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Topic: China (Read 93872 times)
Reply #550 on:
February 19, 2014, 09:29:54 PM »
Jane Goodall alarmed China plundering Africa, but admits destructive habits changing
China is exploiting Africa's resources just like European colonizers did, with disastrous effects for the environment, acclaimed primatologist Dr Jane Goodall told AFP.
On the eve of her 80th birthday, the fiery British wildlife campaigner is traveling to world capitals lecturing on the threats to our planet.
During the past decade China has been investing heavily in African natural resources, developing mines, oil wells and running related construction companies.
Activists accuse Chinese companies of paying little attention to the environmental impact of their race for resources.
“In Africa, China is merely doing what the colonialist did. They want raw materials for their economic growth, just as the colonialists were going into Africa and taking the natural resources, leaving people poorer,'' she told AFP in an interview in Johannesburg in South Africa.
The stakes for the environment may even be larger this time round, she warns.
“China is bigger, and the technology has improved... It is a disaster.''
Other than massive investment in Africa's mines, China is also a big market for elephant tusks and rhino horn, which has driven poaching of these animals to alarming heights.
But Goodall, who rose to fame through her ground-breaking research on chimpanzees in Tanzania, is optimistic.
“I do believe China is changing,'' she said, citing as one example Beijing's recent destruction of illegal ivory stockpiles.
“I think 10 years ago, even with international pressure, we would never have had an ivory crush. But they have,'' she added.
“I think 10 years ago the government would never have banned shark fin soup on official occasions. But they have.''
Her organization Roots and Shoots, founded over two decades ago to instil conservation values in children, has also become involved in China.
“We work with hundreds of Chinese children, and they are not different from children we work with here. They all love nature, they love animals, they want to help, there's no difference because they're Chinese,'' she said.
Young people's enthusiasm to change the world gives her hope.
“These young people will become the next parents, the next teachers, the next lawyers, the next business people and the next politicians, some of them.''
“The biggest problem is that people understand but don't know what to do,'' she said.
“If you have one thousand, one million or eventually several million people all making the right choice, all thinking about the consequence of their behavior, then we're going to see big change.''
Another glimmer of hope is “this amazing resilience of nature,'' she continued, citing as an example the China's Loess Plateau on the Yellow River bouncing back after massive soil erosion.
“It was set to be the biggest totally destroyed ecosystem in the world,'' she said.
A US$400-million project funded by the Chinese government and international donors introduced better farming methods in the area, which greatly reduced erosion and lifted 2.5 million people out of poverty, according to the World Bank.
“That took a lot of money, but if you look at it now, it's all green, lush and farmland, and children have come back from the cities. It's even got a whole area for wildlife,'' said Goodall.
“We still have a small window of time to change things.''
Reply #551 on:
February 19, 2014, 10:07:20 PM »
while speaking of Jane goodall one must watch this video and as noted anyone who watches should bring their hanky along;
It is the window video in the third picture box 3 minutes long:
bahttp://www.care2.com/causes/the-heartfelt-hug-that-said-it-all-chimp-thanks-jane-goodall-for-rescue.htmlck in the wild
Richard Young; Marc Faber:Bankruptcies coming and it won't be pretty
Reply #552 on:
March 20, 2014, 02:43:46 PM »
SHOCK: Wave of Bankruptcies Set to Hit China
March 17, 2014 by Young Research
Print This Post
In a shocking admission Chinese Premier Li Keqiang warned lenders in the country to prepare for a wave of defaults on debt in the coming year. China had so far been able to prevent embarrassing defaults among its corporations, even by presumably bailing out the world’s largest bank earlier this year (no one knows exactly what happened here but common sense would point to a hidden government bailout). But the government couldn’t, or wouldn’t, act fast enough to save Shanghai Chaori Solar Energy last week. It’s a signal from the Communist Party that Beijing is getting out of the bailout business. Borrowers, lenders and investors should take heed. Phillip Inman reports that the Middle Kingdom is facing serious challenges.
Li’s warning followed the failure of Shanghai Chaori Solar Energy to make a payment on a 1bn yuan (Ł118m) bond last week. The default was the first of its kind for China and widely seen as pointing to the end of 11th-hour government bailouts for troubled enterprises.
Some analysts said the decision to let some indebted firms collapse was a sign the authorities had learned from the Japanese boom and bust experience of the late 1980s and early 1990s. Tokyo was plunged into two “lost” decades of stagnation after it prevented zombie companies from declaring bankruptcy – even blocking petitions from bondholders in the courts – when a property collapse exposed debts many times the value of their businesses.
However, figures this week revealed that Beijing is copying the Japanese tactic of ramping up public infrastructure spending to replace the steep slowdown in private sector investment. Fixed asset investment, a measure of government spending on infrastructure, expanded 17.9% during the first two months of 2014, the National Bureau of Statistics said.
If China’s economic troubles force it to reduce purchases of U.S. treasury securities, and the Fed continues to taper its own purchases, there’s no telling what could happen to interest rates. There could be serious risks to America’s ability to fund itself. You can find our advice on profiting from the risks and opportunities of such shocks in our premium strategy reports, Richard C. Young’s Intelligence Report and Young Research’s Global Investment Strategy.
Reply #553 on:
March 21, 2014, 10:36:05 PM »
"If China’s economic troubles force it to reduce purchases of U.S. treasury securities, and the Fed continues to taper its own purchases, there’s no telling what could happen to interest rates. There could be serious risks to America’s ability to fund itself. "
I think they mean there could be serious risks to our continuing ability to
China Property Collapse Has Begun
Reply #554 on:
April 14, 2014, 02:39:23 PM »
As predicted here...
