Chinese Military,Political and Social Superthread

[a_majoor]

If we don't learn from history...

http://pajamasmedia.com/ronradosh/2010/09/20/maos-great-leap-forward-and-the-power-of-history/?singlepage=true

Mao’s ‘Great Leap Forward’ and the Power of History
September 20, 2010 - by Ron Radosh

We have known for some time that Mao Zedong, founder of the People’s Republic of China, was one of the last century’s most brutal and vicious mass murderers.  In 2005, Jung Chang and Jon Halliday’s biography of Mao was published in this country to wide acclaim, and for the first time, many of the myths surrounding his rise to power and the nature of his rule after 1949 were brought to light. The authors estimated that Mao “was responsible for over 70 million deaths in peacetime, more than any other twentieth-century leader.” My own discussion of their findings can be read here.

One period they covered was Mao’s “Great Leap Forward,” his attempt to rapidly industrialize China in the five years between 1958 and 1962. Chang and Halliday had argued that not only did the program fail; it produced mass starvation, with areas of China resorting to cannibalism. Peasants and city dwellers alike were forced to build home steel furnaces, and all metal implements — including pots and pans used for cooking — were to be smelt, turning each home into a mini local steel producing factory. Mao also ordered that all sparrows be killed, since they ate grain. The “bourgeois” bird was condemned; the result was the upsetting of nature’s ecological balance, as pests and other birds once killed by sparrows began to attack crops. Before long, Mao was asking the Soviet Union to send them 200,000 sparrows from the Soviet Far East.

Mao had said: “Half of China may well have to die,” and he was prepared for such an outcome. It almost came true. Thirty-eight million people died of starvation and overwork during the Leap and the subsequent famine, which lasted for four long years. This greatest of 20th century manmade famines exceeded the deaths caused by Stalin’s collectivization of the Ukraine. As Mao told his staff, “50 million (might have to) die … you can’t blame me when people die.”

Now Frank Dikötter, a historian who lives in Hong Kong, has written the first major book about these disastrous years, which Dikötter calls “one of the worst catastrophes the world has ever known.” It is titled Mao’s Great Famine: The History of China’s Most Devastating Catastrophe, 1958-1962. Using regional archives in rural areas, he has unearthed many gruesome details. A British newspaper covered the author’s recent book talk, noting that Dikötter “compared the systematic torture, brutality, starvation and killing of Chinese peasants to the Second World War in its magnitude. At least 45 million people were worked, starved or beaten to death in China over these four years; the worldwide death toll of the Second World War was 55 million.”

Calling the period a virtual war between the peasant and the State, Dikötter said: “It ranks alongside the gulags and the Holocaust as one of the three grimmest events of the 20th century. … It was like [the Cambodian communist dictator] Pol Pot’s genocide multiplied 20 times over.” It is not only a period that official China has conveniently forgot — wiped out of the historical memory of China’s newly prosperous populace — but of course it is one also forgot by those legions of American leftists who in those years maintained that Mao and the Chinese Communists were successfully creating a new world.

The records Dikötter found revealed:

    State retribution for tiny thefts, such as stealing a potato, even by a child, would include being tied up and thrown into a pond; parents were forced to bury their children alive or were doused in excrement and urine, others were set alight, or had a nose or ear cut off. One record shows how a man was branded with hot metal. People were forced to work naked in the middle of winter; 80 per cent of all the villagers in one region of a quarter of a million Chinese were banned from the official canteen because they were too old or ill to be effective workers, so were deliberately starved to death.

All of this raises the question of what this means for the people of today’s China, whose real history is carefully hidden from them by the Party’s leaders. As we read of the great progress China has made in the past few decades, it is tempting to think that China is no longer what anyone would call a Communist state — since it is so far removed from these horrible events of Mao’s day.

Yet an important essay by journalist Ian Johnson, in the current issue of The New York Review of Books, makes the point that “today, the Party is arguably stronger than ever but few outsiders are aware of its enduring reach.”  It is at the center of events as varied as shifts in global currency markets, New York stock market listings, and clashes over North Korea.

While China’s economy may be a market communism and many of its policies cannot be called anything resembling traditional Communism, “the Party is still Leninist in structure and organization, resulting in institutions and behavior patterns that would be recognizable to the leaders of the Russian Revolution.” Johnson provides a particularly striking example showing how powerful the Party is. China’s new thriving giant corporations are not actually run by its board of directors, but by the Party:

    All have Party secretaries who manage them in conjunction with the CEO. In big questions, such as leadership or overseas acquisitions, Party meetings precede board meetings, which largely give routine approval to Party decisions. The Party’s overarching control was driven home a few years ago when China’s large telecom companies had their CEOs shuffled like a pack of cards because of a decision by the Party’s Organization Department. It would have been like the US Department of Commerce ordering the heads of AT&T, Verizon, and T-Mobile to play musical chairs. For the Organization Department, which acts as the Party’s personnel department, it was normal; it often shifts senior Party officials every few years to prevent empire building and corruption.

A similar structure guides the political decisions that are made. The National Congress is nothing but a rubber stamp institution for the Party, which runs the government through what Johnson calls a “parallel structure of behind-the-scenes control.” Even in a high school, it is the Party leader, not the principal, who decides how the school is to be run.  The Party has 78 million members, which are led by the nine-man Standing Committee of the Party’s Politburo. In other words, it is not incorrect to call the regime one of “market Leninism.”

Rather than declining in power as the economy grows, the Party seemingly has perfected a mechanism to maintain control while it presides over a controlled capitalism. Those brave enough to demand real democratization, a multi-party system, and a weakening of control from above, face years in brutal prisons.

The Party presides over economic growth, and so far, the results of a better life for some — especially in the cities — have worked to curb mass demands for democracy. Johnson thinks the Party is not threatened at present, but that it “lacks the impetus to reform.” Thus he concludes, “With China on top of the world, the Party’s perch atop the country seems impregnable and yet more vulnerable than ever.”

Knowing this, it is not really surprising that China’s current rulers prefer that its people not learn the real history of the Party and the Maoist years, since its own legitimacy stems from the Revolution Mao and his comrades made. That is why getting this history to the people of China is so important. At times, true history itself can play a revolutionary role.

 

[Edward Campbell]

The Party is, indeed much, much stronger than it was in Mao's day - when a revolution was revolutions, formented by Mao's own associates, were a very real possibility.

But the Communist Party of China circa 2010 is nothing like he CPC in 1960 (Geat Leap Forward) or, worse, circa 1970 - at the peak (depth) of the Great Proletarian Cultural Revolution. Attempts to equate Hu Jintao to Mao are, simply, the ludicrous ramblings of ill informed fools - of which the blogosphere has an apparently endless supply.

The Party is , earnestly - almost desperately, looking for ways to hang on to power by finding some new way to earn the 'consent' or 'mandate' of the people to govern. In this they resemble Canadian Conservatives and Liberals more than Maoists.

 

[GAP]

A Thousand Grains Of Pain
Article Link
September 20, 2010

American counter-intelligence efforts are snagging more Chinese spies. This may be more because of increased spying effort by China, than more success by the FBI and CIA. For example, recently, a former U.S. Army analyst (26 year old Liangtian Yang) was arrested as he was boarding an airliner headed for China. He had a one-way ticket. Yang had in his possession electronic versions of classified army manuals. Another recent development was the indictment of Chinese born Kexue Huang for stealing $300 million worth of trade secrets (how to manufacture new organic insecticides) for use in China.

Incidents like this are just another example of China's use of industrial espionage to turn their country into the mightiest industrial and military power on the planet. For over two decades, China has been attempting to do what the Soviet Union never accomplished; steal Western technology, then use it to move ahead of the West. The Soviets lacked the many essential supporting industries found in the West (most founded and run by entrepreneurs), and was never able to get all the many pieces needed to match Western technical accomplishments. Soviet copies of American computers, for example, were crude, less reliable and less powerful. Same with their jet fighters, tanks and warships.

