million cars per year compared to 11 million in the U.S. China is working hard building roads to keep up with the gigantic demand for the automobile.<br />
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The just-completed Beijing to Shanghai high-speed rail link, which takes less than five hours for the 800-mile trip, is the crown jewel of China's current 5,000 miles of rail, set to grow to 10,000 miles in 2020. Compare that to decaying Amtrak.<br />
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Government Leadership: Here the differences are staggering. In every meeting we attended, with four different customers of our company as well as representatives from four different arms of the Chinese government, our hosts began their presentation with a brief discussion of China's new five-year-plan. This is the 12th five-year plan and it was announced in March 2011. Each of these groups reminded us that the new five-year plan is primarily focused on three things: 1) improving innovation in the country; 2) making significant improvements in the environmental footprint of China; and 3) continuing to create jobs to employ large numbers of people moving from rural to urban areas. Can you imagine the U.S. Congress and president emerging with a unified five-year plan that they actually achieve (like China typically does)?<br />
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The specificity of China's goals in each element of the five-year plan is impressive. For example, China plans to cut carbon emissions by 17% by 2016. In the same time frame, China's high-tech industries are to grow to 15% of the economy from 3% today.<br />
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Government Finances: This topic is, frankly, embarrassing. China manages its economy with incredible care and is sitting on trillions of dollars of reserves. In contrast, the U.S. government has managed its financials very poorly over the years and is flirting with a Greece-like catastrophe.<br />
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Human Rights/Free Speech: In this area, our American view is that China has a ton of work to do. Their view is that we are nuts for not blocking pornography and antigovernment points-of-view from our youth and citizens.<br />
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Technology and Innovation: To give you a feel for China's determination to become globally competitive in technology innovation, let me cite some statistics from two facilities we visited. Over the last 10 years, the Institute of Biophysics, an arm of the Chinese Academy of Science, has received very significant investment by the Chinese government. Today it consists of more than 3,000 talented scientists focused on doing world-class research in areas such as protein science, and brain and cognitive sciences.<br />
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We also visited the new Shanghai Advanced Research Institute, another arm of the Chinese Academy of Science. This gigantic science and technology park is under construction and today consists of four buildings, but it will grow to over 60 buildings on a large piece of land equivalent to about a third of a square mile. It is being staffed by Ph.D.-caliber researchers. Their goal statement is fairly straightforward: "To be a pioneer in the development of new technologies relevant to business."<br />
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All of the various institutes being run by the Chinese Academy of Science are going to be significantly increased in size, and staffing will be aided by a new recruiting program called "Ten Thousand Talents." This is an effort by the Chinese government to reach out to Chinese individuals who have been trained, and currently reside, outside China. They are focusing on those who are world-class in their technical abilities, primarily at the Ph.D. level, at work in various universities and science institutes abroad. In each year of this new five-year plan, the goal is to recruit 2,000 of these individuals to return to China.<br />
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Reasons and Cure: Given all of the above, I think you can see why I pose the fundamental question: Which is the developing country and which is the developed country? The next questions are: Why is this occurring and what should the U.S. do?<br />
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Let's face it—we are getting beaten because the U.S. government can't seem to make big improvements. Issues quickly get polarized, and then further polarized by the media, which needs extreme viewpoints to draw attention and increase audience size. The autocratic Chinese leadership gets things done fast (currently the autocrats seem to be highly effective).<br />
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What is the cure? Washington politicians and American voters need to snap to and realize they are getting beaten—and make big changes that put the U.S. back on track: Fix the budget and the burden of entitlements; implement an aggressive five-year debt-reduction plan, and start approving some winning plans. Wake up, America!<br />
