Wednesday, July 4, 2012

A Monetary History of China - Peng Xinwei (book review)


EH.NET BOOK REVIEW ------
Title: A Monetary History of China
Published by EH.Net (July 2012)
Peng Xinwei, A Monetary History of China. Bellingham, WA: Center for East Asian Studies, University of Western Washington, 1994.  (Translation by Edward H. Kaplan of Zhongguo huobi shi, third edition, Shanghai, 1965.)  xlix + 929 pp. (2 volumes) $50 (paperback), ISBN: 0914584812. 
Reviewed for EH.Net by Kurt Schuler, Center for Financial Stability.
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.
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.
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.
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.
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.
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.
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.
Kurt Schuler is Senior Fellow in Financial History at the Center for Financial Stability in New York. He is the editor ofHistorical Financial Statistics, a free, online data set at the Center. These are his personal views.
Copyright (c) 2012 by EH.Net. 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 EH.Net Administrator (administrator@eh.net). Published by EH.Net (July 2012). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Monday, June 4, 2012

Princelings and paupers - John Garnaut

Princelings and paupers

John Garnaut
The Age, May 25, 2012

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 Moulin Rouge. "He had a grin from ear to ear," says a source who accompanied him at the time.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
''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!''
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.''
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.
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.)
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.
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.
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.
In 2007 investigative reporters at Caijing Magazine 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.
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.
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.
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.
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.
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.
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:
■ 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);
■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);
■Zhou Bin, son of oil czar and security chief Zhou Yongkang (contracting with China's big oil companies).
The business operations of all six princelings relate to the portfolios of their fathers (or father-in-law, in the case of Wilson Feng).
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.
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.
''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.''
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.
Political analysts see the families of Zeng Qinghong, and his patron Jiang Zemin, as the pioneers of modern princeling business.
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.
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.

John Garnaut is writing a book on China's princelings. A version of this story will also appear at foreignpolicy.com



A Family Affair

China's princelings are running amok. And Bo Xilai is just the tip of the iceberg.

BY JOHN GARNAUT | MAY 30, 2012

Saturday, May 26, 2012

Bear in a China shop - Arthur Kroeber (Foreign Policy)


Bear in a China Shop

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.

BY ARTHUR KROEBER | MAY 22, 2012

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, predicted in March 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 China is nearing a wall hit by many high-speed economies when growth slows or stops altogether -- the so-called "middle-income trap."
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?
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.
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.
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.
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.
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. 
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.
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.
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 wrote the book on financial manias, called China's housing boom "totally unsustainable" 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.
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.
Since 2000, the average house in China has been bought with around 60 percent cash down, according to research by my firm, GK Dragonomics, 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 articles about "ghost cities" 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.
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. 
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 2010 study 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 $165 billion in 2011. Yet private firms, which produce almost all of China's productivity and employment gains, earn thin margins and suffer pervasive discrimination.
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.

Sunday, April 8, 2012

The Revenge of Wen Jiabao - John Garnaut (Foreign Policy)


John Garnaut
Foreign Policy, March 29, 2012

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.

If Premier Wen Jiabao is "China's best actor," as his critics allege, 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
Responding to a gently phrased question about Chongqing, Wen foreshadowed Bo's political execution, 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 ideological heirs. 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.
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.
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.
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.
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.
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 until Feb. 6 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.
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."
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.
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.
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.
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.'"
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.
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.
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 then propaganda minister, 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."
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.
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.
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.
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.
"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."
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.
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.
Wen Jiabao remained in charge of the Communist Party Central Office, now working for Hu Yaobang's increasingly reformist successor, Zhao Ziyang. A famous photo 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 Wen shifted his loyalty 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.
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.
Two years ago, on the 21st anniversary of Hu Yaobang's death, Wen penned an essay in thePeople's Daily 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.
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.
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 "Guangdong Model." 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. The third, in September, explored the 30th anniversary of the 1981 Resolution on History, which had confirmed the Cultural Revolution as a catastrophe that must never occur again.
It was at the September gathering that Hu Deping set down the themes that Wen later referred to in his press conference, and published his comments on a website 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!"
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?
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:
"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."
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.
"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."
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.
"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."
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.
Hu Dehua, the youngest son, spelled out the gulf between these positions in a rare Chinese media interview 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."
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.

John Garnaut is China correspondent for the Sydney Morning Herald and the Age. He is writing a book on the princelings shaping China's future.