China gets around this by making it profitable for Western firms to set up factories in China, where Chinese managers and workers can be taught how to make things right. At the same time. China allows thousands of their best students to go to the United States to study. While most of these students will stay in America, where there are better jobs and more opportunities, some will come back to China, and bring American business and technical skills with them. Finally, China energetically uses the "thousand grains of sand" approach to espionage. This involves China trying to get all Chinese going overseas, and those of Chinese ancestry living outside the motherland, to spy for China, if only a tiny bit.

This approach to espionage is nothing new. Other nations have used similar systems for centuries. What is unusual is the scale of the Chinese effort. Backing it all up is a Chinese intelligence bureaucracy back home that is huge, with nearly 100,000 people working just to keep track of the many Chinese overseas, and what they could, or should, be to trying to grab for the motherland. It begins when Chinese intelligence officials examining who is going overseas, and for what purpose. Chinese citizens cannot leave the country, legally, without the state security organizations being notified. The intel people are not being asked to give permission. They are being alerted in case they want to have a talk with students, tourists or business people before they leave the country. Interviews are often held when these people come back as well.
More on link

 

[Edward Campbell]

A Thousand Grains Of Pain
Article Link
September 20, 2010
...
China gets around this by making it profitable for Western firms to set up factories in China, where Chinese managers and workers can be taught how to make things right. At the same time. China allows thousands of their best students to go to the United States to study. While most of these students will stay in America, where there are better jobs and more opportunities, some will come back to China, and bring American business and technical skills with them. Finally, China energetically uses the "thousand grains of sand" approach to espionage. This involves China trying to get all Chinese going overseas, and those of Chinese ancestry living outside the motherland, to spy for China, if only a tiny bit.

This approach to espionage is nothing new. Other nations have used similar systems for centuries. What is unusual is the scale of the Chinese effort. Backing it all up is a Chinese intelligence bureaucracy back home that is huge, with nearly 100,000 people working just to keep track of the many Chinese overseas, and what they could, or should, be to trying to grab for the motherland. It begins when Chinese intelligence officials examining who is going overseas, and for what purpose. Chinese citizens cannot leave the country, legally, without the state security organizations being notified. The intel people are not being asked to give permission. They are being alerted in case they want to have a talk with students, tourists or business people before they leave the country. Interviews are often held when these people come back as well.
More on link

This is a vital point which we ignore at our peril. As one who has sponsored/helped Chinese visiting scholars, and who may do so again, I am very conscious of the fact that some, probably many, are, to one deree or another, manipulated by one or another arm of the Chinese national government.

One thing that is changing: more and more students are returning to China; only a tiny handful stay in Europe; more, but now a minority, I think, stay in Australia and Canada and a few more stay in America. But China is now the land of opportunity and foreign degrees are very valuable for securing better jobs and big money there.

 

[a_majoor]

Rising power is creating rising discontent as well:

http://drezner.foreignpolicy.com/posts/2010/09/23/china_has_a_longer_learning_curve_than_i_had_anticipated

China has a longer learning curve than I had anticipated
Posted By Daniel W. Drezner Thursday, September 23, 2010 - 10:21 AM Share

There's been a lot of oh-my-God-China-is-eating-America's-lunch-have-you-seen-how-pretty-their-infrastructure-is?-kind of blather among the commentariat. And, to be sure, China has had a good Great Recession. But one of the points I've been making on this blog repeatedly is that, for all of China's supposed deftness, "China's continued rise seems to be occurring in spite of strategic miscalculations, not because of them."

Now, I had also assumed that China's leadership would quickly move down the learning curve and practice a more subtle form of statecraft. After reading Keith Bradsher in the New York Times today, however, I guess I was wrong:

    Sharply raising the stakes in a dispute over Japan’s detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, win turbines and guided missiles.

    Chinese customs officials are halting shipments to Japan of so-called rare earth elements, preventing them from being loaded aboard ships this week at Chinese ports, three industry officials said Thursday.

    On Tuesday, Prime Minister Wen Jiabao personally called for Japan’s release of the captain, who was detained after his vessel collided with two Japanese Coast Guard ships about 40 minutes apart as he tried to fish in waters controlled by Japan but long claimed by China. Mr. Wen threatened unspecified further actions if Japan did not comply.

Is this effort at economic statecraft going to accomplish Beijing's objectives? In a word, no. True, according to Bradsher, "China mines 93 percent of the world’s rare earth minerals, and more than 99 percent of the world’s supply of some of the most prized rare earths."

It's also true, however, that Japan has been stockpiling supplies of rare earths. Furthermore, this kind of action is just going to lead to massive subsidies to produce rare earths elsewherein the world (including the United States) and/or develop rare earth substitutes. Oh, and one other thing -- given the spate of flare-ups between Japan and China as of late, the last thing Tokyo will want to do is back down in the face of Chinese economic coercion.

Don't get me wrong -- if China persists in this ban, there will be come economic costs to the rest of the world. Those costs just won't translate into any political concessions. [UPDATE: The Wall Street Journal has an excellent follow-up story suggesting that China is not imposing a ban.]

It is hardly surprising that (reported) actions like these are leading the entire Pacific Rim right to Washington's door:

    [R]ising frictions between China and its neighbors in recent weeks over security issues have handed the United States an opportunity to reassert itself — one the Obama administration has been keen to take advantage of.

    Washington is leaping into the middle of heated territorial disputes between China and Southeast Asian nations despite stern Chinese warnings that it mind its own business. The United States is carrying out naval exercises with South Korea in order to help Seoul rebuff threats from North Korea even though China is denouncing those exercises, saying that they intrude on areas where the Chinese military operates.

    Meanwhile, China’s increasingly tense standoff with Japan over a Chinese fishing trawler captured by Japanese ships in disputed waters is pushing Japan back under the American security umbrella....

    “The U.S. has been smart,” said Carlyle A. Thayer, a professor at the Australian Defense Force Academy who studies security issues in Asia. “It has done well by coming to the assistance of countries in the region.”

    “All across the board, China is seeing the atmospherics change tremendously,” he added. “The idea of the China threat, thanks to its own efforts, is being revived.”

    Asserting Chinese sovereignty over borderlands in contention — everywhere from Tibet to Taiwan to the South China Sea — has long been the top priority for Chinese nationalists, an obsession that overrides all other concerns. But this complicates China’s attempts to present the country’s rise as a boon for the whole region and creates wedges between China and its neighbors.

This latest rare earth ban is just going to accelerate this trend. The ironic thing about this is that it's not like U.S. grand strategy has been especially brilliant. The U.S., however, has two big advantages at the moment. First, it's further away from these countries than China. Second, Washington's actions and rhetoric have been far more innocuous than Beijing's.

In yet another New York Times story, David Sanger provides a small clue as to whether Beijing either knows or cares about the blowback from its recent actions:

    Early this month Mr. Obama quietly sent to Beijing Thomas E. Donilon, his deputy national security adviser and by many accounts the White House official with the greatest influence on the day-to-day workings of national security policy, and Lawrence H. Summers, who announced Tuesday that he would leave by the end of the year as the director of the National Economic Council....

    [O]fficials familiar with the meetings said they were intended to try to get the two countries focused on some common long-term goals. The Chinese sounded more cooperative themes than in the spring, when two other administration officials were told, as one senior official put it, that “it was the Obama administration that caused this mess, and it’s the Obama administration that has to clean it up.”

Well, that is learning, but it's of a very modest kind.

Now, it is possible that Beijing has simply decided that its internal growth is so big that it can afford the friction that comes with a rising power. My assessment, however, is that they're vastly overestimating their current power vis-a-vis the United States, and they're significantly undererstimating the effect of pushing the rest of the Pacific Rim into closer ties with the United States (and India). 

More significantly, and to repeat a theme, China is overestimating its ability to translate the economic interdependence of the Asia/Pacific economy into political leverage. With these misperceptions, however, China is risking some serious conflicts down the road.