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<i>Mr. Herbold, a retired chief operating officer of Microsoft Corporation, is the managing director of The Herbold Group, LLC and author of "What's Holding You Back? Ten Bold Steps That Define Gutsy Leaders" (Wiley/Jossey-Bass, 2011).</i>Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-58253173127442595562011-07-12T12:57:00.000-03:002011-07-12T12:57:42.991-03:00Liu Xiaobo Empty Chair: a book from the New York Review of Books<b>A New York Review Books e-book original</b><br />
July 12, 2011<br />
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In <b><i>Liu Xiaobo's Empty Chair: Chronicling the Reform Movement Beijing Fears Most</i></b>, Perry Link, China scholar and regular contributor to The New York Review of Books, chronicles Nobel Laureate Liu Xiaobo's story: from his arrest, show-trial, and harsh sentencing, to the suppression of Charter 08, an eloquent pro-democracy manifesto that he helped write. Liu is still serving out an eleven-year prison sentence while the government undertakes one of its worst crackdowns on dissent in decades.<br />
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Writing about Beijing's attacks on dissidents in the wake of the Arab Spring, Link draws on leaked government documents to reveal just how nervous the regime has become about prospects for a "Jasmine Revolution" in China. The e-book includes the full text of Charter 08 and other primary documents.<br />
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New York Review senior editor Hugh Eakin spoke with Perry Link about the book and the importance of the Charter 08 movement.<br />
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Although Nobel Peace Laureate Liu Xiaobo is little known in China and most of his writings have been read only by a small circle of intellectuals and activists, the Chinese government considers him an enemy of the state and has sentenced him to eleven years in prison. What makes him so threatening?<br />
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There is a tremendous amount of popular discontent in Chinese society today. People feel angry about corruption, special privilege, land grabs and forced relocations, air and water pollution, and repression of unapproved religions. Many people feel insecure about their future. The Chinese government is well aware of this discontent and spends much effort and huge sums of money to keep it atomized and disorganized. The authorities repress Liu Xiaobo's writings because they are afraid that his ideas would have broad appeal and could give shape to movements that they could not control.<br />
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Among the writings that have most concerned the Chinese government is the document called Charter 08, which Liu Xiaobo helped draft and which you have translated in full in your book. What ideas in it, in particular, make Beijing anxious?<br />
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I have no doubt that the idea in Charter 08 that most upsets Beijing is the call for an end to one-Party rule. The charter's other ideas—elections, a free press, separation of powers, an independent judiciary, an apolitical military, to name a few—might be argued as matters of degree, but an end to the Communist Party's monopoly on power stands out as the one idea that is an utter anathema to China's rulers. In addition to the Charter's ideas, its tone likely causes them some distress as well. The writing in the Charter is clear, rational, moderate, broad of vision, responsible, and well organized—in short, not easy to refute, and for that reason a headache for an autocrat.<br />
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Following the mass uprisings in the Middle East, many people are wondering whether something similar could happen in China. You suggest that is unlikely for now, despite the "pent up anger" many ordinary Chinese harbor toward their government. Why?<br />
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A Jasmine Revolution is unlikely in China because the repressive apparatus there is far more extensive and sophisticated than in many of the Middle Eastern countries. The relatively peaceful abdications by dictators that we saw in Tunisia and Egypt would never happen in China, where the rulers, in their determination to stay in power and their willingness to use violence to do so, are more like the rulers of Libya and Syria. But the Libyan and Syrian regimes are twenty years behind China's in their techniques. They are still using tanks and machine guns. China's rulers, who used those methods in 1989, have in the intervening years worked hard on ways to find and snuff out dissent before it goes anywhere. The budget for internal "stability maintenance" in China this year is about 550 billion yuan—more than the government spends on its military, and more than it spends on health, education, and social welfare combined.Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0tag:blogger.com,1999:blog-8683972455454019008.post-55724206563018342652011-07-12T11:46:00.001-03:002011-07-12T11:52:07.901-03:00China’s Other Revolution - A forum for debating the questionFollowing the precedent post -- <b><a href="http://shangaiexpress.blogspot.com/2011/07/chinas-other-revolution-edward-s.html">China’s Other Revolution - Edward S. Steinfeld (Boston Review)</a></b> -- here the Forum promoted by Boston Review on China's impressive performance in many other social and economic aspects, least the political side of its really astonishing progresses over the last decades.<br />
