tag:blogger.com,1999:blog-70799141070366514442024-03-13T12:20:50.595-04:00Articles by He Qinglian (何清涟)This blog contains English translation of some of the articles by He Qinglian, not affiliated with the author in anyway.Unknownnoreply@blogger.comBlogger183125tag:blogger.com,1999:blog-7079914107036651444.post-27565072168309029262020-07-31T23:56:00.000-04:002020-08-04T08:06:00.152-04:00Chomskyans' plea:the flame of political correctness now scourged usAnyone with a passing knowledge of the Western Left's current eight-pronged map will be familiar with the name of Noam Chomsky, the great master of the Left. As the intellectual elites of the same age are gradually passing, Chomsky, who has spent his life criticizing the bastion of capitalism, the United States, and destroying this mountainous country, finally ushered in the end of America at the age of 91: in 2020, Wuhan pneumonia sent the U.S. economy into shock, and the BLM movement launched the American Cultural Revolution to erase the American history and destroy the foundations of the U.S. nation. As an "eternal opponent of America," Chomsky will of course join the revolutionary current, but also eagers to point the way, as he did during the Occupy Wall Street movement in 2003.<br />
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Chomsky's lifelong enemy: the United States</div>
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Chomsky has been an enemy of the United States all his life, and all American presidents, no matter who they are, have basically been his enemies. Take the presidents in office in the past 20 years for examples, George W. Bush was a warmonger, and Barrack Obama killed people all over the world. Chomsky therefore expressed his wish that George W. Bush, Barrack Obama and others be arrested and transferred to the International Criminal Court in his lifetime; after having won the election in 2016, Trump became the worst and most evil president in American history in his eyes. Every speech he made since then would inevitably call out Trump as a way to vent his righteous anger. As the Wuhan pneumonia epidemic spreads around the world this year, Noam Chomsky, in self-isolation in Arizona, was<a href="https://internal.diem25.org/events/562" target="_blank"> invited by DiEM25 TV host Srecko Horvat to share his reflections and views on the Wuhan pneumonia crisis</a>.</div>
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Although the whole world knew that the Wuhan pneumonia epidemic originated in China, the country that concealed hand-in-hand with the WHO information about the epidemic and bought out anti-epidemic materials around the world, leading to the spread of Wuhan pneumonia around the globe, Chomsky, having all along labeled the U.S. as the world's "leading terrorist state," continued at this point to bleat out his lifelong irrelevant preaches: the epidemic aside, humanity is also facing a series of more dire threats, such as nuclear war, global warming and the decline of democracy. Interestingly, when asked about his "reflections and observations" on the Wuhan pneumonia crisis, Chomsky said nothing about China, the country where the pneumonia originated, but blamed President Donald Trump's sanctions for the suffering and damage caused to Iran and Cuba (his friendship with Castro is world-famous). At the end of the interview, Chomsky also said that the epidemic had exposed the social and economic problems caused by "neo-liberalism" and that he believed that in the near future many countries would undergo major transformations. --For the Chomskyans, Mises, Hayek and Obama are all part of the "neo-liberal" spectrum and should all be reprimanded.</div>
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It can be said that this recent speech by Chomsky exposed the incompatibility between the Western intellectuals' understanding of the social crisis and the reality. While Chomsky was dreaming that the world would "undergo a major transformation," he found himself the target of the left's "#CancelCulture" campaign. Why did the younger leftists abandon their own great masters? This was caused by the August 22, 2017 interview published in the UK's <i>Independent</i>: "<a href="https://www.independent.co.uk/news/world/americas/noam-chomsky-antifa-us-alt-right-us-state-donald-trump-white-nationalist-a8044526.html" target="_blank">Noam Chomsky: Antifa is a gift to the far right and US state repression</a>." For the Far Lefts, who are currently running amok from Maine to Texas, Chomsky seriously offended the Antifa.</div>
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Chomsky, ever accustomed to others listening to him with reverence all his life, does not dread being a minority, but is very troubled by the betrayal of leftist followers who come after him. From this one can see how intense the depression the nonagenarian is experiencing right now.</div>
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The politically correct Chomskyans care only about their own freedom of speech<br />
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Why can't Chomsky, who has always considered himself a benchmark of political correctness, catch up with the revolutionary trend this time? The story started with the revolutionary bonanza, which has really been the result of years of hard work by the Chomskyans, young and old, summoning the genie out of the bottle.<br />
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Since May 25, the BLM movement has, apart from all the smashing, looting, burning and killing across the United States, identified as its mission to eradicate the history of the United States. A fierce movement of political consolidation has swept through America's arts, education, business and entertainment institutions. Even the <i>Wall Street Journal</i>, which initially applauded the BLM movement, had the audacity to publish an article like "<a href="https://www.wsj.com/articles/americas-jacobin-moment-11592867349" target="_blank">America’s Jacobin Moment</a>". That article stated that the ongoing coerced cultural transformation could wipe out whatever is left of American civic culture and undermine centuries of social development in the United States "because of its revolutionary ideological fervor and casual judgment. While the guillotine is not used, the impulse is the same and will destroy the careers, livelihoods and reputations of many individuals". Many university professors, company executives and employees have been called out to the institutions for which they work because of their remarks that the BLM and the leftists consider politically incorrect. Those people have been forced to apologize and have their jobs suspended in minor cases or lose their jobs altogether in worse cases.<br />
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In addition to Democratic state governments supporting the BLM's drive to defund the police, college campuses have come under the terror of political correctness, with many professors being called out at their institutions for politically incorrect statements and, at the demand of the BLM, have their tenure terminated by the school management, or are suspended from teaching and forced to apologize in public.<br />
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The Twitter account @SpeechUnion listed hundreds of examples of people who have lost their jobs, or suffered censorship, for violating political correctness taboos. <a href="https://unherd.com/thepost/liked-tweets-nearly-cost-me-my-university-job/" target="_blank">One of the most absurd examples </a>was what happened to Dr Mike McCulloch, a geography lecturer at Plymouth University. An anonymous source sent Plymouth University a list of tweets the lecturer had "liked" in a 24-hour period, including "All lives matter", "Gender is scientifically valid", and objection to mass immigration. This wanton destruction of free speech in the name of political correctness is something Chomsky turns a blind eye to. For the freedom of speech he has in mind is the protection of politically correct speech, not the protection of speech that contradicts the principles of political correctness, as his words and deeds have repeatedly proven over the years.<br />
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As a minority scholar in many fields as well as a prominent public intellectual, Chomsky somehow still understands the value of free speech. A person who has hated the United States all his life, ever the unforgiving critic of it, and has maintained friendships with Castro and other socialist dictators, Chomsky nevertheless still resides in the United States. When asked why he remains in the States, Chomsky explained, "There's no point in comparing countries in general, and I wouldn't compare them that way. But the United States has some achievements that are worthy of admiration, especially the leading position in free speech that it achieved with efforts made over the centuries."<br />
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It is true that the U.S. comes first in the world in legislative protection of the freedom of speech. However, the protection of free speech in the United States is not about protecting correct speech, but about protecting the rights of everyone to freely saying what they think, including incorrect views. This has been made evident by various jurisprudence on the freedom of speech. It was this protection that Chomsky enjoyed back then that enabled him to criticize as an anarchist minority everything the US government did and defend the Khmer Rouge. It could be argued that without the freedom of speech protected by the U.S. Constitution and its First Amendment, there would not be figures like Chomsky in the United States. But the leftist camp, of which Chomsky is a leading figure, has caused harm to many people or even have them fired from their jobs in recent years due to its increasingly authoritarian tendencies to restrict free speech, a drive emerged from the surging tides of political correctness.<br />
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Chomsky, a leading figure in the leftist camp, sees himself as the embodiment of political correctness, unharmed for the moment, and certainly would not exercise self-discipline.<br />
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In August 2017, during an interview by the UK's <i>Independent</i>, Chomsky made critical comments about the violence of the then-growing Antifa group. Those comments were included by the interviewer in the aforementioned article. Although Chomsky did not criticize the actions of the terrorist group per se, he did say something about the tactics of the leftist movement, arguing that Antifa's violence would give the right wing and the U.S. government a reason to repress, and that was actually a voice of disappointment, And although he pointed out in the interview that the accusation President Trump made about Antifa being a "bad guy" would cause society to become unduly uneasy with and wary of the group, BLM members took that as criticism to the Antifa all the same and for them, both Antifa and BLM are divine bodies that must not be criticized. So, this year, as the BLM revolution enters the climax of its history of reckoning, Chomsky will have to pay the price for his "historical mistakes".<br />
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Chomsky, the self-proclaimed embodiment of political correctness, finally had his hair and beard burned by the flames of political correctness, which made him see one thing clearly: the "beautiful new world" to be built by BLM, a Marxist organization, will probably not have a place for him. His situation is shared by a number of leftist intellectuals, such as J.K Rowling, author of the Harry Potter series, a politically correct woman who was put on the #CancelCulture boycott list in June for writing the phrase "only women can menstruate". Her works have been asked to be removed from the shelves. Cultural celebrities, including writers, scholars, professors, pop singers, musicians, as well as entertainers, who were considered by BLM and other leftist revolutionaries to have made "politically incorrect" remarks were placed on the list and subjected to severe criticism and boycotts, which included writing open and anonymous letters to the institutions in which they worked, calling for their dismissal, or the removal of their works from the shelves.<br />
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In the face of the cultural terror of #CancelCulture, a group of leftist writers, scholars, and professors, who had long ago put aside the conservative motto on safeguarding free speech -- "I don't agree with you, but I will defend your right to speak" -- could no longer sit still. After more than 40 days of sitting on the sidelines and even supporting the cultural terror,<a href="https://harpers.org/a-letter-on-justice-and-open-debate/" target="_blank">Chomsky, Fukuyama, Ms. Rowling, and more than 150 others issued a joint-signature open letter on July 10</a>.<br />
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Why did this letter displease both left and right?</div>
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At the time of writing this letter, these cultural celebrities did not reflect on the fact that the fire of "political correctness" that was burning them was the result of their years of hard work. They didn't think it was wrong to erase history and stifle people who have different views, but rather begged for forgiveness and let the extreme leftists consider their interdependence as comrades-in-arms, letting them off the hook and pointing their guns at right-wing forces like Donald Trump. Out of all the celebrities involved, why did I single out Chomsky for my analysis? Because the letter bore indelible traces of Chomsky: it still asked the left camp not to give the right a reason to oppose them by overreaching, in line with what he said in an August 2017 interview by the UK's <i>Independent</i>.<br />
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The letter maintained the usual grandiosity of the left's discourse. It began by highly affirming a number of BLM programmatic demands, including anti-racism and defund the police (on the reality of these two, I've already written an analysis in "Shattering the old world and creating a new one -- The American Cultural Revolution Underway"), and then delineated an enemy camp. The right wing, represented by Trump, is the enemy and a real threat to democracy; the left wing of higher education, journalism, philanthropy, and show business are friends. The right to freedom of expression of them - the enemy - is still treated as nothing, and this open letter addresses only one internal issue: "resistance must not be allowed to harden into its own brand of dogma or coercion" to go after friendly forces of the same camp, for "right-wing demagogues are already exploiting [this]". And then again: "the democratic inclusion we want can be achieved only if we speak out against the intolerant climate that has set in on all sides", and "we refuse any false choice between justice and freedom, which cannot exist without each other." And finally, a confession: "As writers we need a culture that leaves us room for experimentation, risk taking, and even mistakes" - meaning: the battle with figures of right-wing camps, with Trump included, is on, and we are comrades in arms who can't do without each other, so stop blaming each other. We would not judge you for what you do, and we ask you not to take your aims at us, even though you see mistakes in our actions and we see the same in yours.<br />
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The letter also included the following passage: "While we have come to expect this on the radical right, censoriousness is also spreading more widely in our culture: an intolerance of opposing views, a vogue for public shaming and ostracism, and the tendency to dissolve complex policy issues in a blinding moral certainty."<br />
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The conservatives, identified by the letter as the enemies and are accused of exploiting the absurd behavior of the far left, would certainly not make a fool of themselves to like that letter. But the left equally disliked the letter, lambasting it relentlessly, with many claiming it was an expression of decadent elitism. Erin Biba, who labeled herself a "freelance journalist and fact-checker," said, "imagine the enormous advantage of a channel and the audience they all have to use this collective platform - the ability to be able to speak out and be heard. -they use it ... to whine and the internet holds them accountable for their words." DC Sentinel reporter Sam Sacks said, "Look at who signed this letter and you could deduce that it's more about the wealthy elites of the industry who don't want to suffer the consequences of their past (and current) work as war criminal propagandists."<br />
