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G M
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« Reply #450 on: December 14, 2011, 07:56:13 PM »

Too bad they don't have a second amendment , , ,

Well, they'd need a lot of anti-tank weaponry.....
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G M
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« Reply #451 on: December 17, 2011, 07:39:39 PM »

"The communists will save us once again I hope"

Who is going to save these people, Andrew? Or are just more eggs to be broken on the way to Chomsky's paradise?

http://archive.frontpagemag.com/readArticle.aspx?ARTID=18389

Chomsky turned out to endorse a fairly orthodox band of socialist revolutionaries. They included the architects of communism in Cuba, Fidel Castro and Che Guevera, as well as Mao Tse-tung and the founders of the Chinese communist state. Chomsky told a forum in New York in December, 1967 that in China “one finds many things that are really quite admirable.” He believed the Chinese had gone some way to empowering the masses along lines endorsed by his own libertarian socialist principles:

"China is an important example of a new society in which very interesting and positive things happened at the local level, in which a good deal of the collectivization and communization was really based on mass participation and took place after a level of understanding had been reached in the peasantry that led to this next step."

When he provided this endorsement of what he called Mao Tse-tung’s “relatively livable” and “just society,” Chomsky was probably unaware he was speaking only five years after the end of the great Chinese famine of 1958–1962, the worst in human history. He did not know, because the full story did not come out for another two decades, that the very collectivization he endorsed was the principal cause of this famine, one of the greatest human catastrophes ever, with a total death toll of thirty million people.


http://www.nytimes.com/2011/12/17/world/asia/wukan-revolt-takes-on-a-life-of-its-own.html?_r=1&hp=&pagewanted=all



A mourner at a rally and mock funeral for Mr. Xue on Friday. Relatives said his body was covered in bruises, his nose bloodied and his thumb broken.

WUKAN, China — Each day begins with a morning rally in the banner-bedecked square, where village leaders address a packed crowd about their seizure of the village and plans for its future. Friday’s session was followed by a daylong mock funeral for a fallen comrade, whose body lies somewhere outside the village in government custody.


It has been nearly a week since the 13,000 residents of this seacoast village, a warren of cramped alleys and courtyard homes, became so angry that their deeply resented officials — and even the police — fled rather than face them. Now, there is a striking vacuum of authority, and the villagers are not entirely sure what to make of their fleeting freedom.

“We will defend our farmland to the death!” a handmade banner proclaims, referring to a possible land deal they fear will strip them of almost all their farmland. “Is it a crime,” another muses, “to ask for the return of our land and for democracy and transparency?”

How long they will last is another matter. As the days pass, the cordons of police officers surrounding the village grow larger. Armored trucks and troop carriers have been reported nearby. On local television, a 24-hour channel denounces the villagers as “a handful of people” dedicated to sabotaging public order, with the names of protesters flashing on a blue screen, warning that they will be prosecuted. Many here fear this will all end badly. “The SWAT teams and the police here are acting like they’re crime organizations, not police forces,” said Chen Dequan, a 50-year-old farmer and fisherman. “The entire village is worried.”

The dispute that emptied Wukan of its government officials is, on its face, like hundreds — if not thousands — of others that inspire protests here each year: villagers who believe their land was taken illegally take to the streets when their concerns are ignored.

But the suspicious death of a well-liked villager, who was selected to negotiate on the citizens’ behalf, appears to have turned this long-simmering grievance into a last-straw standoff with the authorities.

The land deal inspiring the protests involved one of China’s largest property developers, a Hong-Kong listed company called Country Garden that prides itself on fast-paced construction in mostly suburban areas. Yang Huiyuan, described by analysts as the company’s chairwoman, is often listed as one of the richest women in China.

The company has faced controversy before. Xinhua, China’s official news agency, said this year that it had bought Anhui Province land to build a golf course in a deal that smacked of “the typical collusion of real estate business and local government.” The agency’s signed commentary said more than 10 government officials had been punished after that transaction and other cases of illegal purchases and use of land there.

Here in Wukan, many residents believed that the national government had not yet intervened to resolve matters simply because it had been misled by nefarious local officials to believe that all was well.

So far, however, it seems from inside this locked-down village that government leaders at all levels are flummoxed at their blue-moon, if temporary, loss of control.

Lin Zuluan, 67, a retired businessman who is now the village’s de facto leader, said that officials had approached him to negotiate an end to the protest, but that talks had gone nowhere, in part because the officials would not meet villagers’ demands to return all their land.

“I do have concerns” over the lack of progress, he said. “But I do believe this country is ruled by law, so I do believe the central government will do whatever it has to do to help us.”

In the meantime, life here goes on in an aura of unreality as much as uncertainty, a mixture of grief and optimism and somewhat willful ignorance of the hints of trouble at every police roadblock and on every news broadcast.

Inside the village, citizens hail foreign journalists as visiting saviors, bombarding them with endless cigarettes, bowls of rice-and-seafood porridge and free rides on the backs of scooters. The villagers bristle at the government’s suggestion that they are being financed by unnamed foreigners, but are convinced that only reporting outside the state-run press will bring word of their plight to leaders in Beijing.

Corruption accusations against Country Garden, the developer, go back for years. In 2007, the Southern Weekly newspaper alleged irregularities in a hotel construction contract awarded to the company by a district government in Zhangjiajie, in Hunan Province. The paper suggested that the government heavily discounted the project’s land cost because most of Country Garden’s payment was secretly diverted to a company in which two Country Garden officials had invested.

In a faxed statement Friday, Country Garden said both the other projects in Anhui and Hunan were wholly aboveboard. The firm said the Anhui deal was free of corruption and the Zhangjiajie contract was awarded through open, transparent bidding. Officials have contended that the money supposedly diverted was in fact spent for legitimate public purposes related to the project.

In Wukan, two people familiar with the Country Garden proposal said the company planned to buy at least 134 acres of land for villa homes and shopping centers here. About half of that land is controlled by Fengtian Livestock, a pig-raising firm that holds a 50-year lease issued by the government; the rest is apparently in villagers’ hands.

Chen Wenqing, the livestock firm’s owner, said Country Garden was negotiating directly with the local authorities last spring when the deal fell through over a difference on price. Country Garden said it had intended to build a project but has signed no agreements.

But Mr. Lin, the retired businessman, said villagers became angry in September when they saw construction work at the pig-farm site. Officials of Lufeng city, a district that controls Wukan, ordered the building stopped, he said, and asked villagers to select a committee of locals to settle the controversy.

Negotiations to return the land to villagers produced little, however. On Dec. 9, unidentified men abducted one of the negotiators, a 42-year-old leather worker named Xue Jinbo, and four other men from a local restaurant.

The other four soon turned up in nearby jails, accused of inciting villagers to subvert the government. Mr. Xue was seen only on the night of Dec. 11, when local government officials summoned relatives to view his body at a mortuary.

They said that he had died of a heart attack in a hospital and that medical records of his care would be provided.

But family members say officials confiscated their mobile telephones before allowing them into the funeral home, apparently to prevent them from taking photographs. Mr. Xue’s nose was caked with blood, his body was black with bruises and his left thumb was broken, apparently pulled backward to the breaking point, one of them, a nephew named Xue Ruiqiang, said on Friday in an interview.

Word of Mr. Xue’s death brought the villagers into the streets and sent members of the village committee that was involved in the land negotiations fleeing.

Mr. Xue’s 21-year-old daughter, Xue Jianwan, said before the service that her father “was a straightforward man who always stood up for people.”

“Mom said that if he hadn’t been such a straightforward person, he probably wouldn’t have ended up like this,” she added.




Shi Da contributed research from Wukan, and Mia Li from Beijing. Sharon LaFraniere and Jonathan Ansfield contributed reporting from Beijing.
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ccp
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« Reply #452 on: December 19, 2011, 01:49:31 PM »

China abroad
Sun Tzu and the art of soft power
China is using a new tool to boost its influence abroad. Is it the right one?
Dec 17th 2011 | Beijing, Guangrao and Huimin | from the print edition

IN HUIMIN COUNTY in the Yellow River delta, a push by China to build up the nation’s global allure has fired the enthusiasm of local officials. Young men and women dressed in ancient military costumes goosestep across a rain-soaked open-air stage. Their performance is in homage to the 6th-century-BC strategist, Sun Tzu, author of pithy aphorisms beloved of management gurus worldwide. Local cadres sitting on plastic chairs stoically endure the sodden spectacle.

Huimin county regards itself as the birthplace of Sun Tzu and thus the fountainhead of an ancient wisdom which, officials believe, can help persuade the world of China’s attractiveness. The damp display marks Sun Tzu’s supposed birthday. Organisers try to whip up enthusiasm with fireworks and a massive digital screen flashing images of the bearded sage and his one slim work, the “Art of War”, a 6,000-word booklet. Under an awning, journalists from the Communist Party’s newspaper, the People’s Daily, feed live video of the event onto their website. The world gets to see it, even if most locals have stayed at home.

At a local hotel, a Sun Tzu symposium is held. Colonel Liu Chunzhi of China’s National Defence University (also a leader of the China Research Society of Sun Tzu’s Art of War) told this year’s gathering that Sun Tzu was part of “the riches of the people of the world”. Promotion of his work, he said, was “an important step toward the strengthening of China’s soft power”. Sun Tzu may have written about stratagems for warfare, but Huimin’s assembled scholars prefer to tout him as a peacenik. Their evidence is one of the sage’s best-known insights: “The skilful leader subdues the enemy’s troops without any fighting.” What better proof, say his fans in China, that the country has always loved peace?

Chinese leaders, determined to persuade America that they mean no harm, have recruited Sun Tzu to their cause. In 2006 President Hu Jintao gave President George Bush silk copies of the “Art of War” in English and Chinese (not, it seemed, as a way of suggesting better ways of fighting in Afghanistan and Iraq, but of hinting that the wars need not have been fought in the first place). Jia Qinglin, the fourth-ranking member of the party’s supreme body, the Politburo Standing Committee, said in 2009 that Sun Tzu should be used to promote “lasting peace and common prosperity”. In July this year, Beijing’s Renmin University presented an “Art of War” to Admiral Michael Mullen, the chairman of America’s joint chiefs of staff, during a visit to the capital.

China has long been proud of Sun Tzu. Mao Zedong was a great fan, even sending aides into enemy territory during the civil war to find a copy of the “Art of War”. But it is only relatively recently that the party has seized upon the notion of building up soft power, a term coined 20 years ago by an American, Joseph Nye of Harvard University, a former chairman of America’s National Intelligence Council and senior Pentagon official, to describe “the ability to get what you want through attraction rather than coercion or payments”. President Hu’s use of it in 2007 signalled a shift in party thinking. Throughout the 1990s and into this century, China had been trumpeting Deng Xiaoping’s slogan of “economic construction as the core”. Over the past decade building soft power has emerged as a new party priority.

Mr Nye himself drew a link between soft power and Sun Tzu in a 2008 book, “The Powers to Lead”. Sun Tzu, he said, had concluded that “the highest excellence is never having to fight because the commencement of battle signifies a political failure”. To be a “smart” warrior, said Mr Nye, one had to understand “the soft power of attraction as well as the hard power of coercion”.

Mr Hu may have been slow to adopt Mr Nye’s term openly, but soon after he took office in 2002 he began trying to make China a more attractive brand. In June 2003 a small group of senior propaganda officials and foreign-policy experts met in Beijing for the first time to discuss the importance of soft power. Later that year officials began touting a new term, “peaceful rise”, to describe China’s development. Their message was that China would be an exception to the pattern of history whereby rising big powers conflict with established ones. Within months of the slogan’s launch, officials decided to amend it. Even the word “rise”, they worried, sounded too menacing. The term was changed to “peaceful development”. Mr Hu also adopted the word “harmonious”, sprinkling speeches with references to China’s pursuit of a “harmonious world” and a “harmonious society”.


The results have been mixed. With rich countries on the skids, China’s economic model is looking good. Development driven by the state as well as the market seems to be delivering dividends, and China’s success has helped popularise the idea that state-owned companies should have a large role in economies. Businesspeople around the world admire the efficiency of both the public and private sector in China. Chinese investment in African countries is giving the continent a welcome boost. Yet the economic model is inseparable from the political model; and, as the Arab spring has shown, authoritarianism has little appeal in the West or anywhere else. China’s hard power, in terms of cash, is certainly increasing; but its careless use of that power has not attracted admiration. Its truculent behaviour at the Copenhagen climate-change conference in 2009, its quarrels with Japan over fishing rights in 2010 and its more assertive behaviour recently in the South China Sea have created deep unease about the nature of its evolving power, not least among neighbours that once saw China’s rise as largely benign. Such concerns have been compounded by its persistent efforts internally to suppress dissent, control the internet and stifle the growth of civil society.

This is not how the party sees it. After a meeting in October this year, the party’s Central Committee declared that the soft-power drive had made “conspicuous gains”. But it said further efforts were urgently needed. Many Chinese would agree. The word “harmonise” is now widely used ironically by ordinary Chinese to mean suppressing dissent. Abroad, officials have been trying to win over Western audiences by pouring billions of dollars into the creation of global media giants to rival the soft power of brands such as CNN and the New York Times. A provincial propaganda official complained in January that America, with only 5% of the world’s population, “controlled” about 75% of its television programmes. “Combined with the influence of brands and products such as Hollywood, Kentucky Fried Chicken, McDonald’s, jeans and Coca-Cola, American culture has permeated almost the entire world,” he wrote.

China is hamstrung by a contemporary culture that has little global appeal. Its music has few fans abroad; indeed, China’s own youth tend to prefer musicians from Hong Kong, Taiwan, Singapore and America. Its political ideology has few adherents: Mao Zedong and his little red book no longer enjoy the cachet they did in Western counterculture during the 1960s. The goosestep of the Sun Tzu soldiers in Huimin county notwithstanding, officials are now well aware that to market China abroad they must avoid references to authoritarianism. The party and its ideology were barely hinted at in the pageantry of the opening ceremony of the Olympic games in Beijing in 2008. Since the present is a hard sell, China is having to lean heavily on the distant past.

The party has not bought into Mr Nye’s view that soft power springs largely from individuals, the private sector and civil society. So the government has taken the lead in promoting ancient cultural icons whom it thinks might have global appeal. Even here it has limited options. Buddhism, which is anyway a foreign import, has been cornered by the Dalai Lama. Both it and Taoism, a native religion, sit uncomfortably with an atheistic party doctrine. This leaves only a handful of figures to choose from.

At the forefront is Confucius. Few Westerners can quote a saying of Confucius. But most at least regard him as a bearded, wise dispenser of aphorisms, far more profound than America’s superficial consumerism. The party is promoting him as a kind of Father Christmas without the undignified jolliness; a sage whose role in the development of centuries of Chinese authoritarianism the party glosses over in favour of his philosophy’s pleasant-sounding mantras: benevolence, righteousness and (of importance to Mr Hu) harmony. So it was that China used Confucius’s name to brand the language-training institutes it began setting up abroad in 2004. There are now more than 300 Confucius Institutes worldwide, about a quarter of them in America.

But Confucius is problematic. Mao and his colleagues regarded Confucius’s philosophy as the ideological glue of the feudal system they destroyed; and so attempts to promote him are vulnerable to the growing split in the Communist Party. In January, with great fanfare, the National History Museum unveiled a bronze statue of him standing 9.5 metres (31 feet) high in front of its entrance by Tiananmen Square. Three months later the statue was quietly removed. The sage’s appearance so close to the most hallowed ground of Chinese communism had outraged hardliners. They saw it as an affront to Mao, whose giant portrait hung diagonally opposite.

Sun Tzu is not so tainted. His is the only big name among China’s ancient thinkers to have survived the communist era with barely a scratch. In the 1970s he was held up as an exemplar in Mao’s struggles against leaders he disliked. The study of Sun Tzu, said a typical tract published in 1975, offered useful guidance for “criticism of the rightist opportunist military line” and the “reactionary views of the Confucianists”. The party still keeps Confucius at the forefront of its soft-power drive, but Sun Tzu is making headway.

That’s partly because the West’s enthusiasm for Sun Tzu makes him an easy sell. The “Art of War” is widely used by after-dinner speakers short of ideas. Take, for example (from the 1910 translation by Lionel Giles, the first authoritative one in English): “The best thing of all is to take the enemy’s country whole and intact; to shatter and destroy it is not so good”; “all warfare is based on deception”; and “it is the business of the general to be still and inscrutable, to be upright and impartial”. Sun Tzu beat the Christmas-cracker industry by two –and-a-half millennia.


 .In the West Sun Tzu’s advice has been adapted for almost every aspect of human interaction from the boardroom to the bedroom. The publishing industry feeds on Sun Tzu spin-offs, churning out motivational works such as “Sun Tzu For Success: How to Use the Art of War to Master Challenges and Accomplish the Important Goals in Your Life” (by Gerald Michaelson and Steven Michaelson, 2003), management advice such as “Sun Tzu for Women: The Art of War for Winning in Business” (Becky Sheetz-Runkle, 2011) and sporting tips such as “Golf and the Art of War: How the Timeless Strategies of Sun Tzu Can Transform Your Game” (Don Wade, 2006). Amazon offers 1,500 titles in paperback alone. Paris Hilton, an American celebrity and author of an aphorism of her own: “Dress cute wherever you go, life is too short to blend in”, has been seen dipping into him (see picture).

The sage’s popularity in the West still owes more to Hollywood than China’s own effortsRather more seriously, in his recent book, “On China”, Henry Kissinger revealed how impressed he was by the ancient strategic wisdom Chinese officials seemed to draw upon when he visited the country in the 1970s as America’s national security adviser. Mao, he noted, “owed more to Sun Tzu than to Lenin” in his pursuit of foreign policy. To some historians Mao was a dangerously erratic despot. To Mr Kissinger, he was “enough of a Sun Tzu disciple to pursue seemingly contradictory strategies simultaneously”. Whereas Westerners prized heroism displayed when forces clashed, “the Chinese ideal stressed subtlety, indirection and the patient accumulation of relative advantage”, Mr Kissinger enthused in a chapter on “Chinese Realpolitik and Sun Tzu’s Art of War”. Praise indeed, from the West’s pre-eminent practitioner of Realpolitik, whose mastery of the art of ideology-free diplomacy enabled President Nixon’s visit to China in 1972.