Wednesday, February 29, 2012

Political reform in China - Stratfor


China: Reform in a Resilient Political System
Stratfor, February 29, 2012

Summary
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. 

Analysis 
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. 

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.

Reform in a Chinese Context 
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. 

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. 

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. 

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. 

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. 

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. 

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.

Systemic Challenges 
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. 

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. 

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. 

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. 

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. 

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.

Sunday, January 8, 2012

Ian Buruna on China - Le Monde


"Le modèle chinois ébranle les certitudes américaines"

LE MONDE CULTURE ET IDEES | 07.01.12 | 17h08   •  Mis à jour le 08.01.12 | 09h15
par Propos recueillis par Sylvain Cypel
Des employées d'une ligne de production dans l'entreprise de matériel électronique Suzhou Etron à Suzhou, en Chine.
Des employées d'une ligne de production dans l'entreprise de matériel électroniqueSuzhou Etron à Suzhou, en Chine.Reuters/© Aly Song / Reuters

NEW YORK, CORRESPONDANT - Installé depuis 2005 à New York, Ian Buruma est devenu l'un des intellectuels les plus en vue aux Etats-Unis. Il collabore à la New York Review of Books, au New York Times et au New Yorker. Polyglotte (néerlandais, anglais, allemand, chinois, japonais et français, quoi qu'il en dise), il a été l'éditeur des pages culturelles de la Far Eastern Economic Review, à Hongkong, et de The Spectator, à Londres. Aujourd'hui professeur de démocratie, droits de l'homme et journalisme à l'université Bard - "façon de dire que j'enseigne ce que je veux, c'est le charme du système universitaire américain", 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.

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 ? 
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 Domicile conjugal(1970), de François Truffaut. Le personnage d'Antoine Doinel y tombe amoureux de la Japonaise... et moi aussi ! A l'époque, aller 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'yenseigner. 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.
Vous êtes progressiste et un produit typique du multiculturalisme. Pourquoi dénoncez-vous la "courte vue" des progressistes sur l'islam ?
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'accepter 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 préserver 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.
Il y a des choses plus importantes que la culture. Je n'admets pas l'argument culturel pour justifier 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 porter le niqab dans ses fonctions, oui. Une personne dans la rue, non. Ce type d'interdiction n'est qu'une façon de dissuader des gens impopulaires d'adhérer à une religion impopulaire.
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 ?
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 leRockefeller Center, 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 préserver des liens l'emportera sur les forces poussant au conflit.
Quelle est la part de réalité et de fantasme dans cette tension montante ?
Par fantasmes, vous entendez peur. Elle est fondée : la montée en puissance de la Chine ne pourra que réduire le pouvoir 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.
Un sondage de l'Institut Pew 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... 
C'est une combinaison d'ignorance et de peurs, exploitées par des chroniqueurs de radios dans le but de blâmer 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'alarmer inconsidérément. Au début du XXesiècle, l'invention du personnage de Fu Manchu (sorte de génie du Mal incarnant le "péril jaune") 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'être aussi réelle qu'on l'a présentée. Mais même la CIA y a sincèrement cru.
Les Etats-Unis sont un pays qui vit sous la peur constante de puissances extérieures qui menaceraient de faire disparaître 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 protéger. 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.
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 ?
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 monter 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.
Et le regard des Chinois sur les Etats-Unis, comment évolue-t-il ?
Tout dépend de quels Chinois on parle, mais, pour résumer, c'est attirance-répulsion. Surtout parmi les classes éduquées qui rêvent d'envoyer leurs enfants dans les universités américaines et en même temps peuvent être 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 pouvoir 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 XXIesiècle 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 sentir acceptés, légitimes en termes occidentaux, et se sentaient rejetés. C'est ce que ressentent aujourd'hui les nationalistes chinois.
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 ?
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 accéder 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 àsurmonter, 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.
Qu'est-ce qui pourrait déclencher un processus démocratique en Chine ?
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'avancer vers la démocratie. Pour le pouvoir, la grande faiblesse de ce système est que, le jour où l'économie cesse de croître et que l'enrichissement des élites urbaines s'arrête, l'édifice s'écroule. Dans ce cas, tout pourrait advenir, d'une alliance entre démocrates, ressortissants des nouvelles élites, et une fraction du parti, jusqu'à un coup d'Etat militaire.