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Peas in a Pod

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Bill Markle
Uncategorized
02 March 2025

 

Peas in a Pod

 

… and just another way that DJT and GOP have a strong resemblance to XJP and CCP -

This below is from Jude Blanchette at the Center for Strategic and International Studies, the non-partisan and thoughtful advisor on American foreign policy. At China Books Review he reviews two China books, both of which are due their own accolades. But this is Blanchette on Xi. Go ahead and do the substitution – replace the word  Xi with Trump, when you read Party think of GOP, and think of US instead of China -

Unlike his predecessors, who often adopted more cautious or internally-focused approaches, Xi has mobilized far greater resources and directed the full machinery of the Party toward strategic ambitions on the world stage. His methods — which blend Leninist control with modern economic, technological and military prowess — represent a more aggressive and concentrated effort to reclaim China’s historical stature, with the long-term goal of challenging the current global power balance.

That is the goal. Yet it is becoming more evident by the day that to achieve this objective, Xi is corrupting the machinery of effective governance, like Stalin and Mao did before him. He has replaced pragmatism with paranoia, merit with loyalty, and debate with blind obedience. Governing institutions, that once seemed to be serving the nation as a whole, now serve one man’s unrelenting pursuit of power for the Party that he leads. Bureaucratic professionalism is giving way to fear-driven stagnation, as officials scramble to stay in favor, not to solve governance challenges. The promise of a prosperous, harmonious society has been bartered for the promise of stability, security and “national greatness.” Yet the price of pursuing these goals — paid in the currency of repression — continues to rise. The question is not just whether Xi will achieve his aims, but what will be left of China if he does.

 

What’s that line about “if it looks like a duck and walks like a duck”?  Narcissistic authoritarians think alike.

 

On the Learning Curve for Peaceful Rise

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Bill Markle
Uncategorized
18 October 2022

On the Learning Curve for Peaceful Rise

China watchers dissect what comes out of important CCP conclaves, and no conclave is more important than this 20th CCP Congress. The Congress is held every five years. Apart from setting broad policy for the next few years, the shuffling of members of the Politburo and Politburo Standing Committee is done at this time. As you most certainly know, Xi Jinping will be upsetting what had become a normalizing tradition of the CCP General Secretary stepping down after two 5 year terms. Xi will begin a third term when voting is complete in a few days.

In the first day's action at the Congress, Bill Bishop at Sinocism reports - https://sinocism.com/p/20th-party-congress-chinese-modernization?utm_source=email

Xi delivered an abbreviated version of the Report to the 20th National Congress of the Communist Party of China on Sunday.... The title of the report is “Hold High the Great Banner of Socialism with Chinese Characteristics and Strive in Unity to Build a Modern Socialist Country in All Respects.

There are Goals to be achieved in several areas, including law and foreign affairs. From Xi's presentation - 

Law - “VII. Exercising Law-Based Governance on All Fronts and Advancing the Rule of Law in China'“;

Overall development objectives for the year 2035 include -

 

  • Basically modernize the system and capacity for governance; improve the system for whole-process people's democracy; build a law-based country, government, and society

  • Become a leading country in education, science and technology, talent, culture, sports, and health; significantly enhance national soft power

Now we know that China is a big complicated place. The Wolf Warrior diplomacy of the last three years seems to have died down a bit.  But right on the heels of aspirations about rule of law and enhancing national soft power we have this below. Chinese diplomats in Manchester England beating up protesters outside of the consulate and dragging a protester inside to further beat him. 

Again from Sinocism -

 - https://sinocism.com/p/20th-party-congress-chinese-modernization#%C2%A7prc-diplomats-in-uk-beat-up-protestors

PRC diplomats in UK beat up protestors

PRC diplomats from the consulate in Manchester destroyed signs on public property outside of the consulate and then dragged one of the protestors inside the consulate gates where he was beaten by a pack of feral wolf warriors. From the videos of the incident it appears one of the assaulters was the Consul General himself, Zheng Xiyuan 郑曦原. England has seen this before during the Cultural Revolution and it is very dangerous. The UK should PNG every PRC diplomat involved, to make it clear there is zero tolerance for this kind of behavior. If they do not they are giving PRC diplomats license to do this again, perhaps with worse consequences.

