THE CHINA READER

From today’s NY Times:

“President Obama on Saturday selected one of the nation’s leading Republican governors to serve as the ambassador to China, nominating Gov. Jon Huntsman Jr. of Utah for a diplomatic post that Mr. Obama called “as important as any in the world.” The decision renewed Mr. Obama’s sometimes rocky efforts to reach across the aisle in an era of political polarization while signaling that he would continue the American policy of economic and strategic engagement with China advanced by presidents of both parties in recent times.”

The pick was not surprising considering his China background and Mandarin skills, but somewhat noteworthy, as Huntsman Jr. is considered a right-of-center Republican from Utah.  Many had been critical of Obama’s long delay in choosing such an important post, considering how much is at stake in U.S.-China relations.  It’s good to see the pick has finally been made.

May 16th, 2009 | Category: Politics, US-China Relations | Leave a comment

Just when it appeared military relations between the United States and China were beginning to enter a more conciliatory phase, you have incidents like the USNS Impeccable flare-up two weeks ago to remind us how easily tensions can arise.

It was only last month in Beijing that the United States and China conducted high level military talks that were praised by the Pentagon as the “most productive in the 18 years of military negotiations with Beijing.” Known as the “Defense Policy Coordination Talks”, the two-day meeting seemed to presage improved military-to-military relations between American and Chinese officials, an area which has historically been fraught with intermittent conflict and tension.

The latest confrontation started when Chinese vessels surrounded and harassed the USNS Impeccable about 75 miles off Hainan island, south of the Chinese mainland, during a routine surveillance mission. The Chinese boats were maritime fishing vessels with Chinese flags, but were not affiliated with the Chinese military. At least one vessel came within 25 feet of the American vessel, and at one point Chinese sailors used long hooks to try to snag cables (see picture above) the Navy boat was using to tow sonar equipment designed for antisubmarine warfare. In response, the Impeccable, which is an unarmed civilian vessel, sprayed water out of fire hoses at one of the vessels as a warning, but its crew members stripped to their underwear as their ship “continued closing to within 25 feet,” the Pentagon said. Two of the Chinese vessels stopped directly in the path of the U.S. ship, forcing it to conduct an emergency stop. (For video of the incident, click here).

The U.S. immediately lodged a formal complaint with Beijing, saying that under international law, the U.S. military can conduct activities “in waters beyond the territorial sea of another state without prior notification or consent,” including in an exclusive economic zone of another country, said Maj. Stewart Upton, a Pentagon spokesman. The Impeccable and another ocean surveillance ship have been targeted five times in the past week, the Pentagon said, for “increasingly aggressive conduct” by Chinese ships and aircraft. White House press secretary Robert Gibbs reiterated the U.S. Navy will “continue to operate in those international waters, and we expect the Chinese to observe international law around there.”

The Chinese foreign ministry issued a sharp response, saying U.S. claims were “gravely in contravention of the facts and confuse black and white, and they are totally unacceptable to China and violated international maritime laws and customs around China’s Special Economic Zone.”

At issue is what exactly constitutes “international waters” and whether China’s aggressive behavior was appropriate. In both cases I would argue the answer to those questions is a resounding “no”.

Under the United Nations Charter Article 51, it states, “any dispute over activities in the 200-mile economic zone from China’s coast in no way authorizes the use of force.” If the country in authority of the economic zone feels its rights have been infringed upon, it states, “a formal complaint is to be lodged through relevant international administrative bodies and the United Nations.”  Furthermore, it explicitly states that “all countries enjoy high-seas freedoms in such zones, including the right to engage in military activities without prior notification to, or consent of, the coastal state.”

Of course we have seen this kind of harassing behavior before from China, most notably in 2001 when Chinese fighter planes surrounded and antagonized a US surveillance plane, called the EP-3, clipping its wing and forcing it to make an emergency landing on Hainan Island where the plane and crew were held for eleven days. The accident resurrected arguments concerning state interpretation of article 58 of the United Nations Convention on the Law of the Sea (1982), and more specifically, whether the distinct legal regime created by the establishment of an EEZ has imposed limitations on ‘pre-existing rights’ on the high seas. The U.S. and many other countries have been using the EEZ area in the South China Sea to conduct both military and commercial missions, and China has never formally lodged a complaint. The U.S. maintained, as in the latest Impeccable incident, that the location of the incident occurred in international waters, and that the U.S. had the right of free transit passage. During the EP-3 incident, the Chinese again regarded U.S. activity as “unlawful” and claimed the area as part of their airspace over their exclusive economic zone based on the UNCLS, which is considered the codification of Customary International Law.