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The giant net over the heads of the Leftists in the Ivory Tower was woven by themselves<br />
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That the United States would have come to this today does not make me feel surprised at all. At least, I already understood in 2016 that this would be the fate of the United States. The is the fate ushered in collectively by the left-wing professors who monopolize the American university podiums--Chomskyans, young and old. In 1987, Alan Bloom wrote in his best-selling book <i>The Closing of The American Mind </i>a forewarning that the American higher education would be failing the American political system because it fosters a left-wing, anti-free-speech mentality and goes great length to achieve the uniformity of thought.<br />
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As leftist professors marginalize conservatives at universities and use their academic positions to employ various censorship to ban dissenting voices, the younger generation feels that freedom of speech need not exist at all. The findings of the Washington-based Victims of Communism Memorial Foundation for three consecutive years from 2016-2018 show that <a href="https://www.voachinese.com/a/communism-20181108/4651122.html" target="_blank">half of millennial believe that freedom of speech should be restricted</a>.<br />
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Although Professor Chomsky is already 91, it is nonetheless my wish that he would spend his remaining years thinking over the following question: the America that he hates has made him what he is, it embraced everything he said and did, afforded him fame and status, allowed him the freedom to make friends with dictators around the world, and become the biggest institutional arbiter of the modern era snaking around the capitalist and socialist systems. Now, the "brave new world" he has been calling hard for over the years has finally arrived, but there would be no room for his not-so-sharp criticism. I would like to urge Professor Chomsky, as a critical thinker, to ask himself: Which world is the one that is truly worth his pursuit?</div>
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Source Article: <a href="http://yangl3.sg-host.com/2020/07/22/noam-chomsky-political-correct/" target="_blank">乔姆斯基们的告饶:政治正确的熊熊烈火烧着了我</a></div>
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Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-63396250009571046682020-06-14T00:33:00.002-04:002020-06-14T18:45:16.090-04:00Shattering the old world and creating a new one-- The American Cultural Revolution Underway<br />
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I lived through the Cultural Revolution in both China and the US <br />
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The Chinese have long feared the return of the Cultural Revolution, but few thought it would be reborn in America. As a Chinese intellectual who has experienced the scourge of the Left in China and understands the increasingly extreme leftist culture in the United States, it was not long before Barack Obama's "The Cultural Revolution" began to take hold in America. I found, back in the early days of the Obama administration, that the leftist culture in the United States shares the same DNA as that of the Cultural Revolution in China. For example, the Leftist culture would, in order to reconstruct historical memory, trumpet the deconstruction of history, and initiate the process of dismantling historical monuments and rewriting the historical status of Jefferson and General Lee by standards of identity (e.g., slave-ownership). These are not dissimilar to the Chinese Cultural Revolution terms of destroying the Four Olds and dismantling the historical relics. A number of individuals who are familiar with the Cultural Revolution in China are calling it the American Cultural Revolution, and if you are interested, you can read "<a href="http://blog.creaders.net/u/3027/201708/299469.html" target="_blank">Report on the American Cultural Revolution Movement (Chinese only)</a>", an article that documents the feats of the American Cultural Revolution In the United States not reported by the mainstream media and unbeknownst to the majority of the general public.<br />
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The most important effect of Sanders' two candidacies is the de-homogenization of communism (socialism). As a result, this year, since the beginning of the Floyd protests on May 25, the Cultural Revolution, which had been a minor event, has been presenting itself in a very disturbing manner. The scene has unfolded in such a way that Americans are worried about losing control and the Chinese are very surprised. But I have written for several years that American politics was bound to come to this day. If we look at it from the perspective of globalization, ever since Secretary of State Dulles said that he wanted a peaceful evolution of the socialist countries, Since the revolutions of 1989 (dubbed Su-Dong-Bo, first characters of the Chinese translation for the Soviet Union, Eastern Europe, and the Chinese word for waves)", a series of events took place: from the so-called color revolutions to the revival of socialist ideas in Europe and the United States, and finally to the devouring (albeit to different extents) of Europe and the United States by their respective home-grown Leftist movement. This is a huge research topic in itself, and the lessons to be learnt in the process are not unimportant.<br />
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From the age of ten, I experienced the Cultural Revolution in China. On several occasions I could only watch helplessly as possessions were taken after Red Guards raided my home. I also saw with my own eyes the dismantling of the Four Olds, <a href="https://en.wikipedia.org/wiki/Struggle_session" target="_blank">the struggle sessions</a>, the "enemies of the people" <a href="https://en.wikipedia.org/wiki/Cultural_Revolution" target="_blank">got paraded through the streets</a>, the <a href="https://en.wikipedia.org/wiki/Violent_Struggle" target="_blank">factional conflicts</a>, and mass killings. Having seen all those, I find it necessary to compare the identical trait of the Cultural Revolution in China and that of the United States. Scholars in China and elsewhere are of the unanimous proposition that such catastrophic events as the Cultural Revolution could only happen in China, but I could see from the Cultural Revolution in China and the US version that the two share the same root. Both originated from the Marxist theory of violent revolution: smash the old world (capitalism) and create a new one. The difference was that the Cultural Revolution in China was initiated from the top by Mao Zedong with his power as the country's supreme leader; the Cultural Revolution in the United States, on the other hand, is a bottom-up spontaneous movement kick-started by the people after years of indoctrination. The democrats, in whichever states under their control, are fanning the flames.<br />
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Dismantling the Existing Law and Order<br />
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Here, it is necessary to introduce the classic Marxian theory that the proletariat must smash the old state apparatus. According to the Marxist (Leninist) interpretation, the state is the instrument by which one class rules over another. The implication is that the ruling class must establish a set of laws, institutions, and executive agencies, and only with these can the dominion be realized. The army, the police, the courts, the prisons and other organs of the dictatorship were all important components of the state apparatus. Therefore, the first step of a proletarian revolution would be to smash the old state apparatus and build a new one under its own control.<br />
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Mao Zedong deeply understood the essence of this theory and conveyed it in words that Chinese peasants (the basis of the Chinese Communist revolution) could grasp: "The Marxism, sophisticated as it is, can be boiled down to one sentence: to rebel is justified. For thousands of years, it has been said that oppression is justified, exploitation is justified, and rebellion is not. Since the advent of Marxism, this old saying has been turned on its head, and this is a great achievement, for the proletariat has learned this truth from the struggle. As Marx concluded. According to this reasoning, we should resist, we should struggle, we should engage in socialism.<br />
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Mao Zedong initiated the Cultural Revolution, with one of the aims being to "smash the old world and create a new one". However, if one look deeper one would see that Mao was driven equally by his ideological needs and his real politics needs. He was dissatisfied with the Soviet-style political order he had created, but more importantly, he wanted to eliminate his political enemies. As a result of Mao's Great Leap Forward blunder, the Chinese were plunged into a three-year famine that killed 35 million (or 40 million) people. Mao was forced to step down to the second tier, while pragmatists like Liu Shaoqi took over the administration, and was rising to the prominence in the party - when I was in primary school, Liu's portrait was displayed alongside that of Mao as leaders. As a person who wanted nothing less than absolute personal authority, Mao found this too much to stomach and Liu must be removed. To do this, Mao could not rely on the system of government that were taken over and operated by Liu Shaoqi (the most important of which were, of course, the public security bureau, the procuratorate, and the courts), he summoned the Red Guards instead. And during the Cultural Revolution, the Red Guards were ordered to revolt, and their first major political move was to smash the offices of the Public Security Bureau, the procuratorate, and the courts, which maintained the existing order. Only after this could the Red Guards capture Mao's most hated political enemies and parade them through the streets, criticizing, humiliating and punishing them at will. <br />
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In the protests over Floyd's death in the United States, the dismantling of existing law and order became the main demand of those who were secretly manipulating the movement.<br />
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Defund the police: the way the American Cultural Revolution does away with the police, the prosecutors and the courts.<br />
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Almost all protesters in major cities are trumpeting the slogan "Defund the police". Beginning on May 25, protests have been held in dozens of U.S. cities, with riots and violent robberies occurring everywhere. Brand name stores, gold shops, and hotels are all targets of robbery and vandalism, with shops being robbed, cars burned, and buildings vandalized. According to U.S. media reports, the riots in Minnesota have spread to more than 70 cities across the U.S. In response to the demonstrations, at least eight states, as well as Washington, D.C., have mobilized the National Guards, curfews were imposed in more than 40 cities. The beating, smashing and looting of the Chinese Cultural Revolution are being repeated in the American Cultural Revolution.<br />
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Strangely enough, the places with the most vandalism and violence are mostly governed by Democrats: New York. Chicago, Detroit, Los Angeles, Atlanta, and the likes. The vast majority of these cities have, over the years, been on the list of the top 10 most crime-ridden cities in America, and the police there is a high-risk profession. It is only through the efforts of the police officers that these cities have not become complete "crime havens". But it is from these crime-ridden cities that calls for defunding the police emerge, and many states are prepared to do the same. What are the reasons for removing the barriers to public safety, which is beautifully called police reform?<br />
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This "reform" is directly related to the public appeal made by former President Barack Obama.<br />
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Obama enjoys "Changing" the U.S.<br />
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The police know from where the wind is blowing, and Milwaukee County Sheriff David Clark has made no secret of it: Obama <a href="https://twitter.com/paulsperry_/status/1267884247119015936" target="_blank">deliberately instigated this war on police officers</a>.<br />
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Clark did not wrong Obama. On June 1, as memorial services for Floyd are held, and protests and marches escalate across the U.S., former President Barack Obama, published on the Medium a letter to the protesters of the nation, titled "<a href="https://medium.com/@BarackObama/how-to-make-this-moment-the-turning-point-for-real-change-9fa209806067" target="_blank">How to Make this Moment the Turning Point for Real Change</a>" in which it says, "it’s going to be up to a new generation of activists to shape strategies that best fit the times". In a departure from his previous rhetorical speeches, he points to a specific direction for reform: the recurring racial bias in the U.S. criminal justice system. In addition to reform through protests and elections, the focus is on reforming the police department and the criminal justice system, and the most important entry point is at the state and local levels.<br />
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It was with the advantage of his skin color and the slogan "change" that Barack Obama managed to garner the votes from all the blacks and young people dissatisfied with the realities of their lives and determined to do away with the US capitalist system. As has been summed up, former president Obama is one of those rare individuals of the past few decades who, in addition to high I.Q. and E.Q., has the protections of the correct skin color and political correctness. <br />
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In his first term in office, Obama was quite cautious and exercised some level of restraint. In the final two years of his second term, however, he stuck at nothing, from decriminalizing drugs to promulgating the absurd order of setting up all-gender toilets. Some of his dozen or so political legacies that changed America have been repealed or undone by Trump, but a few of them are seriously affecting America today. For example, the promotion of skin politics for an increase the influence of a particular group of people resulted in race relations being torn apart and social stability undermined; the introduction of large numbers of illegal immigrants would secure votes for the Democrats for decades to come; and the decriminalization of drugs that connived at teenagers seeking indulgence has turned them into another group of staunch voters for the Democrats.<br />
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Although Obama is now out of office, he wants to undermine the very foundation of American society, the federal system. Clark's comment rang true. But this time, the fact that the police system alone is being targeted, while the local judicial and administrative systems left untouched, shows the movement to be one that has been carefully calculated so the two systems would not intervene.<br />
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Concrete actions taken in each state to defund the police <br />
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Minneapolis, the capital of Minnesota, where the Floyd incident
occurred, has seen multiple incidents of smashing and looting a few days before the protests. On 7 June, the Minneapolis City Council, despite the public opposition of Mayor Jacob Frey, decided with a majority vote (9 to 4) to disband the Minneapolis Police Force, which has been "widely criticized for racism" and set up a new model of public safety system: Community Joint Defense. The
council has 13 seats, 12 from the Democratic–Farmer–Labor Party (a subsidiary of the
Democratic Party) and 1 from the Green Party.<br />
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leftist council members, with their confused mind, simply fail to see <a href="https://www.wsj.com/articles/defund-police-watch-crime-return-11591658454" target="_blank">the status quo</a> in
the city they serve: from January to May 30, the car hijacking rate increased by 45%, the homicide rate increased by
60%, and the arson cases increased by 58% The theft rate rose by 28%.