China Property Collapse Has Begun
Nothing is going right for Hangzhou at this moment. Walmart will be closing its Zhaohui store in that city on April 23 as a part of its overall plan to dump marginal locations—about 9% of the total—in China.
Thanks to the world’s largest retailer, another large block of space in Hangzhou, the capital of Zhejiang province, will go on the market at a time when there is generally too much supply. The problem is especially pronounced in the city’s premium office market. Hangzhou’s Grade A office buildings at the end of 2013 had, according to Jones Lang LaSalle, an average occupancy rate of 30%.
The real weakness, however, is Hangzhou’s residential sector. The cause is simple: massive overbuilding. Sara Hsu of the State University of New York at New Paltz writes that Hangzhou faces “burgeoning swaths of empty apartment units.”
Hangzhou’s market has not yet collapsed. There are still secondary sales, for instance. Singapore’s Straits Times reports Allen Zhao, a businessman, has been looking to sell his two-bedroom flat in Hangzhou for 2 million yuan. His neighbor just let go a similar unit for 1.7 million. If Zhao also sells for that amount, he will make a profit, but he will be disappointed. “That is not much more than the price I paid in 2012,” Zhao told the paper. “Now I’m regretting not selling earlier—more bad news about the property market keeps coming in every day.”
New homes also face price pressure. Developers in Hangzhou are now offering deep discounts, and investors and owners are noticing. And not just in that city. “It seems that the 30% price cut in Hangzhou really changed the way Chinese people think about real estate,” writes Anne Stevenson-Yang of J Capital Research, “and I doubt there is any turning back from here.” (more at link)
China housing bubble about to burst 2.0?
Reply #555 on:
April 15, 2014, 12:02:43 PM »
WSJ: China's growth struggles
Reply #556 on:
April 21, 2014, 07:19:12 AM »
Addresses themes I have discussed here for years, but comes to a more optimistic sense of things. I can't this this is wrong though , , ,
China's Growth Struggles
Market reform is crucial to avoiding the middle-income trap.
Updated April 20, 2014 5:16 p.m. ET
China's first quarter growth of 7.4% beat expectations last week, but it was a six-quarter low and below Beijing's 2014 target of 7.5%. Some analysts worry the country is vulnerable to a property market collapse and explosion of bad bank loans. So is the main engine of global growth about to stall?
One thing most everyone agrees on: China is in transition from a go-go phase driven by abundant capital and labor (think of the U.S. in the late 19th century) to a more mature development track in which growth depends on productivity gains. At this point other countries such as Brazil and Malaysia fell into the "middle-income trap" and stagnated, while South Korea and Taiwan powered through to become wealthy, although not without crises along the way.
Through the 2000s, Beijing struggled to rein in growth to avoid inflation, and any time the economy looked to be slowing it simply eased restrictions on investment and was off to the races again. Now gross capital formation, which averaged 15% from 2000-10, is around 10% as costs rise and profits are squeezed. The economy is overleveraged, with total debt (government and private) exceeding 200% of GDP. Negative purchaser managers index (PMI) indicators reflect the realization that companies can't rely on high GDP growth to repay loans.
Beijing's new leaders seem to recognize that financial reform and a period of deleveraging are needed to meet this challenge. Since slower growth is a necessary part of this program, the current slowdown could be read as a positive sign that the days of growth at any cost are over. The announcement last month that deposit rates will be liberalized over the next two years signals an end to financial repression, by which interest paid on savings was kept low to make borrowing cheaper. That suppressed consumption and led to the most lopsided economy the world has ever seen, with investment accounting for about 50% of GDP.
Like many of China's past reforms, de facto deposit-rate liberalization started well before the official announcement, in the form of what's been called the shadow banking system. While dangerous risks may be hidden here, there is a considerable upside: The state banks created entities to attract deposits at market rates of interest.
This "reform" came about because banks found that profit margins were shrinking on traditional loans to state-owned companies and local governments. So they sold high-return "wealth-management products" (WMPs) to investors and used the money to lend at still higher rates to private companies. By pricing risk, WMPs make the allocation of capital more efficient.
Another piece of good news is that access by private companies to bank loans has grown dramatically, surpassing the loans to state enterprises in 2012. This would have happened even faster if Beijing's post-2008 stimulus hadn't given a big boost to state firms. Private firms now account for two-thirds of investment, up from 40% a decade ago.
Over the last decade, demographic trends have pushed wages up faster than productivity growth. You wouldn't know it with all the angst about high inequality, but this trend has put pressure on managers to find efficiency gains. And it will help force Beijing to sell off state-owned enterprises that can't keep up. All of this suggests that China may follow South Korea and Taiwan and avoid the middle-income trap.
But it doesn't say whether a crisis is brewing in the next few years. Most crisis scenarios concern the property market, which accounts for almost a quarter of the economy. The problem is not so much high prices, since the average cost of an apartment has tracked rising urban incomes. Nor is it leverage, since regulations restrict mortgages and many buyers pay with cash. It is simply volume.
A side-effect of China's low bank-deposit rates and dysfunctional stock market is that many households have put their savings into empty apartments, which are so numerous they have spawned "ghost cities." When prices begin to fall, most owners will likely hold on and wait for a rebound. That means a long period of stagnation as the excess supply gradually comes onto the market.
The loss of such a big driver of growth will be painful, but by itself it shouldn't trigger the kind of financial crisis the U.S. saw in 2008. Chinese firms, ever flexible, will seek out new opportunities, and that could pay some surprising dividends. One reason China has been slow to produce innovative firms or global brands is that much of the country's talent and capital have been sucked into the production of empty buildings.
