The Great Helmsman

Bricks are stacked to dry at a kiln in Yichang, Hubei Province in this undated photo. The practice of using farmland soil to make bricks means huge loss of farmland each year in China.

The core principle that drives Chinese government policy, The Party, is social stability. Social stability in China includes justice for the mass of people outside The Party while the graft of officials, “violation of discipline,” within The Party, agitates the masses for reform.

The Party has assumed the role of the Great Helmsman to navigate the land of Ch’in through currents of social change brought about by new found economic affluence. Increased production and consumerism, cars, fast food, refrigerators, electronics, cosmetic surgery, has resulted in a greater demand for control of citizens and the acquisition of resources. Demand for goods and services to maintain the Chinese life style requires an inexhaustible demand for resources: oil, coal, copper, zinc, wheat and corn. The Chinese have spread across the world buying land to grow food and mine minerals in Suriname for example.

External currents, relations with the rest of the world, resource regions such as Brazil and Africa which resent the imposition of a Chinese system must be balanced with the needs of the consumer countries. Unlike Western governments, the Chinese do not make stringent ideological demands on local communities but native populations everywhere disdain arrogance. However, until the China becomes a consumer society like the United States, instead of an economy driven by exports, the Great Helmsman in the wheelhouse should navigate through the shallow shoals of unintended consequences to avoid the coral reefs of unnecessary confrontation due to

Can the United States feed China?

Lester R. Brown
Friday, March 11, 2011; 4:00 PM

China is at war. It is not invading armies but expanding deserts that threaten its territory. As old deserts grow, as new ones form and as more and more irrigation wells go dry, Beijing is losing a long battle to feed its growing population on its own.

In the years to come, China will almost certainly have to turn to the outside world for grain to avoid politically destabilizing price spikes. Enter the United States – by far the world’s largest grain exporter. The United States exports about 90 million tons of grain annually, though China requires 80 million tons of grain each year to meet just one-fifth of its needs.

Just as China is America’s banker, America could become China’s farmer. Such a scenario – to be dependent on imported grain, much of it from the United States – is China’s worst nightmare and one that could create nightmares for U.S. consumers, as well.

The evidence of China’s plight is clear. Since 1950, some 24,000 villages in the northwestern part of the country have been totally or partially abandoned as sand dunes encroach on cropland. And with millions of Chinese farmers drilling wells to expand their harvests, water tables are falling under much of the North China Plain, which produces half of the nation’s wheat and a third of its corn.

Chinese agriculture is also losing irrigation water to cities and factories. Cropland is being sacrificed for residential and industrial construction, including highways and parking lots that accommodate China’s voracious demand for automobiles. In 2009, automobile sales in China totaled just under 14 million, surpassing those in the United States for the first time. For every 1 million cars added to this fleet, at least 50,000 acres are paved over.

And China’s food supply is already tightening. In November, its food price index was up 12 percent from 2009. The price of vegetables alone was up 62 percent.

In these conditions, how do you feed more than 1 billion people? This question vexes China’s leaders, many of whom are survivors of the Great Famine, in which 30 million people starved to death between 1959 and 1961. Last year, in an effort to halt rising food prices, the government auctioned corn, wheat, rice and soybeans from state reserves. And in recent years, China has bought or leased land in other countries from Sudan to Indonesia to produce food and biofuels, but there is little to show in production from these lands so far.

If China, which imported about 2 million tons of U.S. corn and wheat combined in 2010, charges into the U.S. grain market, American consumers will find themselves competing with nearly 1.4 billion foreign consumers for the U.S. grain harvest. This would raise the prices not only of products made directly from grain, such as bread, pasta and breakfast cereals, but also of meat, milk and eggs, which take large quantities of grain to produce. Corn futures have already hit $7 a bushel, up from $2 a bushel five years ago. In that same period, soybean futures climbed from $6 a bushel to $14 a bushel, and cattle and hog futures hit all-time highs.

China has been here before – with soybeans. In 1995, around the time the Communist Party prioritized grain production, China produced and consumed 14 million tons of soybeans. By 2010, China was still producing 14 million tons of soy annually, but consuming 69 million tons. For the nation that domesticated the soybean, the change was dramatic, and it resulted in the restructuring of agriculture in the Western Hemisphere. To meet overseas demand, the United States now has more land in soybeans than wheat. Brazil has more land in soybeans than in all grains combined. And Argentina is fast becoming a soybean monoculture. Today, nearly 60 percent of world soybean exports – almost all from these three countries – go to China.

Of course, when selling food to China, the United States is dealing with both an economic competitor and a creditor holding $900 billion worth of U.S. Treasury securities. If China pushes U.S. food prices higher, tensions between the two countries may escalate. An even greater stress may develop between Washington and U.S. consumers, as Americans – who think cheap food is a birthright – are likely to press for restrictions on exports to China. There is precedent for this: In the 1970s, the United States banned exports of soybeans to countries such as Japan to quash domestic food price inflation.

Though withholding food from an emerging superpower could lower domestic food prices, it would be bad diplomacy. Even during the Cold War, the United States exported 10 million tons of wheat – nearly a quarter of the U.S. harvest – to the Soviet Union in 1972 after a crop failure there. Well-fed enemies are more predictable.

Would this work today? The Obama administration – or any future administration – faces a choice. If we limit grain sales to China, might the Chinese limit their monthly purchases at Treasury securities auctions? What would happen to farmers who can’t sell to the world’s largest food market? We can’t know how this tension will play out politically, but we do know that our huge deficits of the past 30 years restrict our bargaining power.

The United States has been the world’s breadbasket for more than half a century. Our country has never known food shortages or spiraling food prices. But, like it or not, we will probably have to share our harvest with the Chinese, no matter how much that raises our prices.

Our world is about to change. In the supermarket checkout line, in restaurants and at Federal Reserve meetings, it’s hard to imagine that it will be for the better.

Energy giants to give agriculture high priority

By Huang Zhe (China Daily/Agencies)
Updated: 2011-02-01 14:25

BEIJING – China has called upon its energy companies to ensure fertilizer producers get ample supplies of natural gas for the spring planting season, to avert shortages as demand grows for foodstuffs including grain and meat.