Am I missing anything? I'm serious -- this problem ain't going away anytime soon.

 

[Edward Campbell]

I usually tell people that the Chinese are subtle and, traditionally, prefer to do their business quietly and even in the shadows. But it's not always that way as this story, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail, makes clear:

http://www.theglobeandmail.com/news/world/asia-pacific/the-chinese-fishing-boat-captain-who-humbled-the-japanese/article1725025/

The Chinese fishing boat captain who humbled the Japanese

Mark MacKinnon

Beijing— From Saturday's Globe and Mail

If Japan’s powers-that-be had just put Zhan Qixiong on the next vessel back to China the day he rammed his fishing trawler into two Japanese coast guard boats, neighbours wouldn't be whispering about Tokyo’s diplomatic humbling at the hands of Beijing.

Japan on Saturday morning released the Chinese fishing boat captain following intense pressure from China. In a region where honour matters, Japan lost face.

As it turned out Japanese authorities didn't have the foresight to rid themselves of the diplomatic time bomb they seized Sept. 7 in disputed waters south of Okinawa. And they didn't have the stomach for what came next.

Beijing, anxious to show Japan and the region that they now set the rules in East Asia, came out swinging.

The Japanese ambassador to Beijing was called on the carpet five times, government-to-government links were severed and Chinese tourists were encouraged to avoid visiting their neighbour. A visit by 1,000 Japanese schoolchildren to Shanghai Expo was cancelled and a Japanese boy band was told to stay away.

As the dispute passed the two-week mark, China's leaders got serious. First, a rumour was allowed to spread that Beijing had halted the export to Japan of rare earths minerals that are critical in the production of everything from mobile phones to Toyota’s prized Prius hybrid automobile. Then, on Thursday, four Japanese nationals were arrested on transparently trumped-up charges.

At the UN in New York, Chinese Premier Wen Jiabao ominously warned “the Japanese side shall bear all the consequences that arise” if Mr. Zhan were not immediately released.

Throughout the diplomatic offensive, Japan – the dominant power in East Asia as long as China’s rulers were tearing their own country to shreds – stood unmoving in its corner, a stunned prizefighter that hadn’t heard the opening bell. After 17 days of insisting it had the right to try Mr. Zhan in its domestic courts, Tokyo threw in the towel on Friday, surrendering unconditionally to bring an end to the worst dispute between the two Asian giants in years.

China’s official Xinhua news agency reported that a chartered plane had been sent to Japan to bring Mr. Zhan home. He is already being treated as a national hero in China, the fishing boat captain who took on the hated Japanese and won.

It was unclear whether Mr. Zhan’s release would affect the fates of the four Japanese, employees of the construction firm Fujita Corporation, who were detained in Hebei province on suspicion of filming in a restricted military area.

What Beijing gained in the showdown – de facto Japanese recognition of its claim to the Japanese-controlled chain of uninhabited islands that are known as the Diaoyu in China and the Senkaku in Japan – was in some ways less significant than what Tokyo lost. (Japan had previously insisted there was no dispute over who owned the atoll, the waters around which are believed to contain as much as seven trillion cubic feet of natural gas and upward of 100 billion barrels of oil.)

Where China is a country triumphantly on the rise – recently leapfrogging Japan to become the world’s second-largest economy – Tokyo is in a two-decade tumble. As the dispute spread, Beijing held most of the best cards: Tokyo could ill-afford a spreading conflict with its largest trading partner.

Still, it was a weak hand poorly played. “I admit that Japan has to come to terms with China’s ever-growing clout some way or another,” said Yuki Asaba, associate professor of international relations at Yamaguchi Prefectural University in western Japan. “[But] the decision today sent a wrong, wrong and wrong message both domestically and internationally ... ”

Prof. Asaba said Japan’s climbdown would affect its claims in other territorial squabbles with China, South Korea and Russia. Just as easily, Beijing’s victory over Tokyo could make China’s smaller neighbours, such as Vietnam, Taiwan and the Philippines, more nervous about standing up to China in their own disputes with Beijing over their competing claims to the resource-rich South China Sea.

In a region where honour matters, China’s other neighbours are wondering when it might be their turn to make the same bow toward Beijing.

Now, there is a special relationship between China and Japan based on a long and often bitter history. The Rape of Nanjing, which was an atrocity, an act of barbarism, of the same order as the Holocaust of the Jews, albeit of a different scale (far fewer people were slaughtered, but they were murdered in a few weeks rather than a few years), still colours Chinese perceptions but the Chinese also admire the Japanese for their rapid development, devotion to quality and strong cultural values which appear to allow the Japanese to reap the rewards of modern, Western business and technology without sacrificing their Japanese natures.

But it is clear than when truly vital interests are at stake the diplomatic gloves are off and Chinese muscle will be applied. China's other neighbours have certainly taken note.

 

[tomahawk6]

Malware that infected Iran's nuclear industry has now infected Chinese industry as well.

Stuxnet 'cyber superweapon' moves to China
(AFP) – 15 hours ago

BEIJING — A computer virus dubbed the world's "first cyber superweapon" by experts and which may have been designed to attack Iran's nuclear facilities has found a new target -- China.

The Stuxnet computer worm has wreaked havoc in China, infecting millions of computers around the country, state media reported this week.

Stuxnet is feared by experts around the globe as it can break into computers that control machinery at the heart of industry, allowing an attacker to assume control of critical systems like pumps, motors, alarms and valves.

It could, technically, make factory boilers explode, destroy gas pipelines or even cause a nuclear plant to malfunction.

The virus targets control systems made by German industrial giant Siemens commonly used to manage water supplies, oil rigs, power plants and other industrial facilities.

"This malware is specially designed to sabotage plants and damage industrial systems, instead of stealing personal data," an engineer surnamed Wang at antivirus service provider Rising International Software told the Global Times.

"Once Stuxnet successfully penetrates factory computers in China, those industries may collapse, which would damage China's national security," he added.

Another unnamed expert at Rising International said the attacks had so far infected more than six million individual accounts and nearly 1,000 corporate accounts around the country, the official Xinhua news agency reported.

The Stuxnet computer worm -- a piece of malicious software (malware) which copies itself and sends itself on to other computers in a network -- was first publicly identified in June.

It was found lurking on Siemens systems in India, Indonesia, Pakistan and elsewhere, but the heaviest infiltration appears to be in Iran, according to software security researchers.

A Beijing-based spokesman for Siemens declined to comment when contacted by AFP on Thursday.

Yu Xiaoqiu, an analyst with the China Information Technology Security Evaluation Centre, downplayed the malware threat.

"So far we don't see any severe damage done by the virus," Yu was quoted by the Global Times as saying.

"New viruses are common nowadays. Both personal Internet surfers and Chinese pillar companies don't need to worry about it at all. They should be alert but not too afraid of it."

A top US cybersecurity official said last week that the country was analysing the computer worm but did not know who was behind it or its purpose.

"One of our hardest jobs is attribution and intent," Sean McGurk, director of the National Cybersecurity and Communications Integration Center (NCCIC), told reporters in Washington.

"It's very difficult to say 'This is what it was targeted to do,'" he said of Stuxnet, which some computer security experts have said may be intended to sabotage a nuclear facility in Iran.

A cyber superweapon is a term used by experts to describe a piece of malware designed specifically to hit computer networks that run industrial plants.

"The Stuxnet worm is a wake-up call to governments around the world," Derek Reveron, a cyber expert at the US Naval War School, was quoted as saying Thursday by the South China Morning Post.

"It is the first known worm to target industrial control systems."

http://www.google.com/hostednews/afp...ad9aa7b8d3.651

 

[Edward Campbell]

There is a law of unintended consequences, as this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail, illustrates:

http://www.theglobeandmail.com/report-on-business/economy/how-china-trade-stance-may-aid-japan/article1742334/
My emphasis added.