UK police open probe into assault of protester inside Chinese consulate | Financial Times

Greater Manchester police said in a statement on Monday that a “small group of men” had come out of the Chinese consulate and dragged one of the protesters back into the grounds and assaulted him. “Officers intervened and removed the victim from the consulate grounds,” it added.

The force said it had opened an investigation and was liaising with “national policing and diplomatic partners.” The victim suffered several injuries and stayed in hospital overnight.

The incident happened on Sunday afternoon when about 40 demonstrators gathered outside the consulate protesting for Hong Kong independence and democracy.

A video of the incident, the man who rips down the signs appears to be Consul General Zheng Xiyuan 郑曦原, who can be seen later grabbing the victim by the hair:

The video of the incident is quite damning. Click on the Sinocism link above to get the video or click here -

https://www.youtube.com/watch?v=xEGl3VXWW1g

The British government should be protesting this action in the strongest terms.

Good thing the goals are for 13 years from now. For now, they can remain aspirational. Or simply a fraud. Evidence for fraud is the following -

Aside from this action, we note that China has been installing its own police stations (!) in British cities and cities around the world - https://www.telegraph.co.uk/world-news/2022/09/14/china-opens-unofficial-police-stations-britain-hunt-people-return/   and

https://www.voanews.com/a/china-s-overseas-police-stations-breach-sovereignty-report-claims/6785143.html

 

Perhaps the learning curve includes redefining rule of law and soft power.

 

 

Housing Affordability ... and a bit more

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Bill Markle
Uncategorized
27 December 2021

 Housing Affordability ... and a bit more 

A recent chart -

 

Source: https://twitter.com/ExanteData

 

One-data point comparisons are always suspect.  On “city housing affordability” one has to ask, “affordability for whom?”  I am always suspicious – affordable to an expat on a two-year assignment, coming with family and – most important - a nice-sized business housing allowance who wants to live in the most-like-home part of town? Ok.

 

Still, there is some value in such a comparison, of the 50,000-foot view variety. We know prices for apartments in New York and London and Tokyo are high. If the chart above is using reasonably comparable methods for all cities, Chinese housing affordability does look outrageous.  And there are plenty of news stories with data on real prices and incomes to support a chart that look something like the one above.

 

More than anything else, such a chart suggests that real estate prices in big cities in China are headed for a fall – as measured by the same methods used to produce the chart. Reasons – a lot fewer expats in China on expense accounts; end of the demographic dividend – the working age population is now falling by about 5 to 7 million a year, and those are people who would buy apartments; a push by owners of multiple apartments to decorate them and rent them out or sell them, now they realize that prices cannot always go up; falling birth rate (from already far-below-replacement numbers; insufficient middle class jobs for college graduates; and crackdowns on purchases of multiple apartments, convenient divorces to permit purchases, and the crackdown on corruption generally.

 

By most accounts there are around 65,000,000 empty (newly built in the last decade or two) apartments in China. As is typical in China, these apartments remain concrete shells with windows, utility stubs in the wall, but no “decoration” – finished floors or walls or appliances or interior doors. The concept has been to buy as a store of value. The value of that means of investment is now highly suspect. GDP growth in China will regularly be below 5%, perhaps in the range of 2% or 3%. Right now and for the next couple of years the economy will have to adjust to millions of people who have lost or will lose jobs in real estate sales and after-school tutoring. With relatively slower growth in exports, decline in construction investment, and general international political antipathy, China doesn’t have – or need - more people clamoring to buy apartments.