China's economic slowdown recalls Adam Smith's remark, often quoted by Milton Friedman : "There is much ruin in a nation." It is a reminder that even though many things go wrong, market forces, if allowed to operate, generally bring about a positive outcome. We can't rule out that there is so much malinvestment on balance sheets that a crisis is coming. But the fact that China's leaders still have the courage to expand the market's role gives hope that this slowdown doesn't herald the end of its growth story.
WSJ: China RE buble bursting
Reply #557 on:
May 05, 2014, 11:24:15 AM »
PoTH: Chinese economy looking shaky
Reply #558 on:
July 17, 2014, 10:52:08 AM »
Gertz: China making intercontinental hypersonic missles.
Reply #559 on:
July 20, 2014, 12:32:02 AM »
"A line drawing of the scramjet-powered vehicle shows that the concept being studied for eventual construction is nearly identical to an experimental National Aeronautics and Space Administration (NASA) scramjet vehicle called the X-43."
Duh how'd that happen?
Anyway the article:
****Report Reveals Chinese Military Developing New Scramjet-Powered Hypersonic Missile
BY: Bill Gertz
July 9, 2014 5:00 am
China’s military is working on a jet-powered hypersonic cruise missile in addition to an advanced high-speed glide warhead that was tested earlier this year.
A Chinese technical journal disclosed new details of research on what China’s defense researchers are calling a hypersonic cruise vehicle.
A line drawing of the scramjet-powered vehicle shows that the concept being studied for eventual construction is nearly identical to an experimental National Aeronautics and Space Administration (NASA) scramjet vehicle called the X-43.
Publication of details of work on the powered hypersonic cruise vehicle indicates China is pursuing a second type of ultra-fast maneuvering missile capable of traveling at speeds of up to Mach 10—nearly 8,000 miles per hour. Such speeds create huge technical challenges for weapons designers because of the strain on materials and the difficulty of control at high velocities.
Large numbers of Chinese military writings in recent years have focused on hypersonic flight. However, few have addressed scramjet powered hypersonic flight.
The Washington Free Beacon first disclosed Jan. 13 that China has conducted the first test of an unpowered hypersonic glide vehicle that U.S. intelligence agencies believe will be used to deliver strategic nuclear warheads through U.S. missile defenses.
The January test of the Wu-14 hypersonic vehicle signaled the beginning of what analysts say is the start of a new high-technology arms race to build high speed maneuvering strike vehicles.
The United States is developing both scramjet-powered and glide-hypersonic missiles. Russia’s government has made development of hypersonic missiles a priority.
The Chinese report outlines in technical detail how a scramjet-powered cruise vehicle operates at speeds greater than Mach 5 and discusses how to integrate airframe design with scramjet propulsion.
A scramjet is an engine that uses supersonic airflow to compress and combust fuel, creating a highly efficient propulsion system with few parts.
The report analyzed “preliminary design methods for airframe/engine integrative configuration.”
The analysis “may serve as a basis for quick preliminary design and performance evaluation of airframe/engine integrative configuration” for a future Chinese hypersonic cruise vehicle, the report said.
The scramjet cruise vehicle was described in a technical military journal called Command Control & Simulation. The article was published by the 716 Research Institute of the state-run China Shipbuilding Industry Corp., China’s largest maker of warships, submarines, and torpedoes.
Chinese drawing of hypersonic cruise missile Command Control & Simulation
Chinese drawing of hypersonic cruise missile / Command Control & Simulation
The study by China’s major naval weapons builder is a sign the PLA may be considering the strike vehicle for use against U.S. aircraft carriers and warships as part of what the Pentagon calls “anti-access, area denial” weapons.
China’s hypersonic weapons are among the most secret programs within the Chinese military, along with anti-satellite weapons and cyber warfare tools. However, China’s Defense Ministry confirmed the test asserting that it was “normal” scientific experiment and not aimed at any foreign state.
Military experts said the disclosure of the scramjet cruise missile is unusual and part of China’s large-scale high-technology arms buildup.
“China long ago identified hypersonics as a critical future military technology and has invested heavily in its development for future weapons,” said Rick Fisher, with the International Assessment and Strategy Center. “The old Bush administration concept of Prompt Global Strike using hypersonic non-nuclear warheads may be dormant in Washington, but it is very much alive and flourishing in Beijing.”
Fisher said a scramjet vehicle would have advantages over the Wu-14 glide vehicle, including better-sustained speeds, some maneuvering, and a depressed trajectory that would complicate efforts by U.S. missile defenses to intercept the ultra-fast maneuvering strike missile.
China’s Chengdu Aircraft Corporation has been leading the development of a hypersonic scramjet engine test platform similar to the decade-old Pentagon-NASA X-43, Fisher said.
Pentagon-NASA X-43 hypersonic scramjet powered vehicle NASA
Pentagon-NASA X-43 hypersonic scramjet powered vehicle / NASA
Fisher said the Chinese report does not make clear whether China is concentrating on scramjet power for future weapons. However, it could signal that researchers have made advances in such engines and materials.
Larry Wortzel, a former China-based military intelligence officer, said Chinese hypersonic arms are what Beijing calls “assassins’ mace” weapons that will give China a strategic edge in any future conflict with the United States.
“China is continuing with a number of programs to develop what Beijing considers to be ‘assassins’ mace’ weapons that defeat conventional defenses, including these hypersonic strike vehicles,” Wortzel said in an email. “The United States must move forward with its airborne and ship-borne laser programs and electromagnetic guns if we are to be able to counter China’s new weapons.”
U.S. hypersonic missile programs have been limited by the federal defense spending crisis that has constrained advanced weapons research.