China National Petroleum Corp, China Petrochemical Corp and CNOOC Ltd are barred from selling gas to other customers until they fill farm-related orders, the National Development and Reform Commission said on Sunday in a statement.

China’s farms face pressure in the coming years to supply the nation’s food needs, Shanghai Securities News reported on Jan 28, citing Chen Xiaohua, a vice-minister of agriculture.

In the next five years, annual demand for grains is expected to grow by 4 million tons, vegetable oils by 800,000 tons and meat by 1 million tons, Chen was cited as saying.

Ensuring enough fertilizer for crops is a “precondition for the grain harvest” and “essential for stabilizing the prices of agricultural products and managing inflation,” the commission said.

Gains in food prices accounted for almost three-quarters of China’s 3.3 percent increase in consumer prices last year, Chen Xiwen, deputy director of the Central Leading Group on Rural Work, said at a news conference on Sunday, according to a transcript on the government website.

Drought has hit 5.16 million hectares of wheat-growing land in China, almost 60 percent of that in the eastern provinces of Henan and Shandong, Water Resources Minister Chen Lei said on Sunday at the news conference.

The drought may continue until at least April, China National Radio reported on Jan 29.

Henan and Shandong provinces accounted for 45 percent of China’s 112 million tons of wheat in the 2008-2009 marketing year, according to data from the State-affiliated China National Grain & Oils Information Center.

China hopes to plant 24.3 million hectares of wheat for the 2010-2011 season, the center forecast.

China will accelerate development of water conservation, aiming to double annual investment in the field during the next 10 years, according to a State Council statement released Sunday via the Xinhua News Agency.

Shrinking arable land adds concern on China’s grain security 2010-10-18 10:34:17

BEIJING, Oct. 18 (Xinhua) — Although China’s success in feeding 22 percent of the world population using the world’s less than 10 percent arable land has been hailed as a miracle, concern is growing that the country’s shrinking arable land would jeopardize grain security.

The country’s summer grain output inched down 0.3 percent from one year earlier to 123.1 million tonnes in the first half of this year after a prolonged drought in southwestern China. It was the first decline in seven years for China’s summer grain output.

To ensure grain security, China set a “red line” to guarantee its arable land never shrinks to less than 1.8 billion mu (120 million hectares).

According to statistics from China’s Ministry of Land and Resources (MLR), the country is already edging dangerously close to its “red line”, with just 1.826 billion mu available as of the end of last year.

China lost 123 million mu of arable land from 1997 to 2009.

Analysts believed several major factors contributed to the arable land loss, such as increasing use of arable land for construction purposes, forest or grassland replanting programs as well as damage caused by natural disasters.

“As China is still in a period of rapid industrialization and urbanization, taking over some arable land is inevitable,” said Wang Xiaoying, a researcher at the Rural Development Institute under the Chinese Academy of Social Sciences. “But it is crucial to hold the bottom line.”

The reclamation of barren land and rectification of land for construction uses would help ensure the arable land area, Wang said.

Kanayo F. Nwanze, president of the International Fund for Agricultural Development, urged China to redouble efforts to maintain enough arable land to produce grain for its growing population.

“For China, limited access to agricultural land, along with a growing population, has always been a challenge,” Nwanze told media reporters while attending a celebration in Rome to commemorate the World Food Day on Saturday.

Over the past few years, to ensure the 1.8-billion-mu “red line”, China has rigidly restricted the conversion of arable land to land for construction, kept the total area of land for construction under control and given special protection to farmland.

According to China’s Land Administrative Law, every plot of arable land turned over for housing or industrial projects must be replaced by an equivalent amount of land.

However, analysts pointed out loopholes in the policy, the most obvious of which is that reclaimed land is always not as arable as occupied croplands.

“China should improve its policy to ensure reclaimed land matches the used arable land not just in area, but also in production capacity,” said Zeng Xibai, a researcher with the Chinese Academy of Agricultural Sciences.

Further, Qiu Baoxing, vice minister of Housing and Urban-rural Development, said there was a dangerous trend when some local governments destroyed forests to reclaim farmland, which caused irreparable damages to the local environment.

To tackle the problem, the MLR urged local authorities to enhance implementation of the arable land policy, intensify monitoring and check conditions of reclaimed land, it said in a statement posted on its website Tuesday.

In the first nine months of this year the MLR found 85,000 mu of illegally occupied arable land, down 10.4 percent from one year earlier. Officials responsible for the illegal occupation were punished.

The Chinese government should also increase input to improve the production capacity of arable land, said Zeng.

See also:

Safe nuclear does exist, and China is leading the way with thorium
A few weeks before the tsunami struck Fukushima’s uranium reactors and shattered public faith in nuclear power, China revealed that it was launching a rival technology to build a safer, cleaner, and ultimately cheaper network of reactors based on thorium.

By Ambrose Evans-Pritchard 9:30PM GMT 20 Mar 2011

This passed unnoticed – except by a small of band of thorium enthusiasts – but it may mark the passage of strategic leadership in energy policy from an inert and status-quo West to a rising technological power willing to break the mould.

If China’s dash for thorium power succeeds, it will vastly alter the global energy landscape and may avert a calamitous conflict over resources as Asia’s industrial revolutions clash head-on with the West’s entrenched consumption.

China’s Academy of Sciences said it had chosen a “thorium-based molten salt reactor system”. The liquid fuel idea was pioneered by US physicists at Oak Ridge National Lab in the 1960s, but the US has long since dropped the ball. Further evidence of Barack `Obama’s “Sputnik moment”, you could say.

Chinese scientists claim that hazardous waste will be a thousand times less than with uranium. The system is inherently less prone to disaster.

“The reactor has an amazing safety feature,” said Kirk Sorensen, a former NASA engineer at Teledyne Brown and a thorium expert.

If it begins to overheat, a little plug melts and the salts drain into a pan. There is no need for computers, or the sort of electrical pumps that were crippled by the tsunami. The reactor saves itself,” he said.

“They operate at atmospheric pressure so you don’t have the sort of hydrogen explosions we’ve seen in Japan. One of these reactors would have come through the tsunami just fine. There would have been no radiation release.”

Thorium is a silvery metal named after the Norse god of thunder. The metal has its own “issues” but no thorium reactor could easily spin out of control in the manner of Three Mile Island, Chernobyl, or now Fukushima.