Hainan Island is an area of strategic concern for the U.S.. China has invested heavily in a new fleet of diesel-powered attack submarines and maintains a submarine base there.  Beijing’s obfuscation about the reasons behind its recent spike in military spending and submarine purchases have added to U.S. suspicions of potential Chinese military aggrandizement in the region.

However, whether or not China feels the U.S. was conducting “spying activity” is tangential. In both cases, Beijing has acted in an aggressive manner, almost as a “show of strength” to admonish Washington to curtail its activities, which strikes me as petulant and more befitting to the erratic, provocative behavior we’ve come to expect from Pyongyang than a great power. If China genuinely feels threatened, there are proper channels to go through that could mitigate and address Chinese grievances. It is actions like these that in my opinion make China look like a weak, not strong power. But China has shown it prefers the more provocative approach, which seems to leave the door open for more flare-ups in the future.

March 22nd, 2009 | Category: China's Military, US-China Relations | Leave a comment

In the face of ominous signs that China’s economy is slowing dramatically due to the world economic downturn, Premier Wen Jiabao, citing “unprecedented difficulties and challenges,” announced an ambitious plan to stimulate domestic spending through infrastructure projects and investment during the recently completed 11th National Peoples Congress.  (For the full text of Premier Wen’s Work Report, click here). In frank terms, Mr. Wen laid out plans to invest heavily in infrastructure, health care and job retraining programs to reinvigorate China’s suddenly lethargic economy hit hard by a steep decline in global import demand.  It was not made explicit whether the plan would be a part of the $585 Billion stimulus package passed last November. Wen also hinted at plans to adjust China’s long-term economic strategy by encouraging citizens to spend and consume more at home, a model advanced by many Western economies.

Recent figures do not bode well for China’s current economic forecast.  Unemployment has risen dramatically over the last few months, with an estimated 20 million of China’s 130 million migrant workers unable to find work. Textile factories are closing by the thousands leaving large swaths of China’s textile workers unemployed. The World Bank on Wednesday lowered its economic growth forecast for China this year to 6.5 percent, down from 7.5 percent at the end of last November, after huge falls in exports and shrinking private sector investment.

As a large country with an unusually high degree of openness to the world economy, China depends on other countries, notably the United States, for its domestic prosperity and stability.  Thus China is highly vulnerable to shocks from the international economy.  The latest figures show foreign trade accounts for 75% of China’s GDP - an astounding figure when put in perspective. Western economists have been urging China to move towards a more domestic-driven growth model to stave off potential economic crisis in the event of a global economic downturn. It seems as though the recent financial crisis is forcing China to take seriously this adjustment to their economic model to guard against its vulnerability to global import demand.

Beijing considers rapid economic growth a political imperative because it is the only way to prevent massive unemployment and labor unrest.  For more than two decades, the government has based its economic policies on a predetermined algorithm derived from its priority on stability.  The economy must grow at an annual rate of 7 percent or more in order to create a certain number of jobs - estimated to be around 10 million per year - to keep unemployment rates at levels that will prevent widespread labor unrest.  This 7 percent growth target rate has become the unambiguous fixture among upper level Party members when determining domestic policies.

China does not have to be reminded of its vulnerabilities at the hands of an unruly populace.  Chinese history textbooks teach that dynasties fall when they are overwhelmed by the twin threats of internal unrest and foreign aggression (内乱外患). The Qing dynasty collapsed because of a weakened administration beset by corruption and encroachment on Chinese sovereignty by Western powers.  The Taiping and Boxer rebellions were grassroots campaigns stoked by anti-foreign nationalistic peasants angry over the failings of a weak Chinese state.  The Chinese civil war was won by the ability of the Communists to rein in and inspire the power of the peasants.

The worst nightmare of China’s leaders is a national protest movement of discontented groups - unemployed workers, hard-pressed farmers, and students - united against the regime by the shared fervor of nationalism.  The horror of 1989 is no doubt everpresent in the minds of Communist officials, and its safe to say the current Hu and Wen administration is fearful that the PRC could meet the same fate.  Thus staying ahead of the wave of popular nationalism and discontent that is constantly under the surface is the name of the game for China’s leaders.