Congress approved $70.7 million for an Army hypersonic missile program—an amount that is considered far less than what both China and Russia are investing in hypersonic arms.
Alan R. Shaffer, principal deputy assistant defense secretary for research and engineering, told a defense industry conference that a U.S. scramjet-powered hypersonic prototype, the X-51, is a leading choice for a military system of conventional rapid precision strike.
“We, the U.S., do not want to be the second country to understand how to have controlled scramjet hypersonics,” Shaffer said.
The Air Force Research Laboratory announced July 3 it will set up a new High Speed Experimentation Branch to study hypersonics at Arnold Air Force Base.
Russian Deputy Prime Minister Dmitry Rogozin said July 3 that Russian missile manufacturers must master the technology for both precision-guided and hypersonic weapons. Moscow has set a goal of 2020 to build its first hypersonic missile prototype.
The People’s Liberation Army (PLA), in a strategic review published last year, stated that new U.S. hypersonic weapons and other nations’ development of hypersonic arms pose a major threat to China’s national security.
The review said new weapons capable of striking land from space will have a “serious impact on national security.”
Among the weapons being developed by foreign powers, the Chinese military said, are “near space craft, spacecraft, and transatmospheric vehicles.”
It was the first time China mentioned the threat posed by the new generation of hypersonic threats in a public document. The report, “Strategic Review 2013,” was published by the PLA think tank Center for National Defense Policy.
It warned that “the role of space power is changing from information support, to space command operations and space-to-ground attacks.”
“The United States is intensifying the construction of its space confrontation capabilities and building a rapid responsive space system,” the report said, adding that the shift has begun from using space for support to ground attacks.
The report noted the U.S. development of near-space strike vehicles, including the X-51, a scramjet powered hypersonic vehicle developed by Boeing, the HTV-2, a glide strike vehicle, and the X-37 space plane launched atop a rocket. The PLA review called these weapons “new measures of power” and stated that they were “a bid to eliminate the boundary between air and space.”
Lee Fuell, a technical intelligence specialist at the Air Force National Air and Space Intelligence Center, told a congressional hearing in January that China’s hypersonic glide vehicle was a ballistic missile-launched system that glides and maneuvers to its target at speeds up to Mach 10 (about 7,611 mph).
Fuell said U.S. intelligence agencies believe that the glide vehicle is “associated with [China’s] nuclear deterrent forces.” Hypersonic strike vehicles also could be used for conventional precision-guided strikes, he said.
A Chinese-language version of article is available from the Canada-based Oriprobe information services.
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Reply #560 on:
July 20, 2014, 09:17:28 AM »
Please post in the Military Science thread as well.
Stratfor: The End of Consensu Politics in China
Reply #561 on:
August 09, 2014, 12:35:53 PM »
The End of Consensus Politics in China
Tuesday, August 5, 2014 - 03:02 Print Text Size
By John Minnich
Chinese President Xi Jinping's anti-corruption campaign is the broadest and deepest effort to purge, reorganize and rectify the Communist Party leadership since the death of Mao Zedong in 1976 and the rise of Deng Xiaoping two years later. It has already probed more than 182,000 officials across numerous regions and at all levels of government. It has ensnared low-level cadres, mid-level functionaries and chiefs of major state-owned enterprises and ministries. It has deposed top military officials and even a former member of the hitherto immune Politburo Standing Committee, China's highest governing body. More than a year after its formal commencement and more than two years since its unofficial start with the downfall of Chongqing Party Secretary Bo Xilai, the campaign shows no sign of relenting.
It is becoming clear that this campaign is unlike anything seen under Presidents Jiang Zemin and Hu Jintao. Both carried out anti-corruption drives during their first year in office and periodically throughout their tenures as a means to strengthen their position within the Party and bureaucracy and to remind the public, however impotently, that Beijing still cared about its well being. But that was housekeeping. This appears to be different: longer, stronger, more comprehensive and more effective.
With this in mind, we ask: What is the fundamental purpose of Xi's anti-corruption campaign? An attempt to answer this question will not tell us China's political future, but it will tell us something about Xi's strategy -- not only for consolidating his personal influence within the Party, government and military apparatuses, but also and more important, for managing the immense social, economic, political and international pressures that are likely to come to a head in China during his tenure. Getting to the heart of the anti-corruption campaign -- and therefore understanding its inner logic and direction -- provides insights on the organization and deployment of political power in China and how those things are changing as the Party attempts to remake itself into an entity capable of ushering China safely through the transformation and crises to come.
The Campaign Continues
The announcement July 29 of a formal investigation into retired Politburo Standing Committee member Zhou Yongkang marked something of an end to the first major phase of Xi's anti-corruption campaign. By all accounts, Zhou was one of the most powerful men in China throughout the 2000s. During his tenure on the Standing Committee, Zhou controlled the country's domestic security apparatus, a pillar of the Chinese government's power. Prior to that, he had served as Party secretary of Sichuan province, an important inland industrial center and breadbasket with historically strong regionalist tendencies. And before Sichuan, Zhou chaired state-owned China National Petroleum Corp., the country's most powerful energy firm and the direct descendent of the Ministry of Petroleum. Zhou was known to sit at the apex of at least these three power bases, and his influence likely extended deep into many more, making him not only a formidable power broker but also, at least in the case of his oil industry ties, a major potential obstacle to reform. Certainly, Zhou and his vast networks of influence and patronage were not the sole targets of the Xi administration's crackdown, but he and his associates, including former Chongqing Party Secretary Bo Xilai, widely seen as an early competitor of Xi, formed its central axis.