Professor Robert Cywinksi from Huddersfield University said thorium must be bombarded with neutrons to drive the fission process. “There is no chain reaction. Fission dies the moment you switch off the photon beam. There are not enough neutrons for it continue of its own accord,” he said.

Dr Cywinski, who anchors a UK-wide thorium team, said the residual heat left behind in a crisis would be “orders of magnitude less” than in a uranium reactor.

The earth’s crust holds 80 years of uranium at expected usage rates, he said. Thorium is as common as lead. America has buried tons as a by-product of rare earth metals mining. Norway has so much that Oslo is planning a post-oil era where thorium might drive the country’s next great phase of wealth. Even Britain has seams in Wales and in the granite cliffs of Cornwall. Almost all the mineral is usable as fuel, compared to 0.7pc of uranium. There is enough to power civilization for thousands of years.

I write before knowing the outcome of the Fukushima drama, but as yet none of 15,000 deaths are linked to nuclear failure. Indeed, there has never been a verified death from nuclear power in the West in half a century. Perspective is in order.

We cannot avoid the fact that two to three billion extra people now expect – and will obtain – a western lifestyle. China alone plans to produce 100m cars and buses every year by 2020.

The International Atomic Energy Agency said the world currently has 442 nuclear reactors. They generate 372 gigawatts of power, providing 14pc of global electricity. Nuclear output must double over twenty years just to keep pace with the rise of the China and India.

If a string of countries cancel or cut back future reactors, let alone follow Germany’s Angela Merkel in shutting some down, they shift the strain onto gas, oil, and coal. Since the West is also cutting solar subsidies, they can hardly expect the solar industry to plug the gap.

BP’s disaster at Macondo should teach us not to expect too much from oil reserves deep below the oceans, beneath layers of blinding salt. Meanwhile, we rely uneasily on Wahabi repression to crush dissent in the Gulf and keep Arabian crude flowing our way. So where can we turn, unless we revert to coal and give up on the ice caps altogether? That would be courting fate.

US physicists in the late 1940s explored thorium fuel for power. It has a higher neutron yield than uranium, a better fission rating, longer fuel cycles, and does not require the extra cost of isotope separation.

The plans were shelved because thorium does not produce plutonium for bombs. As a happy bonus, it can burn up plutonium and toxic waste from old reactors, reducing radio-toxicity and acting as an eco-cleaner.

Dr Cywinski is developing an accelerator driven sub-critical reactor for thorium, a cutting-edge project worldwide. It needs to £300m of public money for the next phase, and £1.5bn of commercial investment to produce the first working plant. Thereafter, economies of scale kick in fast. The idea is to make pint-size 600MW reactors.

Yet any hope of state support seems to have died with the Coalition budget cuts, and with it hopes that Britain could take a lead in the energy revolution. It is understandable, of course. Funds are scarce. The UK has already put its efforts into the next generation of uranium reactors. Yet critics say vested interests with sunk costs in uranium technology succeeded in chilling enthusiasm.

The same happened a decade ago to a parallel project by Nobel laureate Carlo Rubbia at CERN (European Organization for Nuclear Research). France’s nuclear industry killed proposals for funding from Brussels, though a French group is now working on thorium in Grenoble.

Norway’s Aker Solution has bought Professor Rubbia’s patent. It had hoped to build the first sub-critical reactor in the UK, but seems to be giving up on Britain and locking up a deal to build it in China instead, where minds and wallets are more open.

So the Chinese will soon lead on this thorium technology as well as molten-salts. Good luck to them. They are doing Mankind a favour. We may get through the century without tearing each other apart over scarce energy and wrecking the planet.

China’s repression undoes its charm offensive

By Joseph S. Nye Jr., Friday, March 25, 8:12 PM
I was asked to lecture at Beijing University on soft power, the ability to use attraction and persuasion to get what you want without force or payment. This was before the series of revolutions roiling the Middle East, in whose aftermath China is clamping down on the Internet and jailing human rights lawyers, once again torpedoing its soft-power campaign. The auditorium that day was packed, and I had been told that more than a thousand articles have been published in China on this topic. That may have something to do with the fact that in 2007, President Hu Jintao told the 17th Congress of the Communist Party that China needed to increase its soft power.

Over the past decade, China’s economic and military might have grown impressively. But that has frightened its neighbors into looking for allies to balance rising Chinese hard power. The key is that if a country can also increase its power of attraction, its neighbors feel less need to balance its power. Canada and Mexico, for example, do not seek alliances with China to balance American power the way Asian countries seek an American presence to balance China.

The result of this regional wariness is that China is spending billions on a charm offensive to increase its soft power. Chinese aid programs to Africa and Latin America are not limited by the institutional or human rights concerns that constrain Western aid. The Chinese style emphasizes high-profile gestures, such as rebuilding the Cambodian Parliament or Mozambique’s Foreign Affairs Ministry. The elaborately staged 2008 Beijing Olympics enhanced China’s reputation, and the 2010 Shanghai Expo attracted more than 70 million visitors. The Boao Forum for Asia on Hainan Island annually attracts nearly 2,000 Asian politicians and business leaders to what is billed as an “Asian Davos.”

China has always had an attractive traditional culture, and now it has created several hundred Confucius Institutes around the world to teach its language and culture. The enrollment of foreign students in China has increased from 36,000 a decade ago to 240,000 last year. While Voice of America has been cutting its Chinese broadcasts, China Radio International has been increasing its broadcasts in English to 24 hours a day. In 2009, Beijing announced plans to spend billions developing global media giants to compete with Bloomberg, Time Warner and Viacom. Further examples of Beijing’s efforts to use soft power rather than military might to win friends abroad — or at least placate wary neighbors — include its investment in 2009-10 of $8.9 billion in external publicity work, including a 24-hour Xinhua cable news channel designed to imitate al-Jazeera. During Hu Jintao’s state visit to Washington in January, Beijing rented video screens in Times Square to present attractive pictures of China.

For all these efforts, however, China has had a limited return on its investment. A recentBBC poll found that opinions of China’s influence are positive in much of Africa and Latin America but predominantly negative in the United States, Europe, India, Japan and South Korea. Similarly, a poll taken in Asia after the Beijing Olympics found that China’s charm offensive had been ineffective.