Yet a closer look reveals Sun Tzu’s flaws as a tool of soft power. Chinese attempts to remould him as a man of peace stumble over the fact that his book is a guide to winning wars, avidly studied by America’s armed forces as it was by Mao. Sam Crane of Williams College in Massachusetts says that during the Abu Ghraib prison scandal in Iraq he delighted in telling students attending his Sun Tzu classes (some of whom were preparing to join the army) that the “Art of War” advised that prisoners be treated kindly. But, he says, “I think the thing that makes [the book] universal in a grim way is war and competition. War is not a Western construct: the Chinese have been really good at war for a long time.”

American strategists often read the “Art of War” to understand China not as an alluring and persuasive wielder of soft power, but as a potential enemy. A psychological operations officer in America’s Army Central Command, Major Richard Davenport, argued in the Armed Forces Journal in 2009 that China was making use of Sun Tzu’s advice to wage cyber warfare against America. The incriminating quotation was “Supreme importance in war is to attack the enemy’s strategy”.

The sage’s popularity in the West still owes more to Hollywood, source of much American soft power, than China’s own efforts. John Minford, whose translation was published in 2002, says that after Gordon Gekko, a villainous corporate raider played by Michael Douglas in the film “Wall Street”, quoted a line from Sun Tzu (“Every battle is won before it’s ever fought”), the book acquired a “mystique” among students of entrepreneurship.

Professor Minford says he is mystified by this. “I had to struggle with the book at the coal face, with the actual Chinese, and it’s a very peculiar and particularly unpleasant little book which is extremely disorganised, made up of a series of probably very corrupt bits of text, which is very repetitive and has extremely little to say.” He calls the work (whose authorship is even disputed) “basically a little fascist handbook on how to use plausible ideas in order to totally destroy your fellow man”.

Some Chinese say openly that using ancient culture to promote soft power is a bad idea. Pang Zhongying of Renmin University says it does not help the country boost its standing abroad. Instead, says Mr Pang, a former diplomat, it highlights what he calls “a poverty of thought” in China today. “There is no Chinese model, [so] people look back to Confucius and look back to Sun Tzu.” Mr Pang argues that democracy is the best source of soft power. President Hu gives short shrift to that notion.

As Mr Nye sees it, soft power stands a better chance of success when a country’s culture includes “universal values” and its policies “promoted interests that others share”. But China’s soft-power push has coincided with an increasingly strong rejection by Chinese leaders of the very notion of universal values. Among China’s leaders, the prime minister, Wen Jiabao, has come closest to supporting the universalists’ view, but his is a lone voice.

At least in Huimin, Mr Wen appears to enjoy some support. The title last year of the county’s annual Sun Tzu symposium was “Universal values in Sun Tzu’s Art of War and [the work’s] use in non-military realms”. But local officials are more preoccupied with revving up the economy of Huimin, whose dreary main street enjoys a burst of colour from the frontage of a 24-hour McDonald’s. Sun Tzu is seen as a potential new engine of growth; a draw for tourists to the agricultural backwater. In 2003, at a cost of 65m yuan ($7.9m), the county opened Sun Tzu Art of War City, a vast complex of mock-imperial buildings which hosted the rain-soaked birthday celebration. Huimin’s main urban district has been renamed Sun Wu (as Sun Tzu is also called).

But the vast empty car park outside the Art of War City and its near-deserted courtyards suggest the town is struggling. It is not being helped by fierce competition with another county 100km (60 miles) away, Guangrao, which in recent years has been laying a rival claim as Sun Tzu’s birthplace. In June the county, whose tyre, petrochemical and paper-making industries have made it much richer than Huimin, held a foundation-stone ceremony for its own Sun Tzu theme park. Chinese media say this is due to open in 2013 and will cost a prodigious 1.6 billion yuan ($250m).

But Guangrao too will have a hard time turning Sun Tzu into a soft-power icon. In April about 700km (430 miles) to the south, Disney broke ground in Shanghai at the site of an amusement park that it says will feature the world’s largest Disney castle. It is due to cost 24 billion yuan and open in five years. Xinhua, a government news agency, published a commentary on its website calling such theme parks “a big platform for soft-power competition between nations”. One widely reposted blog put it more bleakly. American soft power, it said, had “conquered 5,000 years of magnificent Chinese civilisation”.

Sun Tzu had an aphorism to suit China’s predicament: “Know the enemy, know yourself and victory is never in doubt, not in a hundred battles”. If China wants to influence the world, it needs to think hard about the values it promotes at home.

from the print edition | Christ
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bigdog
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« Reply #453 on: December 19, 2011, 08:24:03 PM »

http://www.huffingtonpost.com/lawrence-korb/defense-spending_b_1158413.html
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G M
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« Reply #454 on: December 22, 2011, 11:11:13 AM »

**I wouldn't pop the corks on the champagne just yet.....

http://www.telegraph.co.uk/news/worldnews/asia/china/8969702/Wukan-forces-Chinese-officials-to-release-three-villagers.html

Wukan forces Chinese officials to release three villagers

The rebellious Chinese fishing village of Wukan forced the ruling Communist Party to agree to the release of three villagers detained for protesting against corruption and land grabs on Wednesday.
 

Residents attend a rally in Wukan, a fishing village in the southern province of Guangdong  Photo: AFP/Getty Images
 

By Peter Simpson in Wukan

8:41AM GMT 21 Dec 2011

Chief village representative Lin Zuluan emerged from two hours of talks with the first high-ranking Chinese government official to intervene in the three-month long open revolt.
 

In a humbling rebuff of his administration’s authority, Guangdong provincial deputy-Communist Party Secretary Zhu Mingguo agreed to a series of demands, said Lin, starting with the release of the villagers.
 

“The three will be released one after another today and tomorrow,” Mr Lin announced to residents.
 

Mr Zhu also agreed to release “in due course” the body of Xue Jinbo, the protest leader allegedly beaten to death in police custody nearly two weeks ago, Mr Lin said.
 

Mr Lin did not say when the body of he 42-year old father of three would be released — police claim he died of a “sudden illness” but his family allege he was beaten to death.
 


Related Articles

Wukan siege: Chinese villagers claim small victory
20 Dec 2011

Wukan: protests and clashes across southern China
20 Dec 2011

 
But he said deputy-secretary Zhu had agreed to launch a full reinvestigation into the death, with Mr Xue’s family closely involved.
 
And he said the authorities have agreed to legitimise the status of the 12-strong temporary village representatives, led by Lin and Yang Semao, until later agreed elections.
 
“We went with three demands and they met them all,” said Mr Lin.

A government working group is to be allowed to enter the village and investigate the land grabs from peasants by local officials who were – along with the police – kicked out of the village during the rebellion.
 
Mr Lin says he believes the authorities will keep their word to avoid more unrest.
 
“Zhu and other officials stressed over and over again they would not come in the village and arrest people,” he said.
 
To the relief of the authorities, a planned protest march on the local administrative town of Lufeng to brazenly confront officials and demand Xue’s body for burial has been called off indefinitely.
 
“We’ll protest again if f the government doesn’t meet its commitments,” village representative Yang warned.
 
Unrest is spreading in the wealthy southern boom province of Guangdong, with two reported deaths on Wednesday during riots in the nearby town of Haimen, situated 75 miles from Wukan.
 
There, residents fearing for their health because of planned coal-fired power plant clashed with security forced after storming government offices.
 
Officials have denied any deaths but more unconfirmed reports emerged last night of further protests, with thousands of people blocking a motorway.
 
Though unrelated to the revolt in Wukan, Haimen residents told Hong Kong reporters they had been following the villagers’ resistance closely.
 
After a rally informing the residents of the unique bluff calling, Wukan village chief Yang told The Daily Telegraph the government’s compromise was a “temporary victory” for the community.
 
“The real victory lies ahead. When we can elect our own leader and when we get back all the land the government sold too cheaply, and trace all the money the officials have embezzled and hand it back to the villagers, that will be a victory,” he said.
 
“I think people can see the miracle of democracy will happen in Wukan,” Yang said.
 
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ccp
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« Reply #455 on: December 23, 2011, 11:48:26 AM »

Sun Tzu in practice.  I suspose Brockster thinks we will gain learn more about them then vice versa which will neutralize them

Historically the US seems to get duped every time with this sort of strategy.  We continue to give it all away:
 
Inside the Ring
By Bill Gertz
-
The Washington Times

7:51 p.m., Wednesday, December 21, 2011
NUKE SCIENTIST EXCHANGE PLANNED

Deputy Energy Secretary Daniel B. Poneman is working on a major Obama administration initiative that would renew scientist exchanges between U.S. nuclear weapons laboratories and Chinese nuclear facilities.

The idea is aimed at promoting openness and transparency by China’s military about its secret, large-scale buildup of nuclear weapons, according to U.S. officials.

Critics say the plan is similar to an exchange program in the 1990s that sent U.S. nuclear scientists to China and produced one of the worst cases of nuclear espionage. Secrets about every deployed warhead in the U.S. arsenal were compromised, including the W-88 small nuclear warhead deployed on submarine-launched missiles.

“We’ve seen this movie before, and it has a bad ending,” one official said.

Officials familiar with the plan told Inside the Ring that the initiative was discussed during a recent policy committee meeting of senior national security officials at the White House.

The initiative is part of the administration’s arms-control-centered security policies. According to the officials, the administration hopes to coax the reluctant Chinese communist leadership and its military into engaging the United States in strategic nuclear talks, something China so far has refused.

“This is a way to reach out to [the Chinese] with multilateral arms-control programs,” said a second U.S. official familiar with the plan.

The initiative likely will face opposition from Congress.

House Republicans added language to the 2012 Defense Authorization Act that restricts the Pentagon and Energy department from cooperating with Beijing in setting up a nuclear security center in China. The provision, when signed into law, will block funding for the center until the secretary of defense certifies that China has halted nuclear proliferation and that the center will be in line with U.S. interests.

U.S. intelligence has linked China to nuclear arms proliferation in Pakistan and other emerging nuclear states.

The second official said the plan evokes memories of the 1990s case of Los Alamos National Laboratory scientist Wen Ho Lee.

Former Energy Department intelligence chief Notra Trulock stated in his 2003 book that Lee, a scientist at Los Alamos’ weapons-designing X Division, provided sensitive nuclear weapons data to China during unreported meetings with nuclear weapons scientists as part of Energy’s exchange programs.

Lee was the U.S. government’s chief suspect in the compromise of W-88 warhead secrets to China.

The FBI, however, mishandled the case against him, and he was never charged with espionage. Instead, he pleaded guilty in September 2001 to a felony charge of mishandling classified information.

Lee denied being a spy and said he was targeted by the FBI because he is Chinese-American.

The FBI has said as recently as last year that it is still investigating the theft of U.S. nuclear secrets by China from the 1990s. But no one has been arrested for the crime since the Lee case.

U.S. counterintelligence in 1998 warned about China’s aggressive intelligence targeting of nuclear scientists. It stated that “rather than send its intelligence officers out to recruit knowledgeable sources at facilities such as the national laboratories, China prefers to exploit over time the natural scientist-to-scientist relationships.”

“Chinese scientists nurture relationships with national laboratory counterparts, issuing invitations for them to travel to laboratories and conferences in China,” the report on foreign spying against laboratories said.

Security officials say renewing the nuclear lab exchange also would reward China for massive cyberattacks against nuclear labs that have been ongoing for decades.

Story Continues →

‹‹ previous 1 2 next ››  About the AuthorBill Gertz
Bill Gertz is national security editor and a national security and investigative reporter for The Washington Times. He has been with The Times since 1985.

He is the author of six books, four of them national best-sellers. His latest book, “The Failure Factory,” on government bureaucracy and national security, was published in September 2008.

Mr. Gertz also writes a weekly .
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« Reply #456 on: February 10, 2012, 04:33:07 PM »

**Make no mistake, a Chinese civil war would shake the world.

http://www.nytimes.com/2012/02/12/opinion/sunday/is-china-ripe-for-a-revolution.html?_r=1

Beijing has learned its lessons from the past. We see this in the swift and ruthless suppression of Falun Gong and other religious sects that resemble the Taiping before they became militarized. We can see it in the numbers of today’s “mass incidents.” One estimate, 180,000 in 2010, sounds ominous indeed, but in fact the sheer number shows that the dissent is not organized and has not (yet) coalesced into something that can threaten the state. The Chinese Communist Party would far rather be faced with tens or even hundreds of thousands of separate small-scale incidents than one unified and momentum-gathering insurgency. The greatest fear of the government is not that violent dissent should exist; the fear is that it should coalesce.

The rebellion holds lessons for the West, too. China’s rulers in the 19th century were, as they are today, generally loathed abroad. The Manchus were seen as arrogant and venal despots who obstructed trade and hated foreigners. All romance was on the side of the Taiping rebels, who at the onset were heralded abroad as the liberators of the Chinese people. As one American missionary in Shanghai put it at the time, “Americans are too firmly attached to the principles on which their government was founded and has flourished to refuse sympathy for a heroic people battling against foreign thralldom.”

As Mr. Xi prepares to visit the United States on Tuesday, a similar sympathy shapes our view of China’s current unrest. Just last weekend, Senator John McCain warned China’s vice foreign minister that “the Arab Spring is coming to China.” The dominant tenor of Western press coverage is that the Communist Party is finally receiving its comeuppance — for its corruption, for its misrule in the countryside, for its indifference to human rights and democracy. And below the surface, usually unspoken, lurks a deeply felt sense of schadenfreude — a desire to see the Communist Party toppled from power by its own people.

But we should be careful about what we wish for. For all of the West’s contempt for China’s government in the 19th century, when the Taiping Rebellion actually drove it to the brink of destruction, it was Britain that intervened to keep it in power. Britain’s economy depended so heavily on the China market at the time (especially after the loss of the United States market to the American Civil War in 1861) that it simply could not bear the risk of what might come from a rebel victory. With American encouragement, the British supplied arms, gunships and military officers to the Manchu government and ultimately helped tip the balance of the war in its favor.

We may not be so far removed. Given the precarious state of our economy today, and America’s nearly existential reliance on our trade with China in particular, one wonders: for all of our principled condemnation of China’s government on political and human rights grounds, if it were actually faced with a revolution from within — even one led by a coalition calling for greater democracy — how likely is it that we, too, wouldn’t, in the end, find ourselves hoping for that revolution to fail?


An associate professor of history at the University of Massachusetts, Amherst, and the author of “Autumn in the Heavenly Kingdom: China, the West, and the Epic Story of the Taiping Civil War.”
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« Reply #457 on: February 10, 2012, 07:47:14 PM »

Intuitively that argument doesn't make much sense to me, but then its a POTH opinion piece  cheesy 

BTW there was an interesting article in today's LA Times about China's car industry's sales doing very well in Latin America.  They've been reverse engineering what's out there and then sell it for 33-50% less.  Apparently there are about 15 Chinese car companies involved.
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« Reply #458 on: February 10, 2012, 08:08:33 PM »

It would be nice to see a greatly improved Chinese gov't, but the road to that point would be a bloodbath of mindboggling numbers.

As far as reverse engineering, it's not coincidental that every foreign car company in China has to have a domestic Chinese car company partnership.
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« Reply #459 on: February 13, 2012, 06:57:07 AM »

"Last month, as Barack Obama's administration began to prepare for Chinese Vice President Xi Jinping's visit to Washington, someone close to the U.S. vice president leaked that Joe Biden would "take over" China policy. The leaker made the case that Biden had a good rapport with Xi, thus priming the U.S. vice president to add the China mandate to his portfolio. According to a number of administration sources, however, this leak was nothing more than an instance of a Washington-style power play -- or score settling. But the episode does demonstrate how important the China relationship has become in the Washington power game, how the portfolio is troublingly up for grabs, and how wildly elbows swing (or pivot) to take control of it."

Continued at:

http://www.foreignpolicy.com/articles/2012/02/10/bull_in_the_china_shop?page=full
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« Reply #460 on: February 13, 2012, 08:57:40 AM »

"Last month, as Barack Obama's administration began to prepare for Chinese Vice President Xi Jinping's visit to Washington, someone close to the U.S. vice president leaked that Joe Biden would "take over" China policy. The leaker made the case that Biden had a good rapport with Xi, thus priming the U.S. vice president to add the China mandate to his portfolio. According to a number of administration sources, however, this leak was nothing more than an instance of a Washington-style power play -- or score settling. But the episode does demonstrate how important the China relationship has become in the Washington power game, how the portfolio is troublingly up for grabs, and how wildly elbows swing (or pivot) to take control of it."

Continued at:

http://www.foreignpolicy.com/articles/2012/02/10/bull_in_the_china_shop?page=full

In case future historians want to trace the origins of the Sino-American wars of the 21st century.....
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« Reply #461 on: February 20, 2012, 02:36:59 PM »

Stratfor's VP of Strategic Intelligence Rodger Baker examines how ethnic conflict, fear of foreign intrusion and access to key freshwater sources will continue to keep China's attention focused on Tibet.

Video transcript:(Watch the video on Stratfor.com to see the maps & graphics!)

The Tibetan Plateau lies in the southwest of China, with Xinjiang to the north, Sichuan to the east and Yunnan to the southeast. It borders Myanmar, India, Bhutan and Nepal, linking China to Southeast Asia. Covering some 2.5 million square kilometers, it accounts for just shy of a quarter of Chinese territory.

The high mountains along the Himalayas and Tibetan Plateau (itself around 4,500 meters above sea level) provides a natural buffer for the Chinese heartland, protecting the Han Chinese through natural barriers and strategic depth.

From Beijing's perspective, if the Tibetan region were opened to foreign influence, it could leave the Chinese core vulnerable. China is particularly concerned about the traditional relations between Tibet and neighboring India.

Historically, Indian cultural and religious influence spread into and through Tibet, and prior to 1950 the majority of Tibetan trade was with India, not China. Beijing views India's hosting of the exiled Tibetan government as a clear sign of India's intent to undermine Chinese authority and to give New Delhi a strategic advantage in any regional competition or confrontation.