Now begins another phase. There are indications that it will center on the military. There are other signs that it will target Shanghai, the primary power base of Jiang Zemin and the locus of financial sector reform in China. Further neutralization of Zhou's allies in energy and public security will likely be necessary, too, as the Xi administration seeks to accelerate market-oriented reforms in the oil and natural gas sectors and to reinforce its internal security footprint in peripheral regions like Xinjiang as well as the Han Core. But ultimately, it is unclear which individuals and networks will anchor the next phase. The possibilities are as numerous as the Xi administration's myriad near- and medium-term policy goals.
The question of who or what will be targeted next is subordinate to that of why. Not why, specifically, they will be targeted, but why the campaign must and will continue. This brings us back to our question regarding the fundamental purpose of the anti-corruption campaign. It may be impossible to divine, beyond mere speculation, its future on a tactical level -- that is, what will come in three, five or eight months' time. But the direction of the campaign so far, combined with other actions by Xi, such as the formation of a unified National Security Council chaired by Xi himself and his apparent wresting of the reins of economic and social reform from Premier Li Keqiang, suggest that some other and deeper shift is underway, one for which the anti-corruption campaign is at once a vehicle and a symptom. Stratfor believes this shift involves nothing less than an attempt to rework not only the way the Communist Party operates but also the foundations of its political legitimacy.
To understand why, we look first not at Xi and what he has done thus far but at China and what it will undergo over the next decade. This will give us a sense of the external constraints and pressures of which Xi's administration is no doubt aware and to which it has no option but to respond. These constraints and pressures, more than any other factor, will shape Xi's actions and the Communist Party's evolution in the years to come.
A World Constrained
Over the next decade, the defining constraints on China will emanate from within. They are fundamentally economic in nature, but they cannot be disassociated from politics and society.
China is in the midst of an economic transformation that is in many ways unprecedented. The core of this transformation is the shift from a growth model heavily reliant on low-cost, low value-added exports and state-led investment into construction to one grounded in a much greater dependence on high value-added industries, services and above all, domestic consumption. China is not the first country to attempt this. Others, including the United States, achieved it long ago. But China has unique constraints: its size, its political system and imperatives, and its profound regional geographic and social and economic imbalances. These constraints are exacerbated by a final and perhaps greatest limit: time. China is attempting to make this transition, one which took smaller and more geographically, socially and politically cohesive countries many decades to achieve, in less than 20 years.
The bulk of this work will take place over the next 10 years at most, and more likely sooner, not because the Xi administration wants it to, but because it must. The global financial crisis in 2007-08 brought China's decadeslong export boom cycle to a premature close. For the past six years, the Chinese government has kept the economy on life support in the form of massively expanded credit creation, government-directed investment into urban and transport infrastructure development and, most important, real estate construction. In the process, local governments, banks and businesses across China have amassed extraordinary levels of debt. Outstanding credit in China is now equivalent to 251 percent of the country's gross domestic product, up from 147 percent in 2008. Local governments alone owe more than $3 trillion. It is unknown -- deliberately so, most likely -- what portion of outstanding debts are nonperforming, but it is likely far higher than the official rate of 1 percent.
Despite claims that China's investment drive was and is irresponsible -- and certainly there are myriad anecdotal cases of gross misallocation of capital -- it nonetheless fulfills the essential role of jumpstarting the country's effort to "rebalance" to a new, more urban and more consumption-based economic model. But the problem, again, is time. China's real estate sector is slowing. Sales, home prices and market sentiment are falling, even in the face of continued expansion of the overall credit supply. The days of high growth in the housing construction sector are numbered and prices, along with overall activity, are on a downward trend -- one that can and will be hedged by continued high levels of investment and credit expansion, but not one that can be stopped for long. Real estate and related construction activity will remain the crucial component of China's economy for the foreseeable future, but they will no longer be the national economic growth engines they were between 2009 and 2011.
This means that in the next few years, China faces inexorable and potentially very rapid decline in the two sectors that have underpinned economic growth and social and political stability for the past two or more decades: exports and construction. And it does so in an environment of rapidly mounting local government and corporate debt, rising wages and input costs, rising cost of capital and falling return on investment (exacerbated by new environmental controls and efforts to combat corruption) and more. Add to these a surge in the number of workers entering the workforce and beginning to build careers between the late 2010s and early 2020s, the last of China's great population boom generations, and the contours emerge of an economic correction and employment crisis on a scale not seen in China since Deng came to power.
The solution, it would seem, lies in the Chinese urban consumer class. But here, once more, time is China's enemy. Chinese household consumption is extraordinarily weak. In 2013, it was equivalent to only 34 percent of gross domestic product, compared to 69-70 percent in the United States, 61 percent in Japan, 57 percent in Germany and 52 percent in South Korea. In fact, it has fallen by two percentage points since 2011, possibly on the back of the anti-corruption campaign, which has curbed spending by officials that appears to have been erroneously counted as private consumption. There is reason to believe that household consumption is somewhat stronger than the statistics let on, but it is not nearly strong enough to pick up the slack from China's depressed export sector and depressive construction industries. China's low rates of urbanization relative to advanced industrial economies underscore this fundamental incapacity.
Whatever the Chinese government's stated reform goals, it is very difficult to see how economic rebalancing toward a consumption- and services-based economy succeeds within the decade. It is very difficult to see how exports recover. And it is very difficult, but slightly less so, to see how the government maintains stable growth through continued investment into housing and infrastructure construction, especially as the real estate market inevitably cools. This leaves us with a central government that either accepts economic recession or persists in keeping the economy alive for the sake of providing jobs but at risk of peril to its reform initiatives, banks and local governments. The latter is ugly and very likely untenable under the current political model, which for three decades has staked its claim to legitimacy in the promise of stable employment, growth and rising material prosperity. The former is absolutely untenable under the current political model.