Great powers often try to use culture and narrative to create soft power that promotes their advantage, but it is not an easy sell when it is inconsistent with their domestic realities.

Shortly after the 2008 Olympics, China’s domestic crackdown in Tibet and Xianjiang and its resumed pressure on human rights activists undercut the very gains in soft power it had built up. The Shanghai Expo was a great success but was followed by the jailing of Nobel Peace laureateLiu Xiaobo. And for all the efforts to turn Xinhua and China Central Television into competitors of CNN and the BBC, there is little international audience for brittle propaganda. In the wake of the Middle East revolutions, China is tightening its controls on the Internet and arresting activists for fear that the Egyptian example might inspire similar protests. A few futile efforts by demonstrators have been quickly suppressed by Chinese police.

After my lecture at Beijing University, a student asked how China could increase its soft power. I suggested that he ask himself why India’s Bollywood films command far greater international audiences than do Chinese films. Does India have better directors and actors? When Zhang Yimou, the acclaimed Chinese director, was asked a similar question, he replied that films about contemporary China are neutered by the censors. I told the student that much of a country’s soft power is generated by its civil society and that China had to lighten up on its censorship and controls if it wished to succeed. But I also admitted that he would probably not find my answer very helpful.

China’s Central Asian Profile Continues Growing

Publication: Eurasia Daily Monitor Volume: 8 Issue: 55
March 21, 2011 02:04 PM Age: 11 days
By: Stephen Blank

Though largely unnoticed by the media, China continues to expand its economic and therefore political and strategic position in Central Asia. This expansion even includes territorial revisions in China’s favor. In the energy sector Turkmenistan has agreed to sell China 20 billion cubic meters (bcm) more of gas that will be shipped from the Turkmenistan-China pipeline, thus achieving a figure of 60 bcm annually. This means building new pipelines and equals more than 60 percent of China’s domestic gas production in 2010. To finance this deal China’s State Development Bank will lend Turkmenistan an unspecified amount of money (World China Times, Taipei, March 3, 2011).

However, the deal may not yet be complete. Reportedly, China is offering to pay $100 to $150 per thousand cubic meters (tcm) far below the European market price of $250 to $400 per tcm. If this deal goes through not only will China be buying more Turkmen gas than Russia, thus weakening Moscow’s leverage on Ashgabat, it also will reduce China’s need to meet Russian price demands in the Russian gas pipeline negotiatoins currently underway which remain stuck over price disputes (The Moscow Times, November 24, 2010).

Meanwhile, this agremeent has strenghtened China’s position in Turkmenistan to the point where its leader, President, Gurbanguly Berdymukhammedov, has stated again just how much Turkmenistan views China as one of its most dependable and strategic partners, an obeisance that Beijing clearly likes to hear from Central Asian leaders (The Golden Age, Ashgabat, March 14; Turkmen TV Altyn Asir, March 14). This deal thus underscores China’s capability to buy up the energy and infrastructure it needs and wants and to displace Russia in Central Asian markets. Similarly, it stimulates other producers there to sell to China. Thus, Iranian Radio reports that Uzbeksitan will build the third line of the Turkmenistan-China gas pipeline and open it by 2013 (Voice of the Islamic Republic of Iran, March 9).

But China is not only talking to these states. During Kazakh President Nursultan Nazarbayev’s recent visit to China agreements were signed on major loans to Kazakh metal companies and for building a gas chemical complex in Atyrau. Both sides also signed a framework agreement on exploiting the Urihktau deposit of raw materials for the gas pipeline from Western Kazakhstan to China and a memorandum of cooperation on constructing a high-speed rail network from Almaty to Astana. However, beyond these deals there are dark suspicions in the Kazakh media and political circles that China forced Kazakhstan to secretly lease land (EDM, March 14, 2011). Although, such reports are unconfirmed, China has recently completed such an arrangement with Tajikistan where Dushanbe actually ceded land to China.

This agreement, allegedly based on a prior accord between the two governments in 2002 that was ratified again in 2010 cedes about 1,000 square kilometers (km) in the Pamir Mountains to China, about 1 percent of Tajikistan, albeit a sparsely settled area. Tajikistan’s government hailed this as a victory because China had actually claimed some 28,000 km and settled for only about 3.5 percent of its claims. Moreover, Shukhrob Sharipov, Director of the Presidential Center for Strategic Studies, argued that, “If we had not decided to transfer the land (at this time), we would not have been able to resist China’s pressure” (Eurasia Insight, January 28; Asia Times Online, January 2). Accordingly, this “rectification” of the borders ensures Tajikistan’s inviolability of its borders, definitively solves its border problems with China, and ensures its stability “for decades to come” (Interfax, January 18; Asia-Plus Online, January 13; Interfax, January 14; Interfax, April 28, 2010).

This deal triggered a strong and public nationalist backlash at the surrender of Tajik territory to China, even if the disputes about it go back to Tsarist times. Perhaps this backlash was triggered more by the fact that between 1,500 to 2,000 Chinese farmers will settle another 2,000 hectares of land beyond the border agreement. According to the opposition, Tajikistan is becoming increasingly economically dependent on China due to its large investment in the area. But worse still, the raw material resources in the land ceded by Tajikistan allegedly equals the entire Chinese investment in Tajikistan to date. Therefore, China has reportedly recouped its investment at no cost to itself and has both the land and its resources as well as maintaining its investments and penetration of Tajikistan. Indeed, Tajikistan represents only the latest example of such border rectifications in China’s relationships with Central Asia. Similarly the charges of cession of land to China could easily cause even more unrest than was discerned in the tightly regulated Kazakh media and political circles. The Paris-based journal, Intelligence Online, accused China of carrying out a policy of “organized annexation of strategic areas” (Online Intelligence, February 17). So, despite official denials, Kazakh policy towards China as well as Chinese pressure on Kazakhstan will probably come under greater scrutiny (Interfax-Kazakhstan, March 4).