Compared with the lowest point in 2018, violent crimes are 16% higher
overall and property crimes are 20% higher.<br />
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It's a different story for Chicago, known all along as "the crime city." Despite the
fact that<a href="https://twitter.com/RyanAFournier/status/1270029309282058240" target="_blank"> 92 people were shot in the first week of June, with 27 of them dead</a>, the mayor decided to disband the police force, a council
member objected by pointing out that [Chicago] cannot just look to the police to keep
order, the presence of just over 370 national guards is not
enough. Instead of relying on good-faith people to react to looters and rioters going into the neighborhood at
nigh, a better plan would be needed. That remark was <a href="https://twitter.com/TheSharpEdge1/status/1270375422891405315" target="_blank">brusquely dismissed by the mayor</a>.<br />
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New York City Mayor Bill de Blasio also agreed to consider disbanding the police force, but<a href="https://www.worldjournal.com/6983776/article-%E7%B4%90%E7%B4%84%E5%B8%826%E6%25%209C%88%E7%AC%AC%E4%B8%80%E5%91%A8%E6%A7%8D%E6%93%8A%E6%A1%88%E3%80%81%E8%AC%25%2080%E6%AE%BA%E6%A1%88%E7%8C%9B%E5%A2%9E-%E9%81%942015%E5%B9%B4%E9%AB%98%E5%B3%B0%20/" target="_blank"> a new report released by the New York City Police Department</a> made him hesitate. The report cites the fact that between June 1 and the night of June 7, there were 13 murders and 40 shootings in the city. That compares to just five murders and 24 shootings during the same period in 2019, the most in a week since 2015.<br />
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These do not include the "handful of riots" in the demonstrations, just the nightly community policing. De Blasio needs to take into account <a href="https://www.wsj.com/articles/defund-police-watch-crime-return-11591658454" target="_blank">another set of data</a> from the NYPD: from January to May of this year, shootings in New York City increased by 18 percent, burglary cases increased by 31 percent and carjackings up by 64 percent. Compared to the same period last year, the number of thefts in the first five months of this year has increased by about 1,279, the number of stolen vehicles has increased by 1,078, and the number of victims in shootings increased by 57. Most of these cases occurred outside of Manhattan's business district. The high risk posed by the disbanding the police has forced de Blasio to opt for a tone lower than that of Minneapolis when he <a href="https://www.cbsnews.com/news/nypd-nyc-funding-social-services-mayor-de-blasio/" target="_blank">responded</a> to calls for defunding the police. He announced that a yet undecided amount of money will be diverted from the police budget and spent on youth and social services in communities of color.<br />
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Police in Democratic states withdraws, violence rages.<br />
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In this crazy Cultural Revolution orgy, normal police enforcement was treated as violence against the public, while real violence rages. A group of rappers, transsexuals, and homeless people have taken over seven city blocks in Seattle, and proclaimed the creation a self-governing kingdom. After the food was stolen by the homeless, one of the founders tweeted that he wanted to commit suicide and asked the community to provide food, only vegan food, for the autonomous zone to remain operational. The police had to go in the police-no-go zone, do a round of patrol, and said if violence broke out, call 911 and then left.<br />
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<span class="tlid-translation translation" lang="en"><span class="" title="">Although the US Democratic presidential candidate Biden has been adjusting his position and moving closer to Far Left for support, he senses the inappropriateness in this matter. On the evening of the 8th, he stated that while he supports police reform, he opposes defunding the police.</span></span><br />
<span class="tlid-translation translation" lang="en"><span class="" title=""> </span></span> <br />
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Although responses to the leftist protesters' slogan of "defund the police" in left-leaning states have been positive to a varying degrees, all sides of society questioned whether the slogan had gone too far. Let alone the fact that the slogan was condemned by the Republican Party as "radical left-leaning," a <a href="https://www.rasmussenreports.com/public_content/politics/current_events/social_issues/most_reject_calls_for_defunding_police" target="_blank">Rasmussen poll</a> on June 9 showed that only Twenty-seven percent of Americans favored reducing the budget for police officers in the communities where they live, while fifty nine percent opposed cutting the budget for local police officers, and fourteen percent remained undecided. Sixty-seven percent of respondents believed local police officers are performing well or excellently. Respondents agreed that blacks being treated unfairly by police is a problem, but discrimination against police officers, reaching an all-time high, presents a bigger issue than crime within the city.<br />
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Democratic states have paid no attention to the social disorder in their states, except to blame it on racial discrimination, and recently invented ways of appeasement have begun to be used: From Kneeling, washing the feet of blacks in the streets, kneeling and kissing the shoes of the blacks, to joining these people to tear down historical monuments, with no intention to stop them. The US constitutionalism, based upon the rule of law, has finally shown the world the true state of its serious decline. The dirt and filth that the Democrats have been concealing for years to garner votes are also exposed in broad daylight. Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-40487806626304703162019-12-24T22:24:00.000-05:002019-12-24T22:24:31.704-05:00Agreement reached, fruit of victory for the USAfter 19 months of talks and quarrels, the phase one of the agreement between China and the US is about be materialized. Judging from the text, both sides have made concessions. The US got its way regarding intellectual property rights and lowering trade deficit; China secured the cancellation of some of the tariffs imposed. From the perspective of the respective needs of both sides, Xi Jinping got a breather in alleviating domestic economic pressure; Trump got to free his hands to focus on the general election in 2020. Only two groups of people felt particularly dissatisfied with the deal. One group being the people do not want to see Trump reelected. Paul Krugman for one wrote a piece for the New York Times on December 17, insisting that Trump lost in this trade war. The other group being the opposition camp in China, a camp that wished Trump to directly bring about the collapse of the Communist party by means of the trade war. These two groups people had basically disregarded the fact that the fruit of victory for the US lay not in such trivial matters as tariffs but in forcing the Communist Party to revert from the aggressive mode back to the defensive mode. <br />
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The fruits of victory for the US came from three directions.<br />
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Firstly, China switched from expansionist mode back to contraction <br />
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China`s expansionist approach chiefly manifested itself in economic expansion, and the primary indicator for this was its investment in other countries. Back in 2017, China was still envisioning the creation of a “circle of friends” spanning across Europe and Asia after the implementation of the Belt and Road Initiative. Chinese media outlets ran numerous reports on BRI, stating that the “circle of friends” would encompass 65 countries along the overland economic Belt and the maritime Silk Road; involve 4.6 billion people, or 60% of the world`s total population; and account for about 30% of the total of GDP of the world. <br />
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After the trade war started in March 2018, China`s investment in other countries markedly decreased. According to data from AEI China Global Investment Tracker, China`s investment in other countries was 165.7 billion in 2016 and peaked at 175.9 billion in 2017. The figure dropped sharply afterward. In 2018, this figure fell to 112.4 billion. In the first half of 2019, China`s investment and construction projects around the world valued 27.5 billion, which was a whopping 50% decrease from the figure of the same period in 2018. Analysis estimated that this downward trend would very likely remain unchanged for the next few years.<br />
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At different times, the drop in China`s investment in other countries was caused by different reasons. Initially it was because China implemented capital control to prevent forex reserves from shrinking. Then in the second half of 2018, China`s investment in other countries decelerated as the trade tension between China and the US escalated. Currently the majority of China`s forex reserves came from the trade surplus from the US. If the surplus got threatened, whether by the tariff imposed by the US or by purchasing more US products in accordance with the agreement reached with the US, the money China could use in overseas acquisition and merger or BRI projects would be reduced. In the first half of 2019, the majority of the international investment sector believed that foreign investment from China dropped was caused by the increasing wariness of technology transfer to China and more and more countries were setting restrictions on investment from China.<br />
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Secondly, with the globe`s industry chain restructured, China pasted its peak in terms of trading.<br />
Foreign capitals were already in the process of gradually leaving China, and, as I pointed out in my article in September 2018, the trade war between US and China sped this up. This article would only focus on the obvious consequence of industry chain restructure: China is no longer the number one exporter of the world. As Maarten-Jan Bakkum, NN Investment Partners` senior strategic analyist for emerging markets, put it, the shift could be the forerunner of the passing of peak China. According to data from the IMF, in the first half of 2018, China`s export to 174 countries was greater than the US, which was the biggest exporter to 51 countries only. In the first of this year, however, the US regained its position as the world`s largest exporter, China`s position as a major exporter, held throughout the last two decades, was dealt with a blow.<br />
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This is a significant victory for the US. Ever since China`s accession to the WTO, the US had been slowly losing its grip on the status of the world`s largest trading power, and its trade deficit grew through the years. A major goal of president Trump`s trade war has been to reduce trade deficit to China. Although China has been stalling in becoming a signatory of a deal, the US managed, with the pressure created by the trade war, to make foreign investment leave China. All of the top ten export entities of China were foreign companies, four from Taiwan. Even if China signed the deal now, it had no means to lure back these foreign enterprises.<br />
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Thirdly, regarding intellectual property, the US put an end to the stealing project of China`s “Thousand Talents” and aroused the world`s guard against China.<br />
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The intellectual property has been a tough spot in US-China relations. However, with the “anti espionage campaign”, the US severed the long arm of “Thousand Talents” that stole intellectual property of the US. Since the Chinese government approved the implementation of “Thousand Talents” at the end of 2008, over 7,000 scientists joined in. Many of these scientists worked at state research agencies such as National Institutes of Health、National Science Foundation and Office of Science, DOE. Through a series of actions, the US forced China to abandon its “Made in China 2025” project in 2019. Shortly after that, though, a new company with 21 billion US dollar capital was quietly set up to invest in new materials, next generation of information technologies and electrical devices and the top 10 cutting-edge industries listed in “Made in China 2025”.<br />
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Nonetheless, since China could no longer directly take away the end results of researches of the US, the industry level-up process would lose its momentum a few years from now and become increasingly unpredictable, after the existing “fruits” have all been digested to fuel rapid developments.<br />
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The exposure of Chinese espionage by the US made one Western country after another take up measures guarding against China. In February 2019, Germany announced its National Industry Strategy 2030. In a speech by Peter Altmaier, Federal Minister for Economic Affairs and Energy, the wariness of China in this strategy had been clearly manifested. Some commentators even held the view that the strategy emerged because Germany dreaded the possibility of China buying up all its industries.<br />
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China`s image rapidly slide from positive to negative<br />
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While the US engaged China in the trade war, it released numerous investigation reports about China`s espionage and infiltration activities in the US. These, added by China`s going back on its promises, self-contradictory self defense and actions in the course of the trade war, caused the world to rapidly and markedly change its perception of the Chinese communist government.<br />
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In 2005, China claimed to the outside world that its rise would be “peaceful.” From that year, Pew Research Center has been conducting a survey once every year to track the changes in Americans` perception of China. In the first year of this survey, only 35% of respondents did not find China a favorable country. This percentage grew through the years. In August 2016, 47% of respondents did not find China favorable. In August this year, up to 60% of respondents did not find China favorable, the highest in the last 14 years. As for China`s economic development, 41% of respondents considered that a bad thing. In general, the respondents were of the view China poses a greater military threat than it does economic threat. 81% of the people surveyed considered China`s military development and its reach in the Pacific, Indian Ocean and the Middle East region a bad thing.<br />
The survey finding also showed that, compared with the Democrats, the Republicans had a more negative view of China, and were more wary of China`s military prowess.<br />
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For people of the view that the above survey has been limited to the US and does not represent the sentiments in other countries, another <a href="https://www.pewresearch.org/fact-tank/2019/12/05/people-around-the-globe-are-divided-in-their-opinions-of-china/" target="_blank">survey</a> conducted by Pew Research Center in 34 countries in 2019 showed the perception of China has changed from positive to negative around the world should present a different perspective. In the six Asia-Pacific countries where the survey took place, 45% of the respondents did not feel confident in Xi Jinping about international affairs, only 29% of the respondents felt otherwise. This negative view is most eminent in the following countries: 81% of respondents in Japan, 74% in South Korea, and 54% in Australia held negative view on Xi Jinping.<br />
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In this survey, 79% of the respondents in the Asia-Pacific region considered the growth in China`s military strength a bad thing. In Japan and South Korea, the percentage even reached 90%. In African countries such as Nigeria and Kenya, the majority thought they could benefit from China`s military strength, though.<br />
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Trump`s accomplishment: cleared away the political taboo about China<br />