The pressures stemming from China's economy -- and emanating upward through Chinese society and politics -- will remain paramount over the next 5-10 years. The above has described only a very small selection of the internal social and economic constraints facing China's government today. It completely neglects public anger over pollution, the myriad economic and industrial constraints posed by both pollution and pervasive low-level corruption, the impact of changes in Chinese labor flows and dynamics, rising education levels and much more. It completely neglects the ambivalence with which many ordinary Chinese regard the Communist Party government.
It also neglects external pressures and risks, whether economic or military. What would another global economic crisis and recession do to China's already hobbled export sector? What would a prolonged spike in oil prices -- the result, perhaps, of deepening crises in Russia or Iraq -- mean for Chinese industry and its change to China's growing army of car drivers? What impact will structural changes in the East Asian and world systems, such as Japan's attempt at a national economic and military revival, have on China's overseas economic and maritime interests, or on Chinese society's confidence in the strength of its military and government? The potential risks, many of them of moderate to high probability, are legion. It takes only one to materialize to dramatically reduce the likelihood that the Communist Party, as currently constituted, survives China's transformation.
The Old Model Breaks Down
Xi knows this. He and his advisers know China's virtually insurmountable challenges better than anyone. They know how little time China has, how fragile the Party's political legitimacy -- its claim to the Mandate of Heaven -- has become over the past three decades and how great the consequences of inaction will be. But they also know how much potentially greater are the consequences of failure. Knowing all these things, they are acting to reconstitute the Party one cautious step at a time.
The anti-corruption campaign is one of those steps. It serves many overlapping functions: to clear out potential opponents, ideological or otherwise; to consolidate executive power and reduce bureaucratic red tape so as to ease the implementation of reform; to remind the Chinese people that the Communist Party has their best interests at heart; and to make it easier to make tough decisions.
Underlying and encompassing these, we see the specter of something else. The consensus-based model of politics that Deng built in order to regularize decision-making and bolster political stability during times of high growth and that effectively guided China throughout the post-Deng era is breaking down. It can no longer hold in the face of China's transformation and the crises this will bring. Simply put, now that its post-1978 contract with Chinese society -- a social contract grounded in the exchange of growth for stability -- is up, the Party risks losing the public support and political legitimacy that this contract undergirded. A new and more adaptive but potentially much less stable model is being erected, or resurrected, from within the old. This model is grounded more firmly in the personality and prestige of the president and more capable, or so Chinese leaders seem to hope, of harnessing and managing the Chinese nation through what could well be a period of turmoil.
This does not necessarily mean a return to Imperial China, nor does it mean a return to the days and methods of the Great Helmsman, Mao. It doesn't even mean the new model will succeed, even remotely. What it means will be decided only by the specific interplay of structure and contingency in the unfolding of history. But it is this transformation that serves as the fundamental, if latent, purpose for Xi's anti-corruption campaign.
Editor's Note: Writing in George Friedman's stead this week is Stratfor Asia-Pacific Analyst John Minnich.
Read more: The End of Consensus Politics in China | Stratfor
Centripetal and Centrifugal Forces
Reply #562 on:
September 26, 2014, 04:41:38 PM »
Centripetal and Centrifugal Forces at Work in the Nation-State
Tuesday, September 23, 2014 - 03:00 Print Text Size
By Zhixing Zhang
"Here begins our tale: The empire, long divided, must unite; long united, must divide. Thus it has ever been." This opening adage of Romance of the Three Kingdoms, China's classic novel of war and strategy, best captures the essential dynamism of Chinese geopolitics. At its heart is the millennia-long struggle by China's would-be rulers to unite and govern the all-but-ungovernable geographic mass of China. It is a story of centrifugal forces and of insurmountable divisions rooted in geography and history — but also, and perhaps more fundamentally, of centripetal forces toward eventual unity.
This dynamism is not limited to China. The Scottish referendum and waves of secession movements — from Spain's Catalonia to Turkey and Iraq's ethnic Kurds — are working in different directions. More than half a century after World War II triggered a wave of post-colonial nationalism that changed the map of the world, buried nationalism and ethnic identity movements of various forms are challenging the modern idea of the inviolable unity of the nation-state.
Centripetal and Centrifugal Forces at Work in the Nation-State
Yet even as these sentiments pull on the loose threads of nations, in China, one of the most intractable issues in the struggle for unity — the status of Tibet — is poised for a possible reversal, or at least a major adjustment. The long-running but frequently unnoticed negotiations have raised the possibility that the Dalai Lama, Tibet's spiritual leader, may be nearing a deal that would enable him to return to his Tibetan homeland. If it happens, it would end the Dalai Lama's exile in Dharamsala, India — an exile that began after the Tibetan uprising in 1959, nine years after the People's Republic of China annexed Tibet. More important, a settlement between Beijing and the Dalai Lama could be a major step in lessening the physical and psychological estrangement between the Chinese heartland and the Tibetan Plateau.
Tibet, the Dalai Lama and Self-Determination
The very existence of the Tibetan issue bespeaks several overlapping themes of Chinese geopolitics. Most fundamentally, it must be understood in the context of China's struggle to integrate and extend control over the often impassable but strategically significant borderlands militarily and demographically. These borderlands, stretching from northeast to the southwest — Manchuria, Mongolian Plateau, Xinjiang, Tibet and the Yunnan Plateau — form a shield, both containing and protecting a unified Han core from overland invasion. In attempting to integrate these regions, however, China confronts the very nature of geographic disintegration and the ethnic identities in these restive borderlands, which have sought to resist, separate or drift away from China at times when weak central power has diminished the coherence of China's interior.