 

My guess is that another round of fiscal reform is coming in a few years. The last major reform in 1994 https://en.wikipedia.org/wiki/Tax-Sharing_Reform_of_China_in_1994  adjusted taxes paid to central and local governments and revenues distributed. The result, along with evaluating local and provincial officials by how much GDP they “created” during their five year term, was the extreme overemphasis on physical development we have seen in the last twenty years. These policies also created severe imbalances in the shares of investment and consumption in the economy. Subsequent reforms have not addressed the excessive use of land sales by local governments to fund daily operations.

 

The GDP problem that could be ignored for twenty years is now salient. As China grew dramatically, all parts of the economy grew.  There are now plenty of investment firms and stock exchanges and futures markets and marketing firms and media companies. But the big story was in investment.  There were plenty of jobs in construction and for architects and designers and engineers and project managers. Some of those architects and designers and engineers will find work elsewhere in China or on OBOR projects.  Some of the construction workers will be able to do that as well.  The point is the old story about imbalance between investment and consumption.  With investment share of GDP falling, the consumption share must rise, and the economy just doesn’t need so many construction workers at the same time it doesn’t really need more workers in retail or personal services.

 

Michael Pettis has been talking about this dilemma for a decade. His point, and mine, is that the income share of GDP needs to go up. That means less money for SOE investments and salaries and profits and less money for governments -  fewer expressways and ports and fancy government buildings - and more for ordinary working Chinese. Incomes and interest rates have long been repressed in China to focus on investment. If emphasis on the physical environment is lessening, money should be available for social environment purposes – education, health care, pensions, personal services. When general incomes go up, consumption can go up, along with jobs in those sectors.

 

Unfortunately, the trend is in the other direction. With the decline in real estate land and apartment sales, local governments are now in a severe fiscal crunch. For many big cities revenues from land sales have been 50% or more of total revenues and that is no longer going to be the case. Beijing has said it will increase transfers to local governments to help alleviate the fiscal crisis, but my suspicion is that a good portion of that money will go to pay interest and principal on bonds for infrastructure projects that cannot cover their payments now. In other words, the transfer funds will go the banks and investors, not ordinary Chinese. Bankers and investors have jobs, too, but they are not the ordinary Chinese we are talking about.

 

We just saw that civil servant salaries have been trimmed in Eastern China by 15% or so.  Quarterly bonuses that were always a significant part of salaries have been cancelled. That is an astounding change.   https://www.rfa.org/english/news/china/bonuses-07122021142758.html

 

Civil servants have been reasonably well compensated, as have some university teachers – but by no means all. This is the middle class that has been able to go on vacations and buy some luxury products – not a lot, but some – and those bonuses will not be coming back soon. 

 

For a couple of decades there has been a meme in development economics that some developing countries “industrialized too fast” using foreign donations and import replacement tactics. These developed resource-heavy industries that created very wealthy vested interests and politics, including corruption, skewed to their own interests at the expense of factory and extraction workers. A local service sector economy was insufficiently developed.

 

Development economist Dani Rodrik makes the argument Growth Without Industrialization.  

After some early industrialization, the argument goes, some of these countries “deindustrialized too quickly” meaning that their resource base declined or local labor prices rose or external competition increased. Funding from donors tended to be misspent or go into physical infrastructure that did little to enhance local incomes. The countries attempted to build their service sector, but some of those functions could easily be handled by foreigners outside (law, banking, investment, even marketing and advertising). The economies did not grow in a reasonably balanced way, for both investment and consumption. The local service sectors remained underdeveloped, mostly because incomes were not distributed widely among the population.

 

I don’t want to push this model to represent China, but one can see the parallels. China did industrialize quickly, and government attention was on investment and not on consumption or services.  Now, labor costs in China have risen, factories in China are more efficient (more machines than before), manufacturers are leaving China, and the service sectors have blossomed in the past fifteen years.  But those service sectors remain smaller than needed for good consumption growth, because general Chinese incomes, although rising, remain low.  Only with substantial transfers of wealth from SOE and governments to ordinary Chinese can this conundrum be remedied. That can be investments in education or health care, so Chinese don’t need to fund so much of those items from their own pockets. But social service spending is needed to raise incomes and GDP in China. 