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As this article is winding up, I find it necessary to mention the contribution President Trump made in clearing away the political taboo about China.<br />
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After Zheng bijian published his article `<a href="https://www.foreignaffairs.com/articles/asia/2005-09-01/chinas-peaceful-rise-great-power-status" target="_blank">China`s “Peaceful Rise” to Great-Power Status in Foreign Affair</a> (Sept-Oct issue, 2005), the whole world (in particular France, Germany, and the anti-US camp) was eager to see the rise of Communist China; and in the US, the panda huggers dominated China policy, whoever criticized the Communist Party were in their eyes smearing China.<br />
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China became a new hegemon on par with the US. Even Barack Obama told the Americans in <a href="https://www.theatlantic.com/magazine/archive/2016/04/the-obama-doctrine/471525/" target="_blank">an interview by the Atlantic</a> a year before he left office that "we have more to fear from a weakened, threatened China than a successful, rising China". Because of this, the China model, based on predatory environment plundering and low human right standards, got commended by many scholars in the West; it even became the untouchable political correctness issue in the China study circle.<br />
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Through the trade war, and the exposure of all the bad things the Chinese government has been doing, President Trump finally cleared away the political taboo about China, and raised reasonable doubts regarding US China policy in the last 30 years. All these successfully curbed China`s outward political-economic expansion and forced China to be on the defensive.<br />
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Although President Trump has not yet achieve his goals of reducing trade deficit and forcing China to completely relinquish “Made in China 2025”, the facts listed in this article fully demonstrated that China`s offensive approach in the international politico-economic system has ended and it is forced to be on the defensive from now. Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-2670081079243850372019-08-24T21:34:00.002-04:002019-08-24T21:34:35.098-04:00 The origin of the Hong Kong problem and the way for a win-win solution This article, if published before the August 18 peaceful march, would doubtlessly be criticized by people from all sides. And in fact, even today, I do not expect it to draw no criticism. Nonetheless, I hope that the people who read this post would think calmly over my reasoning. After all, the protest movement that has been on going for a few months, with the people of Hong Kong shedding sweat and even blood on the streets, should bear fruits that are conducive to both sides. This should be the best result that can be hoped for. <br />
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How it all started? <br />
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Hong Kong’s decline can be traced back to its losing the status as one of the four little dragons of Asia. <br />
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This anti-ELAB movement has a very specific target, the amendment bill. However, it draws momentum not just from the bill; it is in fact a full scale eruption of the feelings of loss and anguish that the people of the city have been building up for years, after the setback of the Occupy-Central movement. <br />
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Only those who witnessed first hand Hong Kong’s economic takeoff in the 1980s can make sense of the origin of the anxiety and the sense of loss of Hongkongers. The four little dragons was a legend of East Asia. From the perspective of China back when it just implemented the Reform and Opening-up policy, Hong Kong, Taiwan, South Korea and Singapore are the symbol of wealth and modernization, the economic models that China could learn from. However, since the 1990s, capitals around the globe moved to China and the 500 biggest multinationals started doing business directly in the country, the four little dragons gradually lost their glory, and it was Hong Kong that suffered the worst in this process. The reason was simple: Hong Kong’s prosperity was the result of China closing its door to the outside world during Mao era. At that time, China needed Hong Kong to be its bridge to the rest of the globe, to serve as a transit port of re-exportation and even as a gateway to information of the outside world. After China’s official accession to the WTO in 2001, the only key irreplaceable function that Hong Kong still managed to keep has been its financial service. Most of the younger generations of the residents of the city were born around the turn of the millennium. Given that 2001 was only four years away from 1997, the 1997 handover has been by-and-large deemed as the starting point of Hong Kong’s decline. <br />
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Objectively speaking, it wasn’t just Hong Kong that lost the glory of being one the four little dragons. All four of them experienced boom between 1980s and 1990s, and they each had troubles of their own, the things in common were economic slowdown and low employment; the political problems they face, though, were different between one another. Taiwan is facing the pressure of red infiltration from mainland China, and the demand for unification with the other side of the Taiwan Strait; as for Hong Kong, young people are facing issues like high unemployment rate, limited room for upward mobility, staggering housing price. All this eventually fueled the anger toward Beijing (mainland China). In South Korea, the issues they have are all about the economy, the younger generations, seeing no channel to vent their frustrations, are taking it all out they become anti-government. <br />
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Youth unemployment, a global phenomenon <br />
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That the room for speech is squeezed and the freedom of the press gradually stripped are the results of Beijing and the city’s tycoons joining hands in running media (see my book in Chinese about Chinese media’s global expansion for an in-depth look); that Hong Kong’s rule of law is being eroded is the result of accomplices between Beijing and the city’s pro-establishment camp. The one issue that has been troubling Hong Kong even before the handover is the high property price. At the moment, housing price in Hong Kong is the second highest in world. It is very difficult to live in Hong Kong. The middle class, working hard all their lives are still struggling to have a flat of their own. As many as 200,000 people are reportedly living in ‘cage homes’ or other tiny space dwelling. <br />
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Look around the world, a lot of governments lost the hearts of the younger generations because of high unemployment rate and the clogging of the upward mobility channel. Nowhere is this issue stirring up more frustrations than in the developing countries. However, the difference in the political systems of those countries means that each country has its own set of precise reasons of losing of younger generations, and thus the protest directions of the young in each of the countries have been different. <br />
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Among the MENA countries, the young started the Arab Spring. The movement ended up making many of those countries worse off than before the revolution, as the book by Robert Worth pointed out. <br />
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Among the developed countries in Europe and the America, the young reject capitalism and turn to embrace socialism. However, the protests in European countries differ significantly from those in the America. In Europe, where high welfare is already in place under democratic socialist government, the protesters do not have a clear direction, they are just rambling about anything. Typical of this is the protest movement in France. In the face of the movement that has been going on for quite a long while, French president Macron, in his 2019 New Year’s speech, reminded the French to be mindful of the reality, “we cannot ask for lesser workload and more income at the same time; nor can we ask the government to reduce tax and at the same time increase government spending; we cannot ask for cleaner air without changing our habits.” <br />
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In the US, the country that was used to be regarded as an exception to Socialism, nearly half of those in the younger generations agree to socialist beliefs. The student loans and grim employment prospect render them staunch supporters of the Democrats. At the moment, the 20 persons who seek presidential nomination are counting on the support from the millennial socialists to help them enter the White House. <br />
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The hardship facing youth in Hong Kong and the Chinese mainland factors <br />
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No one knows better about the origins of the Hong Kong issues than the people of Hong Kong themselves. During the antiELAB protests this year, Duowei interviewed quite a few members of the pro-establishment. They have a clear understanding of the grudge of younger Hongkongers. It was almost a unanimous view among them that the unpopular ELAB itself was not enough to explain the scale of the movement, the deeper themes are anti-China and anti-government of the SAR <br />
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Vice president of the Hong Kong Association of Young Commentators, Chen Zhihao summed up the sentiments in two points. First, the steady and incessant stream influx of people from the Chinese mainland taking up residency in Hong Kong, around a 100 each day. From the perspective of the people in Hong Kong, these newcomers are there compete with them for resources, and no doubt have an impact on their lives, making the housing problem worse. Second, the people in Hong Kong can not agree to the ideology and values of mainland China, viewing those as relatively backward, uncivilized and ugly. In addition, many interviewees raised the same old problem, the housing price is so high that, many in the city are struggling to have a tiny flat of them own. Watching the many videos about sub-devided flats, “coffin flats” and cage homes on the internet and one would feel despair. Regardless of the political outlook for Hong Kong, this real property market would be a major cause of serious social problems. <br />
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Universal suffrage may not solve all problems, but it can alleviate the sentiments <br />
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Hong Kong during the British rule had seen good social governance. And the city, with its pool of all sorts of talents, is fully capable of implementing high degree of autonomy. All of the problems facing Hong Kong today, from high unemployment among the younger generations, the staggering housing prices to the inhumane living conditions, can be seen in the Chinese mainland as well. I once lived in Shenzhen for years, knowing too well that China based its land finance and real property development approach on the Hong Kong model, the “ant mole dwellers” in major cities like Beijing are facing issues similar to those living in cage homes and the like in Hong Kong. Beijing do not have a cure to the high housing price and high unemployment problems, it can not improve the living conditions of the “ant mole dwellers”, and it does not have to capability to resolve the age-old issues in Hong Kong, either. <br />
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To use heavy-handed measure to crush the protests in Hong Kong would only result in deeper-seated hatred and greater will to fight. For Beijing to address the Hong Kong problem at this point, an old Chinese saying is most suited, “Gai fang shou shi xu fang shou, de rao ren chu qie rao ren” (Let go when the time has come for one to let go, and make room for others when one can make room). Beijing should have allowed direct elections in Hong Kong long ago and yet it has been reluctant to do so all along. As a result, for anything that doesn’t go right in Hong Kong, people blame it on the relationship between Hong Kong and Beijing as well as the rest of mainland China. Even in the view of long term national interest, the win-win solution is for universal suffrage and autonomy to be allowed in Hong Kong. <br />
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Can universal suffrage solve all the social problems in Hong Kong? No one can guarantee this. However, with it, the people of Hong Kong would enjoy greater autonomy and they get a say in the politics and the social policy. With this autonomy, they would no doubt understand that they themselves have to be responsible for their decisions. Although this kind of “Hong Kong people rule Hong Kong” would mean that the central government can not dictate every of the affairs in the city as it wishes, it is the best way to cut loss: China still has sovereignty over Hong Kong, but it would no longer be the seen as the root of all problems in the city, nor would it be denounced around the world. <br />
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Originally published in Chinese <a href="https://www.rfa.org/mandarin/pinglun/heqinglian/hql-08232019150318.html" rel="nofollow" target="_blank">here</a>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-72141349049115902942018-11-23T23:59:00.002-05:002018-11-23T23:59:32.342-05:00Cultural Revolution - Again?Recently, Xinhua News Agency ran pieces that promoted “the spirit of the <a href="https://en.wikipedia.org/wiki/Boxer_Rebellion">Boxers</a>” and “the Fengqiao social management model”; and official documents stipulating that “Political Screening” be included in the National Higher Education Entrance Examination (commonly known as <i>Gaokao</i> for short) in places like Chongqing, Fujian, and Zhejiang. Alongside these ominous signs of a repeat of the Cultural Revolution is a video, sent to <i>Mingjing News</i>, of <a href="https://en.wikipedia.org/wiki/Big-character_poster">Big Character Posters</a> in favor of the Cultural Revolution and oppose private ownership purportedly seen on the streets of Beijing. By now, the Chinese people should indeed take heed of what is about to come: the openly expressed longings by top officials like Xi Jinping for the way Mao Zedong governed China coincides with the Mao-Leftists who are becoming increasingly active, and the people at the bottom of society, those who became part of the leadership class and the driving force of the revolution are reliving their power hallucination. <br />
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<b><u>Bringing up the Boxers' solidarity against foreign humiliation for what?</u></b><br />
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Every Chinese person knows more or less about the Boxers, albeit with different levels of understanding. At a time when it remains uncertain how the trade war between the U.S. and China will evolve, and that the Chinese government deems itself humiliated by the U.S., the purpose of the state media outlet publishing an article on the Boxer Rebellion with emphasis on nationalism cannot be more obvious: it was to tell the Chinese people to be united against foreign humiliation in the event of a Chinese economic recession due to the trade war.<br />
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Judging from the anti-Japan demonstrations that took place across China in 2005 and 2012, there is no shortage of “Boxers” who would rebel against foreigners at the order of the Chinese government. Also, the so-called Guo Wengui Twitter Revolution indicated that there is plentiful of people who believe things like “democratic revolution occurs when people act in unity. In the process, it is acceptable to deceive, smear, inflict suffering and kill any or all of those in power. Whichever works, we will carry it out. It’s simple as that.” As scholar Zi Zhongyun observed, “No improvement made after a hundred years. It’s still Empress Dowager Cixi at the top, and those governed remain Boxers…It’s a usual tactic to redirect people’s anger to an enemy outside of the country when domestic tension emerges. The government will have to quell that anger when things go out of control and ultimately, it will have to make compromises to foreign countries.<br />