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<b><a href="http://www.bostonreview.net/BR36.4/ndf_chinas_other_revolution.php">China’s Other Revolution</a></b><br />
Boston Review, <a href="http://www.bostonreview.net/BR36.4/ndf_chinas_other_revolution.php">JULY/AUGUST 2011</a><br />
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<a href="http://www.bostonreview.net/BR36.4/ndf_edward_s_steinfeld_china.php">Edward S. Steinfeld</a><br />
China’s recent crackdown on dissidents suggests that the country’s authoritarian regime is here to stay.<br />
But missed in all the headlines are the radical political and social changes China has undergone over the past twenty years.<br />
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<a href="http://www.bostonreview.net/BR36.4/ndf_andrew_g_walder_china.php">Andrew G. Walder</a><br />
The fate of the former Soviet Union is paramount in the minds of China’s leaders. (July 11)<br />
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Helen H. Wang<br />
One of the critical conditions of democracy is present in China: a large and stable middle class. (July 12)<br />
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Baogang He<br />
Even the phrase ‘civil society’ has been banned by propaganda officials. (July 12)<br />
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Ying Ma<br />
Many of the capitalist roaders co-opted by the Party echo the government’s refrain that China is not ready for democracy. (July 13)<br />
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Guobin Yang<br />
So disempowering are Chinese markets that a term was invented for ‘powerless social groups.’ (July 13)<br />
<br />
Edward S. Steinfeld<br />
Far from prioritizing self-preservation, the Chinese government has gambled on radical and socially destabilizing reforms. (July 14)<br />
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========<br />
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<b><a href="http://www.bostonreview.net/BR36.4/ndf_andrew_g_walder_china.php">Holding Strategy</a></b><br />
Andrew G. Walder<br />
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This article is part of China’s Other Revolution, a forum on political and social change in China.<br />
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Edward Steinfeld’s account of revolutionary changes in China’s economy and society over the past 30 years is compelling and on the mark. He is correct to warn that we should not underestimate remarkable cumulative changes in Chinese society and the economy, which have important and largely irreversible political implications. But his argument avoids an elephant in the room: China still has a Soviet-style political system that has changed little over the past two decades.<br />
This is not a garden-variety personal or military dictatorship. There are only four other regimes structured like China’s, in Vietnam, Laos, North Korea, and Cuba. China’s network of Communist Party organizations, its conservative leadership in a national politburo, the preeminence of Party organizations over all government institutions, its subservient legal system, and its massive and growing security apparatus are all familiar to those who recall communist systems of 30 years ago. The recent crackdown is a symptom of the survival, indeed the revitalization, of a Soviet model of governance. The continuing strength of that model is not altered by revolutionary changes in the economy or by the staffing of government institutions by younger, better educated, and more worldly administrators. China’s economy and society may remind us of South Korea’s and Taiwan’s in an earlier era, but the core political institutions, and in recent years the political attitudes of the leaders, are more reminiscent of the Soviet Union during the late Brezhnev era. This makes China a deeply paradoxical polity, presenting its leaders with a real dilemma.<br />
China today is indeed unlike China 25 years ago, and it is far more open and dynamic than the Soviet Union ever was. But political change, when it does occur, may not turn China into Taiwan or South Korea writ large. Our discussions of Chinese political change often appear to adopt an unconscious default position: China’s leaders are holding back a tide of change that leads to liberal multiparty rule, better governance, the elimination of corruption, political stability, the rule of law, and greater economic prosperity. But other political futures are just as likely.<br />