Through history, Chinese empires have had mixed relations with Tibet, and it was not until the Qing Dynasty that the Chinese made a substantial effort to not only dominate Tibetan territory, but also to gain authority over Tibetan cultural and social structures through control of Tibetan Buddhism. Historically, in China, when the central government is weak, control over buffer regions is weak, leaving those areas vulnerable to internal separatism or foreign influence.

The strength of the domestic and overseas Tibetan movement is seen as the single biggest ethnic challenge to Beijing. China's leaders fear if Tibet were to break away, it could trigger a domino effect, stripping China of much of its territory and its strategic buffers.

Potential Tibetan moves for independence also challenge China's attempts at overall territorial integrity. The Tibet Autonomous Region is close to 13 percent of Chinese territory but has a population of only around 3 million. Minority ethnic groups in China overall make up around 7 percent of the population, but ethnic areas of China comprise some 60 percent of territory.

There is another consideration for Beijing, beyond national unity and strategic depth. Tibet has been dubbed Asia's "water tower." The Qinghai-Tibet Plateau is the source of some 20 major rivers, and Tibet's glaciers and lakes hold some 400 billion cubic meters of fresh water.

Waters originating in Tibet supply around 30 percent of China's fresh water, through major rivers, including the Yellow and Yangtze, and supply other major regional rivers, including the Brahmaputra, the Mekong, the Irrawaddy and the Salween.

Availability and control over fresh water is growing more important as populations rise, regional climates adjust and water use increases. In addition to water, these rivers are seen as potential -- or realized -- sources of hydropower, and Beijing has already laid plans for both water diversion projects and additional dams along the major rivers -- some that can increase tensions with neighboring states.

Overall, Tibet remains one of the most important yet one of the most contentious of China's strategic buffer zones. Ethnic instability, perceived foreign interference and competition over key natural resources gives China little choice but to remain heavily involved and focused on Tibet.
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« Reply #462 on: February 20, 2012, 05:08:19 PM »

Given all the current discussion about China and water, this book might interest some of you: http://www.amazon.com/Chinas-Water-Warriors-Citizen-Action/dp/0801446368.  

Also, here is a shorter, 20 page, journal article: http://falcon.arts.cornell.edu/am847/pdf/Unbuilt%20Dams.pdf.
« Last Edit: February 20, 2012, 05:10:29 PM by Crafty_Dog » Logged
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« Reply #463 on: February 25, 2012, 08:39:12 AM »

Stated by Obama to the presumed next leader of China.  He has children going to Harvard and does business here in the US frequently.   He is also a son of a Mao Communist and perfectly capable of poltical crackdowns at home.

Seems to me Sun Tzu would be very proud.  They are not just "competing" with us.  They are at war with us for dominance IMO.

Larry Ellison the CEO of Oracle operates his business like a Samurai warrior.  Sun Tzu sells as much as a businees book as for military doctrine.

At the very least it seems clear to me China is competing with us as warriors. 

So do we play dumb in public like Obama and play rough behind the scenes (I think, I hope we are doing that) or do we publically call their bluff?

*** Breaking Now:Obama CampaignMiddle EastNational SecurityThe Obama EconomySearch   Xi Jinping: The Princelings’ Prince
Next leader of China sends daughter to Harvard, crushes dissent

Xi Jinping / AP
   
BY: Bill Gertz - February 16, 2012 5:00 am
During Chinese Vice President Xi Jinping’s visit to Washington, D.C., this week, the media glossed over several facts about the man expected to be China’s next supreme ruler, including his ties to the Chinese military, his connections to U.S. business interests, and his past role in violations of Tibet’s human rights.

Xi is the most powerful of China’s “princelings,” the term for powerful offspring of Chinese communist leaders past and present. Princelings control key sectors of China’s government and economy, drive western luxury cars, and send their spouses and children to the United States to live and work.

Xi is no exception.

At the powerful Central Military Commission (CMC), Xi worked as an office secretary under Gen. Geng Biao for three years beginning in 1979. The work for the military commission is significant since it holds the key to power in China.

Geng’s fortunes rose after he was ordered to take control of broadcast and television stations from the communist faction headed by Mao’s wife and three others known as the Gang of Four. The quelling of the gang led to the rise of reformer Deng Xiaoping, who put China on its current modernization path and away from the turmoil of the Cultural Revolution.

Xi’s wife is a singer in the People’s Liberation Army and performs in a PLA uniform, further highlighting his ties to the military. His daughter, Xi Mingze, secretly attends Harvard under a cover name and her two-dozen man security detail may be collecting intelligence for the Chinese, according to U.S. officials.

The son of Xi Zhongxun, a first-generation communist revolutionary who died in 2002, Xi was picked several years ago to become the party’s General Secretary in place of current Secretary Hu Jintao during a major conference expected this fall.

If the communist succession takes place as planned, observers predict Xi likely will get only half the power at first and Hu will remain head of the CMC, the party organ that runs the military and is the ultimate power in China.

Xi is one of a number of several princelings who have come under scrutiny in China from more doctrinaire communists. The power of the hardline element continues to grow in China; though they welcome China’s growing prosperity, they believe the regime is insufficiently Marxist-Leninist as developed under Mao Zedong.

One such hardliner is Bo Xilai, the provincial Party chief in Chongqing accused of corruption by deputy mayor Wang Lijun, a subordinate who tried to defect to the U.S. consulate in Chengdu but was turned away after spending the night in the consulate.

Bo is considered a “neo-Maoist” and is pushing for a seat on the nine-member Politburo Standing Committee, the collective dictatorship that controls China.

Bo, like Xi, is a princeling and his son, like Xi’s daughter, is a student at Harvard.

Many of the communist princelings live or travel frequently to the United States and are engaged in business dealings, interacting with and influencing American policy analysts and businessmen.

For example, during Xi’s Washington visit, the incoming leader met with former Secretary of State Henry Kissinger, who runs Kissinger Associates and who helps U.S. companies get business deals in China. Xi also met former Clinton administration National Security Adviser Sandy Berger during the visit. Berger’s Stonebridge International also does business in China.

Xi met with Defense Secretary Leon Panetta and a spokesman said the meeting included a “wide-ranging discussion, with Xi urging the U.S. and China to strengthen military exchanges.”

But a U.S. official said that Panetta was surprised by Xi’s lack of candor or response to questions regarding cyber intrusions and advanced weapons, among other issues.

A second U.S. official also said Panetta would travel to China.

Owing in part to his family position and in part to his future place in the Chinese hierarchy, it is difficult to pin down Xi’s exact policy sentiments.

Human rights issues are a stumbling block for Xi and his U.S. counterparts; human rights watchdogs have criticized Xi during the visit for his role in ongoing repression in China.

The group Chinese Human Rights Defenders (CHRD) issued a report that said the wining and dining of the communist leader in Washington is taking place at the same time China is cracking down on dissidents.

Tibet has been a major target of the Chinese in recent months, as several Tibetan monks have set themselves on fire to protest Chinese repression.

Xi traveled to Tibet in July with Chen Bignde, chief of the military’s general staff to celebrate the 60th anniversary of what China calls the “peaceful liberation of Tibet.” The Chinese takeover involved a military assault on the mountainous region that included mass killings and shelling of Buddhist monasteries.

“This seems a strange time for the U.S. to engage in diplomatic niceties or goodwill overtures to China’s likely future president,” said CHRD International Director Renee Xia. “The U.S. should instead hold Xi and other Chinese leaders to account for the Chinese government’s escalating human rights violations at home and its heartless position towards the suffering of the Syrian people.”

China vetoed a U.N. resolution earlier this month that would have condemned Syria’s government for the brutal crackdown in Syria.

Xia said the Obama administration should highlight the worsening human rights abuses in China.

President Obama, Vice President Joseph Biden, Secretary of State Hillary Clinton, and Defense Secretary Leon Panetta made only vague references in public during the Xi visit to China’s human rights abuses, its unfair trade and industrial practices, its military buildup, and its weapons proliferation to rogue states.

The CHRD said that it is “uncertain” whether Xi’s rise to power later this year will lead to improvements in China’s human rights or for future political reform.

CHRD said Xi was Communist Party secretary in Zhejiang from 2002 to 2007, one of the worst periods for democracy and human rights activists in the affluent coastal province, where rampant human rights violations were reported and for which Xi was not held accountable.

“While Xi held a position with the highest authority in the province, the Zhejiang government stood out in its zealous persecution of political dissidents, writers, underground Christians, and human rights activists,” the group said.

Xi also directed the round up and repression of democracy and rights advocates in China prior to the 2008 Olympics in Beijing.

This entry was posted in China and tagged China, hu jintao, Xi Jinping. Bookmark the permal
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Crafty_Dog
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« Reply #464 on: February 25, 2012, 08:49:23 AM »

Just a quick yip to underline a passing point in that piece concerning Henry Kissinger:  A few years back an IDB article went into a goodly amount of depth on how former high ranking US figures were getting paid shocking sums of money to represent China's interests.  Near the top of the list or at the top of it was Kissinger.
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« Reply #465 on: February 25, 2012, 10:01:22 AM »

A little vague but there is a vague allusion to Kissinger being on the take to a Chinese government's technology tech company.

Well I guess he had to impress his celebrity girlfriends (Jill St John among others) somehow (money?).  Certainly not his looks though I guess it could have been his brains:

http://news.google.com/newspapers?nid=1891&dat=19830810&id=TZ8fAAAAIBAJ&sjid=HNYEAAAAIBAJ&pg=3089,1858930
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« Reply #466 on: February 25, 2012, 03:20:24 PM »

Good Google-Fu CCP!
 
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« Reply #467 on: February 26, 2012, 12:04:09 PM »

"Fu"

Did you mean "follow up"?
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« Reply #468 on: February 26, 2012, 12:32:04 PM »

"Fu"

Did you mean "follow up"?

Google-fu


Contents
  [hide]  1 English 1.1 Alternative forms
 1.2 Etymology
 1.3 Noun 1.3.1 Usage notes
 1.3.2 Related terms
 



[edit] English
 
[edit] Alternative forms
 google-fu, Google fu, google fu
 
[edit] Etymology
 
Blend of Google and kung fu
 
[edit] Noun
 
Google-fu (uncountable)
 1.Skill in using search engines (especially Google) to quickly find useful information on the Internet.  [quotations ▼]


[edit] Usage notes
 
Google-fu is often used as a generic term applying to any search engine, and is frequently written in the lowercase form, google-fu. Reliably published usage suggests some ambivalence on whether to place a hyphen between Google and fu.
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« Reply #469 on: February 26, 2012, 12:38:29 PM »

I understand the clarification cool
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« Reply #470 on: March 05, 2012, 02:37:43 PM »


http://online.wsj.com/article/SB10001424052970204276304577262882415736796.html?mod=WSJ_hp_LEFTWhatsNewsCollection

By BOB DAVIS
BEIJING—By lowering China's growth target to 7.5% this year, Premier Wen Jiabao has signaled that an era of supercharged expansion may be coming to an end, a shift with profound implications for countries like Australia and Brazil that have prospered from red-hot Chinese demand for commodities.
The NPC will set key economic priorities for 2012 but as the WSJ's Aaron Back tells Deborah Kan, it's often what goes on behind the scenes that's most telling.

China has announced it is lowering its target growth forecast to 7.5% from 8%. Not a big move but enough to send a few tremors through the world's financial markets. Andrew Peaple and Martin Essex discuss what this means for the global economy. Photo: AP
The adjustment suggests that China's leaders have reached a comfort level with slower growth, and that they don't intend to stimulate the economy through state-led investment, as they have in the past. Instead, they plan to let a long-touted shift away from export-led expansion take its course.
The consequences of this shift depend on how well Beijing manages the transition. China's trading partners are bound to be affected in different ways.
A reduced pace of investment in infrastructure, power generation and exports would likely mean slower growing imports of steel, concrete, oil and other commodities—potentially a blow to Brazil, the oil states of the Middle East, Australia and other commodity powerhouses.
"We think China's supercycle for commodities is behind us," said Credit Suisse analyst Dong Tao.
But with the shift will also come new opportunities, both at home and abroad.
A China that relies more on consumer spending may pollute less, easing global environmental worries, and produce more jobs. The shift could also lift imports of software, entertainment, tourism, and high-technology goods and services produced by the U.S., Europe and other wealthier nations.
"Accelerating the transformation of the pattern of economic development…is both a long-term task and our most pressing task at present," Chinese Premier Wen Jiabao on Monday told the opening session of the National People's Congress, China's version of a parliament, which meets once a year.
China's official growth target has been set at 8% since 2005. The target is largely symbolic: For the past seven years, the Chinese economy has grown at an average annual clip of 10.9%. However, analysts say the 7.5% GDP growth target for 2012 indicates the direction of the economy sought by the government's most senior officials. The International Monetary Fund forecasts Chinese growth of 8.2% this year, and analysts generally peg it at 8% to 8.5%.

CONtINUED
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« Reply #471 on: March 08, 2012, 08:51:59 PM »

From the Norwegian Coast Guard to Israeli drone technicians, 8 surprising winners of China's massive military buildup.

http://www.foreignpolicy.com/articles/2012/03/07/riding_the_dragon?page=full
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« Reply #472 on: March 09, 2012, 12:29:26 PM »

Bigdog,  Very interesting and surprising implications pointed out at your link.  Thank you.
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« Reply #473 on: March 19, 2012, 05:03:00 PM »

**This could be very, very bad.

VERY BAD.


http://www.forbes.com/sites/gordonchang/2012/03/18/chinese-leader-cultural-revolution-coming-to-china/

Chinese Leader: Cultural Revolution Coming to China


Will China descend into a decade of chaos?  Chinese Premier Wen Jiabao is worried that it will.

“Without successful political structural reform, it is impossible for us to fully institute economic structural reform and the gains we have made in this area may be lost,” he said on Wednesday morning in Beijing.  “The new problems that have cropped up in China’s society will not be fundamentally resolved, and such historical tragedies as the Cultural Revolution may happen again.”  Mao Zedong’s decade-long Great Proletarian Cultural Revolution killed millions and nearly destroyed Chinese society.

Wen, during his press conference that closed the National People’s Congress annual meeting last week, actually issued two stunning warnings about another Cultural Revolution.  One of them was made in connection with economic and political reform—the one described above—and another followed his remarks about the endlessly fascinating Wang Lijun incident.

While Americans were watching the Super Bowl, Wang, a high-level Chongqing official, attempted to defect to the U.S. at the American consulate in the Sichuan capital of Chengdu, carrying with him papers that many believe document the foreign assets of the wife of Bo Xilai, his former boss.

Bo, then the Chongqing Party secretary, tried to prevent Wang from getting away by ordering hundreds of his armed security troops to cross into neighboring Sichuan province to surround the Chengdu consulate.  The effort failed as Wang was escorted to Beijing by officials of the Ministry of State Security.  Wang, now detained, has been officially branded a traitor to the country and the Communist Party.

Bo has not fared well either.  He was stripped of his Chongqing post on Thursday, and virtually all analysts believe he has no chance of being named to the all-powerful Politburo Standing Committee this fall.  Many believe that Hu Jintao, China’s current supremo, engineered this bizarre incident as a means of sidelining Bo, but events could spiral beyond control as the Party’s factions scramble to take advantage of a fluid situation.

China watchers, for the longest time, seemed to believe that the form of the Chinese political system no longer mattered.  They told us that the Communist Party had institutionalized itself and had solved the problem that had plagued hardline governments since the beginning of time: succession.  We were told that the upcoming transfer of power, from the so-called Fourth Generation leaders to the Fifth, would be “smooth” and uneventful.

They were wrong.  For one thing, Bo is still holding on to his seats on the Central Committee and the Politburo, giving him the opportunity to fight back.  And at the height of the crisis in Chengdu, he ran to the 14th Group Army in Kunming, in Yunnan province.

Bo’s move is widely seen as an attempt to get the military involved on his side in this ever-widening struggle.  Hu Jintao tried the same maneuver last decade when he enlisted generals and admirals in his tussle with Jiang Zemin, his predecessor, who refused to gracefully yield power.

*Read it all, and hope it isn't correct.
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« Reply #474 on: April 03, 2012, 03:05:47 PM »

This seems to be an interesting source for matters concerning China.  My impression is that it is the Falong Gong outside of China.  I read a hardcopy edition of the newspaper yesterday and was intrigued.

http://www.theepochtimes.com/
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bigdog
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« Reply #475 on: April 19, 2012, 01:29:45 AM »

http://www.foreignpolicy.com/articles/2012/04/16/rotting_from_within?page=full

In many fields of international competition, China is less sanguine about its abilities than outsiders. Chinese leaders often remind Westerners that China is a developing country, with hundreds of millions of people living in poverty, an unbalanced economy, and high social tensions. What should most worry Beijing, and provide some comfort to those who fear Chinese military expansionism, is the state of corruption in the People's Liberation Army (PLA).

True, the world underestimated how quickly a four-fold jump in Chinese military spending in the past decade would deliver an array of new weaponry to prevent the United States from interfering in a regional military conflict. Top American generals have worried publicly about "carrier-killer" ballistic missiles designed to destroy U.S. battle groups as far afield as the Philippines, Japan, and beyond. Last year, China tested a prototype stealth fighter and launched its maiden aircraft carrier, to augment new destroyers and nuclear submarines. What is unknown, however, is whether the Chinese military, an intensely secretive organisation only nominally accountable to civilian leaders, can develop the human software to effectively operate and integrate its new hardware.
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« Reply #476 on: April 19, 2012, 06:08:52 AM »

We can hope, but hope is not a strategy cf our current president.

Militaristic nationalism could easily be a tempting strategy for a government faced with the internal contradictions that the Chinese are.
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« Reply #477 on: April 19, 2012, 07:33:43 AM »

We can hope, but hope is not a strategy cf our current president.

Militaristic nationalism could easily be a tempting strategy for a government faced with the internal contradictions that the Chinese are.