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When would these lurking “Boxers” become a political force? The answer lies in who would be the one wakes them up and gives them the opportunity to participate in politics.<br />
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<b><u>What is the "Fengqiao social management model"?</u></b><br />
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Known in full as the “General meeting marking the 55th anniversary of the Instruction by Comrade Mao Zedong on the promotion of the Fengqiao social management model cum the 15th anniversary of the directives by General Secretary Xi Jinping on upholding the development of the Fengqiao social management model, the activity in which the Communist Party commemorates the Fengqiao social management model was one of a relatively high profile. By mentioning Mao and the current leader, the activity aims to emphasize the so-called Fengqiao social management model in the new era, which core ideas are to modernize governance of the grassroots and make China a country with peace and security. However, as in other instances when something that does not exist becomes the focus, from this very idea we can see that for the grassroots in China, the country is not one with peace and security.<br />
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Ever since the abolition of agricultural tax in 2005, rural cadres are no longer responsible for tax collection and they became absent-minded regarding local governance. In the sixth chapter of my <a href="https://www.books.com.tw/products/0010768528" rel="nofollow" target="_blank">book</a> in Chinese, I examined the dilemma of local governance in China and pointed out that, based on analysis of a large number of facts, the politics of levels and units below the county-level division are basically controlled by gangsters and some areas have regress into the state of a jungle, where hooligans rule the roost. As governments of county and township levels solely rely on grass-root cadres to govern the villages, they do not question the integrity of those cadres. In order to tackle these issues, the “Fengqiao model” is revived to cover not only the villages and townships but also counties and cities. And, in addition to the service for and management of the migrant population and special communities, environment management, measures for the administration of the circulation of rural land contracted management right, corporate governance, internet governance are included. In a nutshell, it’s about comprehensive social surveillance.<br />
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In an instruction that was signed in November 1963, Mao Zedong specifically mentioned the Fengqiao model and ordered elsewhere across the country follow that model and implement it after trial. In January 1964, the CPCCC issued a directive on the strengthening of the people’s democratic dictatorship and the transformation of the vast majority of those of the Four Black Categories into new people with the power of the mass, and thereby facilitated the nation-wide implementation of the Fengqiao model. It is necessary to point out that, when the Cultural Revolution ended in 1976, the population of Fengqiao was 137,000 persons, throughout the 12 years, 3,279 individuals were categorized as members of the Four Black Categories, roughly one in every fifty. The four elements were the untouchables in Mao era: the landlords, rich farmers, counter-revolutionaries, and bad-influencers. Following Deng Xiaoping’s Reform and Opening Up policy, the Black Categories – deemed as a practice of the “Left Peril” – were cancelled and the untouchables became ordinary members in society.<br />
Nowadays, with the escalation of various social conflicts, people whose land was seized, those who do not get their fair share in the low-income protection scheme, and those who stage a leapfrog petition after having experienced unfair treatment at the hand corrupt village cadres are labeled as the special communities. The authorities have never made clear the size of these communities and their percentage.<br />
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In short, the revival of the Fengqiao model (one that turned members of the public into informants, made them carry out surveillance against one another and report any wrongdoings or suspicious things to the government) with the aid of technologies in the internet era, is to roll out comprehensive surveillance and eliminate all governance blind spots.<br />
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<b><u>Why some in China miss the Cultural Revolution?</u></b><br />
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The Big Character Posters I mentioned in the beginning of this article didn’t show up in Beijing this year. Instead, they appeared two years ago in Zhengzhou. Nonetheless, they showed signs of reality in China: some individuals of the grass-root never relinquish their yearning for the Cultural Revolution. Zhengzhou, the base of labor movements back in the years of the Communist Revolution, deeply influenced by the revolutionary traditions, saw the emergence of a group of Mao-Leftists whose conviction was particularly unshakable. These Leftists held gatherings to commemorate Mao on a regular basis.<br />
Since the turn of the century, higher education in China underwent industrialization and a large number unqualified institutions obtained the status of university. Youngsters from the villages depleted the savings of their families to study in these “universities” and remained unemployed after graduation. The feelings of disappointment, anxiety, and unfairness make these youngsters susceptible to yearning for the Mao era whitewashed by the Mao-Leftists. The time of planned economy when there was widespread poverty, food and clothes were scarce and purchase could only be made upon production of permits became what the Mao-Leftists described as “life’s needs guaranteed”, where jobless urban youngsters were sent to countryside for hard labor became what those people said as “no one without job”, and the shabby flats where core and extended families had to cramp in became what they called “free housing provided by the government”.<br />
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The real reasons these Mao-Leftists long for the Cultural Revolution are that, during those years, the movements of masses provided general workers of every organization the opportunity to topple those of higher social rankings and thus they got to taste the power hallucination of being on top. When they denounced the untouchables, that they could decide the fate of others were so wonderful an experience for them that those memories became unforgettable.<br />
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In today’s China, as the Guo Wengui Twitter Revolution showed, all the ingredients that gave rise to the Cultural Revolution are already in place: the worship of the leader, members of the public who follow their leader, and people who would vent their hatred in a crazed manner.<br />
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Guo, a tycoon who fled China because of the anti-corruption campaign of Xi Jinping, became a god-like figure in the eyes of his followers. Guo’s followers would go after people who question their leader and flood them with verbal abuse and threats like beheading and skinning.<br />
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I was young during the Cultural Revolution, and had first-hand experiences of the revolution of the masses, of which mass killings were a part. In a country where upward mobility channels do not exist, where Communist Revolution had taken place, and where there are hooligans who have power hallucination and are inclined for violence, that country would be completely consumed when someone in power lets the genie out.<br />
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<b><u>As the world turns left, China turns to blood and violence</u></b><br />
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For now, the Communist Party has not yet released that genie. However, measures targeting the rich are viewed favorably by the Mao-Leftists. And on the Big Character Posters were words that read “the Cultural Revolution is the beacon of human civilization, accept it or suffer it.” Those Posters also denounced private ownership. Ironically, while the Communist Party is the sole landlord in China (all land nationalized) and the largest owner of capitals (state-ownership of banks and big corporations), the Mao-Leftists are going after the private capitals, which only account for a third of the country’s economy. These Leftists have deliberately misplaced their target.<br />
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Capitalism, in its early stage of development, already breeds the forces—the various Leftist theories—that would deconstruct and destroy it. Forces that deconstruct capitalism are chiefly represented by Pierre-Joseph Proudhon, who promoted mutualism and anarchism, and Eduard Bernstein, who promoted the idea that socialism could be achieved by peaceful means through incremental legislative reform in democratic societies. Forces that would undo capitalism are exemplified by Karl Marx’s communism. Marxist communism was implemented in the former Soviet Union, socialist countries in Eastern Europe and China, where it remains the official ideology today. Socialism is implemented in European countries where members of political parties promoting socialist democracy got elected to the legislative chamber. The socialist path in essence is that government creates a welfare system for all with high taxes. Such a system, forked out by the rich and the middle class, provide welfare to the grass-roots and keep them from staging a revolution. Compared with the violent communism in the former Soviet Union and communist China, where the rich and the bourgeoisie got eliminated, and all resources nationalized, the socialist path can be considered as a benign form of communism. Nevertheless, this benign form of communism gets stuck at a bottleneck and I would write another article on this topic later.<br />
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Looking at today’s China, the country’s social distribution inequality is among the worst in the world, and the upward mobility channels are badly stuck. It has become commonplace that young people cannot find a job after graduation from universities, and the “hate-the-rich” sentiment evolves into hatred against anyone who became successful. All the sentiments that Cultural Revolution needed are now there. When and if the authorities gave the green light, the grass-roots, sensing that they can rebel on government’s order, would turn their power hallucination into actions. If things come to this, the most vulnerable would the middle class. A few years ago, I asked an individual working in the media industry in China: which do you find more frightening, a tyrant or a mob? The answer: both are frightening. A tyrant may be a real and present threat, but in the long run, a mob is more dreadful that a tyrant.<br />
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And the Cultural Revolution was in fact a combination of tyrant (Mao Zedong) and mob (the various groups of rebels).<br />
<br />
<span style="font-size: x-small;">Translator note: The Fengqiao model, or literally the Fengqiao experience, refers to the experience of mobilizing the crowd to step-up dictatorship against class enemies at the Fengqiao district, Zhejiang, in the early 1960s. It evolved into a form of consolidated adminstration of social security between the 1980s and the 1990s, and from the 1990s onward, it became an experience of relying on the crowd to maintain social stability. -- <a href="https://zh.wikipedia.org/wiki/%E6%9E%AB%E6%A1%A5%E7%BB%8F%E9%AA%8C" rel="nofollow" target="_blank">https://zh.wikipedia.org/wiki/%E6%9E%AB%E6%A1%A5%E7%BB%8F%E9%AA%8C</a></span>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-2904178116390303022018-11-13T07:07:00.000-05:002018-11-13T07:07:41.709-05:00Domestic Color Revolution of the DemocratsAfter the mid-term election was over on November 6, the Democratic Party took back the majority status in the House of Representatives while the Republicans maintained control in the Senate. Although the Blue Wave the Democrats called for became merely a ripple, the party sees a bright future in 2020 with the Republicans suffering setbacks in the suburbs. All in all, the color revolution instigated by the Democrats in the U.S. has finally begun to bear fruits. This color revolution aims to change the color of the people and that of the thought.<br />
<a name='more'></a><br />
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<u><b>Fruits of Diversification of the Population</b></u><br />
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For the Democrats, their obtained a number of “the firsts” in the history of the U.S.: the first gay governor; two Muslim women elected to the House of Representatives for the first time ever; Alexandria Ocasio-Cortez, the youngest woman with belief in Democratic Socialism, won a seat in House among others. With an overall victory for “Political Correctness” as defined by the characteristics of the voters, media aligning with the Democrats cheered: their side made history in the mid-term elections in 2018 and will lead the way in the future. <br />
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The Republican still controls the Senate. However, the media generally see that president Trump will face countless troubles from the House. For instance, the House can call on an investigation on the president, demand him to submit tax report or even indict him.<br />
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People who vote for the Democrats are mostly the have-nots (those living on social welfare or meager income), the intellectuals (people working in the education, media and other culture-related sectors), the minorities (ethnic minorities, teenagers, and the sexual minority) and the female voters. As the Democrats themselves admitted, they owed their victory in this round of elections to the increase in Hispanic and female voters and the younger generation of Americans who become the popularity cornerstone of Democratic Party.<br />
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It took the Democrats years of effort to mode the voters into this current structure. Except for the number of intellectuals that remains relatively stable, all other voters have seen increase in number and this is very good for the Democrats.<br />
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<b><u> From Melting Pot to Salad Bowl</u></b><br />
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<b><u><br /></u></b></div>
The U.S. has always identified itself as a melting pot, where the population may be of different backgrounds but all share the American values and would not form parallel societies like the Muslims who do not accept the mainstream values in France. After the <i>Charlie Hebdo</i> attack, the French did some reflections and concluded the tragedy was a result of the second- and third-generations of Muslim failing to be assimilated by the mainstream society and they became envious of the melting pot culture of the U.S..<br />
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However, the melting-pot culture in the U.S. has long changed. In order to win over voters, the Democratic Party has been creating new interest groups with new appeals. And the fastest way to boost the Democratic camp is by encouraging immigrants and illegal immigrants. During Obama’s tenure, the largest single amnesty turned five million illegal immigrants into U.S. citizens. Most of these people are of Latin-American descent and are staunch supporters of the Democratic Party. In 2016, Hillary Clinton’s election platform was the promise to immediately open the border after she got elected into the White House.<br />
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As a result of the influx of immigrants and the high fertility rate of the ethnic minorities, especially that of the Latin-American, the structure of the U.S. population changed. Back in 2008, a report by the Census Bureau already forecast a gradual decline of the White population, from 66% at that time to 46% percent by 2050. In another report published in June 2017, the Census Bureau found that as of July 1, 2016, the total number of Hispanic people stood at 57.5 million, registering an increase of 2% from the year before; the number of White people not of Hispanic descent increased by less than 0.01%, or roughly 5,000; the number of Asian Americans increased to 21.4 million, or a 3% jump, larger than all other ethnic groups. And by 2044, it was forecast that over half of the U.S. population will be from ethnic minorities. In the space of less than a decade between the two reports, the change of the color of the U.S. population got accelerated by six years.<br />