How China trade stance may aid Japan

MARK MACKINNON

From Tuesday's Globe and Mail
Tuesday, Oct. 05, 2010

At the height of the diplomatic fracas between China  and Japan over a disputed island chain, Beijing threw one punch that arguably did more to convince its neighbour to cave in than any other: It quietly slowed exports to Japan of an obscure but increasingly precious commodity known as rare earth metals.


By stepping up customs checks at its ports on rare earths headed to Japan – thereby slowing exports to a trickle – Beijing instigated a brief but telling panic among the many Japanese technology firms who need rare earths to produce everything from smart phones toToyota Motor Corp.’s prized hybrid automobile, the Prius. One day after the new customs procedures were introduced, Japan – which depends on China for nearly all of its rare earths – caved in to Beijing’s key demand in the fight, releasing the captain of a Chinese fishing boat that rammed two Japanese coastguard  vessels last month near the uninhabited islands known as the Senkaku in Japan and the Diaoyu in China.

But China also communicated a message to its neighbour besides the one it intended. While the government of Prime Minister Naoto Kan was shocked at how far and how fast Beijing proved willing to escalate the quarrel over the islands, Tokyo also got a potentially valuable lesson on the dangers of relying so heavily on China for rare earths and other natural resources.

The tactic may have helped Beijing win the release of the fishing captain, but it may also result in a loosening of its stranglehold on the international market for rare earth metals. While Chinese Premier Wen Jiabao was making a show of refusing to meet with Japan’s Prime Minister at the United Nations General Assembly in New York, Mr. Kan met with Mongolian Prime Minister Sukhbaatar Batbold on the sidelines of the assembly to discuss Japanese support for more mining of rare earths in Mongolia. That resulted in a deal announced Sunday in which Japanese firms and technology will assist the search for and production of Mongolian rare earths.

Last week, Japan’s Industry Minister travelled to another of China’s mineral-rich neighbours, Kazakhstan, and announced that Japan would subsidize the mining of rare earth metals there, too.

“This is not a coincidence. This is part of Japan’s diplomatic strategy” following the islands dispute, said Yuki Asaba, associate professor of international relations at Yamaguchi Prefectural University. “But Mongolia is not a substitute for China. It’s just a step for Japan to expand its supply.”

China currently mines more than 95 per cent of the world’s rare earth metals, which is the collective term for 17 chemical elements that are particularly abundant in the Chinese province of Inner Mongolia (adjacent to the independent state of Mongolia). Following a strategy laid out by the country’s late leader Deng Xiaoping – who prophesied that rare earths would eventually be as important to China as oil is to the Middle East – part of the reason for Beijing’s dominance is that Chinese producers sell the elements so cheaply as to make it uneconomic for competitors.

State-run Chinese firms sharply expanded production and slashed prices of rare earths in the 1990s, forcing producers in the United States (previously the world’s leading producer and exporter) and elsewhere out of the market. Several Chinese firms involved in the rare earths industry refused to be interviewed for this article, and even Chinese academics who specialize in the topic said it was too politically sensitive to discuss with a foreign journalist.

Now that China has shown its willingness to use its control of the rare-earths market as a political weapon – something some Beijing-watchers have long feared – buyers are scrambling to react. But nowhere is the nervousness more closely felt than Japan, which is the world’s biggest buyer of rare earths and accounts for 65 per cent of Chinese rare earths exports. Even before the tighter customs procedures were slapped on rare earths heading to Japan, China had slashed its exports of rare earths to 7,976 tons in the second half of this year from 22,283 tons in the first half and 28,417 tons a year earlier, Japan’s Trade Ministry said.

Last week the influential Japan Business Federation demanded that the government take steps to ensure a reliable supply, and the Asahi Shimbun newspaper reported Sunday that the government wanted to reduce as quickly as possible its reliance on China, which currently supplies more than 90 per cent of Japan’s rare earths, by dropping that proportion to 70 per cent.

Even before the island’s dispute flared into a near-trade war, some Japanese companies were already uneasy about their heavy reliance on China. Electronics maker Toshiba Corp. – which uses rare earth elements in motor magnets – signed a deal in June with Kazakhstan’s state nuclear power company, Kaztomprom, to produce the necessary elements at mines in the Central Asian country in which Toshiba has a stake. The massive Sumitomo Group trading house signed a similar deal with Kaztomprom earlier this year to produce 3,000 tons of rare earth minerals annually from the residue of uranium mining.

Other Japanese companies are known to be aiding the nascent mining of rare earths in countries as far flung as South Africa and Vietnam, and executives from Sumitomo and Mitsubishi Corp. were among those in attendance when the Japan-Mongolia deal was announced Sunday. Rare earths are critical in producing everything from wind turbines to guided missile systems.

Canadian miners could also stand to benefit as Japan and other countries look for non-Chinese suppliers of rare earths. Great Western Minerals Group, Rare Element Resources, Avalon Rare Metals and Neo Material Technologies are among the top non-Chinese producers of rare earths.

Some Japanese firms, meanwhile, are looking for ways to reduce – or eliminate altogether – their need for the commodities. In particular, auto makers are investigating whether it’s possible to build hybrid cars without using rare earths. They may already have an answer: Last week, the New Energy and Industrial Technology Development Organization, a government research agency, and Hokkaido University announced they had jointly developed a new motor that doesn’t require rare earth metals.

“We have been conducting research and development to find alternatives for the rare earths,” Honda Motor Corp. spokeswoman Kumiko Hashimoto told the Japan Times newspaper. Toyota, which called its suppliers in the middle of the islands crisis to check on stores of rare earths, has reportedly set up an internal task force to investigate the company’s options.

I don’t know enough about rare earth metals – except that China is a huge but now unreliable supplier. Neither Kazakhstan nor Mongolia are free from heavy Chinese influence so I would assess them as unreliable suppliers, too. Both need China more than they need Japan’s money.

Does Canada have enough rare earth metals to make a difference?

 

[GAP]

the article mentions that the US used to be the main suppliers, either with sources in the US, Canada, or whereever......Canada may not be able to supply the total sum, but it's a niche that some ambitious company will exploit.....

 

[Edward Campbell]

This looks like a fairly authoritative - for Wikipedia, anyaway - explanation, while this suggests that:

1. China produces (has in reserve?) 97% of the world's rare earth metals; and

2. Plans to restrict exports of them.

Hmmmm.

 

[MarkOttawa]

Dragon watch: Should a Chinese company get a substantial holding in Potash Corp. (and other matters)? (Afstan angle at end)
http://unambig.com/dragon-watch-should-a-chinese-company-get-a-substantial-holding-in-potash-corp-and-other-matters/

...

...

Mark
Ottawa

 

[Edward Campbell]

Potash matters hugely to China. China can, right now, pretty much feed itself. But the emerging middle class in Eastern China is growing and changing its habits: it wants to eat meat - more protein.

Many (maybe even most) Chinese are semi-vegetarians. They may eat some meat or fish once a day - maybe less often. Meat is, was for that emerging middle class, an expensive luxury that requires huge amounts of feed-grain (corn) to produce - and fertilizer to grow the corn. But, now, the middle class can afford meat with almost every meal and many of them want it, too.

The Chinese have a vested interest in keeping the production of Potash high and the price low. But, in the end, the market, not the vendor, sets the price.

 

[tomahawk6]

The US virtually stopped production of rare earths because of environmental concerns and the low cost of Chinese rare earths. A US company Molycorp is reopening a California mine with an annual production goal of 20,000 tons. An Australian company has gotten into the rare earth biz its called Lynas Corp. Its share price has doubled in the last three months.

 

[MarkOttawa]

E. R. Campbell: Mass meat-eating is quite recent in most of Europe.  I remember reading (no link immediately at hand) of a typical working class family in Hamburg that, before WW I, ate meat once a week; not sure if Wurst included.