 

One can see a lot in a single chart, one you get past the single data point conclusion.

Shuang yin Win-Win February, 2019

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Bill Markle
Uncategorized
05 February 2019

Shuang yin  Win-Win    February, 2019

Now that a crash-out Brexit seems all but assured, where will Britain turn for trade deals?  The kind of relationship that the British government wanted – like that of Canada or Norway with the EU – takes years to negotiate, under favorable circumstances.  There has been discussion for more than ten years that the special relationship between the US and Britain - forged from the mid-19th century and cemented between President Roosevelt and Prime Minister Churchill in World War II – is no longer so compelling.  The EU without Britain is still a huge and attractive market for US trade in both directions.

As of March 29, 2019 – in a bit more than a month - there will be hundreds of treaties and agreements to negotiate, suddenly, quickly, and in great detail.  Some agreements will probably get done – ability of British truck drivers to deliver goods through the Chunnel into EU turf, and ability of airplanes to take off from Heathrow bound for destinations in Europe using parts and crew that, without certification by the EU, would be not allowed.

But where can Britain turn for trade deals, quickly, without years of complicated negotiations?  What large trading partner is willing to set aside the details of complex agreements when mercantile interests, not to mention future geopolitical support, are at stake?  What large trading partner can act quickly, based on personal leadership from a president or prime minister or general secretary?

In October, 2015, a few months before the Brexit vote, Xi Jinping demonstrated his prescience –

"The UK has stated that it will be the Western country that is most open to China," Xi told Reuters ahead of his first visit to the country as president. This is a visionary and strategic choice that fully meets Britain's own long-term interest."

UK Prime Minister David Cameron, speaking on CCTV, China's state broadcaster, said the visit would mark a "golden era" in the two countries' relationship.

Politically, China has always been willing to play a long game for economic access, political favor, and “special relationships.”   But in 2015, I don’t think Mr. Xi was expecting such a quick return on the investment in his state visit.

Even in 2015, Britain said little about China’s incursions into the South China Sea.  A bit unusual for the country that used to rule the waves, and administered Hong Kong, Malaya, Singapore, Fiji, the Solomon Islands, and many more.  Britain has said little or nothing about Chinese cyberthreats or IP theft.  Britain was one of the first countries to join the Chinese counterpart to the IMF, the Asian Infastructure Investment Bank.  In tourism, entertainment, and education, England has become a premier destination for Chinese. A 2015 story from CNN - London has become a favorite destination for young couples to take wedding photos and Chinese viewers are captivated in the millions by shows like "Sherlock Holmes" and "Downton Abbey" … Affluent Chinese parents are sending their children to British schools after some of the most notable names in British education have established campuses in China.

Since 2012, I have written quite a few recommendations for Chinese student to study for a master’s degree in England, at Nottingham, Sheffield, Birmingham, and Manchester. 

China has a one-third interest in England’s first nuclear power plant in three decades, has substantial investments in the Heathrow and Manchester airports, two premier league soccer clubs, and in London’s tallest building.   The UK has been the top EU destination for foreign investment, and is China’s second largest trade partner in Europe.  Huawei is a top supplier to British Telecom, with apparently no qualms on the British side. In May, 2016,  London was granted the right to do RMB trade closings  and Chinese government bonds can now be issued in London.   The RMB is now included in the IMF basket of currencies used for calculation of special drawing rights, which can be freely traded for currencies of member countries.  Some big Chinese banks, like China Construction Bank and the Bank of China, have adopted London as their European financial center, although that could easily change.  The nuclear plant deal at Hinkley Point will give two state owned Chinese companies a one-third stake in ownership, with Chinese involvement expected in two future nuclear plants, including a Chinese-designed reactor. 

Better for China, and worse for negotiators in Britain, is that China will still want strong relations with the EU and will no longer see England as the easy backdoor to the rest of Europe.  In particular, British based banks and investment firms will be representing only Britain, not the rest of Europe.  With regard to the RMB clearinghouse function, Britain will provide access to a market of 65 million people rather than the EU 500 million people.