Consequently, since 1989, the term “social stability” became a fixture of CCP rhetoric. Stripped down to essence however, this is merely a euphemism to convince the Chinese public that Communist Party rule is essential for maintaining order and prosperity, and without it, a country as large as China could descend into civil war and chaos.  In their speeches, the leaders make no secret of their anxieties and social unrest, frequently using the catchphrase ”维护社会安全“ or “maintaining social order” as the overarching principle of Chinese development.

To be sure, it is easy to see why CCP leaders are obsessed with preserving social order.  There are signs all around them of burgeoning social unrest that Beijing is acutely aware of.  Official statistics indicate that there were 58,000 “incidences of social unrest” in 2003, 74,000 in 2004, and 87,000 in 2005.  Scanning the horizon from Zhongnanhai, the government epicenter in Beijing, CCP leaders see nothing but the spector of inchoate social unrest threatening the legitimacy Communist Party rule.

In his address, Premier Wen said that the central government would significantly increase spending on schools, hospitals and clinics, low-income housing, environmental programs and other projects aimed at improving people’s lives, which he sees as the source of China’s long-term economic woes. He also reaffirmed plans to raise subsidies to farmers, old-age pensions and income grants to China’s poorest citizens, and said spending on “social safety net” programs would increase 17.6 percent, or about $6.4 billion.

Persuading conservative Chinese consumers to spend and abandon longstanding savings habits may be a difficult task. China’s consumers are notorious savers, often putting away 30% of their paychecks for unexpected expenditures like a sickness in the family or for more long-term costs like college tuition or retirement. As long as China’s social safety net remains frail, the incentive to save is still very strong among China’s consumers.

March 21st, 2009 | Category: Economic Policy, Economy, Labor, Wen Jiabao | Leave a comment

Due to a heavy workload this semester, I’ve been M.I.A. as of late.  Apologies.

I will be get back in the swing of things after midterms end this week.  In the meantime, Andrew Jacobs has an interesting article in today’s NY Times about China’s underground detention centers. More to come about China’s National People’s Congress currently underway as well.

March 8th, 2009 | Category: Human Rights, Politics | Leave a comment

In a stunning site, the hotel adjacent to the newly-built CCTV tower in Beijing was completely destroyed after a raging fire burned unabated the night before. The fire, reportedly caused by fireworks gone astray during a ceremonial pyrotechnics display celebrating the final day of the lunar year, destroyed one of Beijing’s most eye-catching and modern architectural accomplishments - The Mandarin Oriental Hotel - located adjacent to CCTV’s futuristic-looking headquarters, both built by Dutch architect Rem Koolhaas. Chinese Central Television issued an apology, saying in a statement posted on its web site that the network apologized for the incident and was deeply sorry for the “severe damage the fire caused to the country’s property.”

Blame for the incident has been placed on China Central Television, whose employees apparently defied regulations and staged their pyrotechnics display too close to the unfinished building. One firefighter died and six others were injured fighting the blaze.

The Chinese government has moved fast to staunch any reporting of the incident. By morning the next day there were no pictures on the front page of China’s major newspapers. Besides a brief report of a “fire” from Xinhua and CCTV, reports on the incident were eerily non-existent. The evening news that night did not mention the story.

Soon after the fire, the chat forums were abuzz with citizen reports of the “CCTV building on fire”. Pictures and videos flooded cyberspace but no news of the incident was reported on any of China’s major news channels. Later on that evening a leaked declaration from Chinese authorities made it on the internet:

Translation: “No photos, no video clips, no in-depth reports… All media outlets must only use Xinhua dispatches. The news should be put on news areas only and the comments posting areas should be closed.”

For more on Chinese netizen reaction to the fire and subsequent media censorship, check out ChinaSmack’s post here and here.

February 10th, 2009 | Category: Internet Freedom, Natural Disasters | Leave a comment

February 9th, 2009 | Category: Natural Disasters | Leave a comment

Timothy Geithner’s warning this Thursday that President Barack Obama believes China is “manipulating” its currency may trigger renewed tensions between two of the world’s biggest economies.

Geithner, Obama’s nominee for Treasury secretary, also told senators the administration will press China to “adopt a more aggressive stimulus package” to boost its domestic economy. The remarks on manipulation were a shift from President George W. Bush’s team, which stopped short of using the term in criticizing China’s exchange-rate management.

The remarks on China ’s exchange-rate policy may presage a tougher line with the nation that is the biggest foreign investor in U.S. government debt. Former Treasury Secretary Henry Paulson preferred diplomacy over confrontation with China to resolve disputes and, in semiannual reports, refrained from labeling it an illegal “manipulator” of its currency.