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It is necessary to point out that the fastest increase in the number of Asian Americans posts no significant influence on the politics of the country because of the diversified background of this ethnic group, which includes people from India, China, Japan, Hong Kong, Taiwan and several countries in the Middle East. This ethnic group, due to difference in race, culture, religion, political beliefs and its scattered nature, will not possibly become a strong political force in the short run. The Muslim immigrants, on the contrary, can become a wavering political force easier. Take Florida and Minnesota for example, the fast increase in the number of Muslims immigrants from Somalia and Kenya who live closely together enabled them to elect two Muslim women to the House of Representatives.<br />
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Aside from calling for the legitimization of illegal immigrants, the Democrats and a few social groups meddle with the tension between ethnic groups to further their own political interests, and pocket of the votes of the ethnic minorities by making them angry. As a result of this manipulation, the U.S. as a melting-pot is no more; it has become a salad bowl instead.<br />
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<b><u>Democrats taking a turn for Socialism</u></b><br />
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In June 2015, the Census Bureau published a report saying that the millennials—people born between 1982 and 2000, with a total number of 83.1 million—make up more than a quarter of the entire population of the U.S. The younger generations have always been steadfast supporters for the Democratic Party. In this round of mid-term elections, a sharp increase in the number of voters aged between 18 and 29 was registered and was a third factor contributing to the success of the Democrats. In a poll conducted by the John F. Kennedy School of Government at Harvard University in October that targeted young people, it was revealed that 40% of young voters will go to the polling stations to cast their ballots, up from the usual 20% turnout rate since 1986. Furthermore, most of the voters of this demographic group support the Democrats. According to a report by the Atlantic, in states like Texas and Nevada, where the competitions for the seats in the House were the fiercest, there was a five-fold increase in the turnout rate of young voters in early-voting.<br />
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Like their counterpart in Europe, young people in the U.S. are mostly left-leaning. In November this year, the Victims of Communism Memorial Foundation released, in partnership with YouGov, their <a href="https://www.victimsofcommunism.org/survey/" rel="nofollow" target="_blank">second annual report</a> on U.S. attitude toward Socialism and communism.<br />
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According to that report, the majority of the Americans, regardless of their demographic groups, prefer to live in a free market society. But for the millennials, their number one option is socialism. Forty-four percent of the people in this age group want socialism, surpassing capitalism (42%), and 7% opt for Fascism and Communism respectively.<br />
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With belief in socialism, the millennials throw their support for the Democrats. On July 3, the <i>New York Times </i>published a piece, ‘<a href="https://www.nytimes.com/2018/06/30/opinion/democratic-socialists-progressive-democratic-party-trump.html" rel="nofollow" target="_blank">the Millennial Socialists Are Coming</a>’, which cited the finding of a recent survey: “61 percent of Democrats between 18 and 34 view socialism positively”. They are the progressive wing of the Democratic Party.</div>
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<b><u>General Election 2020, 50/50 for both camps</u></b><br />
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Despite the cheers of victories for the blue camp, sensible observers know that neither side can win for sure in the General Election in 2020.</div>
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<div>
Within the Red camp, the differences between the party establishment and Donald Trump have sorted out somewhat. As can be recalled, Donald Trump succeeded by defeating the establishment of the Democratic Party and that of the Republican Party as well as the Bush’s and the Clinton’s families. For this reason, Trump will not get the support of Republican establishment. Late Senior Senator John McCain for one opposed Trump more than the Democrats. In this mid-term, many of the Republicans who lost their seat are followers of John McCain. Thus, while the Red camp lost seats, it became more united under Trump. In the coming two years, policies by the White House will get greater support among Republicans. However, taking into account that voter demographics, the campaign strategies, mobilization ability and fundraising capability, the odds are against the Republicans.<br />
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For the Democrats, its establishment and the grass-roots are at odds though. Originally an independent presidential candidate, Bernie Sanders joined the Democratic Party only in 2016 to get its support. Former staffers of the Sanders campaign team, his supporters and followers—by and large socialists—joined the Democrat Party this year and formed the Brand New Congress, an organization that aims to get young people with similar political beliefs elected.<br />
The progressive played a big role in the mid-term. Notable achievements included helping Ocasio-Cortez defeat Joe Crawley and, as The Hill reported, during the Democratic National Convention summer session on August 25 in Chicago, secured a vast-majority vote to restrict the role ‘super representatives’ play in deciding the Party’s presidential candidates and so a replay of the Blue camp choosing Hilary Clinton over Bernie Sanders can be avoided. ‘Super representatives’ include former presidents, former vice-presidents, Congress leaders, DNC chairpersons, its members Democrats in the House and the Senate as well as incumbent governors.</div>
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<br /></div>
<div>
The victory of Ocasio-Cortez and the restriction on the role ‘super representatives’ play signify the victory of the grass-root democrats, who without question will become even more at odds with the establishment.</div>
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<div>
With years of effort made, the Democrats have silently brought forth a domestic color revolution, one which race and thought are important components. In the last 50 years, countries in the Latin America formed a Leftist circle. Immigrants from these countries are inherently supportive of socialism. And as the political and economics beliefs of the Democratic Party become increasingly Utopian, the rivalry between the Republican and the Democrats will not just be a competition between common sense and Utopian beliefs but will also determine the roles the U.S. will play around the globe.</div>
Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-44044105753925147532016-04-16T11:18:00.000-04:002016-04-17T22:59:47.844-04:00How China Is Causing Real Estate Bubbles Around the WorldBy He Qinglian on March 12, 2016<br />
Source article in Chinese: <a href="http://heqinglian.net/2016/03/12/china-capital-flight/" rel="nofollow" target="_blank" title="“帝国红利”套现,推动世界房产泡沫化">“帝国红利”套现,推动世界房产泡沫化</a><br />
This abridged translation first appeared in the <a href="http://www.theepochtimes.com/n3/1998355-how-china-is-causing-real-estate-bubbles-around-the-world/" rel="nofollow" target="_blank">Epoch Time</a> on March 20, 2016<br />
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<br />
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Will the Chinese economy have a hard landing? Absolutely not,
according to Xu Shaoshi, director of China’s state economic planning
agency. A hard landing for China’s economy is not a possibility, and
neither is it possible that China’s slowdown will drag down the global
economy, Xu said at a news conference during the annual “Two Meetings,”
the de facto legislature of the Communist Party.<br />
Despite how much has already been written about China’s economic slowdown, Xu’s statements require a response.<br />
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<a name='more'></a><br />
<h2>
The Impact of China’s Economy on the World</h2>
Let’s take a look at the past first. In the past 30 years, China has
accepted foreign investment to fund development through its “opening up”
policy. China then joined the World Trade Organization
(WTO) to export cheap goods to the world. In the mid-1990s, when China
had accumulated enough profits and power, it started making strategic
investments to acquire resources and enterprises around the world.
Although there were more failures than successes, China’s huge capital outflows have been a significant force.<br />
Viewed from different perspectives, China has had both a positive and
a negative impact on the world economy. Inexpensive goods manufactured
in China at the turn of the century indeed benefited consumers all over
the world for about seven to eight years.<br />
<br />
On the downside, however, substandard and toxic products have led to
boycotts and loss of credibility beginning around 2005. There were the
toys containing high levels of lead, followed by melamine-tainted milk
powder and feed, pesticide residues and other toxic substances in
textiles and leather, problematic drywall, and more. In short, China has
constantly been subject to complaints via the World Trade Organization,
and this was one of the reasons prompting the United States to set up
the Trans-Pacific Partnership—a hope to bypass China and establish
another international trade organization.<br />
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Since 2009, when it largely stopped being the world’s factory, China
became the world’s largest money printer. In 2012, when this strategy
was no longer sustainable, China was left with an inventory of 9.83
billion square meters (105 billion square feet) of vacant real estate
and dozens of industries loaded with excess capacity.<br />
China was set to expand trade with over 30 countries around the
world. But these countries are now either in turmoil, war, or economic
recession. As a result, China is no longer in a position to be a major
raw materials importer and thus stifles the world economy. Of course,
one cannot say that this is China dragging the world economy down. But
the dreams that China would become the world’s economic engine have been
dashed.<br />
<h2>
Capital Outflows and Real Estate</h2>
China’s real estate market also indirectly affects the world. Real
estate prices in Beijing, Shanghai, and Shenzhen have recently soared.
For example, the total market value of all homes in one Shenzhen
community climbed to 14 billion yuan (US$2.1 billion), nearly matching
that of Shenzhen’s airport, which is approximately worth 14.8 billion
yuan ($2.2 billion). How can housing prices rise so incredibly high?
It’s because Chinese are maintaining the high prices by taking out cash
loans against the bubble-priced assets and then moving money out of the
country. The capital escaping from China’s housing market will affect
the world.<br />
<br />
Since the end of June 2014, when China’s foreign exchange reserves
were $3.99 trillion, there has been an outflow of nearly $790 billion.
Such a huge flow of funds around the world is going to have a large
impact. Where did this money go? Part of it was used for investments,
mainly in real estate, which has been pushing up housing prices around
the world.<br />
The overseas investments of Chinese real estate enterprises totaled
about $22 billion in 2013 according to the 2015 China Enterprise
Globalization Report. In 2014 it reached nearly $40 billion, with $28.6
billion going into the U.S. market. Led by giants such as Vanke, Wanda,
and Greenland Holding, Chinese real estate firms invested as much in the
first half of 2015 as in the whole of 2014.<br />
<br />
According to a Sept. 7, 2015, article by Caijing National Weekly,
wealthy Chinese are buying homes in more than a dozen overseas countries
or regions, including the U.K., Australia, and Dubai. On Jeju Island in
South Korea, Chinese owned 20,000 square meters (215,000 square feet)
of properties by 2009. At the end of April 2015, the area rose to 11.73
million square meters (126 million square feet), an increase of nearly
600 times in six years.<br />
The money being created by China’s state printing press is flowing
around the world. Real estate prices in China have long deviated from
their actual value. A small 150-square-meter (1,600-square-foot)
apartment in Beijing, Tianjin, Shanghai, and Shenzhen is listed for
about 6 million yuan ($920,000). For this kind of money, one can buy a
single-family home three times the size on the East or West Coast of the
United States (except for places like Manhattan and San Francisco) with
a large garden and pool. Faced with this reality, Chinese real estate
investments are bound to flood the globe.<br />
The fact that China is no longer purchasing large amounts of global
commodities may not be really dragging down the world’s economy.
However, when rich Chinese invest huge amounts of cash in other
countries’ real estate markets, they are causing bubbles. Eventually,
locals won’t be able to afford a home, and the country will be
impoverished. Can this not legitimately be called a drag on the global
economy?<br />
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<br />Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-61091646614589945882016-04-16T11:04:00.000-04:002016-04-17T22:59:47.849-04:00China’s Economy Is Just ‘One Kilometer’ Away From a CliffBy He Qinglian on February 27, 2016<br />
Source article in Chinese: <a href="http://heqinglian.net/2016/02/27/china-financial-crisis-2/" rel="nofollow" target="_blank" title="中国财政危机:距悬崖还有一公里">中国财政危机:距悬崖还有一公里</a><br />
This abridged translation first appeared in the <a href="http://www.theepochtimes.com/n3/1985569-chinas-economy-is-just-one-kilometer-away-from-a-cliff/" rel="nofollow" target="_blank">Epoch Time</a> on March 7, 2016<br />
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The “China collapse theory” has once again become popular—and not in
the usual places. Words that were once used exclusively in articles
authored by “hostile forces”—like “cliff,” “crisis,” and “collapse”—now
are publicly used by Chinese. Even more unusually, it is officials of the Communist Party (CCP) themselves that are using these terms to
describe China’s economy.<br />
Among them, China’s incumbent Minister of Finance Lou Jiwei is the most prominent recent example.<br />
<a name='more'></a><br />
<h2>
Approaching The Cliff</h2>
On the morning of Feb. 26, Lou Jiwei gave a short seminar talk at
G20’s economic summit held in Shanghai. In the speech, he warned that
the later structural reform comes, the less space will be left for
carrying out reform.<br />
Despite a number of problems to be solved, China is “lucky” to still
have some space for reform, he said. Hesitating only results in less
room, like placing oneself near a cliff. “A person may fall off a cliff,
but a country can’t. If that happens, what is left for us is just
endless suffering. So it would be best to anticipate the crisis when
‘one kilometer’ away from the cliff, and expedite reforms starting
there. Don’t wait until the last meter, and fall off the cliff.”<br />
For outsiders, it may seem that Lou was discussing China’s issues
within the context of the global economy. But insiders know that Lou was
using a clever means of delivering a message to China’s leaders who
dictate policies. The Chinese government is currently placing much
tighter constraints on speech, and economic statistics can’t be
announced without approval. So even as the Minister of Finance, Lou
Jiwei is only able to make the alert in an indirect manner, at an
international conference.<br />
The Ministry of Finance is the money pouch of the Chinese government.