I fear that's exactly how it'll play out.
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« Reply #478 on: May 10, 2012, 01:13:37 PM »

http://online.wsj.com/article/SB10001424052702304203604577395423545473012.html?mod=WSJ_hp_LEFTTopStories

By DINNY MCMAHON And SHEN HONG
China has instructed the Big Four auditors to hand over control of their Chinese operations to local partners by the end of the year and put a Chinese citizen at the top within three years, adding to challenges facing the companies in a fast-growing market.

China's Ministry of Finance said no more than 40% of partners at Ernst & Young, KPMG, Deloitte Touche Tohmatsu and PricewaterhouseCoopers can have gained their qualification as a certified public accountant from overseas. That number can't exceed 20% by the end of 2017, according to the guidelines, which took effect May 2 but were only announced Thursday.

The new rules, which will apply to both partners and managing partners, will given local partners a majority of votes in the new partnership the firms are forming, and effective control

Foreigners were brought in to help build China's accounting business more than 20 years ago, and the accounting giants may struggle to find enough local employees with the necessary experience to run their operations. By one estimate, more than 90% of senior positions are now held by non-Chinese.

The Finance Ministry's move may also complicate efforts to reassure investors that auditing problems of recent years, in which instances of fraud and misrepresentation went undetected, are under control. That could be particularly true if the new rules result in a forced pace of promotion for partners and if the experienced foreign employees necessary to help train the firms' rapidly expanding workforce are sent home.

While the accounting firms have overhauled the way they audit small Chinese firms in an effort to catch reporting abuses that have slipped by in the past, experienced auditors are still necessary to help spot frauds that have plagued the market, accountants say.

The reputation of Chinese auditors has taken a beating over the last two years after many—including big foreign firms—signed off on the books of U.S. and Hong Kong-listed Chinese companies that were later accused of fraud and misrepresentation by short sellers. In some cases, the accounting firms disavowed their own audits from previous years after they discovered problems in the financial statements.

That has become a major point of tension between the U.S. and China. The U.S. has called for access to Chinese-based auditors so as to vouch for their quality, something Beijing has refused to allow.

Those tensions escalated on Wednesday, when the U.S. Securities and Exchange Commission said the refusal of Deloitte's Chinese arm to turn over documents tied to a U.S.-listed client under investigation by the SEC violates U.S. law. Deloitte said it is prohibited from turning over the documents by Chinese law, and is caught between the conflicting interests of two governments. The China Securities Regulatory Commission didn't immediately respond to a request for comment.

In most countries, only locally registered CPAs can be partners, so the new regulations represent a concession by Beijing.

While Chinese law requires that partners in accounting firms must be locally registered CPAs, the government had made an exception for the joint ventures of the Big Four when the country joined the World Trade Organization in 2001, The firms are required to starting restructuring into partnerships this year, which is the form accounting firms take in most parts of the world.

This could have resulted in Beijing demanding the full localization of the firms, as is the practice elsewhere.

China's accounting firms have traditionally drawn some of the best and brightest graduates from the country's universities, and young Chinese auditors have a reputation for being technically proficient and extremely hard working. However, the firms' cracking expansion pace and high turnover among junior staff means they are taking on thousands of inexperienced staff every year.

Local CPAs currently account for 50% of all Big Four partners, according to the Ministry of Finance. But the Big Four may have trouble meeting other conditions announced Thursday, such as ensuring that at least 60% of partners in management roles are held by local CPAs.

Another new rule is that within three years, the head of the firm needs to be a Chinese citizen.

Paul Gillis, a visiting professor of accounting at Peking University's Guanghua School of Management, estimates that more than 90% of management positions at the four accounting firms in China are held by foreigners.

"It's going to be tough for the firms to meet this," he said of the management transition. "I would have thought in the normal scheme of things, we wouldn't have seen a local senior partner for another 10 years," he added, referring to the top job at the firms.

Foreigners aren't barred from taking the CPA exam but it can only be taken in Chinese, a natural barrier for many who currently work in China, although that might prove less of a problem for native Chinese-speaking accountants from Taiwan and Hong Kong.

Other countries also require that CPAs take the exam in the local language.

PwC and Ernst & Young said in separate statements that they suppors the move toward localization and have been taking on more local partners in recent years.

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« Reply #479 on: July 09, 2012, 02:08:41 PM »

Price Data Suggest Specter of Deflation in China
By KEITH BRADSHER
Pravda on the Hudson wink
Published: July 9, 2012
•   
HONG KONG — Prices are tumbling across the Chinese economy, according to government data released Monday, as a flood of goods pouring out of the country’s factories and farms exceeds anemic demand from Chinese households and businesses.
The downward trend makes it much harder for businesses to sell enough goods to repay loans that they took out, usually on the expectation of rising prices. Falling prices also discourage investment, which had slowed sharply this spring, and gave consumers an incentive to delay purchases until prices could fall further.

The news of falling prices, together with a pledge by Prime Minister Wen Jiabao on Saturday to maintain stringent bans on real estate speculation, produced a slide Monday in mainland Chinese stock markets. The main index of the Shanghai stock market dropped 2.4 percent, while the Shenzhen stock market’s benchmark fell 2.2 percent.

Consumer prices dropped 0.6 percent in June from May, the largest month-to-month drop in two years, the National Bureau of Statistics in Beijing announced Monday. Consumer prices were up 2.2 percent from a year earlier, but only because prices kept rising fairly briskly through January of this year before beginning what has now become an accelerating descent.

Producer prices, measured at the factory gate, were down 2.1 percent in June from a year earlier, and down 0.7 percent in June from May. Those prices had started to weaken late last summer, about six months before consumer prices began eroding.

Sun Junwei, a China economist at HSBC, noted that the month-to-month price data were not seasonally adjusted and that June has historically been a month of lower prices. Adjusting for that pattern, he said, could mean that consumer prices were flat in June compared with May.

But consumer and producer prices are clearly slowing even faster than expectations, many economists said, adding that the trend strengthened the case for further economic stimulus in China. The Organization for Economic Cooperation and Development said Monday in Paris that the Chinese and Indian economies were both entering more marked economic slowdowns.

Some company managers complain of having to cut prices for their wares even as labor costs continue climbing.
“Business is slower and more challenging this year compared to the same period last year — I would say prices are down over all by 5 percent this year,” said Elaine Yan, the manager of the import and export department at Wuxi Zontai International, a trading company in Wuxi, China, that sells leather gloves, handbags, scissors and embroidery.

Sopheia Wang, the sales manager at Kunshan Tianyuan Precision Industry, a manufacturer of coffeepots and mugs based near Shanghai, said that her company had resisted cutting prices so far because the local minimum wage had risen 21 percent last month.
“With the global economy not doing well, we are looking into developing the domestic market for our products, rather than actively adjusting downwards our pricing,” she said.

Companies are saving money on raw materials, however, as the global boom in commodity prices has swung into reverse since March.

Chinese economic policy makers did little to respond to the country’s slowing economy from mid-March to mid-May. That period happened to coincide with a factional struggle, as a prominent member of the Communist Party, Bo Xilai, was removed as party secretary of Chongqing in March and suspended from the Politburo in April.

The country’s leadership now seems to be reacting with policies aimed at offsetting the economic slowdown. Mr. Wen took an inspection tour of east central China over the weekend and called for more aggressive fiscal and monetary policies . The Chinese central bank has cut interest rates twice in the past month .

But Mr. Wen also reaffirmed over the weekend the central government’s commitment to improving the affordability of housing, through policies designed to discourage real estate speculation. Banks have been discouraged from issuing mortgages for second and third homes, for example.

China is expected to release a long list of economic indicators Thursday or Friday, but many economists are suspicious that Chinese statisticians “smooth” the data, by underreporting economic growth in good times and overreporting it during periods of slowdown. Some analysts have looked at electricity production and consumption data as a more reliable gauge, but the bank Standard Chartered issued a research report on Monday saying that even electricity figures were showing signs of inaccuracy.

A few economists are starting to ask whether China could face deflation, a sometimes intractable condition of falling prices that can become self-reinforcing, as Japan has found over the past two decades.

“Today’s inflation data show that deflation could become a larger concern for China than inflation,” said Ren Xianfeng, a China economist at IHS, a global consulting company.

But most economists are still skeptical that China faces a significant risk of sustained deflation. Regulated bank lending rates are at 6 percent, leaving a long way for them to be cut. While local government agencies are heavily indebted, the central government is not. And while one of the dangers of deflation is that banks cut back on lending, the Chinese government still heavily controls the country’s banking sector and dictates when to raise or lower the flow of loans.

Michael Pettis, a finance professor at the Guanghua School of Management at Peking University, said that falling prices could even be good for China. Chinese banks have allocated credit heavily to state-owned enterprises and politically connected individuals, who have prospered by borrowing money at 6 percent and investing it in an economy growing at twice that pace, before adjusting for inflation.

Households, which have few investment options available other than bank accounts, have paid a high price under the current system, earning only 3 percent in annual interest, or a quarter of the economic growth rate. The disappearance of inflation, and even falling prices, would help erase a huge annual transfer of wealth away from households and would help to rebalance the economy toward consumers, Mr. Pettis said.

Hilda Wang contributed reporting.

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« Reply #480 on: July 19, 2012, 07:45:16 AM »

This is a piece I wrote in response to a request from a senior State Department officer who is an Asia hand, but has not focused directly on China during his career.  He was looking for an insider's view of the social turmoil occurring recently such as that in Wukan this past Winter.  His question was "are these events isolated, one-time occurrences, or signs of growing tension throughout China?"  It is in part based on discussions with a college professor of Chinese Policy, who is well traveled in China and fluent in Mandarin, and my Father, who follows geopolitics religiously.

Analysis of Local Protests in Rural Chinese Areas

On April 18th in Lijiang, Yunnan, thousands of local farmers surrounded government buildings to protest damage to their homes from coal mining activities, and the behavior of the local officials who unjustly supported the coal companies to the detriment of the local villagers (http://www.kanzhongguo.com/news/12/04/19/448717.html).  A warning shot from a police firearm scared the farmers into attacking a large group of officers with their edged weapons.  Fifteen officers were injured and the Deputy Chief of Police of Yunnan Province was killed.  Riot police were called in to rescue the officers, and many of the farmers were shot dead.

Events like this are not uncommon in China on a national level.  There is a lot of local discontent that boils over into various forms of protest and demonstration.  Last fall, there was a similar uprising in Wukan, Guangdong that led to the abduction and extrajudicial detainment of several of the protest leaders (http://en.wikipedia.org/wiki/Protests_of_Wukan), one of whom was killed.  This intensified the protest until thousands of police seized the town forcing a resolution.

The question here is if these events are isolated, one-time occurrences, or signs of growing tension throughout China.

What makes this incident unique is that it occurred in Lijiang.  Lijiang is a World Heritage Site and premier tourism center of China.  It is very wealthy, and a centerpiece of China’s program for successful minority relations.  The region is populated largely by non-Han people (Yi, Naxi, Hui, Tibetan, and Bai), although most of the police, and government officials are of the Han ethnicity.  The growing number of civil uprisings are not limited to the Han governed minority populated areas however.

"The data show that mass incidents are generally rooted in work-related grievances and seek address of immediate demands rather than seeking broad political changes"  (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1451828).  While the data, in a large part, reflects simple economic concerns, when do these incidents increase to the point where there are areas that become ungovernable due to the conflicts, simple in nature or not?

China has a history of breaking along certain fault lines that crack due to various strains.  So if you add nationwide scandal, like that of Bo Xi Lai, that shows the People how absent they really are in their leaders’ thoughts, to local grievances also related to quality of living and work, what will happen?

Typically, they air month long marathons of anti-Japanese WWII TV shows on every channel to take focus away from the Chinese Communist Party (“CCP”).  This has worked remarkably well to the point that I do not know one person in China that does not hate the Japanese, but they know basically nothing about the Gong Chan Dang/ CCP.

Before I left China earlier this year, I asked a lifelong member of the Gong Chan Dang what if my daughter can no longer speak Chinese after living in the United States for a while.  He said, "It doesn't matter.  China is nothing."  This was reflective of a newly found feeling that the Government doesn't take care of the people, and that they are trying to regulate them too closely and unfairly even when they fully comply with the Gong Chan Dang's agenda.  (see Member's Area for full story and analysis).

The most likely path from here is stabilization of conflicts and more Japanese WWII TV dramas.  However, it is interesting to examine the alternative.

There are several essential problems with creating an accurate picture about what is going on in China.  Most of the US/ foreign media and business interests tend to overhype any turmoil.  Academia tends to try to gain a balanced approach through careful analysis of trends and underemphasizes the turmoil as being common and not disruptive to progress or reform.  And, if you are actually on the ground there, you have little access to news of any events that are occurring, so you do not see or feel any turmoil unless you are in the midst of it.

In the end, what we have is a bunch of interest-biased information coming to us from all directions and people gravitating toward what fits their world image most closely.

What the lifelong member of the Gong Chan Dang said is instructive here.  He has benefited tremendously from the Chinese occupation of the Tibetan Plateau and has gone along with the Party's agenda for decades.  Still, he feels underrepresented and alien to his current Government.  The question is, will this feeling grow among the people like him, or can the Party control this sentiment?  I don't think any of us can predict the answer to that, or what will happen if it does grow beyond the Party's control.

Many Chinese feel that China is a dangerous place where those with money do as they please at the expense of everyone else.  They base this on the food quality issues, leadership abuses of their duties to take care of the People, and the token allowances given to minorities to appease them (financial and academic aid that only masks the vast disparities).  I am not aiming at getting into a comparative argument here between China and any other nation in terms of these issues, but rather to illustrate why people are frustrated to the point of despair about what is happening to their lives there.

There is no vehicle there for people to exert their rights, or to make gains other than through wealth.  And for those that do get wealth (media stars and business tycoons), they send their children overseas to escape the arbitrariness of that system.

On May 17, 2012, it was reported that a suicide bomber, a woman carrying a baby with explosives strapped to her body, killed several people at a government office in Qiaojia, Yunnan.  She was protesting authority’s plans to tear down her home for a development project.  
Quickly the story was revised by the Government to say that the bombing had been done by a disgruntled worker (http://www.theglobeandmail.com/news/world/worldview/death-and-justice-in-south-china/article2435484/page1/).  Rather than awaiting a full investigation of the incident, the chief of Yunnan’s Public Security Bureau declared the case closed and stated that he could stake his reputation and career on the decision.  This prompted the Chinese public to ask why proof of the crime was not being used to determine the outcome rather than this Chief’s reputation and career.

It is becoming obvious that people are losing respect for the Government and the police, and the public's perception of the Bo Xi Lai scandal could be fueling this disconnect between the two further.  One blogger commenting on the Qiaojia incident wrote: “I'm not law professional, nor police, of course not a Public Security Bureau chief, but I know there must be enough evidence before confirming that some suspected criminal is guilty, instead of basing it on deduction or a subjective assumption. Why are there so many suspicious facts in the case? Why is the whole country of China asking questions?”

Of course, the Chinese People deserve better than this.  Dramas about the Japanese during WWII will hopefully outlive their usefulness and social media will hopefully have a positive impact as well.

In China, I asked many people if they thought peoples’ lives were improving and they said no.  They could not trust the food because of all of the scandals involving tainted products of every kind.  People were getting sick and in the hospital often from tainted food they said.  This is just one example, but it is indicative of the greater problem.

If the sentiment is that their lives are not improving and that their Government does not support them, how long can the WWII Japanese dramas keep the masses sedated?  And if they do not remain sedated, what happens then?  Who knows?  Maybe nothing.  

This year before the CCP change of power is going to be unpredictable and very dangerous.  Similar tensions as these reported above are what have led to popular revolt in modern China.  You also have to factor in the impact of the new and ubiquitous communication technologies, and the inflationary potential of bloggers.  These factors magnify all of the tensions, and lend new leverage to organizational effort.  The incident in Wukan is quite instructive in this regard.

So an Apple Store on every corner may be more than just good business for Apple. Tiananmen Square took place at a time that "rhymes" with the present political instability.  That was appreciated by Mark Twain, who has been quoted as saying that "History does not repeat itself, but it does rhyme."
« Last Edit: July 19, 2012, 07:52:03 AM by Russ » Logged

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« Reply #481 on: July 20, 2012, 01:12:10 AM »

Russ,  Wow, great writing and analysis!  Nice to have you on board.

It's been 23 years since the Tiananmen protests and the regime's use of force against them.  I believe freedom will prevail but I've been wrong about the timing for a very long time.
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« Reply #482 on: July 20, 2012, 07:07:49 AM »

Russ,  Wow, great writing and analysis!  Nice to have you on board.

It's been 23 years since the Tiananmen protests and the regime's use of force against them.  I believe freedom will prevail but I've been wrong about the timing for a very long time.

I wholeheartedly agree with DougMacG. Welcome to the the forum, Russ.

On a side note, China is opening in interesting ways. I met 18 Chinese students this week, and had the opportunity to discuss the Constitution, in particular separations of power and the Bill of Rights with them for a couple hours. They are on site for a two week experience. Very interesting discussions.
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« Reply #483 on: July 20, 2012, 09:23:13 AM »

With highly subversive consequences to their way of thinking I'm guessing! 

I would love to hear more about this.
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« Reply #484 on: September 04, 2012, 02:16:30 PM »


 
The balance of payments
BoP until you drop
For the first time since 1998 more money leaves China than enters it
Aug 4th 2012 | HONG KONG | from the Economist print edition
 
..
 
MAINLAND China can now boast over 1m wealthy citizens (qianwan fuweng) each with over 10m yuan ($1.6m), says the latest edition of the “Hurun Report”, which keeps track of China’s capitalist high-roaders. But the mainland seems to be having trouble keeping them. According to the report, published on July 31st, more than 16% of China’s rich have already emigrated, or handed in immigration papers for another country, while 44% intend to do so soon. Over 85% are planning to send their children abroad for their education, and one-third own assets overseas.
 