Geithner’s comments triggered a drop in Treasuries on concern that demand from China, the largest foreign investor in U.S. government debt, may wane. They may also reignite calls among some U.S. lawmakers for measures to punish trading partners perceived to have undervalued exchange rates.

Geithner made the remarks in written responses to questions from Senate Finance Committee members that were posted on the panel’s website. The committee voted 18-5 yesterday to approve the nomination of Geithner, 47, who is the president of the Federal Reserve Bank of New York.

In a statement on Friday night, China’s commerce ministry said Beijing “has never used so-called currency manipulation to gain benefits in its international trade”. They went on to say, “Directing unsubstantiated criticism at China on the exchange-rate issue will only help US protectionism and will not help towards a real solution to the issue.”

Pressure from lawmakers on China’s currency policy waned in 2007 and the first half of 2008 as Chinese authorities let the yuan rise at a faster pace and as concern rose about a falling U.S. currency. Those trends shifted in the middle of last year, when international demand for dollars rose amid the credit crunch, and China restrained the yuan.

In May, Obama signed on as a co-sponsor of legislation aimed at China that would give U.S. companies the ability to petition for import duties to compensate for the effect of a weak currency.

Using a form of the word “manipulation” has legal implications, and the Bush administration steered clear of the term. The Treasury is required to report to Congress on whether other countries are using their currency to gain an unfair trade advantage.

Under current statutes, designating China a currency manipulator would have little immediate effect. The 1988 law requiring the report requires only that Treasury begin talks with the offending country “to eliminate the unfair advantage.” The last country to be branded was China in 1994. However, the Treasury must decide later in the spring whether to label China a currency manipulator, under a law that requires the administration to report to Congress twice a year on the exchange rate practices of trading partners. If they decide to pass that law, US-China economic relations could be facing a cooling just days after President Obama has assumed the Presidency.

Mr Geithner’s blunt tone, along with President Obama’s veiled criticism of China and other authoritative regimes in his inaugural address last week, saying,“To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist.”, is leading some experts to worry that the Obama administration is going to take a more hawkish stance towards China.  The preliminary signs seem to suggest just that.

For more commentary on the issue, James Fallows provides some food for thought.

January 24th, 2009 | Category: Economic Policy, Economy, US-China Relations | Leave a comment

A court in Shijiazhuang on Thursday sentenced two men to death for their role in the country’s deadliest food scandal in decades that embarrassed the Chinese government and prompted hundreds of families to sue for compensation. The woman in charge of the dairy company at the heart of the crisis, Tian Wenhua, was sentenced to life in prison.

The Shijiazhuang Intermediate People’s Court, in the northern province of Hebei, said the defendants had intentionally produced or sold dairy products laced with a toxic chemical called melamine, which was used to create the illusion of a higher protein count, but which caused kidney stones and other ailments in about 300,000 children last year and killed five infants.

The court also announced two other life terms and a suspended death sentence that is expected to be commuted to life imprisonment. Six defendants received terms ranging from five to 15 years. The court session was closed to the public and conducted under heavy security.

The death sentences were given to Zhang Yujun, 40, for harming public security by operating an underground melamine workshop, and Geng Jinping, who ran a milk collection center and was convicted of producing and selling poisoned food. The government labeled Mr. Zhang and Mr. Geng as the “principal criminals” in the scandal and convicted them of selling more than 600 tons of melamine-tainted “protein powder” to dairy companies.

The life sentence of Tian Wenhua, 66, the former chairwoman of the Sanlu Group, one of China’s largest dairy companies, was the most anticipated case of the scandal, with many hoping for a death sentence for her failure to stop producing and selling the tainted goods even after her company learned they were flawed - in essence aiding and abetting the selling of tainted milk that sickened thousands.

January 23rd, 2009 | Category: Business Ethics, Food Scandals | Leave a comment

For a full explanation, see the NY Times article here.

What is funny about this, besides the hapless anchorwoman and pundit forced to suddenly ad-lib and talk about the “economic challenges that Obama faces”, is that the term “Communism” was almost certainly in reference to the former USSR and not China. But when the propaganda authorities give you a list of “key phrases” to look-out for, I suppose there isn’t much time for judgment calls.

January 21st, 2009 | Category: Media Reform, US-China Relations | Leave a comment