As the UK economy deteriorates, so will the value of Chinese investments in England, but so will the ability of Britain to strike hard bargains anywhere.  British companies in China have been optimistic about the fallout from Brexit.  But to the extent their concerns are with IP theft or cyberthreats, internet access, or unequal trade practices, they should not expect much support coming from London.  Britain will become a less expensive country in which to invest, British goods will become cheaper in China, but British companies selling in China will find a tougher road.  The British companies are not known for doing well in heavily competitive markets like China.  Supporters of democracy and free speech in Hong Kong should not expect any more moral support from Britain.

Britain will need trade deals quickly, China will not, and in such a balance England should expect to give a little more on political support for Chinese foreign policies and trade policies, despite the early reticence of Mrs. May to Chinese deals.  China will see a weak Britain, the former colonialist, opium supplier and burner of the Summer Palace (yuanmingyuan, Garden of Perfect Brightness) in 1860.  There will be artifacts from the looting of the Summer Palace that China will want returned, but there will be more important concessions demanded.  China will want Britain as a partner in establishing China as the global standard-setter in media relations, internet availability, business practices, finance, and foreign trade.  China might be able to get a good part of that agenda.

For China, the timing is perfect.  With Europe worried about the nearer threat from the east, in Russia, China may be able to strike better deals in the remaining EU as well.  Even without a firm trade deal, China will be ready to help Britain as much as it is to China’s benefit.  Britain, after all, will be another developing economy in need of assistance, and win-win is always the Chinese mantra in such deals.  Just some wins are more advantageous than others.    

 

 

Reminders of Oppression - Xu Zhiyong

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Bill Markle
Uncategorized
18 October 2018

Reminders of Oppression - Xu Zhiyong

 

The New Citizens Movement was a small affair - a few loosely organized activists campaigning against corruption in China. You know that CCP has experienced a crackdown on corruption since Xi Jinping took power in 2012, so one might think that citizen support would be viewed with favor.  But one must not forget the cardinal rule of authoritarian survival - only the leaders have the truth, only the leaders can determine right and wrong, and no civil society organization that competes with government can be tolerated. 

The New Citizens Movement promoted "constitutionalism," meaning the adherence of government (and CCP) to the sort of principles that are actually in the Chinese Constitution, but ignored by the government at will.   But the use of the term constitutionalism was likely the reason for the opposition within CCP to discussion of what would seem to be an odd, but innocuous request - follow the laws as written.  The New Citizens Movement, active since about 2010, is clearly within the crosshairs of the infamous Document No. 9, promoted in the Spring of 2013 by the CCP General Office.  This is the document - fairly quickly erased from online - that warned CCP members

The activism promoted equal access to education, transparency in exposing the wealth of government officials, and rule of law and democracy.  Remember that it was in 2012 that the New York Times and Bloomberg exposed the extreme family wealth of Xi Jinping and Wen Jiabao, respectively, for which both publications were banned in China. 

Xu was arrested in July of 2013, tried shortly after, and in January of 2014 was given a four year prison sentence for "amassing a crowd to disturb order in a public space." 

https://www.bbc.com/news/world-asia-china-27917234

the wiki https://en.wikipedia.org/wiki/New_Citizens%27_Movement

Xu Zhiyong's statement on the New Citizen's Movement, translated at China Change -

https://chinachange.org/2012/07/11/china-needs-a-new-citizens-movement-xu-zhiyongs-%E8%AE%B8%E5%BF%97%E6%B0%B8-controversial-essay/

One can understand the subversive nature of the movement.  Xu  wrote in 2012 -

The goal of the New Citizens’ Movement is a free China ruled by democracy and law, a just and happy civil society with “freedom, righteousness, love” as the new national spirit.