The fate of the former Soviet Union and similar regimes is more relevant to China’s political dilemma and is surely paramount in the minds of China’s leaders. Out of some 30 independent states that emerged from the collapse of communism in Eurasia, no more than a third are now prosperous and well-governed multiparty democracies. Almost all of these success stories are small, ethnically uniform states on the periphery of the European Union—a “democratic crescent” that stretches from Estonia to Slovenia. Many of the other post-Soviet countries experienced dismemberment, civil war, and long periods of instability. Russia and Ukraine have undergone severe and prolonged recessions; their political systems are illiberal and deeply corrupt, though surely more “pluralistic” than before.<br />
China’s leaders understand and are haunted by this history. Even if they secretly believe that a multiparty political system is desirable, they know the perils of a botched attempt at political change. Stability is the overwhelming priority of China’s leaders. It is seen, justifiably, as the foundation for China’s economic rise and growing geopolitical importance. The trajectory of Russia—the comparison that really matters to China’s elite—has been in the opposite direction.<br />
So the prescription is: don’t rock the boat. Soviet-style political structures have well-known problems, but they have held China together for the past 30 years of wrenching social and economic change. Experimenting with democracy within the Communist Party, limited electoral mechanisms at the provincial and national level, a freer press, designing effective anti-corruption measures that tie the Party’s hands, and a broader openness in intellectual and political life are unnecessary gambles that risk everything China has accomplished. The elite don’t want to repeat Gorbachev’s naïve mistakes.<br />
The fate of the former Soviet Union is paramount in the minds of China’s leaders.<br />
What are China’s leaders so afraid of? Long before the attempted Jasmine Revolution, they knew how quickly and unexpectedly political challenges can arise. They were just as surprised as everyone else by the collapse of their brethren Soviet-style political systems from 1989 to 1991. And they had their own major crisis in May–June 1989, which escalated out of their control, split their top leadership, and forced a draconian military response.<br />
Continuing social changes, not just history, leave the regime skittish. Waves of local protest—by farmers concerned with taxation and land tenure, urban homeowners expelled with little compensation in corrupt urban redevelopment schemes, tens of millions of state-sector workers laid off in enterprise restructuring and privatization since the mid-1990s, unprotected workers in export industries and the transport sector opposing unfair pay and poor working conditions—do not amount to a unified political movement to challenge Party rule. But China’s leaders believe that they make any kind of political opening a hazardous venture.<br />
What China’s leaders fear is large and prolonged protests in key cities. Precisely because of the changes sketched so clearly by Steinfeld, these would be much harder to control than the protests 22 years ago, and would force the leadership once again to confront a choice between compromise (and perhaps spiraling demands for liberalization and political change) and brute force. This is the choice that has loomed suddenly for dictators in Tunisia, Egypt, Libya, and elsewhere. The same choice openly split China’s Politburo Standing Committee in 1989, which led to even larger protests and surprisingly strong popular resistance to the initial attempt to impose martial law.<br />
What to do? For the time being, postpone any tinkering with core political institutions, and double down on surveillance and repression. China’s leaders have been far more creative at finding ways to monitor the Internet, curb the mass media, and halt incipient protest than at creating credible institutions to deter corruption and abuse of power by their own officials at the local levels. The strategy is conservative and corporate, designed to preserve the rise of a new Chinese state capitalism on a global scale by deploying refurbished Soviet-style institutions as enforcers. This strategy avoids the risks of liberalization and reform and postpones the structural changes necessary to create a genuinely Chinese political system that overcomes the flaws of the Soviet import.<br />
This is, in short, a holding strategy, one that betrays a lack of confidence and political imagination. One might ask, if not now, with China’s economy riding high and public support for the regime strong, when? Incremental political reform will be much harder when the economic juggernaut begins to falter, the population begins to age, and the educated urban middle classes take prosperity for granted. By that point China’s political system—and perhaps with it the economy—may be in for a hard landing.Paulo Roberto de Almeidahttp://www.blogger.com/profile/18268769837454266546noreply@blogger.com0