Lou Jiwei’s job is to manage it. Therefore Lou was certainly referring
to a financial crisis when he spoke of about being “one kilometer away
from the cliff.” As he mentioned, China is lucky to be still “one
kilometer” away, but how fast is the distance being shortened? One meter
per day? Two meters per day? Is China walking slowly, or sliding fast?
The answers lie in how effective China’s upcoming reforms will be.<br />
<h2>
Financial Safety</h2>
The Ministry of Finance’s report of revenue and expenditure can be
regarded as China’s national accounts. What they tell us is that China
is encountering a serious deficit problem. The scent of financial crisis
can be seen from the following news.<br />
First, China’s annual financial deficit reached 2.3 trillion yuan
($353 billion) in 2015. According to an article published in National
Business Daily on Feb. 1, China’s general public budget revenue in 2015
was 15.22 trillion yuan ($2.3 trillion), with a record-low growth rate
of 5.8 percent since 1988. In the meantime, the national general public
budget expenditure is 17.58 trillion yuan ($2.7 trillion), with a growth
rate of 13.17 percent. This results in an annual financial deficit of
2.3 trillion yuan, 735 billion yuan ($113 billion) more than the
year-beginning estimate.<br />
Second, China’s revenue began to decrease in January 2016 compared to
the same period last year. The latest statistics published by the
Ministry of Finance show that the central government’s expenditures in
January 2016 were 839 billion yuan ($129 billion), 11.6 percent more
than last January. In contrast, the revenue this January dropped by 0.7
percent to 726 billion yuan ($111 billion) compared to last January,
resulting in a monthly deficit of 113 billion yuan ($17 billion). More
deficits are expected as China’s economy continues to slow.<br />
Third, more financial pressure is being put on local governments.
Official reports show that in the first 11 months of 2015, revenue from
selling the rights to state-owned land dropped by 29.2 percent compared
to the same period in 2014. The use of land sales to prop up local
budgets appears no longer sustainable.<br />
As China is now so close to the cliff of financial collapse, what
should the first steps of reform be? Those familiar with China’s economy
should already know the answer—the pension system.<br />
<h2>
The First Cuts</h2>
China’s seniors make up nearly 15 percent of the total population.
Obviously, unfunded pensions are closely linked with social instability,
and if any other solutions existed, the government would never want to
touch the pension system. But continuous bankruptcies are making it
difficult to raise taxes, and budget cuts are the only solution to a
surging deficit.<br />
Pension reform started last year, with Lou Jiwei announcing a pension
reform plan in a March press conference. He said that China’s future
pension system will comprise three major parts: the current social
pension system; enterprise annuities; and personal purchases of
commercial health insurance plans, or pension plans. In October, the
policy of “raising the retirement age in progressive steps” was
announced.<br />
In November 2015, the CCP’s Central Committee announced the plan to
terminate free health insurance for retirees. In January 2016, Lou Jiwei
published an article in Qiushi magazine in which he clearly stated that
the government is drafting a policy for retirees on their employer’s
healthcare plans to start paying their own premiums.<br />
Why did the pension system become the first target in reform? The
answer is very simple. Compared to cutting the paychecks of government
officials, military expenditures, or public security spending, it’s
safest to cut the income of the people. Even in the worst case, Chinese
would probably do no more than complain or make some jokes attacking the
government. There’s no concern about a revolution led by seniors,
surely?<br />
<br />Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-2578079585704250192016-04-16T11:03:00.001-04:002016-04-17T22:59:47.839-04:00China’s Economic Recession Shatters Global Dreams of ProsperityBy He Qinglian on February 5, 2016<br />
Source article in Chinese: <a href="http://heqinglian.net/2016/02/05/china-economy-5/" rel="nofollow" target="_blank" title="中国经济衰退,资源国发展梦碎">中国经济衰退,资源国发展梦碎</a><br />
This abridged translation first appeared in the <a href="http://www.theepochtimes.com/n3/1972723-chinas-economic-recession-shatters-global-dreams-of-prosperity/" rel="nofollow" target="_blank">Epoch Time</a> on February 22, 2016<br />
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While charging ahead to become the world’s second largest economy by
gross domestic product, China devoured a massive amount of all kinds of
metals, fuels, and crops from around the world. Australia, along with
countries in Africa and South America, built its own dreams of
prosperity on China’s rapid growth. The present recession in China
therefore affects not only Chinese people but also dozens of developing
countries prepared to sell mineral resources to China.<br />
<a name='more'></a><br />
Over the past 20 years, China has transformed from playing a marginal
role in the world economy to becoming an engine pushing the economic
growth of many countries. “Engine,” in this context, does not refer to
the cheap “Made in China” products, but to China’s increasing need for
resources that led to development in these places. Through this, China
has become the world’s largest buyer of resources and agricultural
products.<br />
In October 2013, China officially replaced the United States as the
world’s largest net oil importer, surpassing the United States’ imports
of 624 million barrels per day. Nearly 60 percent of China’s oil
consumption depended on foreign oil.<br />
In addition, about half of the world’s pork was consumed by China. In
2014, the European Union’s pork exports to China increased slightly to
368,700 tons, amounting to 65 percent of China’s pork imports. The main
EU pork exporters to China are Spain, Denmark, Germany, and the United
Kingdom.<br />
China also imports large quantities of wheat from Australia, the United States, and Canada.<br />
Soy is a major source of China’s vegetable oil. Its soybean
consumption accounts for 22 percent of the world’s. China mainly imports
soybeans from the United States, Brazil, and Argentina.<br />
China’s economic recession has resulted in a decrease of its
purchasing power. With economic globalization, not only are businesses
in China impacted, but so are the countries that supply resources and
agricultural products to China.<br />
<h2>
<b>Australia</b></h2>
Australia’s economic boom and decline over the past years are closely
related to China and involve a very wide range of goods. China’s main
imports from Australia include iron ore, wool, steel, crude oil,
aluminum, and more. Because manufacturing is not very developed in
Australia, it’s also an important export market for China. China’s
export commodities to Australia include textiles, garments, and light
industrial products. Australia has always been one of China’s top 10
export markets.<br />
At the peak of China’s construction boom, its huge demand for iron
ore caused many countries to increase their iron ore production. As the
world’s largest iron ore importer, China purchased iron ore from 18
countries, with 80 percent coming from Australia, India, and Brazil.
Therefore, calling China an “engine” of iron production was not an
exaggeration.<br />
Western Australia is dubbed “China’s quarry.” As a mining state,
Western Australia enjoyed a 10-year economic boom through the sale of
iron ore—the main raw material for making steel—to China. The price of
iron ore reached its peak of $190 per ton in 2011. It has now fallen
more than 70 percent to about $50 per ton. The price drop reduced tax
revenue for local governments and forced small-scale mining enterprises
to close down, with thousands of employees being laid off.<br />
<h2>
<b>Africa</b></h2>
For the past 10 years, China has made very large investments in
Africa. On average, other countries invest about six times more in the
United States than in Africa. By contrast, at the end of 2013, China’s
investments in the United States reached $22 billion while its
investments in Africa totaled $26 billion.<br />
Beginning in 2000, China became Africa’s largest trading partner.
During the 1990s, trade between China and Africa increased by 700
percent. From 2000 to 2012, it grew by more than 1,000 percent, from $10
billion to $200 billion. During this period, the average annual growth
rate of African economies increased from 0.6 percent in the 1990s to 2.8
percent in 2015. As of 2012, South Africa obtained over 20 percent of
China’s $4.8 billion direct investment going to Africa. China’s direct
investment to the top five African countries increased from $317.2
million in 2004 to $11.2 billion in 2012, a 35.5-fold increase.<br />
Rapid economic growth in sub-Saharan countries gave local people
cause for hope of a new era of prosperity. Some people even believed
that these countries’ economies would no longer have to rely on the
world’s unpredictable demand for raw materials. One such symbol of
prosperity was Africa’s first modern, Chinese-built railway that
traversed through Nigeria at the end of 2014, to the delight of the
Nigerian people.<br />
However, with the slowdown in China’s economy, Chinese demand for
African commodities also decreased, and the economies of many African
countries also rapidly declined. The economic prospects for the African
continent have now become grim, especially for its two largest
economies, Nigeria and South Africa. With China’s imports from Africa
plummeting by nearly 40 percent in 2015, the currencies of Nigeria and
South Africa fell to a record low this month.<br />
South Africa, the largest African iron ore exporter to China, is
suffering from the downturn in mining, manufacturing, agriculture, and
other sectors. Nigeria, the largest economy and oil producer in Africa,
is shocked and confused by the collapse of crude oil prices. With a
currency that has been decimated, it will be more difficult for Nigeria
and many other African countries to repay their large Chinese
infrastructure and construction loans.<br />
Australia and African countries still hope that the Chinese economy
will pick up again. However, the reality is that China must adapt to the
“new normal” state of economic recession and prepare for tough times
ahead. For countries that have depended on China’s demand for large
amounts of commodities, it would be best to redesign the blueprints for
their own economic development. Placing hopes for prosperity solely on
another country’s short-term demand for commodities is a very fragile
state indeed.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-20516847764037283642016-04-16T10:50:00.000-04:002016-04-17T22:59:47.834-04:00Unemployment: China’s Biggest Economic WoeBy He Qinglian on December 29, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/12/29/china-unemployment/" rel="nofollow" target="_blank">2015年中国经济关键词:失业</a><br />
This abridged translation first appeared in the <a href="http://www.theepochtimes.com/n3/1954759-unemployment-chinas-biggest-economic-woe/" rel="nofollow" target="_blank">Epoch Time</a> on February 2, 2016<br />
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If you are looking for a single word to summarize China’s economic
situation in the year just gone by, it is “unemployment.” The flood of
bankruptcies, flight of foreign investment, 300 million migrant workers
losing their jobs, the government forcing troubled state-owned
corporations to remain open, its giving jobs to veterans, and policies
encouraging migrant workers to return to their hometowns to start new
enterprises—these are all about unemployment.<br />
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<h2>
<b>Coal and Steel Industries Broke </b></h2>
<span style="font-weight: 400;">China’s coal and steel industries
have been the country’s biggest employers. The coal industry workforce
used to be over 5.8 million, and steel employed another 3.3 million.