The affluent 1m have profited handsomely from China’s economic boom. But only 28% of those asked expressed great confidence in the prospects over the next two years, down from 54% in last year’s report. That unease may also be visible in a more obscure report released on the same day, by China’s State Administration of Foreign Exchange (SAFE). It showed that China’s balance of payments had recorded a deficit in the second quarter, for the first time since 1998. Put simply, more money was leaving China than arriving.
 
The same phenomenon can be described less simply. The balance of payments records two different kinds of transactions: cross-border payments for goods and services (i.e., exports and imports), which are recorded in the “current account”, and cross-border payments for assets. China’s current account is still in surplus, largely because its exports exceed its imports. China is also attracting plenty of direct investment from foreigners eager to buy or build companies on the mainland. But both these inflows of foreign exchange were outdone by a record outflow of other kinds of capital, amounting to a net $110 billion. This left China’s overall balance of payments in deficit, diminishing China’s international reserves by $11.8 billion (or just under 0.4%).
 
The drop in reserves was such an unfamiliar twist in the data that Reuters initially reported it with the wrong sign. A SAFE spokesperson felt the need to say that these outflows did not amount to a mass rush for the exits. The exits are, in any case, partially blocked by China’s capital controls. Still, such regulations can stop neither multinational companies, which may repatriate profits, nor determined wealthy individuals, who travel frequently, hold foreign bank accounts and run their own cross-border businesses. Chinese individuals may take up to $50,000 out of the country each year without special permission. Victor Shih of Northwestern University reckons that the richest 1% of Chinese households own $2 trillion-5 trillion of property and liquid assets. If they took fright, they could overwhelm even China’s vast foreign-exchange reserves.
 
China’s rich often have inside knowledge of the economy’s condition, Mr Shih has pointed out. If their money is leaving, everybody else should take note. But Zhiwei Zhang, chief China economist at Nomura, a Japanese bank, is more sanguine. He thinks the capital outflow is not an alarming sign in itself, but just reflects economic worries that are already well-known. It is no surprise that firms and investors should reshuffle their portfolios given disappointments in China’s property market and the interruption in the yuan’s rise against the dollar.
 
Indeed, downward pressure on the currency is both a cause and a consequence of the capital outflows. From June 2010 to February this year, the yuan appreciated by over 8% against the dollar. Since then, it has slipped by 1% or so. The number of wealthy Chinese, according to the “Hurun Report”, may be growing strongly. But 10m yuan is not what it was.
 
From the print edition | China
 
 
 
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« Reply #485 on: September 19, 2012, 10:47:00 AM »

I don't agree with everything, but the author makes some reasonable points.



West’s China hypocrisy
By Guy de Jonquières, Special to CNN
Editor's note: Guy de Jonquières is a senior fellow at the European Centre for International Political Economy. The views expressed are his own.

You do not need to be a panda-hugger or a Beijing apologist – and I am neither – to think that Western critics sometimes give China a bum rap. Not because China is innocent of the charges they make against it; but because when accusers point fingers or raise suspicions about its conduct, they tend to forget that many of the malpractices they condemn were common – indeed, even encouraged – in the West not long ago.

Take the recent two-week “disappearance” from public view of Vice Premier Xi Jinping, China’s presumed next president. Many commentators seized on Beijing’s stonewalling about his absence and its failure to respond to the ensuing frenzy of rumors that he had fallen ill as a glaring example of the unhealthy secrecy that cloaks activities at the top of the Communist party.

True, decision-making in Beijing remains frustratingly impenetrable – to the Chinese people, as well as to foreigners. However, China is not the first country to hush up sensitive or embarrassing information about one of its leaders. The U.S. did so in the case of several presidents, concealing from the public Grover Cleveland’s operation for jaw cancer, Dwight Eisenhower’s heart attack and John F. Kennedy’s excruciating back problems.
Equally, it took years for the truth to leak out about the ill-health of several British prime ministers while they were in office: Clement Attlee’s duodenal ulcers, Winston Churchill’s series of incapacitating strokes and Anthony Eden’s botched gallbladder operation at the height of the Suez crisis were all kept secret at the time. Eden actually “vanished” for three weeks to Jamaica to recuperate at the house of Ian Fleming, creator of James Bond, which had no direct telephone link to London.

Another frequent target of Western wrath is China’s poor record on intellectual property rights. But in making free with other people’s inventions and ideas, China is only following a path not only long trodden, but fiercely defended, by the United States.
The U.S. recognized foreign patents only well into the 19th century, until when American IPR pirates were free to steal and copy foreign inventions and technology with impunity. Washington took even longer – until 1891 –to legally recognize and protect foreign copyright, and delayed until 1988 signing up fully to the century-old Berne international copyright convention, to which most other industrialized countries had long subscribed.
Impassioned pleas by Charles Dickens failed to persuade Congress or the Supreme Court to halt the pirating of his novels by hordes of 19th Century American copyright thieves. That does not, of course, excuse Beijing’s weak IPR enforcement. But when America’s IPR lobbyists indignantly condemn Chinese piracy today, perhaps they should pause to ask themselves why what Washington strenuously asserted was good then is bad when China does it today.
There is a sniff of double standards, too, about Western criticisms of China’s “indigenous innovation” policy, which is intended to build up the country’s industrial base in advanced technologies at the expense of foreign competitors.

The latter have cried foul at the combination of large subsidies, discriminatory procurement and standards-rigging that China has employed. Yet these are much the same methods as were widely used by governments in Britain, France, Germany and other European countries from the 1960s until the mid-1980s, in an effort to breed “national champions” in computing, chip-making, telecommunications and other high-tech industries.
Arguably, none of China’s non-military activities excites more suspicion abroad than overseas expansion by its state-owned energy companies, as they snap up oil reserves around the world. To some foreign commentators, the companies making this “land grab” look like stalking horses for a stealthy international extension of power by the Chinese state itself.
Perhaps the reason they are suspicious is that in the West, the global interests of Big Oil have long been so tightly intertwined with those of political power. Often, those interests have been identical, such as when a U.S.- and British-backed coup deposed the democratically-elected government of Mohammed Mossadegh in Iran in 1953, after it nationalized the assets of the Anglo-Iranian Oil Company (known nowadays as BP).
Yet the evidence suggests that, in practice, the interests of China’s oil companies are aligned much less closely with those of its state. For one thing, little of the oil they raise abroad gets shipped back to China: most of it is sold or swapped on international markets. For another, Beijing has clearly been embarrassed more than once by the oil companies’ ruthless tactics abroad, such as Petrochina’s alleged human rights abuses in Darfur.
Furthermore, China has been conspicuously reluctant to involve itself in protecting the companies’ overseas operations against threats. When the Libyan uprising broke out in 2010, Beijing responded by hastily evacuating Chinese citizens working there – risking $20 billion of contracts in the process – despite popular pressure at home to adopt more muscular action in defense of its national interests.

True, China’s oil companies effectively control its energy ministry, out of which they were carved. However, they appear largely to set their own rules, separate from the country’s overall foreign policy agenda. Indeed, a report last year by the International Energy Agency, to which China does not belong, concluded that its oil companies generally operate independently of Beijing.

What most of these examples tell us is the exact opposite of what China’s critics often contend. Far from being a self-confident emerging global superpower, poised to sweep all before it, it is actually a rather large developing country that confronts the rest of the world from a position of relative weakness and often seems strangely behind the times.
Western governments may have gotten away 50 years ago with news blackouts about their leaders’ whereabouts and health. It is far harder for Beijing to do so today, when new media, instantaneous communications and a less deferential and more questioning public expose it to searching scrutiny at home and abroad. We may not know the truth about Xi’s “disappearance,” but official silence has only added to the Chinese public’s rising skepticism and mistrust of the ruling Communist Party.
China’s IPR piracy, infuriating as it is to companies operating there, is actually another sign of backwardness. Economies with strong knowledge and technology bases act to protect them: those without steal. As and when Chinese innovators start to produce real commercial breakthroughs, their incentive to embrace strong IPR rules will increase in tandem – just as it did in the United States.

As for China’s “indigenous innovation” policy, it seems destined to repeat the mistakes that made Europe’s state-backed “national champion” policies expensive failures. Europe’s experience showed that hefty subsidies, government-ordained standards and protection against global competition are not enough to leap to the forefront of commercial technologies, especially when the beneficiaries are the large and often inefficient established companies that are best placed to petition for government favors. Rather than turning China’s market into a springboard for international success, ringing it with artificial barriers could end up isolating it from advances made elsewhere.
Finally, overseas expansion by China’s oil companies does not threaten supplies to the rest of the world. It actually makes no difference, because oil is a fungible commodity and one extra barrel pumped by China means one more barrel available for everyone else. That would be true even if all the oil lifted by Chinese companies abroad were shipped home.
Concern about the companies acting as advance guards for the onward march of the Chinese state is equally misplaced. Indeed, the exact reverse is true. As China’s dependence on foreign sources of energy and raw materials grows, so will the need to protect those supplies and thus the likelihood of being drawn inexorably, just as western governments have been, into the political complexities of the countries that produce them.

That will test to the limit China’s adherence to “non-intervention” in other countries’ affairs as a central pillar of its foreign policy. Lacking the West’s diplomatic experience and intelligence networks and boasting few close international allies, it appears at present ill-equipped for the challenges ahead. If it is to meet those challenges – and a host of others – successfully, China still has a lot of catching up to do.
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« Reply #486 on: October 07, 2012, 12:33:21 PM »

Subsidizing products that don't make economic sense on their own, who knew that centrally planned economies make lousy investment decisions?
(Could also go in the energy and economic fascism threads.)

http://www.nytimes.com/2012/10/05/business/global/glut-of-solar-panels-is-a-new-test-for-china.html?pagewanted=all

Glut of Solar Panels Poses a New Threat to China
NY Times October 4, 2012

BEIJING — China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.

But now China’s strategy is in disarray.  Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

    The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

    China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.
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« Reply #487 on: October 12, 2012, 11:28:26 AM »

China's Basis for Sea Power
October 10, 2012 | 1103 GMT
Stratfor
By Robert D. Kaplan
 
The headlines about China involve two ostensibly unconnected issues: China's new naval aggressiveness in the Western Pacific, and the increasing fragility of China's one-party state in the face of economic trouble. But the two are deeply connected by a third element: China's stability on its vast land borders. By not having to worry about its frontier areas, China is in the position to go to sea like it has. And it is the safeguarding of such stability in its ethnic-minority borderlands that provides China's autocrats with yet another crucial incentive to hold on to power.
 
Securing its land borders and building a great navy are the ways in which China's leaders signal to the West that the period of humiliation for China is over. In the 1800s and early 1900s, China suffered gross territorial humiliation at the hands of the Western powers, with foreign troops occupying significant sections of Chinese cities -- the so-called treaty ports. In the 1930s and 1940s came occupation by Japan. Mao Zedong's portrait still hangs over the entrance to the Forbidden City in Beijing partly because -- despite the depredations of the Great Leap Forward and Cultural Revolution -- he unified China, thus providing the context for its current expansion in the Western Pacific.
 
Sea power, while obviously a prerequisite for island nations, is not altogether necessary for continental ones such as China. The fact that growing Chinese naval power is slowly altering the correlation of forces in the Western Pacific -- challenging the totality of U.S. naval dominance for the first time since the end of World War II -- is possible only because of China's successful management of the upland terrain beyond the ethnic-Han Chinese core: to the north, west and southwest. Indeed, for the first time since the High Qing Dynasty in the early 19th century, the interior of China -- for more than three decades now -- has not been in profound domestic turmoil. Projecting power into what China considers blue territorial space is a natural consequence of this happy fact. As one Chinese student told me fervently in Beijing last year, Chinese naval expansion is "harmonious" because it only serves to incorporate what is rightfully China's, while America's naval presence in the South China and East China seas is "hegemonic" because the United States has no business being half a world away from its own shores.
 
But despite the bravado, China is still vulnerable because a Tibet or a Uighur Turkic Xinjiang in serious, sustained upheaval could divert the attention of party chiefs away from the islands in the Western Pacific. A decaying authoritarian China might be able to deal with low-level insurgencies in both Tibet and the Uighur area and also send submarines into the South China and East China seas, but its military -- while dangerous and unpredictable in such a circumstance -- would lack the advantage of a focused civilian power structure behind it.
 
In other words, lurking behind China's intensifying political drama is a profound geographical one. As Beijing's one-party rule comes under increasing pressure in the months and years to come, China's cohesiveness as a sprawling, continental-sized state also comes into question. For more freedom means heightened ethnic awareness. The question now becomes whether the dominant Hans, who constitute more than 90 percent of China's population and live mainly in the arable cradle of China abutting the Pacific coast, are able to permanently keep the Tibetans, Uighur Turks and other minorities who live on the drier, higher-altitude peripheries under control.
 
China's arable cradle was first linked in the second century B.C. and then truly united between 605 and 611 A.D. with the building of the grand canal linking the Yellow and Yangtze rivers, making a singular civilization out of the wheat millet-growing northern area of the cradle and the rice-growing southern area. This eased the north's conquest of the south during the medieval Tang and Song dynasties, thus consolidating the core geography of agrarian China. China's rapid economic and technological development may make these distinctions now seem quaint, but they hold in terms of a densely populated Han island teeming with hundreds of millions of people embraced by more sparsely populated and poorer minority areas, whose elevated tablelands make up roughly half of China's territory and hold the water sources on which the island of Han culture depends. It is precisely in the minority areas where the oil, natural gas, copper, iron ore and other strategic natural resources are located. Coal, which provides roughly 80 percent of China's power generation, is mined mainly in the northern and western plateaus.
 
The minority areas are sometimes larger than they appear on the map, owing to the spread of communications between dissident ethnics by way of the Internet and cellphones. For example, of the more than 30 self-immolations of ethnic Tibetans protesting Han Chinese rule between March 2011 and April 2012, almost all occurred outside the Tibet Autonomous Region itself in adjacent ethnic Tibetan areas of Sichuan, Qinghai and Gansu. Thus ethnic unrest need not be confined to the legal confines of Tibet, for example, even as such unrest would be invigorated by democratic stirrings within the Han core.
 
There is also Xinjiang, the Turkic Uighur Autonomous Region. Xinjiang only became part of China in the middle of the 18th century. Mao Zedong's communists kept Xinjiang quiet, but in 1990 and again in 2009, there were riots and bloodshed protesting Chinese rule. Here, too, the political liberalization that the West urges is precisely what Beijing fears, because it could ignite further unrest in a peripheral plateau area twice the size of Texas. Indeed, freedom explodes in all directions, releasing individual identity as well as identity within an ethnic solidarity group. This is particularly true in Tibet and Xinjiang, where the large populations of Han immigrants are concentrated together in garrison cities such as Lhasa and Urumqi, while the rest of those areas are heavily Tibetan and Uighur.
 
The Inner Mongolia Autonomous Region to the north and northwest of Beijing is hard up against the border with Mongolia proper. Ethnic Mongolians constitute only 20 percent of the population of 24 million, yet the region has been rocked by ethnic protests over land seizures and pollution. A minor irritant by the standards of the Tibetan and Uighur problems, Inner Mongolia offers another demonstration of how China is, albeit to a much smaller extent than the former Soviet Union, a prison of nations waiting to express themselves once central authority weakens. In this prison, ethnic problems can become inflamed by their interaction with contentious issues such as the deteriorating physical environment, property rights and so on.
 
What China becomes in the 21st century will ultimately depend not on military hardware but on the ability of the arable Han core to project peace and prosperity into the dusty plateaus where minorities live. This is not easy. With its economy in structural crisis, Beijing lacks the budgetary bandwidth to simply buy off the minorities. Moreover, the minorities know that true autonomy is out of the question. China's best option is to address the underlying social stress in both Tibetan and Uighur areas: the perception of a loss of culture, language and history to the dominant, occupying "Hans." But encouraging local languages, as the authorities have started to do, is itself risky. Because different factions exist within the Tibetan and Uighur communities themselves, there is not one policy that can mitigate tensions across the board.
 
China's best hope is the evolution of a truly pan-ethnic Middle Kingdom identity rooted in the past. The Qing, themselves of foreign Manchu descent, governed both Inner and Outer Mongolia. The 13th and 14th century Yuan dynasty was Mongolian, not Chinese. The early medieval Tang dynasty oversaw trade routes throughout Central Asia as far as northeastern Iran. So there is no conflict between Chinese history and greater decentralization aligned with cultural self-rule: It is the Communist Party that has distorted China's multiethnic past through severe repression of all ecumenical visions of the country. Here is where the ideals of human rights meet the dictates of geography.
.

Read more: China's Basis for Sea Power | Stratfor
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« Reply #488 on: October 14, 2012, 10:01:50 AM »

Zhang Weiying: China's Anti-Keynesian Insurgent Zhang Weiying's warnings that stimulus spending would lead to malinvestment were once ignored. Now official ministries invite the follower of Hayek to speak
By ABHEEK BHATTACHARYA
Beijing

It's a rare afternoon in the Chinese capital when smog hasn't blocked the skies, and one of China's most famous economists is in a sanguine mood. The economy is in trouble as the Communist Party heads for a once-in-a-decade transfer of power while prosecuting its former golden boy, Bo Xilai, on criminal charges. Worried investors want signs that Beijing remains committed to growth—and the sign they'd most like to see is a big Keynesian stimulus.

Zhang Weiying would say that they're wrong to panic. The economic slowdown, he calmly says over tea, is actually good news that "makes the government think we need to change"—toward reform and away from priming the pump. We aren't all Keynesians now in China, he insists.

Three years ago, Keynesianism was official policy. The 2008 financial crisis had Beijing gloating over the failure of the free-market "Washington Consensus" and touting the "China Model" of government intervention. Keynesianism fit the statist zeitgeist and Beijing then suffered an export slump, so the government allocated $3.5 trillion—or about 50% of gross domestic product—in bank loans and direct spending.

Mr. Zhang's academic colleagues were all praise for the "China Model," but in 2009 he was giving speeches entitled "Bury Keynesianism." Then a top administrator at Peking University, where he now teaches economics, he argued that since the financial crisis was caused by easy money, it couldn't be solved by the same. "The current economy is like a drug addict, and the prescription from the doctor is morphine, so the final result will be much worse," he said.