Tibet in many ways represents the extreme edge of this pattern. Indeed, while the formidable geography of the Tibetan Plateau (its altitude averages 4.5 kilometers, or almost 2.8 miles, above sea level) largely inured it from most frontier threats to the Han core compared with the more accessible Manchuria, Mongolian Plateau or Xinjiang. Perhaps no borderland is as fraught with as much consequence as Tibet under China's contemporary geopolitical circumstances. The Tibetan Plateau and its environs constitute roughly one-quarter of the Chinese landmass and are a major source of freshwater for China, the Indian subcontinent and mainland Southeast Asia. The high mountains of the Himalayas make a natural buffer for the Chinese heartland and shape the complex geopolitical relationship between China and India.
Historically, China's engagement with the Tibetan Plateau has been lacking and not characterized by national unity. Starting in the 7th century, China made sporadic attempts to extend its reach into the Tibetan Plateau, but it wasn't until the Qing dynasty that the empire made a substantial effort to gain authority over Tibetan cultural and social structures through control of Tibetan Buddhist institutions. The weakening of China after the Qing dynasty led peripheral states, including Tibet, to slip from Chinese central rule.
Since the People's Republic of China began ruling over Tibet in 1950, the perennial struggle manifested as political, religious and psychological estrangement between political power in Beijing and the Dalai Lama, the charismatic political and spiritual symbol of the Tibetan self-determination movement, who consistently has resisted China's full domination over Tibet. Here, the nominally impersonal process of geopolitics confronts the rare individual who has a lasting impact. The Dalai Lama has concentrated the Tibetan cause into himself and his image. It is the Dalai Lama who represents the Tibetan identity in foreign capitals and holds a fractious Tibetan movement together, holding sway over both indigenous Tibetans in the homeland and the old and new generations of Tibetan exiles.
Perennial Struggle and Contemporary Moves
Under the People's Republic, China has some of the clearest physical control and central authority over one of the largest and most secure states in China's dynastic history. However, the ancient compulsion to secure the Chinese periphery did not go unaddressed by China's Communist leadership.
Over the years, the central government has pushed aggressively to bolster Han Chinese economic and demographic dominance over the borderland while attempting to overcome the physical barriers of distance through grandiose infrastructure projects, including road and rail links. And yet, the estrangement with the Dalai Lama has left Beijing dealing with the perception that its control over the Tibetan Plateau is partial and of questionable legitimacy. Meanwhile, the Dalai Lama's international prestige exposed the central power in Beijing to numerous international critics. Moreover, it offered New Delhi an opportunity to exploit Beijing's concerns by hosting the Dalai Lama and the Tibetan government-in-exile.
Beijing sees no space to allow the autonomy demanded by the Tibetan exile movement; it is a short path from robust autonomy to direct challenge. Beijing's strategy has been to try to undermine the Dalai Lama's international prestige, constrain interaction between the exile community and Tibetans at home and hope that when the spiritual leader dies, the absence of his strong personality will leave the Tibetan movement without a center and without someone who can draw the international attention the Dalai Lama does. Central to Beijing's calculation is interference in the succession process whereby Beijing claims the right to designate the Dalai Lama's religious successor and, in doing so, exploit sectarian and factional divisions within Tibetan Buddhism. Beijing insists the reincarnation process must follow the Tibetan religious tradition since the Qing dynasty, meaning that it must occur within Tibetan territory and with the central government's endorsement, a process that highlights Tibet's position as a part of China, not an independent entity.
Beijing's plan could work, but the cost would be high. Without recognition from the Dalai Lama, Beijing's appointed successor — and by extension, Beijing's authority in Tibet — can hardly be accepted by the wider Tibetan community. To resist Beijing's attempt at interference, the Dalai Lama has in recent years made various statements signaling that the ancient traditions of the succession process could break. In particular, the Dalai Lama has discussed the potential for succession through emanation rather than reincarnation. This would place his knowledge and authority in several individuals, each with a part of his spiritual legacy, but none as the single heir. Emanation can occur while the Dalai Lama is alive, thus giving him the ability to manage a transition. He has also mentioned the possibility that no successor will be named — that the reincarnation of the Dalai Lama will end, leaving his legacy as the lasting focus for Tibetans.
More concretely, the Dalai Lama has split the role of spiritual and political leadership of the Tibetan movement, nominally giving up the latter while retaining the former. In doing so, he is attempting to create a sense of continuity to the Tibetan movement even though his spiritual successor has not been identified. However, it also separates the Dalai Lama from any Tibetan political movement, theoretically making it easier for the spiritual leader and Beijing to come to an accord about his possible return as a spiritual — but not political — leader. But the maneuvering by the Dalai Lama reflects a deeper reality. The Tibetan movement is not homogenous. Tibetan Buddhism has several schools that remain in fragile coordination out of respect for the Dalai Lama. The Tibetan political movement is also fragmented, with the younger foreign-born Tibetans often more strongly pressing for independence for Tibet, while the older exiles take a more moderate tone and call for more autonomy. The peaceful path promoted by the Dalai Lama is respected, but not guaranteed forever, by the younger and more radical elements of the Tibetan movement, which have only temporarily renounced the use of violence to achieve their political goals.
The future of the Tibetan movement after the Dalai Lama's death is uncertain. At a minimum, the spiritual leader's fame means no successor will be able to exercise the same degree of influence or maintain internal coherence as he has done. Just as the Dalai Lama was concerned that an extremist wing of the new Tibetan generation would undermine his moderate ideology and dilute the movement's legitimacy, Beijing fears that the post-Dalai Lama era would enable multiple radical, separatist or even militant movements to proliferate, leaving Beijing in a much more difficult position and potentially facing a greater security threat.