 

 

 

School's Out

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Bill Markle
Uncategorized
08 October 2018

 

What Chinese are talking about … (2)

The cult of Xi – from the Little Red Book on Mao Zedong thought to the nightly quiz show on Xi Jinping thought

extolling Mao with the little red book; and

extolling Xi with the tv quiz show

Source: https://www.bbc.com/news/blogs-china-blog-45728131

 

As you know, I have some acquaintances from the Chinese government, in several different provinces and in some state owned businesses and universities.  All have pretty good jobs, at mid-level or higher.  A few are moving beyond a middle mid-level, perhaps chu bu ji, to higher reaches ting bu ji, as party leaders in districts or counties or university departments. 

Over the last three years, many expressed concerns about the direction of current Chinese governance, in much the same way that Americans look askance at the machinations of the Republican party and the orange-haired baboon (hat tip to Brad DeLong for the descriptor).  A common theme in China is the return to the fears and terrors of the Cultural Revolution.  Most of my acquaintances were born in that era, and have stories from their parents and families and colleagues.  The disappearances, the arrests now for corruption on actions that until recently were standard operating procedure, the personality cult of Mr. Xi, the demands for ideological purity, the lack of procedural rules that makes accessories to crimes out of officials just doing what they are told to do, the double binds that crop up all too frequently – if I do this thing, it will be illegal;  if I don’t do this thing, my career will be over – all are chilling reminders. 

The new era affects CCP members in their most cherished place – their families and kids. 

Among the recent developments in the last couple of years is passport retention by the Discipline Inspection Bureau for all mid-levels.  Prior to about 2013, Chinese officials going abroad could use either of two passports – a government official passport, which was always held by the Human Resources Department of their workplace, or their own private passport, which individuals retained, as we would do in the US.  Now, even the private passports are being held by the Discipline Inspection Bureau jiwei for some midlevels and above in at least some places.  I am told this policy is active in Hubei Province; not sure where else as of October.  It was not in effect in Zhejiang in June.  And some of my acquaintances – more than a couple – are worried that they might be unable to get out of China in the future.  Travel to the US is much more restricted, and this was the case before the US 2016 election.  Chinese with kids in college in the US no longer get automatic approval to go out to see their kid graduate, notwithstanding the further restrictions on students and their families from the American State Department.

So what to do?  This is not a matter of trying to get illegal gains out of China.  These concerns are being expressed by good public servants who wish to retain options for retirement or school choices for their kids. The government has made it more difficult to move money out of China.  For the past twenty years, that was the safety valve for wealthy families- buy the house in London or Sydney or New York or San Francisco or Vancouver or Seattle, let the wife and kids live there, and at some point, retirement or the need to get out, join them (the US has no extradition treaty with China).  In 2012, Lin Zhe, a professor from the CCP’s Central Party School and a member of the National People’s Congress, said that 1.18 million senior officials’ spouses and children had emigrated between 1995 and 2005.

There are still ways to get money out.  Now, getting the people out is becoming more risky on both ends.  It is reported that senior government officials (perhaps at the provincial vice minister level or higher) will no longer be able to send their children outside China for education.  Secret Order to Bar Children of Senior Officials   China Said to Issue Secret Order Barring Senior Officials’ Children From Studying in US   This article notes that -

At a Senate Committee on Foreign Relations hearing on July 24, Dan Blumenthal, director of Asian studies at the American Enterprise Institute (AEI), recommended that the U.S. government impose visa limitations on the children of the CCP elite as a means of economic pressure.

AEI is a fairly right wing organization, and in normal times there would be no reason to think that its recommendations about visa restrictions would be considered.  However, we are not in normal times.  Good  thing that Xi Mingze was able to get out of Harvard by 2014.

https://images.firstpost.com/wp-content/uploads/2015/02/Xi-daughter-Twitter.jpg

One of the few known pictures of Xi Mingze from her time at Harvard.   Source: https://images.firstpost.com/wp-content/uploads/2015/02/Xi-daughter-Twitter.jpg

 

It is a worry for some smart and thoughtful Chinese officials and business people and academics.   Good thing Canada is still here. 

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