He invoked the ideas of the late Nobel laureate Friedrich Hayek and the Austrian School of Economics to argue that if the economy weren't allowed to adjust on its own, China's minor bust would be followed by a bigger one. He also advocated doing away with existing distortions such as the monopolies enjoyed in many industries by state-owned enterprises.

Those were the days when China was fast becoming the world's second-largest economy (growth in one 2010 quarter crossed 11% on an annual basis), so the establishment was in no mood to listen. "When I criticized the central government's stimulus policy, many senior officials were not happy," Mr. Zhang says. It might not have helped that at last year's World Economic Forum in China he called the government's powerful National Development and Reform Commission "a bunch of smart people doing something really stupid."

Ultimately, Beijing's stimulus fed a false investment boom that stoked asset bubbles—then the morphine wore off while the government tightened. Officials claim the economy grew at 7.6% year-on-year between April and June this year. Skeptics think the real number is closer to 4%. (One London research house says 1%.) Meanwhile, industries dominated or favored by the state, such as steel or solar power, are idling from overcapacity. Countless sheets of copper are reportedly stacked in warehouses, blocking doorways and exemplifying Hayek's notion of "malinvestment."

In other words, the stimulus was a poster child for Mr. Zhang's Austrian theories. And the sheer size of the failure suddenly has people paying attention. "The Keynesian policy didn't deliver what it promised," he says, so "more and more people realize that . . . when the government makes investment [in] something that's useless, recession will come."

Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak. He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai—a fairly high-level apparatchik—told him he liked it.

Could Austrian sympathies be percolating right to the top of Chinese officialdom? Last month, Premier Wen Jiabao called the stimulus a "scientific response" to the crisis and tried to refute the charge that the country "paid an undue price" for it. He sounded like someone forced to defend against internal challengers who had been reading Hayek—or Zhang Weiying.


Mr. Zhang didn't identify with the Austrian school until 2008, when he presented a paper at an economics conference in Chicago and someone told him he sounded like a Hayek acolyte. He says he'd always thought this way.

The 52-year-old was born in rural Shaanxi province in north-central China. In a country where party officials and tiger mothers compete to brainwash youth, he escaped both.

"Rural areas were not so polluted by [party] ideology," he says. "My parents were illiterate," he adds, and once he began his education, they couldn't understand the ideas he brought home from school. "That means they never interfered."

Mr. Zhang has been charting his own way since he was a graduate student in economics in Shaanxi. He wrote a newspaper article in 1983 arguing that money wasn't evil. For that crime, critics from the still-powerful anticapitalist camp tore into him. There was a danger he wouldn't be able to graduate with a degree, but "thankfully, China's political climate changed in a very short time."

In the mid-1980s, under party leader Deng Xiaoping, officials were moving to liberalize the economy. Yet they were sometimes clueless. After decades of a planned economy, says Mr. Zhang, "the price [of everything] was distorted" and the government's solution was to "set up a price research center with a big computer . . . and adjust prices according to this calculation." Of course, "they couldn't get any results."

This gave Mr. Zhang his first break. In his graduate thesis, he considered the possibility of having one price system remain government-controlled and leaving another to the market, with industries moving slowly from the first track to the second. He impressed policy makers with the idea at a 1984 conference, and they adopted it, giving Mr. Zhang a job with the State Commission for Reforming the Economic System. The stint turned him off from policy-making. Bureaucrats rarely "rock the boat," he says. "Making policy is a political process . . . a compromise."

Looking for a world where he didn't have to compromise, he went to Oxford, where he studied for an economics doctorate. On returning to China in 1994, he co-founded the China Center for Economic Research at Peking University, the country's oldest modern institution of higher learning.

Mr. Zhang says he prefers the academic marketplace of ideas rather than policies, but he stands out there too. Unlike the Chinese tribe of reformer-economists who see themselves as technocrats chipping away at statism, Mr. Zhang thinks in stark moral terms. In a speech this year, he invoked Aristotle and Thomas Aquinas to argue that there is such a thing as natural law and that the right to property is "passed prior to sovereignty."

The flip side of this freedom to pursue success is being able to stomach failure, which is where Mr. Zhang's affinity for Hayek ties in. Austrians frown even on central banks trying to manipulate demand because, as Mr. Zhang tells it, "when you make a mistake, you must take responsibility."

"If you suffer today, it's a small suffering. But if you don't have that suffering today," tomorrow "you'll have a big suffering." Letting people know that truth, he says, "is what an economist or scholar should do."

Leaders should do this too, and he talks excitedly about the late 1990s, when the Asian economic crisis spurred the party to privatize state companies, even if it left 20 million unemployed. The crisis had brought Indonesia and others to their knees, says Mr. Zhang, and China's leaders understood at the time that "the lesson was not to have crony capitalism" and a bloated public sector.

Back then, the intellectual tide was going in Mr. Zhang's direction. State-controlled CCTV proclaimed him "Economist of the Year" in 2002, and he remembers that at Peking University "the whole culture was reform-oriented too." He was appointed assistant president of the university that year and later dean of the Guanghua School of Management, where he pushed reform.

The reforms proved successful, but the reformer was crucified. The old guard in the faculty lounges revolted, while accusations impugning Mr. Zhang's loyalty and questioning his credentials swirled over the Internet. He was forced out of his Guanghua post in 2010.

Much of the trouble stemmed from internal campus politics, but he also says that the broader "environment changed." China's universities are a product of a planned economy, so "if the whole country [was] in the good process of reform, people like me won't be treated like that."

What happened? China's leadership team of Hu Jintao and Wen Jiabao, in place since 2002, reversed reforms. Rising inequality was the original excuse for favoring the public sector and, one suspects, high growth soon convinced policy makers to continue on that path. The new mantra in Beijing was "guo jin, min tui"—the state advances, the private sector retreats.

When the financial crisis struck Beijing jumped at the chance to advance the state even further. The poor economic result is now front and center, but Mr. Zhang says the past decade has also seen dramatic social problems that help alter the climate of opinion. The Chinese people have watched bureaucrats distribute resources to state companies and their friends, and popular perceptions of corruption and inequality have grown. Far from a crisis of markets, he says, Beijing is facing a crisis of state.

That is why Mr. Zhang is hopeful for reforms. He proposes restarting privatization, which he says is easier to do now because "some of these companies are listed on exchanges." Overhauling the financial system is next, since state companies use the banks as ATMs and deprive entrepreneurs of formal loans.

Can we expect such a liberalization right after the new crop of leaders is anointed in mid-November? He says that Guangdong Party Secretary Wang Yang, a contender for the top decision-making body, is a "real reformer." But otherwise he admits that Chinese politics is a black box.


Is there a possibility that Beijing will turn to another stimulus to goose GDP? "Certainly things could go worse. But there could also be good opportunity," he says. What he does know is that people's way of thinking has changed. It's just that the "impact is implicit, not explicit" in China's nondemocracy.

Mr. Zhang is optimistic because he thinks 30 years of openness have altered expectations. "We have a lot of trust in" markets today, which is why the last decade's anti-market turn has exasperated people. Mass protests against land grabs and other government bullying now number 180,000 a year, according to government data compiled at Beijing's Tsinghua University. These protests are hard for the party to ignore—and powerfully make the moral case for free markets.

"We human beings always seek happiness," says Mr. Zhang. "Now there are two ways. You make yourself happy by making other people unhappy—I call that the logic of robbery. The other way, you make yourself happy by making other people happy—that's the logic of the market. Which way do you prefer?"

Mr. Bhattacharya is an editorial page writer for The Wall Street Journal Asia
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« Reply #489 on: October 14, 2012, 04:30:27 PM »

Remeber when China was lead by communists and we were lead by captialists? Ah, those were the days....

The danger here is that China really becomes a capitalist economy and we get another term of Buraq.

Zhang Weiying: China's Anti-Keynesian Insurgent Zhang Weiying's warnings that stimulus spending would lead to malinvestment were once ignored. Now official ministries invite the follower of Hayek to speak
By ABHEEK BHATTACHARYA
Beijing

It's a rare afternoon in the Chinese capital when smog hasn't blocked the skies, and one of China's most famous economists is in a sanguine mood. The economy is in trouble as the Communist Party heads for a once-in-a-decade transfer of power while prosecuting its former golden boy, Bo Xilai, on criminal charges. Worried investors want signs that Beijing remains committed to growth—and the sign they'd most like to see is a big Keynesian stimulus.

Zhang Weiying would say that they're wrong to panic. The economic slowdown, he calmly says over tea, is actually good news that "makes the government think we need to change"—toward reform and away from priming the pump. We aren't all Keynesians now in China, he insists.

Three years ago, Keynesianism was official policy. The 2008 financial crisis had Beijing gloating over the failure of the free-market "Washington Consensus" and touting the "China Model" of government intervention. Keynesianism fit the statist zeitgeist and Beijing then suffered an export slump, so the government allocated $3.5 trillion—or about 50% of gross domestic product—in bank loans and direct spending.

Mr. Zhang's academic colleagues were all praise for the "China Model," but in 2009 he was giving speeches entitled "Bury Keynesianism." Then a top administrator at Peking University, where he now teaches economics, he argued that since the financial crisis was caused by easy money, it couldn't be solved by the same. "The current economy is like a drug addict, and the prescription from the doctor is morphine, so the final result will be much worse," he said.


He invoked the ideas of the late Nobel laureate Friedrich Hayek and the Austrian School of Economics to argue that if the economy weren't allowed to adjust on its own, China's minor bust would be followed by a bigger one. He also advocated doing away with existing distortions such as the monopolies enjoyed in many industries by state-owned enterprises.

Those were the days when China was fast becoming the world's second-largest economy (growth in one 2010 quarter crossed 11% on an annual basis), so the establishment was in no mood to listen. "When I criticized the central government's stimulus policy, many senior officials were not happy," Mr. Zhang says. It might not have helped that at last year's World Economic Forum in China he called the government's powerful National Development and Reform Commission "a bunch of smart people doing something really stupid."

Ultimately, Beijing's stimulus fed a false investment boom that stoked asset bubbles—then the morphine wore off while the government tightened. Officials claim the economy grew at 7.6% year-on-year between April and June this year. Skeptics think the real number is closer to 4%. (One London research house says 1%.) Meanwhile, industries dominated or favored by the state, such as steel or solar power, are idling from overcapacity. Countless sheets of copper are reportedly stacked in warehouses, blocking doorways and exemplifying Hayek's notion of "malinvestment."

In other words, the stimulus was a poster child for Mr. Zhang's Austrian theories. And the sheer size of the failure suddenly has people paying attention. "The Keynesian policy didn't deliver what it promised," he says, so "more and more people realize that . . . when the government makes investment [in] something that's useless, recession will come."

Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak. He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai—a fairly high-level apparatchik—told him he liked it.

Could Austrian sympathies be percolating right to the top of Chinese officialdom? Last month, Premier Wen Jiabao called the stimulus a "scientific response" to the crisis and tried to refute the charge that the country "paid an undue price" for it. He sounded like someone forced to defend against internal challengers who had been reading Hayek—or Zhang Weiying.


Mr. Zhang didn't identify with the Austrian school until 2008, when he presented a paper at an economics conference in Chicago and someone told him he sounded like a Hayek acolyte. He says he'd always thought this way.

The 52-year-old was born in rural Shaanxi province in north-central China. In a country where party officials and tiger mothers compete to brainwash youth, he escaped both.

"Rural areas were not so polluted by [party] ideology," he says. "My parents were illiterate," he adds, and once he began his education, they couldn't understand the ideas he brought home from school. "That means they never interfered."

Mr. Zhang has been charting his own way since he was a graduate student in economics in Shaanxi. He wrote a newspaper article in 1983 arguing that money wasn't evil. For that crime, critics from the still-powerful anticapitalist camp tore into him. There was a danger he wouldn't be able to graduate with a degree, but "thankfully, China's political climate changed in a very short time."

In the mid-1980s, under party leader Deng Xiaoping, officials were moving to liberalize the economy. Yet they were sometimes clueless. After decades of a planned economy, says Mr. Zhang, "the price [of everything] was distorted" and the government's solution was to "set up a price research center with a big computer . . . and adjust prices according to this calculation." Of course, "they couldn't get any results."

This gave Mr. Zhang his first break. In his graduate thesis, he considered the possibility of having one price system remain government-controlled and leaving another to the market, with industries moving slowly from the first track to the second. He impressed policy makers with the idea at a 1984 conference, and they adopted it, giving Mr. Zhang a job with the State Commission for Reforming the Economic System. The stint turned him off from policy-making. Bureaucrats rarely "rock the boat," he says. "Making policy is a political process . . . a compromise."

Looking for a world where he didn't have to compromise, he went to Oxford, where he studied for an economics doctorate. On returning to China in 1994, he co-founded the China Center for Economic Research at Peking University, the country's oldest modern institution of higher learning.

Mr. Zhang says he prefers the academic marketplace of ideas rather than policies, but he stands out there too. Unlike the Chinese tribe of reformer-economists who see themselves as technocrats chipping away at statism, Mr. Zhang thinks in stark moral terms. In a speech this year, he invoked Aristotle and Thomas Aquinas to argue that there is such a thing as natural law and that the right to property is "passed prior to sovereignty."

The flip side of this freedom to pursue success is being able to stomach failure, which is where Mr. Zhang's affinity for Hayek ties in. Austrians frown even on central banks trying to manipulate demand because, as Mr. Zhang tells it, "when you make a mistake, you must take responsibility."

"If you suffer today, it's a small suffering. But if you don't have that suffering today," tomorrow "you'll have a big suffering." Letting people know that truth, he says, "is what an economist or scholar should do."

Leaders should do this too, and he talks excitedly about the late 1990s, when the Asian economic crisis spurred the party to privatize state companies, even if it left 20 million unemployed. The crisis had brought Indonesia and others to their knees, says Mr. Zhang, and China's leaders understood at the time that "the lesson was not to have crony capitalism" and a bloated public sector.

Back then, the intellectual tide was going in Mr. Zhang's direction. State-controlled CCTV proclaimed him "Economist of the Year" in 2002, and he remembers that at Peking University "the whole culture was reform-oriented too." He was appointed assistant president of the university that year and later dean of the Guanghua School of Management, where he pushed reform.

The reforms proved successful, but the reformer was crucified. The old guard in the faculty lounges revolted, while accusations impugning Mr. Zhang's loyalty and questioning his credentials swirled over the Internet. He was forced out of his Guanghua post in 2010.

Much of the trouble stemmed from internal campus politics, but he also says that the broader "environment changed." China's universities are a product of a planned economy, so "if the whole country [was] in the good process of reform, people like me won't be treated like that."

What happened? China's leadership team of Hu Jintao and Wen Jiabao, in place since 2002, reversed reforms. Rising inequality was the original excuse for favoring the public sector and, one suspects, high growth soon convinced policy makers to continue on that path. The new mantra in Beijing was "guo jin, min tui"—the state advances, the private sector retreats.

When the financial crisis struck Beijing jumped at the chance to advance the state even further. The poor economic result is now front and center, but Mr. Zhang says the past decade has also seen dramatic social problems that help alter the climate of opinion. The Chinese people have watched bureaucrats distribute resources to state companies and their friends, and popular perceptions of corruption and inequality have grown. Far from a crisis of markets, he says, Beijing is facing a crisis of state.

That is why Mr. Zhang is hopeful for reforms. He proposes restarting privatization, which he says is easier to do now because "some of these companies are listed on exchanges." Overhauling the financial system is next, since state companies use the banks as ATMs and deprive entrepreneurs of formal loans.

Can we expect such a liberalization right after the new crop of leaders is anointed in mid-November? He says that Guangdong Party Secretary Wang Yang, a contender for the top decision-making body, is a "real reformer." But otherwise he admits that Chinese politics is a black box.


Is there a possibility that Beijing will turn to another stimulus to goose GDP? "Certainly things could go worse. But there could also be good opportunity," he says. What he does know is that people's way of thinking has changed. It's just that the "impact is implicit, not explicit" in China's nondemocracy.

Mr. Zhang is optimistic because he thinks 30 years of openness have altered expectations. "We have a lot of trust in" markets today, which is why the last decade's anti-market turn has exasperated people. Mass protests against land grabs and other government bullying now number 180,000 a year, according to government data compiled at Beijing's Tsinghua University. These protests are hard for the party to ignore—and powerfully make the moral case for free markets.

"We human beings always seek happiness," says Mr. Zhang. "Now there are two ways. You make yourself happy by making other people unhappy—I call that the logic of robbery. The other way, you make yourself happy by making other people happy—that's the logic of the market. Which way do you prefer?"

Mr. Bhattacharya is an editorial page writer for The Wall Street Journal Asia

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« Reply #490 on: October 27, 2012, 05:09:44 PM »

The New York Times
Thursday, October 25, 2012 -- 4:51 PM EDT
-----

Family of Prime Minister Holds a Hidden Fortune in China

Many relatives of Wen Jiabao, China’s prime minister, including his son,
daughter, younger brother and brother-in-law, have become extraordinarily
wealthy during his leadership, an investigation by The New York Times shows. A
review of corporate and regulatory records indicates that the prime minister’s
relatives, some of whom have a knack for aggressive deal-making, including his
wife, have controlled assets worth at least $2.7 billion.

In many cases, the names of the relatives have been hidden behind layers of
partnerships and investment vehicles involving friends, work colleagues and
business partners. Untangling their financial holdings provides an unusually
detailed look at how politically connected people have profited from being at
the intersection of government and business as state influence and private
wealth converge in China’s fast-growing economy.

Read More:
http://www.nytimes.com/2012/10/26/business/global/family-of-wen-jiabao-holds-a-hidden-fortune-in-china.html?emc=na
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« Reply #491 on: November 04, 2012, 03:26:30 PM »

http://www.forbes.com/sites/kenrapoza/2012/10/26/and-the-number-one-country-in-the-world-for-investment-is/?utm_campaign=forbestwittersf&utm_source=twitter&utm_medium=social
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« Reply #492 on: December 01, 2012, 07:07:56 PM »

The Dines Letter (not a mainstream investment newsletter, but one on which I have kept my eye over recent years) reports that:

China’s corporate debt rose from 108% of GDP last
year to 122% in 2012, which Bloomberg calls "one of the
most debt-laden in the world." Include corporate, public and
household debts and the total is 206% of GDP! TDL might
"look wrong" in its pessimism toward China’s economy, but
we stand our ground that China is at risk of a crash even if
we are the only member of the world’s press to predict that.