Mark
Ottawa

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail is an article by Frank Ching,*

http://www.theglobeandmail.com/news/opinions/opinion/in-china-a-tortuous-road-to-the-rule-of-law/article1744303/

In China, a tortuous road to the rule of law

FRANK CHING

From Wednesday's Globe and Mail

In late June, China issued new regulations to make confessions obtained through torture inadmissible in court. They seemed a major step forward in the country’s long and tortuous road to a system of rule of law.

Weeks after the new regulations went into effect, horrific details emerged of how a suspect was tortured in the southwestern city of Chongqing, amid a massive crackdown on organized crime. Zhu Mingyong, the lawyer who defended Fan Qihang, a businessman in the construction industry, made public a video in which his client described how he was tortured daily for six months, along with the scars to prove it. During his trial for murder and other crimes, Mr. Fan had tried unsuccessfully to retract his confession.

Mr. Fan was given the death penalty and, after his appeal was rejected by a Chongqing court, the case went to the Supreme People’s Court in Beijing for review. It was the first test case of the new regulations.

Mr. Fan wrote to the top court describing how he was tortured until he confessed, and a group of lawyers, scholars and writers published an open letter asking the court to investigate allegations of torture in Chongqing. So all eyes were on the Supreme People’s Court to see what difference, if any, the new regulations would make in practice. The answer came Sept. 26 when Mr. Fan was executed.

According to the court, “the facts were clear, the evidence was reliable and adequate, the conviction was accurate, the sentence was appropriate and the proceedings were legal.” This was a major blow to everyone who thought that China was actually changing and that the new legal provisions were more than just window dressing.

Increasingly, it seems, China wants to be seen as a country that respects human rights. New laws and regulations have been put on the books, including an amendment to the constitution in 2003 that says, “The state respects and preserves human rights.” Only last week, the government issued a white paper detailing the progress it’s made on human rights in the past year. Within the United Nations system, China has joined 25 international conventions on human rights.

But it’s instructive to see what Beijing says while observing what it does.

Thus, for example, the white paper says: “Leading officials of all levels of the party and government are required to read and reply to letters from the masses, open their offices to complaints from visitors on a regular basis, take responsibility for the cases they handle and be held responsible for any dereliction of duty, so as to guarantee the people’s legitimate rights and interests.” It goes on to say, “In 2009, the number of letters from and visits of the people for petition dropped by 2.7 per cent over the previous year, a decrease for the fifth consecutive year,” implying there’s growing satisfaction with the government.

It doesn’t mention, however, that would-be petitioners are often prevented from travelling to the capital by local governments. And those who do get to Beijing are often abducted by goons who beat them and detain them in “black jails” before sending them back home.

The day before the white paper was issued, the Southern Metropolis Daily reported on a “security service company” in Beijing that had earned commissions for helping liaison offices of local governments in the capital intercept and lock up petitioners. No doubt, the activities of such companies contributed to the drop in petitioners.

Frank Ching is author of China: The Truth About Its Human Rights Record.

While Frank Ching has the facts right, I think he misunderstands the nature of China.

Many of you are already bored with my constant attention to liberal versus illiberal democracy and at the risk of driving more of you even farther away I need to explain my views on liberal (e.g. Amglo-American) versus conservative (East Asian) socio-cultural ‘systems.’

We, Anglo-Americans – which includes most Canadians, are liberals and my definition of liberal is pretty much in the mainstream. A liberal is a person who values individual rights above collective rights but who recognizes that there is some room for the latter. Indeed a liberal society is grounded in conservative values. The conservative values community (usually based on the family) over the so-called ‘sovereign individual’ and all communities are based on the fundamental idea that we individuals willingly, even necessarily, sacrifice some of our individuality in order to gain security and civility. Those who are absolute liberals would, of course, abandon the community and strike out on their own and our mythology is full of examples.

China is a highly conservative society; in fact if you want a good grounding in conservatism then Confucius and Mencius are your best guides – that’s right, the ‘best’ guides to modern, 21st century China are older than Christianity itself but, far more than Christianity, they still ‘shape’ their societies. (Confucian values spread well beyond China.)

Thus, the Chinese, being conservatives can, without upsetting their core, cultural values, say, as their highest court did, that “the facts were clear, the evidence was reliable and adequate, the conviction was accurate, the sentence was appropriate and the proceedings were legal.” The fact that the outcome, being based on torture, would be inadmissible here is neither here nor there – the needs of the community were served despite the violation of one individual’s rights; conservative values in a conservative society triumphed – quelle surprise! It is not that the Chinese do not value individual rights – especially property rights – it is just that they are, for culturally necessary reasons, easily and often subordinated to community or collective rights.

Conservative societies are not the opposite of liberal societies – the two are, in fact, something akin to two sides of the same coin and both are the opposite of illiberal societies. See: here if you have any interest in even more of this dry, dusty stuff.

We need to understand China if we are going to confront China and deal with it to our advantage.


__________
*Frank Ching received a bachelor's degree in English from Fordham University, a master's degree in philosophy from New York University and a Certificate in Advanced International Reporting from Columbia University as a Ford Foundation Fellow.

He is a journalist who has reported and commented on events in Asia, particularly China, for several decades. He worked for The New York Times, The Wall Street Journal and the Far Eastern Economic Review, another Dow Jones publication. He opened The Wall Street Journal's bureau in China in 1979, after the normalization of U.S.-China relations, thus becoming one of the first four American newspaper reporters to be based in Beijing since 1949.

After leaving Beijing, Mr. Ching spent several years working on a book, "ANCESTORS: 900 Years in the Life of a Chinese Family," (Morrow, N.Y. 1988). Using his own family as a vehicle, he presented a history of China from the Sung dynasty to the present. He belongs to a small handful of prominent families that can trace their origin in China for more than 30 generations.

In 1992, he joined the Far Eastern Economic Review. Until spring 2001, he wrote a weekly column, "Eye On Asia," in FEER in which he commented on political developments around the region, in particular China.

He left the Review in 2001 and now writes a weekly column on China, which is syndicated across Asia as well as in North America. For the last eight years, Mr. Ching has also hosted a weekly current affairs TV program in Hong Kong, "Newsline," which appears every Sunday evening on ATV World.
[Peggy Spitzer Christoff, Library of Congress, 2003]
Source: http://hub.hku.hk/handle/10722/49853

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail, is more, related to this:

http://www.theglobeandmail.com/report-on-business/economy/currencies/pressure-mounts-on-china-to-stop-currency-war/article1745532/

Pressure mounts on China to stop currency war

KEVIN CARMICHAEL

WASHINGTON

Published Thursday, Oct. 07, 2010

The United States and other members of the global economic establishment are taking a harder line on China’s practice of tightly managing its exchange rate, saying the country’s policies risk fomenting a currency war that would destabilize the global economy.

U.S. Treasury Secretary Timothy Geithner and the International Monetary Fund said separately Wednesday that many emerging-market countries are under pressure to weaken their currencies to keep their economies competitive. Neither Mr. Geithner nor the IMF explicitly mentioned China, but the chief culprit was clear.

China maintains strict controls on international capital, which help it keep the yuan from rising. Investors then divert the money they would have invested in China to other fast-growing nations, putting upward pressure on the foreign-exchange rates of those countries. That forces them to similarly manage their exchange rates or risk making their exports too expensive. It also makes it more difficult for slow-growing developed countries such as the United States and Japan to stimulate their own economies through exports.

The risk, Mr. Geithner said, is that the race to drive down currencies will unleash a “damaging dynamic” that stokes inflation in developing economies such as Brazil and causes the price of housing, consumer goods and other assets there to jump at an unsustainable rate. A higher exchange rate in those countries would relieve some of that pressure; it would cool the factory economy while making imports cheaper.

The United States has been pressing China to relax its exchange rate policies for years. But in a shift toward hardball diplomacy, the Treasury Secretary said the desire of China and other emerging markets to play a greater role at the IMF could be tied to a commitment to allow their currencies to appreciate – “policies that will reduce [their] reliance on exports and strengthen domestic demand,” he said.