Beijing and the Dalai Lama have shown a willingness to reach a political settlement in the past, but their attempts failed. As uncertainties loom for both sides amid concerns about the spiritual leader's age and the changing domestic dynamics facing China's new president, Xi Jinping, both sides could see a departure from previous hostilities as a reasonable step toward a low-cost settlement. In other words, both Beijing and the Dalai Lama — and by extension his mainstream followers — understand how little time they have and how, without a resolution, the uncertainties surrounding the Tibet issue could become permanent after the spiritual leader's death.
Optimism Now, but Caution Ahead
The report of the Dalai Lama's possible return to Tibet comes as Beijing has resumed talks with representatives of the spiritual leader. This round of negotiations comes after nine rounds of failed talks over the past decade and four years after the last attempt. Nonetheless, the mood appears at least somewhat optimistic on both sides. In recent weeks, the Dalai Lama has offered conciliatory comments about Xi and intimated that he could be open to returning to Tibet, a longstanding desire of the 79-year-old spiritual leader. For its part, Beijing has released some Tibetan political prisoners and reportedly allowed the Dalai Lama's image and words to be used in certain Tibetan regions after years of prohibition.
Of course, many uncertainties surround the return of the Dalai Lama; it is even uncertain whether it could happen at all. Indeed, overcoming 55 years of hostile relations takes enormous effort, and even if the Dalai Lama is allowed to return to Tibet, it is only one of several steps in much broader negotiations between Beijing and the Tibetan exile community over how to reach a resolution, including the possible resettlement of 200,000 Tibetans in exile, the status of the government-in-exile, the authority of the Dalai Lama and, ultimately, the succession process for the spiritual leader.
Over the years, the Dalai Lama repeatedly has expressed a strong desire to return to the Tibetan homeland, seeing it as an end goal in his longstanding efforts to gain Tibetan autonomy. Although Beijing had always left the option open, it repeatedly emphasized that any dialogue with the Dalai Lama would be confined to the scope of an arrangement for the spiritual leader and would carry no political implications. In other words, any agreement will be based on the premise that expanded Tibetan autonomy is not an option and that Beijing's authority over Tibetan regions — and by extension, the borderland in Xinjiang and Inner Mongolia — will remain intact. Similarly, the Dalai Lama will not accept a weakening of his spiritual authority among the Tibetan community or of his role in choosing successors. Nonetheless, with Beijing's concern over the proliferation of radical wings of the Tibetan movement abroad, allowing the Dalai Lama to return to Tibet could mitigate some of the tension and give Beijing a way to divide and weaken the Tibetan movement.
In moving toward an agreement, both sides would have to prepare for some political risk. For Beijing, the foremost concern would be managing the enormous religious influence of the Dalai Lama at home, where he is seen as a challenger to the Communist Party's political leadership. For the Dalai Lama, the main concerns would be managing the role of the Tibetan political leadership overseas and the potential repercussions within the exile movement from the developing settlement's contrast with their goal for Tibetan autonomy.
Perhaps more important, even if there were signs of a resolution developing, the succession issue is likely to be a roadblock. Beijing is unlikely to give any concession in its authority to appoint a reincarnated spiritual leader, and the Dalai Lama shows little intention of allowing Beijing's unilateral move.
Confronting a Geopolitical Curse
Despite various uncertainties, questions and risks, the potential ramifications of even the slim possibility of rapprochement illustrate China's ancient geopolitical dynamism at work.
Again illustrating how an individual can play a role in geopolitics, the potential for reconciliation between Beijing and the Dalai Lama could affect the balance between China and India. China has long viewed India's decision to host the Tibetan government-in-exile as a hostile gesture. However, India's ability to exploit China's concerns about Tibet has diminished along with the government-in-exile's influence and claim to represent Tibet as a legitimate entity. Already, New Delhi has shown waning enthusiasm for accepting Tibetan refugees and greater concern that the internal fragmentation of the Tibetan community will make hosting the exile community more of a liability than a benefit. However, a settlement would not eliminate the underlying geopolitical rivalry between India and China on other fronts — from their 4,000-kilometer land border to the maritime competitions in the Indian Ocean and South China Sea and their competition for energy and other resources.
Even if a settlement on the Tibet issue emerges in the distant future, it does not mean the end of the China-Tibet struggle. Indeed, since 2009 there have been many Tibetan self-immolations, and Beijing's economic developments in many parts of the ethnic borderlands widely are perceived as flawed or incomplete. Quite likely, a detente with the Dalai Lama will result in radicalized and more extremist elements emerging overseas, seeking self-determination and, like many of their counterparts around the world — from Scotland to the Kurds in the Middle East — challenging the centripetal forces of nation-states.
Historically, when Han China is strong, so is its control over these buffer regions. Control of the buffer regions, in turn, is a key precondition for a strong and secure Han China. This arrangement will become crucial as Beijing grapples with the potential challenges in the social, economic and political transformation in the Han core in the coming years. Therefore, despite the flux mentioned in the aphorism from Romance of the Three Kingdoms, for Beijing the ultimate goal is to confront an ancient geopolitical curse by cementing its control over its borderlands and uniting China permanently and irreversibly, however unrealistic this goal might be.
Editor's Note: Writing in George Friedman's stead this week is Stratfor Asia-Pacific Analyst Zhixing Zhang.
Read more: Centripetal and Centrifugal Forces at Work in the Nation-State | Stratfor
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