Actually, if we count me  cheesy they are the second source to so predict.
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« Reply #493 on: December 04, 2012, 04:22:28 PM »

http://www.foreignpolicy.com/articles/2012/11/27/paris_on_the_yangtze#0
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« Reply #494 on: April 01, 2013, 01:37:50 PM »

The Geopolitics of the Yangtze River: Developing the Interior
 
stratfor
 
Editor's Note: This is the first piece in a three-part series on the geopolitical implications of China's move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing's push to develop the Yangtze River corridor.
 
As the competitive advantage of low-cost, export-oriented manufacturing in China's coastal industrial hubs wanes, Beijing will rely more heavily on the cities along the western and central stretches of the Yangtze River to drive the development of a supplemental industrial base throughout the country's interior. Managing the migration of industrial activity from the coast to the interior -- and the social, political and economic strains that migration will create -- is a necessary precondition for the Communist Party's long-term goal of rebalancing toward a more stable and sustainable growth model based on higher domestic consumption. In other words, it is critical to ensuring long-term regime security.
 
The concept of developing the interior is rooted in the dynastic struggle to establish and maintain China as a unified power against internal forces of regional competition and disintegration. Those forces arise from and reflect a simple fact: China is in many ways as geographically, culturally, ethnically and economically diverse as Europe. That regional diversity, which breeds inequality and in turn competition, makes unified China an inherently fragile entity. It must constantly balance between the interests of the center and those of regions with distinct and often contradictory economic and political interests.
 
Currently, the Party's stated intent is eventually to achieve greater socio-economic parity between coastal and inland regions, as well as between cities and the rural hinterland. But Beijing also recognizes that underlying broad categories like "inland," "central" and "western" China is a complex patchwork of regional differences and inequality. Mitigating these differences will require more varied and nuanced policies.
 
Against this backdrop, the central government has targeted the Yangtze River economic corridor -- the urban industrial zones lining the Yangtze River from Chongqing to Shanghai -- as a key area for investment, development and urbanization in the coming years. Ultimately, the Party hopes to transform the Yangtze's main 2,800-kilometer-long (1,700-mile-long) navigable channel into a central superhighway for goods and people, better connecting China's less developed interior provinces to the coast and to each other by way of water -- a significantly cheaper form of transport than road or railway. By positioning this "second coastline" to become one of the nation's new economic cores, Beijing seeks to build what no previous dynasty could: a truly unified Chinese economy.
 
The Yangtze as a Core
 
The Yangtze River is the key geographic, ecological, cultural and economic feature of China. Stretching 6,418 kilometers from its source in the Tibetan Plateau to its terminus in the East China Sea, the river both divides and connects the country. To its north lie the wheat fields and coal mines of the North China Plain and Loess Plateau, unified China's traditional political cores. Along its banks and to the south are the riverine wetlands and terraced mountain faces that historically supplied China with rice, tea, cotton and timber. The river passes through the highlands of the Yunnan-Guizhou Plateau, the fertile Sichuan Basin, the lakes and marshes of the Middle Yangtze and on to the trade hubs of the Yangtze River Delta. Its watershed touches 19 provinces and is central to the economic life of more people than the populations of Russia and the United States combined. The river's dozens of tributaries reach from Xian, in the southern Shaanxi province, to northern Guangdong -- a complex of capillaries without which China likely would never have coalesced into a single political entity.
 








VIDEO: The Strategic Importance of the Yangtze River
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The Yangtze, even more than the Yellow River, dictates the internal constraints on and strategic imperatives of China's rulers. The Yellow River may be the origin of the Han Chinese civilization, but on its own it is far too weak to support the economic life of a great power. The Yellow River is China's Hudson or Delaware. By contrast, the Yangtze is China's Mississippi -- the river that enabled China to become an empire.
 
Just as the Mississippi splits the United States into east and west, the Yangtze divides China into its two most basic geopolitical units: north and south. This division, more than any other, forms the basis of Chinese political history and provides China's rulers with their most fundamental strategic imperative: unity of the lands above and below the river. Without both north and south, there is no China, only regional powers. Only after the Qin captured the Yangtze's three primary regions -- the Upper, Middle and Lower stretches -- in 221 B.C., thereby gaining access to the southeast coast, did "China" as a single unit come into being. In the two millennia since, the Yangtze has continued to mark the boundary between kingdom and empire. The constant cycle between periods of unity (when one power takes the lands north and south of the Yangtze) and disunity (when that power breaks into its constituent regional parts) constitutes Chinese political history.
 
If the Yangtze did not exist, or if its route had veered downward into South and Southeast Asia (like most of the rivers that begin on the Tibetan Plateau), China would be an altogether different and much less significant place. Its population would be much smaller, isolated to the southeast coast, Loess Plateau and North China Plain -- the only parts of Han China where economic life does not depend on the Yangtze. The provinces of central China, which today produce more rice than all of India, would be as barren as Central Asia. Regional commercial and political power bases like the Yangtze River Delta or the Sichuan Basin would never have emerged. The entire flow of Chinese history would be different.
 





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Three regions in particular make up the bulk of the Yangtze River Basin: the Upper (encompassing present-day Sichuan and Chongqing), Middle (Hubei, Hunan and Jiangxi) and Lower Yangtze (Jiangsu and Zhejiang provinces, as well as Shanghai and parts of Anhui). Geography and time have made these regions into distinct and relatively autonomous units, each with its own history, culture and language. Each region has its own hubs -- Chengdu and Chongqing for the Upper Yangtze; Wuhan, Changsha and Nanchang for the Middle Yangtze; and Suzhou, Hangzhou and Shanghai for the Lower Yangtze. Each region has its own internal market networks, and each historically is more interested in protecting its autonomy and prosperity than uniting under the north's control. Conquering and integrating them from the outside therefore required not only overwhelming military power -- historically, northern China's advantage -- but also complex bureaucratic and internal security apparatuses. Finally, it required a transport and communications infrastructure comprehensive enough to make the exercise of central authority over vast distances and diverse populations feasible.
 
Between 1949 and 1978, the Communist Party expanded those networks and laid that infrastructure with brutal efficiency. In many ways, China was more deeply united under Mao Zedong than under any emperor since Kangxi in the 18th century. After 1978, the foundations of internal cohesion began to shift and crack as the reform and opening process directed central government attention and investment away from the interior (Mao's power base) and toward the coast. Today, faced with the political and social consequences of that process, the Party is once again working to reintegrate and recentralize -- both in the sense of slowly reconsolidating central government control over key sectors of the economy and, more fundamentally, forcibly shifting the economy's productive core inland. The first phase of this process will be driven in large part by urbanization along the Yangtze River corridor, especially in the provinces that make up China's traditional Upper and Middle Yangtze regions.
 
Politics and Economy of the Yangtze
 
Today, the Yangtze River is by far the world's busiest inland waterway for freight transport. In 2011, more than 1.6 billion metric tons of goods passed through it, representing 40 percent of the nation's total inland waterborne cargo traffic and about 5 percent of all domestic goods transport that year -- up 250 percent from 2004. Over the last decade, dramatic increases in waterway freight traffic have been seen in some provinces along the Yangtze River corridor, such as Anhui (840 percent, to 364 million tons), Chongqing (640 percent, to 117 million tons) and Hunan (500 percent, to 179 million tons). By 2011, the nine provincial capitals that sit along the Yangtze and its major tributaries had a combined gross domestic product of $1 trillion, up from $155 billion in 2001. That gives these cities a total wealth roughly comparable to the gross domestic products of South Korea and Mexico.
 
This growth, since roughly 2003, has been underpinned by a massive expansion in centrally allocated fixed-asset investment into the interior, and specifically to those parts of the interior Beijing considers most viable as potential alternative or supplemental industrial bases to the southeast coast. Unsurprisingly, areas with ready access to the Yangtze River system have been targeted as cores of future inland urbanization. In part, this is because cities like Chongqing and Wuhan already possess well-developed urban industrial infrastructures, the legacy of Mao's intensive focus on inland industrialization. This legacy in turn gives these cities comparatively more influence and leverage than less developed parts of the interior when it comes to extracting central government financial support. Finally, cities along the Yangtze benefit from geography: Transport by road is roughly 30-35 times more expensive than transport by water, and rail is 3-3.5 times as expensive, meaning that cities without direct access to the Yangtze are inherently less viable as manufacturing and trade hubs.
 
Investment in further industrial development along the Yangtze River reflects not only an organic transformation in the structure of the Chinese economy but also the intersection of complex political forces. First, there is a clear shift in central government policy away from intensive focus on coastal manufacturing at the expense of the interior (the dominant approach throughout the 1990s and early 2000s) and toward better integrating China's diverse regions into a coherent national economy. But how that policy shift plays out on regional, provincial and local levels is shaped less by dictates from Beijing than by the political maneuvering of local and provincial governments for central government favor. Access to navigable waterways enables the cities of the western and central stretches of the Yangtze River to lobby more effectively for credit and tax rebates that might otherwise have gone to less competitive, landlocked provinces.
 
Investment in the interior accelerated rapidly in the wake of the 2008-2009 financial crisis, when the sudden evaporation of external demand revealed just how fragile and imbalanced China's economy had become. Thirty years of export-oriented manufacturing centered in a handful of coastal cities generated huge wealth and created hundreds of millions of jobs. But it also created an economy characterized by deep discrepancies in the geographic allocation of resources and by very little internal cohesion. By 2001, the economies of Shanghai and Shenzhen, for instance, were in many ways more connected to those of Tokyo, Seoul and Los Angeles than of the hinterlands of Sichuan and Shaanxi provinces. For most of the 1990s and 2000s, this lack of cohesion was viewed as an unfortunate but necessary and temporary byproduct of an economic model that was otherwise doing its job. After the 2008-2009 financial crisis, internal economic disunity -- like the growth model it embodied -- became a social and political liability.
 
The foundation of this model was an unending supply of cheap labor. In the 1980s, such workers came primarily from the coast. In the 1990s, when coastal labor pools had been largely exhausted, factories welcomed the influx of migrants from the interior. Soon, labor came to replace coal, iron ore and other raw materials as the interior's most important export to coastal industrial hubs. By the mid-2000s, between 250 million and 300 million migrant workers had fled from provinces like Henan, Anhui and Sichuan (where most people still lived on near-subsistence farming) in search of work in coastal cities.
 
This continual supply of cheap labor from the interior kept Chinese manufacturing cost-competitive throughout the 2000s -- far longer than if Chinese factories had only had the existing coastal labor pool to rely on. But in doing so, it kept wages artificially low and, in turn, systematically undermined the development of a domestic consumer base. This was compounded by the fact that very little of the wealth generated by coastal manufacturing went to the workers. Instead, it went to the state in the form of savings deposits into state-owned banks, revenue from taxes and land sales, or profits for the state-owned and state-affiliated enterprises that controlled not only many of the major coastal factories but also the various inputs that made manufacturing possible: roads, rail and port construction; power generation; mining; and oil and natural gas. (Notably, state-owned enterprises continue to dominate heavy industrial manufacturing).
 
This dual process -- accumulation of wealth by the state and systematic wage repression in low-end coastal manufacturing -- significantly hampered the development of China's domestic consumer base. But even more troubling was the effect of labor migration, coupled with the relative lack of central government attention to enhancing inland industry throughout the 1990s and early 2000s, on the economies of interior provinces.
 
Remittances from the coast kept families in the interior alive and paid for children of migrant workers to attend school, but they did little to improve the overall vitality of inland provincial economies. As a result, when the children of the first generation of migrant laborers reached working age, many of them followed their parents to the coast, where employment opportunities were far more abundant. However, unlike their parents, who had families to care for back in Henan and Sichuan, the new generation of migrants had far less incentive to one day return inland, let alone send money back. With the possible exception of a handful of inland cities (Hefei, Wuhan, Changsha and Chongqing, all of which saw marginal to moderate population growth between 2001 and 2011), the interior came to represent poverty and backwardness, a place to abandon rather than to develop.
 
Beijing has long understood that it will have to change that perception -- and the economic and policy realities underlying it -- before it can hope to address the growing structural imbalances of its current economic model. But in China, this is easier said than done. In trying to urbanize and industrialize the interior, Beijing is going against the grain of Chinese history -- a multimillennia saga of failed attempts to overcome the radical constraints of geography, population, food supply and culture through ambitious central government development programs. Though its efforts thus far have yielded notable successes, such as rapid expansion of the country's railway system and soaring economic growth rates among inland provinces, they have not yet addressed a number of pivotal questions. Before it can move forward, Beijing must address the reform of the hukou (or household registration) system and the continued reliance on centrally allocated investment, as opposed to consumption, as a driver of growth.
 
Stratfor provides additional coverage of China beyond the website as part of our Custom Solutions offerings. Recent projects have focused on China's political, economic, infrastructural, energy and mining development. To learn more about these services, please visit http://info.stratfor.com/contact/.
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« Reply #495 on: April 02, 2013, 06:21:33 AM »

Editor's Note: This is the second piece in a three-part series on the geopolitical implications of China's move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing's push to develop the Yangtze River corridor.
 
In a sense, Wuhan is the heart of modern China. It is not the country's most important economic or cultural hub, and aside from a brief stint in the 1920s as the Nationalist Party government's capital, it has never been China's official political center. But while Wuhan wields less heft than Beijing, Shanghai or Chongqing, its location at the intersection of the country's most important transport routes gives it a different kind of strategic significance for the Communist Party.
 





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Situated at a bend in the Yangtze River near the geographic center of Han China, Wuhan is a natural transportation crossroads. From west to east, it binds the upper and lower stretches of the Yangtze together, serving as the intermediary for goods passing between the Sichuan Basin -- western China's industrial powerhouse -- and the Yangtze River Delta. From north to south, it anchors the Beijing-Guangzhou railway, a 2,324-kilometer-long (1,444-mile-long) trunk line that gives China's traditional political core, the North China Plain, direct access to the prosperous but historically restive Guangdong province.
 
Just as important as these national-level axes are the numerous interprovincial infrastructure linkages that converge on Wuhan. These roads, waterways and highways bring goods and people from inland provincial capitals such as Xian, Changsha, Kunming and Zhengzhou down to Wuhan's ports and, from there, on to Shanghai. The city serves to integrate China's disparate geographic and economic macro-regions into one coherent economic system and helps enable the central government to enforce political control and social management over these regions.
 
Wuhan's Growing Significance
 
Beijing increasingly recognizes Wuhan's importance in the evolving system of infrastructure linkages and as a core from which to gradually expand urbanization and industrial activity out into the rural hinterlands.
 
As a result, Beijing has launched state-level policy initiatives such as the "Rise of Central China" plan inaugurated in 2004 and the Hubei-Jiangxi-Hunan "Central Triangle" development program, which seeks to transform Wuhan, Changsha and Nanchang into one contiguous urban conglomerate to complement the Yangtze River Delta. Through these programs, Beijing has sought to build on Wuhan's inherent advantages -- its location roughly equidistant from both Chongqing and Shanghai; its physical, historical and economic ties to nearby urban centers such as Changsha and Jiujiang; an extremely high per capita distribution of top-level universities and research institutes; and well-established and influential steel and automaking industries, among others -- to frame the city as both a driver and a model for future inland development. These efforts are most obviously manifested in Wuhan's substantial economic growth over the last decade.
 
Between 2001 and 2011, fixed asset investment into Wuhan (much of it centrally allocated) rose nearly eightfold. Gross industrial output grew by 760 percent over the same period, while local government revenue grew by 680 percent and the city's gross regional product more than quadrupled. In 2011, 418 million tons of goods passed through Wuhan, an increase of more than 255 million tons from a decade before. More freight passed through Wuhan last year than any other inland city besides Chongqing. (Notably, because Wuhan's population is one-third the size of Chongqing's, its per capita freight traffic is actually almost 70 percent higher.) Its economy is now larger than those of Bangladesh, Angola and Morocco. Alone, it contributes almost 35 percent of Hubei's provincial gross domestic product despite housing only 17 percent of the province's population.
 
Wuhan's story over the past decade is one of unimpeded growth, rapid infrastructure development (on Dec. 12, 2012, the city opened the nation's first cross-Yangtze River subway, and it plans to have eight metro lines in operation by 2017) and rising living standards (reported per capita income in 2011 was 4.5 times greater than a decade before). But this was not always the case. In fact, over the last half century, the city has seen its fortunes rise and fall in lockstep with changes in the national political and economic climate. For much of the past three decades, as Deng Xiaoping's Reform and Opening process got under way, local Party leaders in Wuhan have struggled against not only the natural disadvantages facing all inland cities relative to coastal metropolises but also against the direct and indirect burdens imposed by central policies and provincial-level politicking.
 
A closer look at Wuhan's history, ancient and modern, helps explain both the particular dynamics of Wuhan's current "rise" as well as broader elements in Chinese political and economic organization. Wuhan's many iterations over the years reflect the extremely tight relationship between politics and economy in China, and the ways in which policy -- whether at the central or provincial level -- has shaped and guided the development of the Chinese economy throughout the Reform and Opening period.
 
Wuhan and the Evolution of the Middle Yangtze Region
 





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The three cities that together constitute present-day Wuhan have existed in some form for more than 3,500 years and have served as important trading centers in central China since at least the sixth century B.C., when Hanyang (named, like its sister city, Hankou, after the Han River, a major tributary that flows into the Yangtze at Wuhan) emerged as a commercial hub in the prosperous and culturally sophisticated state of Chu. By the third century, the area around Wuhan had become the region's most important trading center. As the core of the Middle Yangtze region, this area was highly sought after by the competing states of Shu, Wu and Wei, which in 208-209 fought one of the most famous battles in Chinese history, the Battle of Red Cliffs, in the hills outside present-day Wuhan.
 