Finance Minister Jim Flaherty expressed support for driving a harder bargain with China, telling reporters in Ottawa that he and Mr. Geithner had already discussed the issue. “I think Mr. Geithner has a point,” Mr. Flaherty said. “We don’t want these kinds of distortions in currency values or distortions in trading relationships, so it’s a very important topic.”

It's a high-stakes diplomatic gambit, given China's well-known aversion to the appearance of being bullied into action by its trading partners.

In Brussels Wednesday, Chinese Premier Wen Jiabao told a business conference that “Europe shouldn’t join the choir” of nations demanding a higher yuan, warning of social instability in the world’s second largest economy because a rapid increase of the currency would lead to mass factory closures. “If the yuan isn’t stable, it will bring disaster to China and the world,” Mr. Wen said.

Mr. Geithner’s remarks represent a new approach by the established economic powers in the Group of Seven to get China to buy into their view that exchange rates should be allowed to float freely. By emphasizing that China is putting at risk its fellow emerging market countries, Mr. Geithner is making a bilateral spat between the world’s largest economies a collective problem. The threat of blocking China’s ascent at the IMF is meant to bring China to the table, something the country has little reason to do as long as its economy powers ahead.

“It’s a very savvy approach,” said Eswar Prasad, a former head of the IMF’s China division. “China is spinning this narrative that the U.S. is acting in its own interest, Japan is acting in its own interest, so why shouldn’t we act in our interest?”

The shift in negotiating tactics comes as economic officials converge on Washington over the next few days for a series of meetings that will be dominated by rising tensions over what Brazilian Finance Minister Guido Mantega last week called a “currency war.”

IMF Managing Director Dominique Strauss-Kahn acknowledged in the Financial Times Wednesday that “there is clearly the idea beginning to circulate that currencies can be used as policy weapons,” an approach that “would represent a very serious risk to the global recovery.”

The yuan has risen about 2 per cent against the U.S. dollar since the People’s Bank of China in June pledged greater flexibility. Mr. Geithner last month called that pace “too slow,” and the U.S. House of Representatives passed legislation that would allow the U.S. Trade Representative to enact import tariffs to retaliate for exchange rates deemed to be artificially low.

Japan intervened in foreign-exchange markets for the first time in six years in September to weaken the yen. The Federal Reserve appears set to create dollars to buy Treasuries, a prospect that is putting downward pressure on the dollar. South Korea, the Philippines, Thailand, Malaysia and India have either intervened in currency markets or have indicated they are prepared to do so.

All the chaos in currency markets is being driven by the imbalanced nature of the global economic recovery.

The IMF said Wednesday that advanced economies will grow 2.2 per cent in 2011, while the gross domestic product of emerging market and developing nations will increase 6.4 per cent. Investors are chasing the growth, plowing massive amounts of money into countries such as Brazil and India, forcing the currencies of these nations higher. Governments and central banks are reacting to try to stem the rise, worried that stronger currencies will undermine their export-dependent economies.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said he thinks countries at this time are mostly trying to slow the ascent of their exchange rates, rather than actively undermine their neighbours. Still, there’s a risk the rhetoric could become a self-fulfilling prophecy, he said. “If you think it’s a currency war, you’ll act like it’s a currency war – it leads to a downward spiral,” Mr. Chandler said.

Mr. Prasad, who is now professor of trade policy at Cornell University in Ithaca, N.Y., and a scholar at the Brookings Institution, called a true currency war a “fairly serious risk.”

With reports from Bill Curry in Ottawa, Joanna Slater in New York and Bloomberg News

I think Geithner and Flaherty are playing a very dangerous game. As the article points out, China is a notoriously ‘prickly’ country and does not take kindly to being lectured – especially not by small-fry like Canada and irresponsible spendthrifts like the USA.

It is important to remember that one of China’s medium term goals is to strip the US dollar of its ‘global reserve currency’ status, with the many (currently unearned) benefits that confers on the US economy. The Chinese do not want their yuan (or RMB) to replace the dollar – their economy is not strong enough for that and it would be bad for their near term ‘soft power’ campaign – instead they want to make the IMF’s Special Drawing Rights (SDRs – created by the IMF to facilitate loan settlements) into a new, official global reserve currency. They probably have a lot of quiet support for this.

A currency war – which could occur – benefits no one, not China, not America and certainly not Canada.

The Americans are desperate to make economic gains – if their growth remains stalled at around 2% then, according to some analysis, unemployed will grow to 12%± by 2020. China, equally desperately, needs to maintain social cohesion and, according to most Chinese, that means keeping the economy growing at 5%±, year after year, for a few decades. That appears to demand a strong export economy which is facilitated by a weak currency – as Canada demonstrated during the ‘80s and ‘90s when we played the same weak dollar game. But, there is one good argument for floating the Chinese ¥: to stimulate domestic demand. A stronger currency will make imports – from America, Europe and Japan – more expensive causing a ‘Buy China!’ effect, especially for manufactured goods. Most Chinese analysts appear to think that is not sufficient, in the near to mid term, to keep the Chinese people happy. What the world does not need, above all, is an unhappy and, therefore, unstable China. The consequences, for the whole world, including the USA, of instability in China are incalculable but, without a doubt: bad, Bad, BAD!

 

[a_majoor]

China's human rights record is thrust back into the spotlight:

http://www.thedailybeast.com/blogs-and-stories/2010-10-08/nobel-peace-prize-chinas-threats-backfire/?cid=blogunit

Beijing is a growing power, but blocking news of jailed rights activist Liu Xiaobo’s Peace Prize projects weakness—and warning that the honor would be seen as “an unfriendly act” may have helped him win.

The colorful Chinese expression “killing a chicken to scare the monkeys,” which means to warn a large group by harshly punishing one, has been Chinese government policy in recent years, especially in the case of Liu Xiaobo, who was sentenced to more than a decade in prison last December for his human-rights advocacy.

On Friday, Beijing’s “killing chickens” strategy failed when Liu won the Nobel Peace Prize. The Chinese government has tried to block word of the award from state-run media and the Web, but look for the news to quickly jump the “great firewall” on China’s Internet and reach many of the nearly 400 million Chinese online.

Liu is serving an 11-year sentence for “incitement to subvert state power,” a charge the Chinese government uses to silence critics. Liu’s “crime,” as a key figure in the release of the Charter 08 manifesto was chiefly to demand greater respect for human rights in China. Modeled on the famous Charter 77 signed by Vaclav Havel that helped undermine the Soviet Union’s iron rule in Czechoslovakia, Charter 08 makes the apparently radical claim that “freedom, equality, and human rights are universal values of humankind.”

China is seen as a growing power in the world. Yet Beijing’s reaction to Liu’s Nobel Prize is not that of a confident and stable government. Instead, top Chinese officials warned Norway and the Nobel Committee itself not to honor Liu. China’s deputy foreign minister said awarding the Peace Prize to Liu “would pull the wrong strings in relations between Norway and China” and be seen as an “unfriendly act.” In no small irony, it is likely that those threats helped tip the Nobel scales in Liu’s favor.

Liu is a 54-year-old former professor of literature at Beijing Normal University who has long been a relentless advocate for reform and the rule of law in China. He was jailed for 21 months after the 1989 Tiananmen Square crackdown and branded a “Black Hand” for his support of students seeking peaceful reform. In 1996, he was sentenced to another three years of “re-education through labor” as a result of further human-rights activism.

After Charter 08 was released on December 10, 2008, the 60th anniversary of the Universal Declaration of Human Rights, the Chinese government wasted no time harassing and detaining many of the 303 Chinese signers of this document—rights defenders, lawyers, and academics, but also ordinary Chinese citizens. An instant viral hit on the Internet in China, the charter quickly gained thousands of signatures before government censors blocked access to it.

The 2010 Nobel Peace Prize puts China’s human rights record squarely back in the spotlight.