These two episodes each show not only the power of China but also the deep suspicion its rise engenders both among Central Asian publics and in their political leadership. Nevertheless, these governments cannot do without Chinese investments and must pay the price for securing them, which includes not only occasional cessions of land to China but also ritual obeisance’s like that of Berdimuhamedov or by the Kazakh pundits who extol China’s development strategy as a possible model for their country (Xinhua, February 28). Clearly China’s burgeoning ties with these states and the implications of the relationship deserve much greater attention because the simmering anxieties about China are carefully concealed behind several masks; but when the mask slips as in the Tajik and Kazakh cases, a most interesting and potentially portentous play is revealed to the spectators.[tt_news]=37671&tx_ttnews[backPid]=13&cHash=39408f415cb723f5b2e069b134372766

China’s premier again calls for political reform

By Keith B. Richburg, Monday, March 14, 10:24 PM

BEIJING — Declaring reform “an eternal theme of history,” Chinese Premier Wen Jiabao said Monday that his country needed to pursue “political restructuring” alongside economic growth to combat rising inequality and rampant corruption.

Speaking to reporters at a press conference at the close of the annual session of China’s nominal legislature, Wen dismissed the idea that China’s authoritarian system made it susceptible to the kinds of popular unrest now roiling the Middle East and North Africa.

“We have followed the situation in [the Middle East] and North Africa,” Wen said. “It is not right to draw an analogy between China and those countries.” He said after 30 years of pursuing market-based economic policies, “the lives of Chinese people have been markedly improved.”

But Wen, who has often been a lonely voice within the ruling Communist Party hierarchy advocating more openness, acknowledged that three decades of spectacular economic growth had left China a country of “weak economic foundations and uneven development.” He said too many Chinese lack equal access to a good education and health care, and many had not seen the benefits of China’s dynamic growth.

The solution, he said, was political reform — but reform that was gradual and led by the Communist Party. “It’s by no means easy to pursue political restructuring in a country with 1.3 billion people,” Wen said. “It needs to take place in an orderly way, under the leadership of the party.

“Political restructuring and economic reform should be advanced in a coordinated way,” Wen said. “Political restructuring offers a guarantee for our economic restructuring endeavors. Without political restructuring, the economic restructuring will not succeed, and the achievements we made in economic restructuring may be lost.”

Asked specifically whether his view of political reform meant Chinese might eventually be allowed to vote in multiparty elections, Wen said the country already had direct elections at the village level, indirect elections at the municipal level, and multiple candidates competing for Communist Party Central Committee positions — although those candidates are of course always vetted by the Communist Party.

“We must pursue a step-by-step approach in this process,” Wen said. “We also should believe when the people have shown they are capable of running a village, they will also be capable of moving from running village affairs to running the affairs of a township and a county. And that will be a gradual process. It needs to proceed in an orderly way and under the leadership of the party,” Wen said.

Wen’s remarks Monday once again seemed to place him at odds with others considered hard-liners in the Communist Party, who have rejected outright any moves toward Western-style democracy, including multiparty elections.

Just last week, Wu Bangguo, the head of the National People’s Congress, as the country’s rubber stamp legislature is known, told the 3,000 assembled delegates that China would fall into an “the abyss of internal disorder” if it tried to “blindly follow or imitate others” in the political field.

“On the basis of China’s condition, we’ve made a solemn declaration that we’ll not employ a system of multiple parties holding office in rotation,” Wu said, in a tough speech that dismissed any talk of separation of powers, an independent judiciary federalism and even privatization of state-owned enterprises. He warned China must never “waver” from its socialist system, which he called “the correct political orientation.”

Wu’s hard-line remarks won praise in newspaper editorials.

China’s Gradual Revolution

Published: March 13, 2011

ABOUT a week after Egyptian protesters forced out President Hosni Mubarak, anonymous calls demanding a similar revolution in China appeared on Web sites hosted outside of China. The unnamed activists asked people to gather every Sunday at designated spots in 13 Chinese cities.

The Chinese government responded swiftly, rounding up prominent dissidents and installing a heavy police presence in the cities. On the following Sunday, police officers at the designated spots herded people away and detained resisters. Foreign journalists were roughed up.

That’s how the Chinese “Jasmine Revolution” has turned out so far. But while it’s true that sudden, radical change is not likely to happen in China, that’s no reason for despair: change has been under way in China for years, but in forms more subtle than most people outside the country understand.

After the government crackdown on protesters in Tiananmen Square in 1989, it was widely assumed that Beijing had quashed any chance for meaningful dissent. But protests have become more common since then, over everything from wages and polluted land to dam-building and animal rights. They have involved workers, villagers, migrants, environmentalists and public-interest lawyers.

Protest is also increasingly common on the Internet. I recently counted 60 major cases of online activism, ranging from extensive blogging to heavily trafficked forums to petitions, in 2009 and 2010 alone. Yet these protests are reformist, not revolutionary. They are usually local, centering on corrupt government officials and specific injustices against Chinese citizens, and the participants in different movements do not connect with one another, because the government forbids broad-based coalitions for large-scale social movements.

Because of those political limits, protesters express modest and concrete goals rather than demand total change. And the plural nature of Chinese society means that citizens have sometimes conflicting interests, making it difficult to form any overarching oppositional ideology. In other words, the government allows a certain level of local unrest as long as it knows it can keep that activism from spreading.

And while the Internet has revolutionary potential, here too Chinese leaders have a firm grasp of the situation: they understand the power of the Internet much better than their Middle Eastern counterparts, and they regularly restrict access to the Web when they sense that unrest is gaining momentum.

At the same time, they are careful not to cut off access completely, knowing that could backfire against them as well as damage the Chinese economy.

What outsiders often miss, however, is the response to that strong government control. Activists who understand the possibilities and limits of political opposition in China have developed new forms of online and offline mobilization.

For example, using the Internet to rapidly organize informal “strolls,” rather than formal protests, is part of a broader trend of contemporary activism in which Chinese activists challenge, embarrass or shame the authorities through provocation rather than direct confrontation.

This kind of activism is effective: even as the government tightens control, it also takes steps to mollify public concerns. To demonstrate his awareness of pressing social issues, Wen Jiabao, the Chinese prime minister, has gone online three times over the last two years to talk with Chinese Web users. And new laws and policies are constantly introduced to tackle the issues raised by activists: barely a year after a scandal involving tainted milk, for instance, China instituted its first food safety law.

Yet rather than resolving the underlying sources of instability, the government all too often offers short-term, superficial solutions, which are more likely to sweep the problems under the carpet or dam them up. The introduction of the food safety law, for example, has so far failed to solve the country’s serious food safety problems.