Over the next 16 centuries, the Middle Yangtze geographic region -- bound to the west by the outer wall of the Sichuan Basin, and to the south, east and north by a patchwork of mountain ranges -- further coalesced into a distinct and relatively independent political, economic and cultural unit. In times of dynastic unity, the Middle Yangtze was loosely subsumed under the center's control through bureaucratic and trade links. In times of disunity, it broke off into its own would-be state. Throughout, Wuhan remained the core around which the region's economic life revolved. Though the Middle Yangtze at times served as a supplier of raw materials (timber, cotton and grain) to the more advanced Yangtze Delta region, it relied far more heavily on its own internal commercial networks than on inter-regional trade. Like most parts of China before the mid-20th century, the Middle Yangtze had far more to do with itself -- economically and culturally -- than with other parts of the Chinese Empire.
 
It is critical to remember the degree to which geography imbued the inhabitants and rulers of China's regions with a strong sense of historical, cultural and political autonomy. As with the Middle Yangtze region, that autonomy was often undergirded by economic reality. Until recently, China has never had a truly unified economic system. Even today, these deep-seated regional differences manifest in strong competition between provinces for Beijing's "favor" -- government investment and preferential tax policies -- and low levels of interprovincial trade. In fact, though Beijing ultimately desires to build a genuinely integrated national economy, it often utilizes its ability, as the center, to exacerbate regional rivalries to solidify its own political and economic influence. Wuhan's experience over the last half century illustrates this strategy.
 
When Mao Zedong came to power, he sought to reassert central control over the economy by closing China to foreign trade. This entailed transferring much of the budding industrial plant around China's major international ports -- Shanghai and Guangzhou -- to inland provinces, Mao's primary power base. Some of that industrial plant went northeast in order to reinforce the region's role as a buffer against invasion via the Korean Peninsula. Much of the rest went to central China, and especially to Wuhan, which Mao quickly transformed into one of the country's most important industrial bases (founding, in the process, some of contemporary China's most powerful state-owned enterprises, such as Wuhan Iron and Steel Co.). When Mao died, Wuhan ranked fourth among Chinese cities in terms of fixed asset investment, industrial profits, tax revenue contributions to the central government and gross industrial output.
 





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With the onset of Deng Xiaoping's Reform and Opening process in the 1980s, Wuhan's fortunes changed rapidly. By 1992, the city's gross regional product had fallen to 11th out of 35 cities surveyed by the State Statistical Bureau. Its gross industrial output fell to 13th over the same period, and its average annual growth rate dropped to 8 percent, below the national average of 8.7 percent and well under the 15-20 percent annual growth enjoyed by new coastal economic zones. In part, Wuhan's relative decline reflects the natural disadvantages of China's interior in a newly market-oriented system based on trade with the outside world. Distance and geography made export-oriented manufacturing in much of inland China economically unfeasible, especially given the region's poor infrastructure links to the coast at the time.
 
But in fact, Wuhan's shift in fortunes was affected, directly and indirectly, by the central government's decision to open coastal Special Economic Zones such as Shenzhen. These zones received enormous government investment in transport and power infrastructure, retained 100 percent of their foreign exchange revenues (compared to 25 percent for the rest of the country) and received significantly higher tax remittances from Beijing. In turn, the extra tax burden was shifted to cities like Wuhan, depressing local government revenue even as the central government dramatically reduced fixed-asset investment into interior China, thereby giving foreign investors even less incentive to look inland. And while Beijing in 1985 did officially grant Wuhan the economic powers of a province (meaning that Wuhan no longer paid taxes to the Hubei government, but only to Beijing), it did so without also implementing policies designed to attract foreign investment. In the end, this hindered Wuhan more than it helped. Not only was the city still unable to attract outside investment, but even its own provincial government came to view Wuhan as a competitor. Because it no longer drew tax revenue from Wuhan, Hubei worked instead to redirect resources and trade that normally would have ended up in the city elsewhere.
 
New Imperatives, New Policy Outlook
 
Beijing's policies in the 1950s grew from a strong need to reassert central control and move industrial activity away from the vulnerable coastline. As a result, cities such as Wuhan were prioritized and grew accordingly. By contrast, the central government's policies in the 1980s and 1990s grew from a need to attract the initial wave of foreign capital that would eventually give the central government the means to develop the rest of the country, even if it required temporarily retarding economic growth in -- and in many ways actively undermining the competitiveness of -- inland provinces. This need went hand in hand with the economic model now widely associated with China: high growth rates built on low-cost, export-oriented manufacturing clustered along the coast. In turn, the interior suffered.
 
As that model becomes economically, socially and politically untenable at a time of rising wages and input costs and weak external demand, Beijing is again working to reprioritize growth and investment into the interior. As a result, cities such as Wuhan, Chongqing and Hefei (the capital of Anhui province) have become sites for new Special Economic Zones (such as Chongqing's Liangjiang New Area), high-tech and industrial development zones (Wuhan's East Lake Zone and Anhui's "861 Plan" to develop eight new industries, including manufacturing) and large-scale transport and port development. Between 2011 and 2020, the central government plans to invest $28.6 billion to revamp Wuhan's port network, giving it a throughput of 200 million metric tons and 2 million 20-foot equivalent units by 2015 -- up from 100 million metric tons and 650,000 20-foot equivalent units in 2012 -- and adding a further 40 million metric tons and 3 million 20-foot equivalent units of capacity by 2020. In just the last two years, favorable central government policies have helped Wuhan attract investment from firms such as Honeywell ($60 million for a turbocharger factory), Ikea ($794 million for a shopping center), Lenovo ($790 million for research and development) and Shanghai General Motors ($1.1 billion).
 
The story these new investments help tell is not only or primarily one of natural economic cycles. Rather, Wuhan's ebbs and flows are a reflection of broad shifts in the balance of political power within the Communist Party, shifts in China's wider geopolitical environment and, ultimately, Beijing's evolving efforts to cope with fundamental constraints and achieve its strategic imperatives. Industrialization and urbanization of the Yangtze River corridor, of which Wuhan is just one node, is not simply an economic process, but rather one driven by a network of needs and interests.


Read more: The Geopolitics of the Yangtze River: Wuhan's Rise | Stratfor
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« Reply #496 on: April 03, 2013, 10:23:21 AM »

The Geopolitics of the Yangtze River: Conflicting Imperatives
April 3, 2013 | 1045 GMT
Stratfor
 
Editor's Note: This is the third piece in a three-part series on the geopolitical implications of China's move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing's push to develop the Yangtze River corridor.
 
Beijing pursues far-reaching development programs such as the industrialization of the Yangtze River region not always because they make economic sense -- often they do not -- but because it must do so to sustain the basic social and economic structures that secure the regime. In the case of Yangtze development, an official from China's National Development and Reform Commission noted in May 2011 a shift in the focus of central government port development policy from the coast to the interior, adding that most of the opportunities for future port-related investment would be in cities along the Yangtze River. According to a statement earlier that year from the Ministry of Transport, as much as 200 billion yuan ($32 billion) would be invested in inland waterway port expansion during the 12th Five Year Plan (2011-2015), roughly double the amount set aside between 2006 and 2010. Wuhan's 10-year port redevelopment program is set to consume a large percentage of that investment -- at $28.6 billion, the program accounts for around 70 percent of the country's total ongoing and planned port construction -- though another $4 billion to $5 billion has been set aside for dredging and port expansion everywhere from Chongqing municipality in southwest China to Wuhu in Anhui province.
 
The central government's heightened emphasis on inland waterway port expansion is incongruous with port throughput trends during the previous five-year period, 2007-2011. Not surprisingly, China's coastal ports dwarf inland ports in terms of both overall throughput and throughput growth. But more telling is that of the major Yangtze ports for which the National Bureau of Statistics provides freight traffic data, only three (at Chongqing, Yueyang and Wuhu) showed significant growth in throughput between 2007 and 2011. Wuhan, the flagship of new port investment on the Yangtze as well as nationally, actually saw declines in both the number of berths and freight throughput during that period.
 
The apparent gap between central government policy prerogatives and the reality of port traffic growth trends exemplifies the way economic development policy under the Communist Party not only responds to present needs but also in many ways actively shapes future realities. In the case of Yangtze River port development, and especially the massive expansion of Wuhan's port networks, it is difficult to differentiate investment and construction to meet growing real demand from investment to direct future attention and activity where it otherwise may not have gone.
 
The distinction is subtle but important because it points to the fundamentally political nature of Yangtze River development efforts (and, more generally, development of the Chinese interior). The politics of inland development plays out on multiple levels, from granular politicking among cities and provinces for central government favor to the underlying forces and constraints that make processes like Yangtze River economic development a social and political necessity for Beijing.
 
Going forward, the question for Beijing will be whether and to what extent it is able to realize its ambitious plans for the Yangtze River corridor and inland China as a whole. Even then, it is not clear that expanding and industrializing a handful of inland cities will reduce mounting economic imbalances or social tensions unless combined with significant changes to a range of other policies, including the hukou (or household registration) system and the fiscal and financial relationship between city, provincial and national governments. Significant changes to these policies will, in turn, meet steep resistance from entrenched bureaucratic interests. More fundamentally, such changes would likely unleash the social unrest that Beijing's entire political economic system is intended to manage.
 
To the extent that inland port development is important for China's social and economic structures, port development in Wuhan is similar to projects like the Three Gorges Dam or the ongoing South-North Water Transfer Project, which seeks to divert up to 10 percent of the Yangtze River's flow to water-starved provinces in northern China. All three are attempts to reconcile immense geographic and environmental constraints with the ballooning demands (both consumer and industrial) of an enormous population and an ever-expanding economy -- all while providing enough jobs to maintain a degree of stability.
 
The problem, then, is not simply that the Chinese government's approach to economic development is inconsistent with the needs of the economy and population as a whole (though, depending on how those needs are defined, it may be). Rather, it is that the needs of the economy -- growth with stability, and energy security despite energy demands that far outstrip domestic resources -- are themselves inconsistent and contradictory. This by no means guarantees that Beijing's continual intervention in and efforts to directly manage Chinese economy and society will succeed, but it does help explain why the Communist Party -- and arguably, any government that attempts to rule China today -- intervenes in the first place.
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« Reply #497 on: April 23, 2013, 10:41:14 AM »




BEIJING — The boy’s chronic cough and stuffy nose began last year at the age of 3. His symptoms worsened this winter, when smog across northern China surged to record levels. Now he needs his sinuses cleared every night with saltwater piped through a machine’s tubes.



Related
 
Air Pollution Linked to 1.2 Million Premature Deaths in China (April 2, 2013)
Cost of Environmental Damage in China Growing Rapidly Amid Industrialization (March 30, 2013)
As Pollution Worsens in China, Solutions Succumb to Infighting (March 22, 2013)
Students at the International School of Beijing playing in one of two domes with air-filtration systems for when smog is severe.


The boy’s mother, Zhang Zixuan, said she almost never lets him go outside, and when she does she usually makes him wear a face mask. The difference between Britain, where she once studied, and China is “heaven and hell,” she said.

Levels of deadly pollutants up to 40 times the recommended exposure limit in Beijing and other cities have struck fear into parents and led them to take steps that are radically altering the nature of urban life for their children.

Parents are confining sons and daughters to their homes, even if it means keeping them away from friends. Schools are canceling outdoor activities and field trips. Parents with means are choosing schools based on air-filtration systems, and some international schools have built gigantic, futuristic-looking domes over sports fields to ensure healthy breathing.

“I hope in the future we’ll move to a foreign country,” Ms. Zhang, a lawyer, said as her ailing son, Wu Xiaotian, played on a mat in their apartment, near a new air purifier. “Otherwise we’ll choke to death.”

She is not alone in looking to leave. Some middle- and upper-class Chinese parents and expatriates have already begun leaving China, a trend that executives say could result in a huge loss of talent and experience. Foreign parents are also turning down prestigious jobs or negotiating for hardship pay from their employers, citing the pollution.

There are no statistics for the flight, and many people are still eager to come work in Beijing, but talk of leaving is gaining urgency around the capital and on Chinese microblogs and parenting forums. Chinese are also discussing holidays to what they call the “clean-air destinations” of Tibet, Hainan and Fujian.

“I’ve been here for six years and I’ve never seen anxiety levels the way they are now,” said Dr. Richard Saint Cyr, a new father and a family health doctor at Beijing United Family Hospital, whose patients are half Chinese and half foreigners. “Even for me, I’ve never been as anxious as I am now. It has been extraordinarily bad.”

He added: “Many mothers, especially, have been second-guessing their living in Beijing. I think many mothers are fed up with keeping their children inside.”

Few developments have eroded trust in the Communist Party as quickly as the realization that the leaders have failed to rein in threats to children’s health and safety. There was national outrage in 2008 after more than 5,000 children were killed when their schools collapsed in an earthquake, and hundreds of thousands were sickened and six infants died in a tainted-formula scandal. Officials tried to suppress angry parents, sometimes by force or with payoffs.

But the fury over air pollution is much more widespread and is just beginning to gain momentum.

“I don’t trust the pollution measurements of the Beijing government,” said Ms. Zhang’s father, Zhang Xiaochuan, a retired newspaper administrator.

Scientific studies justify fears of long-term damage to children and fetuses. A study published by The New England Journal of Medicine showed that children exposed to high levels of air pollution can suffer permanent lung damage. The research was done in the 1990s in Los Angeles, where levels of pollution were much lower than those in Chinese cities today.

A study by California researchers published last month suggested a link between autism in children and the exposure of pregnant women to traffic-related air pollution. Columbia University researchers, in a study done in New York, found that prenatal exposure to air pollutants could result in children with anxiety, depression and attention-span problems. Some of the same researchers found in an earlier study that children in Chongqing, China, who had prenatal exposure to high levels of air pollutants from a coal-fired plant were born with smaller head circumferences, showed slower growth and performed less well on cognitive development tests at age 2. The shutdown of the plant resulted in children born with fewer difficulties.

Analyses show little relief ahead if China does not change growth policies and strengthen environmental regulation. A Deutsche Bank report released in February said the current trends of coal use and automobile emissions meant air pollution was expected to worsen by an additional 70 percent by 2025.

Some children’s hospitals in northern China reported a large number of patients with respiratory illnesses this winter, when the air pollution soared. During one bad week in January, Beijing Children’s Hospital admitted up to 9,000 patients a day for emergency visits, half of them for respiratory problems, according to a report by Xinhua, the state news agency.

Parents have scrambled to buy air purifiers. IQAir, a Swiss company, makes purifiers that cost up to $3,000 here and are displayed in shiny showrooms. Mike Murphy, the chief executive of IQAir China, said sales had tripled in the first three months of 2013 over the same period last year.
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Face masks are now part of the urban dress code. Ms. Zhang laid out half a dozen masks on her dining room table and held up one with a picture of a teddy bear that fits Xiaotian. Schools are adopting emergency measures. Xiaotian’s private kindergarten used to take the children on a field trip once a week, but it has canceled most of those this year.



Xu Xiaotian, in his Beijing apartment, has his sinuses cleared every night by a machine that pumps saltwater up his nose.
Air Pollution Linked to 1.2 Million Premature Deaths in China (April 2, 2013)
 

At the prestigious Beijing No. 4 High School, which has long trained Chinese leaders and their children, outdoor physical education classes are now canceled when the pollution index is high.

“The days with blue sky and seemingly clean air are treasured, and I usually go out and do exercise,” said Dong Yifu, a senior there who was just accepted to Yale University.

Elite schools are investing in infrastructure to keep children active. Among them are Dulwich College Beijing and the International School of Beijing, which in January completed two large white sports domes of synthetic fabric that cover athletic fields and tennis courts.

The construction of the domes and an accompanying building began a year ago, to give the 1,900 students a place to exercise in both bad weather and high pollution, said Jeff Johanson, director of student activities. The project cost $5.7 million and includes hospital-grade air-filtration systems.

Teachers check the hourly air ratings from the United States Embassy to determine whether children should play outside or beneath the domes. “The elementary schoolchildren don’t miss recess anymore,” Mr. Johanson said.

One American mother, Tara Duffy, said she had chosen a prekindergarten school for her daughter in part because the school had air filters in the classrooms. The school, called the 3e International School, also brings in doctors to talk about pollution and bars the children from playing outdoors during increases in smog levels. “In the past six months, there have been a lot more ‘red flag’ days, and they keep the kids inside,” said Ms. Duffy, a writer and former foundation consultant.

Ms. Duffy said she also checked the daily air quality index to decide whether to take her daughter to an outdoor picnic or an indoor play space.

Now, after nine years here, Ms. Duffy is leaving China, and she cites the pollution and traffic as major factors.

That calculus is playing out with expatriates across Beijing, and even with foreigners outside China. One American couple with a young child discussed the pollution when considering a prestigious foundation job in Beijing, and it was among the reasons they turned down the offer.

James McGregor, a senior counselor in the Beijing office of APCO Worldwide, a consulting company, said he had heard of an American diplomat with young children who had turned down a posting here. That was despite the fact that the State Department provides a 15 percent salary bonus for Beijing that exists partly because of the pollution. The hardship bonus for other Chinese cities, which also suffer from awful air, ranges from 20 percent to 30 percent, except for Shanghai, where it is 10 percent.

“I’ve lived in Beijing 23 years, and my children were brought up here, but if I had young children I’d have to leave,” Mr. McGregor said. “A lot of people have started exit plans.”
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DougMacG
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« Reply #498 on: April 23, 2013, 12:02:01 PM »

We may question the dangers of CO2, the gas that plants breathe, but filth in the air is another matter.  There is a quite a difference between a 'clean coal' plant and just burning coal.  Likewise for cars.  Maybe dissatisfaction with air quality will lead to a weakening or undoing of the regime.  Breathing is a pretty important human right, even if freedom of speech, assembly and consent of the governed are not.
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Crafty_Dog
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« Reply #499 on: April 23, 2013, 12:07:30 PM »

For quite some time, I have been making this point here about China having some seriously weak links in the chain of the story of how it is going to take over the world such as its inverted demographic profile, seriously dishonest bookkeeeping, and the fact that it is a worsening toxic dump.
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