Liu’s modest writings and reform efforts pose a danger to the government, as he represents a growing community of people inside China who are convinced the country must reform in order to progress. In the years since 1989, the most important trend has been the rise of a generation of committed civil-society leaders: journalists, artists, lawyers, women’s rights activists, religious freedom advocates, and a diverse set of people who organize through the Internet.

Much attention has focused on how the Nobel news is playing outside China. But for Chinese leaders, the biggest challenge is surely how it will play inside. China’s government is not monolithic. Reformers vie endlessly with hard-liners on Politburo policy and the best way to govern China’s vast territory and 1.2 billion people. But since the period leading up to the 2008 Beijing Olympics, hard-liners and security forces have had the upper hand. As a consequence, much of the last decade’s progress has been set back, with those on the front lines of reform in China paying the highest price.

The Chinese government made an example of Liu with a harsh prison sentence, aiming to sideline his activities but also to send the message that public pressure for reform is not welcome. Indeed, Liu is one of many leading human-rights activists who have been harassed, detained, beaten, forced out of their jobs, and jailed in recent years. However, no degree of censorship will prevent countless ordinary Chinese people, government employees, party cadres, and students from wanting to know more about who Liu Xiaobo is, why he was sentenced to prison, and what is so dangerous about Charter 08. They are probably going to discover the modest manifesto, which could spread uncontrollably.

The implications for China’s rulers are also interesting. Perhaps within the Chinese leadership there will even be an accounting of how counterproductive jailing Liu and dozens of rights advocates has been. Liu’s wife, Liu Xia, said, “As the [Nobel] Committee recognized, China’s new status in the world comes with increased responsibility. China should embrace this responsibility, have pride in his selection, and release him from prison.”

The 2010 Nobel Peace Prize puts China’s human-rights record squarely back in the spotlight. Best of all, it tells those in China who struggle every day to make their government more accountable that their fight matters.

As director of global initiatives at Human Rights Watch, Minky Worden works with journalists to help them cover crises, wars, human-rights abuses, and political developments. She also has worked in Hong Kong and at the Department of Justice as a speechwriter for the U.S. attorney general and in the Executive Office for U.S. Attorneys. She is a member of the Council on Foreign Relations and the Overseas Press Club's Board of Governors, and editor of China's Great Leap and co-editor of Torture.

 

[Edward Campbell]

Changes in the Chinese leadership, according to this report, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Los Angeles Times:

http://www.latimes.com/news/nationworld/world/la-fg-china-xi-20101019,0,604801.story

Xi Jinping on track to become China's next president

The Communist Party official is named to a post that is considered a steppingstone for assuming the leadership. He has a reputation for being tough on corruption and friendly toward business, even foreign companies.

Xi Jinping is named China's vice chairman of the central military commission, a position overseeing the People's Liberation Army. (Kazuhiro Nogi, AFP/Getty Images)

By Barbara Demick, Los Angeles Times

October 18, 2010

Unless something goes badly wrong for Xi Jinping over the next two years, it looks like afait accompli that the 57-year-old Communist Party official, who has been groomed his entire career for leadership, will be China's next president.

At the end of a four-day meeting of the party's central committee on Monday, Xi was named vice chairman of the central military commission, a position overseeing the People's Liberation Army that is considered a steppingstone for assuming the leadership. Hu Jintao was given the same post in 1999, three years before he became secretary-general of the Communist Party. Hu became president in 2003.

"It looks like the case is closed. Based on today's announcement, he'll be the next leader," said Jin Zhong, editor of Hong Kong-based Open Magazine and an analyst of the Communist Party.

Like many in the younger generation of Chinese leaders, Xi is a "princeling'' – the son of a pro-reform official, Xi Zhongzun, who was purged in the early 1960s after a falling-out with Mao Tse-tung. At the age of 15, Xi Jinping was sent off to the countryside, assigned to a rural commune in Shaanxi province where people lived in caves and did hard manual labor, in his case, farming wheat. Following the Cultural Revolution, Xi was permitted to resume his education, studying chemical engineering at Beijing's prestigious Tsinghua University. He later received a law degree.

Xi rose through the party, serving in Fujian and Zhejiang provinces and in Shanghai, where he was party chief. He earned a reputation for being tough on corruption and friendly toward business, even foreign businesses. U.S. Treasury Secretary Henry M. Paulson Jr., former head of investment bank Goldman Sachs Group Inc., once called Xi "a guy who really knows how to get over the goal line.''

Others have described Xi, a large man who has at times struggled with his weight, as unusually personable. "He's extremely warm. He has none of the airs of an official who's impressed with himself,'' said Robert Lawrence Kuhn, who interviewed Xi for a book about the Chinese leadership, "How Chinese Leaders Think." Xi is married to a famous Chinese folk singer, Peng Liyuan.

The party's internal deliberations about the leadership are secret, although it has been widely reported that Xi won a straw poll among party officials in 2007 as the favored candidate of the so-called fifth generation of Chinese leaders.

"He is a safe choice. The party didn't want uncertainty," said Liu Junning, a political scientist based in Beijing. Liu said that Xi's views on sensitive issues — such as whether China should open up for political reform — remain largely unknown since he had not tended to put himself on the line. "I would be surprised though over time to see him become a reformer.''

Hu Jintao is due to retire as party secretary in 2012. Xi, if selected to replace him, would likely assume the presidency the following year.

barbara.demick@latimes.com
Copyright © 2010, Los Angeles Times

My guess is that Xi is not Hu’s first choice as successor. I think that Xi is from the ‘right,’ pro-business wing of the Party, sometimes called the Shanghai Gang which was led by Jiang Zemin. Hu is from the ‘new left’ wing and he ousted Jiang et al around the year 2000.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail, is another view of Xi Jinping:

http://www.theglobeandmail.com/news/world/asia-pacific/xi-jinping-a-princeling-and-future-king/article1762993/

Xi Jinping: A princeling and future king

MARK MACKINNON

Beijing— From Tuesday's Globe and Mail
Published Tuesday, Oct. 19, 2010

As Xi Jinping rose through the ranks of the Communist Party of China, he has often been defined – and sometimes derided – as a “princeling,” one of a clutch of rising party stars who owe at least some of their success to the fact they are children of revolutionary heroes.

Mr. Xi is the princeling who will soon be king. Already a vice-president and a high-ranking Politburo member, on Monday he was named the vice-chairman of China's Central Military Commission, a promotion most observers view as the final prerequisite before a stage-managed handover of power when President Hu Jintao steps aside in two years time.

But don't confuse Mr. Xi with Kim Jong-un, the 27-year-old tabbed inherit power from his ailing father in neighbouring North Korea. Unlike the Kim family, it wasn't always a political asset to be the son of Xi Zhongxun.

Mr. Xi was 10 years old when his father, a former comrade-in-arms of Mao Zedong's and a hero of the fabled Long March who rose to be a vice-premier, was suddenly denounced and jailed as an enemy of the revolution. As a teenager, Mr. Xi himself was sent to a rural commune in Shaanxi province to work as a labourer, deemed a “reactionary student” largely because of who his father was. He was jailed four times and publicly humiliated. “I ate a lot more bitterness than most people” during the Cultural Revolution, he once told an interviewer.

After Mao died and Deng Xiaoping rose to replace him, Xi Zhongxun was rehabilitated and entrusted with the key post of governor of the southeastern province of Guangdong during the early 1980s, a time when the region was a laboratory for China's early experiments with market reforms and economic interaction with the rest of the world.

But a decade later, Xi Zhongxun was again a political pariah after speaking out publicly against Mr. Deng's decision to use the army to crush pro-democracy demonstrations on Beijing's Tiananmen Square in 1989. Whether Mr. Xi, now 57, shares his father's beliefs about economic and political matters is unclear, but he does seem to have learned one lesson from his father's repeated downfalls: Shut your mouth and keep your politics to yourself.