What’s more, the energy and resources Beijing puts into maintaining control — its 2011 budget commits more money to internal security than to the military — means that little effort is being devoted to real reform.

There is always the possibility that, if these trends continue, the gaps between reality and people’s expectations will boil over into more aggressive, organized activism. But given the complex dynamic between the Chinese state and public activists, it’s unlikely to happen any time soon.

When fears of radiation spreading from Japan prompted a rush on iodized salt in China, a weekly business newspaper posted the story on its Web site under the headline: “Panic buying in Guangdong, Shenzhen and Dongguan; iodized salt out of stock, nuclear panic in Japan spreads.”

Within minutes, government censors called the Economic Observer’s vice chief editor, Zhang Hong, “and asked us to delete that post immediately,” he said.

In a small act of defiance, Zhang left the story on the site, but he changed the second part of the headline to read: “Salt bureau said the stock is sufficient.”

That March 17 incident is just one example of the daily, even hourly, tussle between editors of China’s state-controlled media and the Communist government’s army of propaganda officials and censors who want to shape every aspect of what Chinese citizens read, see and think.

BRICS summit offers watershed moment for large emerging economies
BRICS countries look for unity at summit and bigger role in global finance

Christopher Bodeen, Associated Press, On Wednesday April 13, 2011, 5:37 am EDT

SANYA, China (AP) — The leaders of the world’s largest emerging economies gather this week in southern China for what could be a watershed moment in their quest for a bigger say in the global financial architecture.

Thursday’s summit comes at a crucial moment for the expanded five-member bloc known as the BRICS, which groups Brazil, Russia, India, China, and, for the first time, South Africa.

With the G-20 group of major economies seeking to remake parts of the global financial architecture, it’s time for the BRICS to test whether they can overcome internal differences and act as a bloc pursuing common interests.Chinese President Hu Jintao, Brazilian President Dilma Rousseff, Russian President Dmitry Medvedev, Indian Prime Minister Manmohan Singh and South African President Jacob Zuma will attend.

“The key priority is for the BRICS to put creative ideas on the table rather than just react defensively to proposals put forward by the advanced economies,” said Cornell University economics professor Eswar Prasad, former head of the International Monetary Fund’s China Division.

Though largely an ad-hoc grouping at present, the BRICS have the potential to emerge as a new force in world affairs on the back of their massive share of global population and economic growth. With the inclusion of South Africa, the group accounts for 40 percent of the world’s people, 18 percent of global trade and about 45 percent of current growth, giving them formidable heft when dealing with the developed economies.

Thursday’s one-day meeting in Hainan’s resort city of Sanya marks only the group’s third annual summit, while moves to lend it greater structure, such as establishing a permanent secretariat, remain under discussion.

Hu held bilateral meetings with several of the other leaders, and according to state media, told Zuma that he was calling for an immediate cease-fire in Libya to prevent the crisis there from worsening.

Hu backed the efforts of the African Union, on which Zuma has a major voice, in ending the crisis.

he five countries are loosely joined by their common status as major fast-growing economies that have been traditionally underrepresented in world economic bodies, such as the International Monetary Fund and the World Bank.

All broadly support free trade and oppose protectionism, although China in particular has been accused of erecting barriers to foreign competition. In foreign affairs, they tend toward nonintervention and oppose the use of force: Of the five, only South Africa voted in favor of the Libyan no-fly zone.

Yet, while the economies of Brazil, Russia and South Africa are driven largely by raw material exports, India and China — the world’s second-largest economy — are oriented more toward manufacturing and services. Brazil and India are also concerned over large trade deficits with China that critics say are supported by a deliberately undervalued yuan.

Politically, Brazil, India and South Africa are functioning democracies, while China, and to a lesser extent, Russia, are authoritarian states characterized by heavy government control over the economy and civil society.

The very lack of a common cultural, political or geographical identity brands BRICS as a new type of grouping forged by nontraditional concerns such as trade barriers and monetary policy, said Li Yang, a finance expert and vice president of the Chinese Academy of Social Sciences.

“The fact that they are grouped together shows the impact of new factors on international relations,” Li said.

In approaching G-20 reforms being proposed by France, which holds the body’s rotating presidency, the BRICS can already point to China’s success in advancing a 6 percent shift in voting rights at the IMF that would give it the third-largest say in decision making after the U.S. and Japan. That move also creates seats for Brazil, Russia, India and China on the IMF’s expanded 10-member governing board, while reducing the influence of Britain, France and Germany.

A key concern now will be stemming inflation and pushing back against debt-fueled expansionary monetary policies being pursued by developed nations that now suffer from negative or anemic growth. With about 40 percent of world reserves lead by China with $2 trillion, the BRICS countries share a concern over exchange rate volatility and macroeconomic instability in the developed world.

Other priorities include reducing economic imbalances and volatility in commodity prices, pushing for even greater influence in the IMF and other bodies, and gaining a say in the potential introduction of new reserve currencies, possibly including the Chinese yuan.

Manbir Singh, a top official in India’s Ministry of External Affairs, said discussions should also cover global security, climate change, and social development goals.

The five also need to answer fundamental questions about the future of their bloc, such as whether to plan for a permanent organization or to admit new members, said Zhang Yuyan, director of China’s Institute of World Economics and Politics.

“They need to decide whether to focus on boosting coordination among their members or simply representing emerging economies in their dealings with the developed nations,” Zhang said.

Regardless of the outcome of such debates, the growth of the BRICS represents an important attempt to create new centers of influence and prevent domination of the world economic order by one or two major players, said South Africa’s ambassador to Beijing, Bheki Langa.

“This formation plays a very important role in rebalancing the balance of forces on the world stage,” Langa said

Inflation in China Poses Big Threat to Global Trade

Published: April 17, 2011

SHANGHAI — As the United States and Europe struggle to get their economies rolling again, China is having the opposite problem: figuring out how to keep its revved-up growth engine from generating runaway inflation.

The latest sign that things were moving too fast came on Sunday, when China’s central bank ordered the biggest banks to set aside more cash reserves.

The move essentially reduces the amount of money available for loans, and is an attempt to cool down the economy. It follows the government announcement on Friday that China’s economy was growing at an annual rate of 9.7 percent, by far the strongest performance by any of the world’s biggest economies.

Because China is now the world’s second largest economy, after the United States, and because the country has been a leading source of global growth during the last two years, money problems here can reverberate fromWal-Mart to Wall Street and the world beyond.

High inflation endangers China’s status as the low-cost workshop for the world. And if the government’s efforts to fight inflation cause the economy to stumble, that will cloud the outlook for international businesses — whether multinationals like General Electric or copper miners in Chile — that have been counting on China for growth.

Inside China, inflation also poses a threat to social stability, a particular worry for Beijing, especially since authoritarian governments in North Africa and the Middle East have become the focus of popular uprisings.

“China’s inflation is a big concern, and actual numbers are worse than officially reported,” said Carmen M. Reinhart, an economist at the Peterson Institute for International Economics in Washington.

She says Beijing is engaged in an economic tug of war, trying to encourage sustainable growth while struggling to control inflation.

Food prices are soaring, and the government said on Friday that the consumer price index in March had risen 5.4 percent, its sharpest increase in nearly three years. Hoping to tame inflation, in the last six months Beijing has tightened restrictions on bank lending and raised interest rates on loans (to discourage borrowing) and deposits (to encourage savings).

The decision on Sunday to raise the capital reserve ratio for banks, to 20.5 percent of their cash, was the fourth such increase this year.

The government has also increased agricultural subsidies to curb food prices, and tried to forbid some Chinese companies from raising consumer prices. These efforts stand in contrast to those in the United States, where inflation is low (the underlying annual inflation rate was 1.2 percent last month) and where the debate centers on how much to stimulate the economy given the size of the deficit. Inflation is also running low in Europe, where some countries are imposing harsh austerity measures to pare their budget gaps.

But analysts say the results of this economic management have been mixed. Growth has begun to moderate from its torrid pace of about 10 percent annual growth but inflation has become worse.

For example, housing prices continue to climb even though Beijing has long promised to curb the property market and to spend billions of dollars over the next few years on affordable housing.

The average apartment in central Shanghai now costs more than $500,000. Even in second-tier cities like Chengdu, in central China, the price of a typical home costs about 25 times the average annual income of residents.

Analysts say too much of the country’s growth continues to be tied to inflationary spending on real estate development and government investment in roads, railways and other multibillion-dollar infrastructure projects.

In the first quarter of 2011, fixed asset investment — a broad measure of building activity — jumped 25 percent from the period a year earlier, and real estate investment soared 37 percent, the government said on Friday.

Some of the inflationary factors, like global commodity and food prices, may be beyond Beijing’s ability to influence. Gasoline prices have also jumped sharply, in line with global oil prices. As the world’s largest car market, China’s demand for fuel is soaring, and gasoline prices are close to $4.50 a gallon, up from $3.82 a gallon in late 2009.

Rising food prices, meanwhile, are showing up in various ways — including higher prices at fast-food chains, like Master Kong, which in January raised the price of its popular instant noodles by about 10 percent.

China’s current supercharged boom began in early 2009, during the global financial crisis, when Beijing moved aggressively to increase growth with a $586 billion stimulus package and record lending by state-run banks.

The loose monetary policy, and big investments in local government projects, did revive economic growth. But even at the time there were already concerns about soaring property prices, undisciplined bank lending and the huge debts being amassed by local governments.

The fear among some experts is that the bubble will eventually burst, leading to a wave of nonperforming loans at the big state-owned Chinese banks, which have been the main financiers of the nation’s phenomenal growth dating to the economic reforms in the 1980s.

Some economists have begun to argue that high inflation may be around for some time. Here again, the tug of war is evident.

To encourage the growth of a consumer market that will help meet the Chinese people’s demand to share the nation’s wealth, Beijing and many municipal governments have required employers to raise wages.

The government has raised minimum wages in the hope of reducing the big income gap between the rich and the poor, and the urban and rural. But higher wages drive up the costs of production, leading to higher prices. Some experts say rising wages may be an unavoidable inflationary force for years to come.

“China is moving into a new era, a new norm,” said Dong Tao, an economist at Credit Suisse in Hong Kong. “In the previous decade, inflation was about 1.8 percent a year; in the next decade, it may be closer to 5 percent.”

The implications of such a shift are huge, not just for domestic consumers but perhaps even more so for exports. As wages and production costs rise, coastal factories are demanding higher prices for the goods they ship overseas. That means Americans, Europeans and other buyers will have to pay more for those goods or seek lower-cost suppliers elsewhere. In some cases, retailers are bidding for goods at prices the exporters consider too low.

“I hear that many Chinese exporters are rejecting orders from Wal-Mart and other Western retailers,” Mr. Tao said. “I’ve been covering the Chinese economy for a long time, and I’ve never heard that before.”

Many analysts say the government is going to have to do even more to slow the economy, through measures like placing additional restrictions on lending and continuing to raise interest rates, the textbook methods of fighting inflation by tightening the nation’s money supply.

But the mixed results so far do not inspire widespread confidence. In fact, some experts say that despite the Communist Party’s efforts to manage the economy by committee, the absence of a top autonomous central banker — Beijing has no equivalent of the United States Federal Reservechairman, Ben S. Bernanke — means no one actually has a hand on the growth throttle.

“The roots of inflation were laid down after the financial crisis, with the stimulus policy,” said Zhang Weiying, a professor of economics at Peking University.

After a big stimulus, stamping out inflation is not easy, Professor Zhang said. “It may take a long time.”

Citizens like Wang Jianren, 56, a retiree in Shanghai, a bustling city of 20 million, say that over the years China has benefited from its rapid economic growth. But like so many here, he complains that inflation is beginning to erode those gains.

“Prices have gone up a lot,” Mr. Wang said at an indoor vegetable market on Friday. “Unstable prices make people nervous and make society unstable. In this sense, our generation even has some nostalgia for Mao’s era.”

The BRIC countries’ Hainan summit could make the G20 redundant
The West’s political and financial elite is still a very long way from grasping the extent to which the global centre of economic gravity is now shifting – and the implications in terms of relative and absolute living standards.