Astonishingly little is known about what the man who will soon lead the world's emerging superpower actually believes. “We don't know very much about [Mr. Xi] at all. He's probably smart enough politically to know that you don't show your hand too much if you want to a get the position,” said David Zweig, director of the Centre for China's Transnational Relations at the Hong Kong University of Science and Technology.

The Beijing-born Mr. Xi, who studied both chemical engineering and law at Tsinghua University, is in many ways a blank slate whom the various factions within the Communist Party all appear comfortable with, even as he belongs firmly to none of them. He won the top job largely because he was one of the few acceptable to both the supporters of outgoing President Hu Jintao and the loyalists of his predecessor and rival, Jiang Zemin.

“Xi Jinping was a compromise candidate, a princeling who could be sure to defend the regime's interests,” said Victor Shih, a professor of Chinese politics at Northwestern University. “He hasn't announced much of his own agenda yet. We haven't seen, in terms of policies, what he's going to propose.”

During his time as a party secretary in Zhejiang province, Mr. Xi was known as a corruption-fighter, as well as being a supporter of private enterprise, but his record is clean of the controversy that brought down his father.

The most outspoken Mr. Xi has been on anything to date was perhaps an address he gave in May to the Party School, which trains China's future leaders and bureaucrats. Lose the long speeches and the political jargon, he implored the class of 900 new cadres. Say what you mean and come up with some new ideas.

But it has largely been through saying little that Mr. Xi has risen so meteorically. He was plucked in 2007 to become the Shanghai Party chief after his predecessor was fired for corruption. Months later, he was named to the Politburo, where he is now the highest-ranked member who isn't retiring in 2012. By the end of 2007, he had gone from relative unknown to being anointed as the likely successor to Mr. Hu.

To boost his profile, Mr. Xi was given the task of overseeing the successful 2008 Summer Olympics in Beijing. He was then given a crash course in China's foreign affairs policy, visiting rivals such as the United States and Japan and allies like North Korea and Myanmar. He was also placed in charge of an internal Communist Party organization that has led a clampdown on dissidents and non-governmental organizations, as well as on Internet content.

But all of that may say more about what his current superiors want him to learn, rather than what he personally believes or might pursue as leader.

Before his rapid ascension, Mr. Xi was best known as the husband of Peng Liyuan, one of China's best-known folk singers and a long-time staple on the televised galas that ring in the Chinese New Year. It's Mr. Xi's second marriage and the couple have a daughter together.

It seems, Ms. Peng, too, was initially unsure what to make of Mr. Xi. “The moment she saw him, she was disappointed. Not only did he look rustic, but he also looked old. However, the first word that he spoke attracted her,” the chinanews.com website reported in 2007. Quoting Ms. Peng, the website reported that Mr. Xi asked her an intelligent question about different vocal techniques.

“I was moved at that time,” Ms. Peng said. “He has a simple heart but is thoughtful.”

And, she might add now, he is also someone who is easily underestimated.

A couple of points:

1. Tsinghua University (best known as a science and engineering school) and its sister institution Peking University (best known for its arts/humanities programmes) are China’s version of Oxford and Cambridge or Harvard and Yale. Tsinghua is also President Hu Jintao’s alma mater. Entrance to Tsinghua is highly competitive and university entrance is one of the very few relatively corruption free administrative matters in China – thus Tsinghua and Peking Universities get China’s best and brightest and, not too surprisingly, produce a disproportionate share of China’s leaders; and

2. I, personally, find it hard to believe that Xi got to be party boss in Shanghai without being philosophically loyal to Hu Jintao’s old arch rival Jiang Zemin. But, perhaps, he is the most moderate of the ‘new right’ wing of the Party and, therefore, least problematical for Hu’s ‘new left’ faction.

 

[Edward Campbell]

More important new from China, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/economy/china-raises-interest-rate/article1763100/

China raises interest rate

BEIJING— Reuters

Published Tuesday, Oct. 19, 2010

China  will raise its benchmark one-year lending and deposit rate by 25 basis points effective from Oct. 20, the central bank said on Tuesday.

The announcement came as Beijing tries to cool rising inflation. China rebounded quickly from the global downturn on the strength of massive stimulus spending and bank lending. Analysts had been expecting China's government to raise rates at about this time to cool inflation and control rapid growth.

Here is what some analysts are saying about the move:

BEN SIMPFENDORFER, CHIEF CHINA ECONOMIST AT RBS

“A surprise, but welcome, hike. It suggests strong inflation and GDP figures on Thursday, but also some concern about property.”

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI

“One thing is sure, that if they have raised interest rates  now, then it creates ground for the yuan to appreciate. So it will be difficult for them to keep away the appreciation pressure on their currency”.

KIT JUCKES, CURRENCY STRATEGIST, SOCIETE GENERALE, LONDON

“This means China is concerned that bank lending and domestic asset price inflation are too strong and they will have to accept a stronger currency.

“The gut reaction of the market is to sell commodity block and emerging market currencies. But it’s not a game changer and there will probably be a queue of people looking to buy EM currencies on dips.”

PARK TAE-GEUN, BOND ANALYST, HANWHA SECURITIES IN SEOUL

“The decision caught markets off guard. Raising lending rates is more than a liquidity control and can be taken as a tightening signal.”

SIMON DERRICK, HEAD OF FX RESEARCH AT BANK OF NEW YORK MELLON

“The PBOC move follows a clear need by the Chinese authorities to take out some of the heat from the economy. Whether this move will lead to a broader move on its currency is open to debate. It certainly leads to speculation that the U.S. and China are in some sort of a deal which will perhaps see the U.S. taking a more gradualist approach to QE. The dollar has already moved higher after this news.”

HITENDRA DAVE, HEAD OF GLOBAL MARKETS, HSBC INDIA, MUMBAI

“China hasn’t raised so far and (they) have only been raising the reserve requirements. With all the asset price speculation, they had to raise rates to normalise policy. It is the local factors that led them to take this decision.”

KORNELIUS PURPS, FIXED INCOME STRATEGIST WITH UNICREDIT IN MUNICH

“The authorities are eager to moderate the housing sector without dampening the overall economy’s growth. This should not be interpreted as an impediment to global growth.”

CHRIS TURNER, HEAD OF FX STRATEGY AT ING

“This is part of the moderate tightening cycle that we are seeing from Chinese authorities to balance their economy. It is part of the normalisation of interest rates in an economy which is growing at a modestly fast clip. The market is reacting like there is an increased risk of hard landing with the commodity currencies like the Aussie being sold off, but I don’t think that is the case.”

- With files from the Associated Press

The so called currency war IS a real problem. Most of the problem (and blame) lies in the USA but most of the solution must rest with Asia and, especially, China. China must find ways to:

1. Contain inflation – because inflation destroys the value of ordinary people’s savings;

2. Sustain economic growth – because the Chinese people need jobs and manufacturing jobs in the private sector are the easiest to creat and sustain in the near to mid term; and

3. Shift the economy away from a too heavy reliance on exports and towards satisfying domestic demand with domestic products and providing services.


All three are aimed, primarily, at maintaining social harmony in China. All three also help with a unique Chinese problem: China is sitting on a mountain of US dollars which need to be spent, before their value declines too much, on modernizing the Chinese economy and securing a resource base to sustain economic growth and satisfy a fast growing domestic demand.  But all three are also aimed at reducing Niall Ferguson’s Chimerica effect which will, perversely, strengthen China and further weaken the USA – exactly what keeps Tim Geithner awake at night. The USA wants its markets to buy less from China – and China is not terribly opposed to that because, quite simply, the US cannot afford to buy as much – and America wants its vendors to sell more to that HUGE and rich Chinese market. But if the Chinese manage well then they, not the Americans, not even Americans with a sadly debased currency, will meet that growing domestic demand.

Oh, yeah, and the RMB will appreciate slowly and slightly, but not anywhere near as fast (months) or as much (25%±) and the USA wants needs.