By Liam Halligan 9:43PM BST 16 Apr 2011

On Friday, at its latest summit in Washington, the G20 group of nations issued a communiqué. I don’t know why anyone bothered. The document was meaningless.

The G20’s membership in theory includes the biggest Western economies, plus the most commercially important emerging markets. At the 2009 Pittsburgh summit, this grouping dubbed itself “the world’s premier forum for international economic co-operation”.

The global economy hasn’t yet fully emerged from the “sub-prime” fiasco. The Doha trade talks are disgracefully stalled. Western banks remain riddled with massive liabilities that haven’t been “fessed up” – an inconvenient truth that could yet cause another “Lehman moment” on skittish global equity markets. Several of the world’s “advanced economies” are anyway in intensive care, their sovereign debt markets propped up only by “printed money”.

Faced with such vast challenges, and the dangers they pose for the future prosperity and security of the human race, the G20 came up with no specifics. The communiqué managed only vague promises about member states “aiming to promote external sustainability” and “pursuing the full range of policies required to reduce excessive imbalances”. As I said, I don’t know why anyone bothered.

The G20 is clearly failing as an effective decision-making body. Its member states disagree entirely about the reasons behind recent global financial instability, so have no shared analysis of what to do. The big emerging markets, in particular, are furious that the US seeks to wield the dollar’s reserve currency status as a “weapon”, using so-called “quantitative easing” to export inflation and debase the value of America’s debts to the rest of the world. The “emerging giants” also complain that, while broader than the G7, the G20 is still run by Western powers essentially to promote their own interests.

No surprise, then, that the fast-growing economies of the non-Western world are establishing rival summits.

This latest G20 gabfest was overshadowed by a simultaneous gathering on the Chinese island of Hainan, attended by the leaders of Brazil, Russia, India and China – the so-called BRIC group. China is the world’s second biggest economy.

India, Russia and Brazil are all well inside the top 10. By 2016, the International Monetary Fund predicts the GDP of these four will total $21,000bn (£12,860bn), out-stripping the US. Already, on a currency-adjusted basis, the BRICs are bigger than the US and UK combined.

It is almost an economic cliché to highlight the growing commercial prowess of these new economic upstarts. The truth is, though, that the West’s political and financial elite is still a very long way from grasping the extent to which the global centre of economic gravity is now shifting – and the implications in terms of relative and absolute living standards.

The BRICs account for 45pc of the world’s population and around three-quarters of total currency reserves. They have few serious fiscal issues and all are net external creditors. The emerging markets in general, says the IMF, will grow by an annual average of 6.5pc over the next four years, while the big Western economies will expand by only 2pc. The BRICs, and their smaller cousins, are now the driving force of the global economy.

Some say the BRIC group makes no sense. Russia and Brazil are big commodity exporters, for instance, while China and India are major importers of such goods. Yet all four nations share a common cause, being united in their determination to convert their new economic power into international political clout – a determination fuelled by the West’s continued dominance of the IMF, the World Trade Organisation and other global regulatory bodies.

A key topic at the Hainan summit was the dollar’s reserve currency status. The importance of the greenback’s predominance in global trade cannot be over-stated. Being reserve currency allows the dollar to defy gravity even though the US keeps borrowing and expanding its money supply. So America is acutely sensitive to any signs such reserve status is slipping.

As such, it is interesting the BRICs just signed an agreement to grant one another loans in their national currencies, not in dollars. The mighty Chinese Development Bank has now formally offered 10bn yuan loans to other BRIC members, expected to focus on large oil and gas projects.

Russia and China are now trading oil in rubles, rather than dollars. A Sino-Russia oil pipeline recently opened, almost ignored by the Western media, which will eventually pump 1bn barrels a year from Siberia to the People’s Republic. It will soon be joined by a gas pipeline too. These developments undermine the dollar’s role of global petro-currency, the bedrock of its reserve currency status. They are of huge geostrategic importance.

The BRICs are all creditors to the US – with the Chinese, in particular, holding vast swathes of American Treasury bills. So they won’t make any sudden moves in terms of dislodging the dollar as “top dog”, as that would harm the value of their T-bill holdings. They are, though, pushing for the IMF to overhaul the role of Special Drawing Rights, the international unit of account comprising the dollar, euro, yen and sterling.

Were the yuan and possibly the ruble to be included, the BRICs say, then the SDR could ultimately replace the dollar. That would be anathema to Washington, formally ending America’s global hegemony and forcing it to address its massive overseas debts. It was a message the BRICs wanted to emphasise in Hainan, just in time for this weekend’s spring meetings of the World Bank and the IMF in Washington.

South Africa attended this latest BRIC conference, representing the entire African continent. To moan about political posturing is to miss an important economic point. Business between Africa and the BRICs is booming. Sino-African trade alone has risen from $10bn in 2000 to $129bn last year. Other emerging markets have noticed that Africa, despite political and logistic difficulties, is on an economic roll.

The GDP of Africa, the world’s second-most populous continent, grew more than that of India back in 2008 and is likely to repeat the trick this year. That’s why the BRICs are investing heavily – both financially and politically – in the world’s last commercial frontier.

In his recent book, The Curse of Berlin, Nigerian academic Adekeye Adebajo comments that the partition of Africa by white colonialists in the mid-1880s produced “some of the most vulnerable societies in modern history”.

He states that while “Africa’s post-independence leaders have largely lacked the vision and resources, and sometimes the ingenuity and discipline to reverse this legacy”, the impact of the West’s presence “has distorted African politics and society and retarded socio-economic development”.

The growing BRIC presence in Africa, particularly that of the resource-hungry Chinese, is seen differently says Adebajo. For one thing, “China, unlike the West, is investing heavily in the infrastructure sectors – roads, railways, electricity – that Africa needs for its industrial take-off”.

At a deeper level, Adebajo notes that “the one big advantage China has over its Western rivals is that most African leaders don’t perceive it to be a neo-imperial power”.

There is a message here that the West would do well to heed – not just in Africa, but in all our dealings with large emerging markets. We have no God-given right to be in charge. We should stop acting as if we do. This is not a moral imperative, but a statement of the bald economic facts. The longer we ignore these realities, the tougher it will ultimately be for us to cope in the new world order now so rapidly emerging.

See also:

The Great Helmsman

About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
This entry was posted in China and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *


+ four = 6

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>