Bankruptcies of businesses in these two industries will inevitably lead
to massive unemployment.</span><br />
<span style="font-weight: 400;">On Aug. 24, 2015, the State Council
issued a briefing of an investigation into the risks in the coal mining
industry and how to manage them. The report stated that 4,947, or 48
percent, of Chinese coal mines have shut down or stopped production. In
other words, nearly half of China’s coal production has closed. Shaanxi,
Shanxi, Inner Mongolia, and other coal-rich provinces are seriously
affected. In Inner Mongolia, which has the country’s largest coal
reserve, half of all mines have shut down or are in a state of
suspension. As a result, more than 100,000 people have become
unemployed. The coal industry depression began in 2013; many companies
struggled to hold on until now, but they can survive no longer.</span><br />
<span style="font-weight: 400;">The situation in the steel industry
is similar. Serious excess capacity has led to low profits through the
entire industry. According to insiders, there is a five-year inventory
stockpile of all types of steel. In early August, the price of steel was
at 1,800 yuan ($273) per ton, or 0.9 yuan ($0.14) per pound—cheaper
than cabbage. </span><br />
<span style="font-weight: 400;">This is a snapshot of China’s
economic slowdown and weak industrial demand. Industry professionals say
that things will get even worse for the steel sector. At present, China
has 2,460 steel companies. This number is expected to eventually drop
to 300. This indicates that more than 80 percent of businesses are up
for mergers and acquisitions, and in the next three years the steel
industry will go through a process of restructuring and elimination.</span><br />
<h2>
<b>World Factory Moves to Other Countries</b></h2>
<span style="font-weight: 400;">In recent years, with the rise of
labor costs in China, many companies have moved their factories to
Vietnam, India, and other Southeast Asian nations so as to maintain
their profit margins. According to data from the Asia Footwear
Association, one-third of orders from Dongguan, known as the “shoe
capital,” has moved to Southeast Asia. Having been a main workshop of
the “world’s factory,” Dongguan’s decline began in 2008, with 72,000
enterprises closing in the next five years. In 2014, no fewer than 4,000
businesses closed. In October 2015, more than 2,000 Taiwan-funded
enterprises left Dongguan, and five million workers were laid off.</span><br />
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<span style="font-weight: 400;">The printing and packaging industry
comes at the end of the manufacturing process and serves as a barometer
of the rise and fall of the manufacturing sector. China has 105,000
printing enterprises, employing 3.4 million workers. With the decline of
manufacturing, the printing and packaging industry gets fewer orders,
and its unemployment rate has gradually been going up. Printing and
packaging is a major industry in Guangdong Province. With declining
demand since 2010, employment in the industry has decreased from 1.1
million in 2010 to 800,000 in 2014 in Guangdong.</span><br />
<h2>
<b>Unemployment Data</b></h2>
<span style="font-weight: 400;">The following three separate sets of data most likely come close to providing a true picture of unemployment in China.</span><br />
<span style="font-weight: 400;">In 2010, then Vice Premier Zhang
Dejiang stated that 45 million jobs in China were created by foreign
companies. With supporting businesses also included, foreign investment
has provided over 100 million jobs in total. This matches the number
mentioned by Justin Lin during the World Economic Forum in January 2015.
Lin said that China would lose 124 million jobs if the entire
manufacturing sector moved out of China.</span><br />
<span style="font-weight: 400;">Prior to 2010, there was already a
huge unemployed population in China. On March 22, 2010, former Prime
Minister Wen Jiabao told U.S. representatives at the 2010 China
Development Forum: “The U.S. government is worrying about two million
unemployed people. But China is facing the pressure of 200 million
unemployed workers.”</span><br />
<span style="font-weight: 400;">Miss Lu Tu, a researcher of China’s
migrant worker population—that is, those whose homes are in the
countryside, and who work in the cities and live in shantytowns due to
residence restrictions—says that China has 300 million new migrant
workers. When including their parents and children, the number reaches
500 million. Their impact on Chinese society must not be overlooked. In
other words, the condition of these 500 million people affects China’s
social stability.</span><br />
<h2>
<b>Social Instability </b></h2>
<span style="font-weight: 400;">If a factory lays off 10 percent of
its workers, people may think that the workers are probably not the
right fit for the position. If 50 percent of companies downsize, it can
be attributed to a market downturn. But if capital leaves, as is the
case today, and hundreds of millions of people become unemployed, then
this is the beginning of a great depression. In that situation,
unemployment is not just a problem for the unemployed workers, but also a
social problem the government must face.</span><br />
<span style="font-weight: 400;">China’s economy is now nearing that
point. China currently has no advantage in technology, resources, or
human capital for a quick recovery. Therefore, China needs to prepare
for the pain of long-term unemployment.</span><br />
<span style="font-weight: 400;">Too many people being unemployed
leads to the emergence of a group of disenfranchised, internal refugees.
The Communist Party should not forget that the social basis of
China’s communist revolution in the 20th century was also a huge number
of such people.</span><br />
<br />Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-41456684623926996112016-01-16T09:55:00.001-05:002016-01-16T09:55:39.965-05:00Achilles' Heel of China's Foreign Currency ReservesBy He Qinglian on January 14, 2016<br />
Source article in Chinese: <a href="http://heqinglian.net/2016/01/14/achilles-heel-of-china-foreign-reserves/" rel="nofollow" target="_blank">中国外储的阿喀琉斯之踵何在?</a><br />
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Right at the very beginning of 2016, the way the Chinese government manages the country’s stock market and currency exchange market has drawn a chorus of criticism. In response, the Chinese government announced the suspension of the “circuit breaker” of the stock market, and, at the same time, steps up its control over the currency exchange market.<br />
<a name='more'></a><br /><br /><u><b>The underbelly of China’s foreign exchange market</b></u><br /><br />Everyone knows about the changes to the figure of China’s foreign currency reserves: from its peak of 3.99 trillion US dollar in June 2014, China’s foreign currency reserves fell to 3.33 trillion US dollar in December 2015 and saw a net reduction of more than 500 billion US dollar.<br /><br />
The criticism of China’s currency exchange market from the international investment sector focuses chiefly on two matters: first, they think that the Chinese government regulation of the Renminbi is a violation of the pledge made when the Chinese currency is included in the IMF SDR basket and would greatly embarrass the IMF; second, the international investment sector finds the Chinese government interferes too strongly with the offshore market, widening the exchange rate deviation between the onshore and the offshore markets as a result.<br /><br /> These critics view the Chinese currency exchange market with their own interests in mind—a Chinese market that is open and allows free floating of currency exchange rate and free exchange of currencies would be a new place to make profit; and it seems that there is sound reasoning behind their criticism. However, both the IMF and the Chinese government are full aware of the actual content of the promise made when Renminbi became an SDR currency.<br /><br />
In November 2015, when the IMF altered the criteria to approve the inclusion of Renminbi as an SDR currency, the Chinese government only promised that the clean floating of Renminbi exchange rate would be implemented in the future. But the Chinese government did not state clearly the time it plans to implement the free floating of China’s currency without government intervention. Besides, PBoC President Zhou Xiaochuan openly stated the day before Renminbi acquired the SDR currency status that, to cope with “financial attacks” from beyond the border, the Chinese government would continue to interfere with the currency exchange market and implement the floating of Renminbi exchange rate under the government regulation.<br /><br />
The IMF representative in Beijing knew about all these public statements. <br /><br />
If the stress to depreciate Renminbi is not too great; if the risks of huge amount of bad debt and excessive debt do not exist in China’s financial system, then Beijing might think that it would not be too risky to allow the free floating of Renminbi exchange rate.<br /><br />From June 2015, however, the above risk factors became increasingly apparent, there is no wonder that the Chinese government would choose financial security over honoring its pledge to the IMF.<br /><br />And then, let’s explore why the Chinese government wants to intervene in the currency exchange market, in particular, the offshore Renminbi exchange rate. There are two reasons for this. First, Renminbi faces tremendous inflation pressure inside China owing to the country’s status as the world’s largest money printer. Second, China is facing immense pressure of capital outflow. As a result of the Chinese government stepping up its anti-corruption campaign from 2012 on, political risk in China became greater. Seeing that with each deposed top official several entrepreneurs fall, many tycoons flee China with their assets, thereby bringing down the country’s foreign currency reserves. <br /><br /><br /><u><b>How much of China’s 3 trillion foreign currency reserves still remain?</b></u><br /><br />
Beginning from August 2015, the Chinese government has been forced to sell US Treasury bonds to facilitate payment made in US dollars. In December 2015 alone, China sold US Treasury bonds at a record pace and cleared about 108 billion US dollar worth of the country’s foreign reserves so as to meet the demands of domestic foreign exchange market.<br /><br />
From this, the international investment sector came to realize that the trillions of US dollar worth of foreign reserves of China is but nominal assets that the Chinese government had long spent away in various areas, The Bloomberg report on January 8, “<a href="http://www.bloomberg.com/news/articles/2016-01-08/china-finds-3-trillion-just-doesn-t-pack-the-punch-it-used-to">China Finds $3 Trillion Just Doesn’t Pack the Punch It Used To</a>”, was precisely about this topic.<br /><br />As that Bloomberg report showed, China’s foreign currency reserves have been used in the following areas:<br />
<br />One, US Treasury Bonds:<br /><br />According to data from the US Treasury, in October 2015, the estimated amount of US Treasury Bonds in China’s possession was worth about 1.25 trillion US dollars. The Treasury added that the estimate may not have truly reflected the amount of US Treasury Bonds possessed by third party accounts on China’s behalf.<br /><br /> Two, Overseas Investment:<br /><br />Although China has not formally made public the sum of direct investment it committed abroad in 2015, Reuters estimated the figure would exceed one trillion US dollars for the first time. The bulk of this one trillion US dollar was investment the Chinese government and China’s State-owned enterprises committed in other countries. For instance, the Silk Road Fund, an overseas investment fund owned by the China Development Bank and the Export-Import Bank of China alongside other government bodies and state-owned institutions, aims to foster investment projects in countries along the <a href="https://en.wikipedia.org/wiki/One_Belt,_One_Road">One Belt, One Road</a> and to promote China’s political interests.<br /><br /> The China Development Bank and the Export-Import Bank of China got a combined injection of 93 billion US dollars from China’s foreign currency reserves.<br /><br />
Three, External Aid:<br /><br />When it comes to external aid, China can be very generous. It often announces new aids to developing countries as it writes off debts owed by those countries that are due for reimbursement. Without doubts, these aid projects are financed by China’s foreign currency reserves.<br />
<br /><br /><u><b>What Foreign Currency Reserves Really Are</b></u><br /><br />Finally, I would like to point out a common misconception of both the Chinese government and the people in China: they see foreign currency reserves as asset of the Chinese government (or the Chinese people). The reality is that, while foreign currency reserves are asset of the People’s Bank of China (PBoC), every dollar of this asset corresponds to an equal amount of debt. The reason that this is the case can be found in the way China accumulates its foreign currency reserves. The PBoC stipulates that when companies doing business overseas wire their profit in US dollar (or Euro or Japanese Yen) back to China, they must do the settlement of exchange through banks and hand over the foreign currencies to the PBoC before they receive from the PBoC Renminbi of the same value. In this process, the foreign currencies handed over to the PBoC become its foreign currency reserves—an asset, yes—but at the same time a new liability—the newly issued Renminbi—is added to the balance sheet of the PBoC as well.<br /><br />To summarize, the PBoC accumulates its foreign currency reserves by “borrowing” US dollars from individuals, foreign companies in China and domestic companies engaging in foreign trade and export. Every dollar of the foreign currency reserves corresponds to a dollar of debt. To spend these reserves on purchasing US Treasury bonds, overseas investment and external aids is to spend away borrowed money as its own. And the move to sell US Treasury Bonds to provide the US dollars needed in currency exchange market shows that the PBoC does not have enough US dollar cash. If the government does not take action to limit currency exchange in China and allow the people to freely do so, it is possible that the PBoC would go broke.<br /><br /><br /><u><b>Currency Exchange: a battle that the Chinese government cannot lose</b></u><br /><br />Many specialists are of the view that a decline in the Renminbi exchange rate would boost the country’s export. The problem is, the benefit of increased export is slow to materialize, but the pressure of capital outflow following a drop in the Renminbi exchange rate would be imminent. For the authorities, the truth that the 3 trillion US dollar worth of reserves are spent away is like the Achilles’ Heel that must never be discovered.<br /><br />
Currently, the Chinese government is gradually tightening its foreign currency exchange policy.<br /><br />According to a Reuters report on January 8, some branches of the State Administration of Foreign Exchange (SAFE) instructed banks within their jurisdiction to step up regulation of currency exchange transaction conducted for clients of those banks, and to observe the cap for the total amount of currency exchanged in January so that the agency can curb the piecemeal capital outflow of enterprises and institutions.<br /><br /> According to the same report, SAFE raided a large number of underground banking houses (shadow banks); issued a rule in Beijing, Shanghai and Shenzhen stipulating that any person who wants to withdraw more than 2000 US dollars must place a booking three days in advance. Some banks even lowered that limit to 1000 US dollars.<br /><br /> On January 14, SAFE official dismissed the Reuters report and said the Agency has never put forward policies mentioned in that report. “The Agency does not rule out the possibility that some banks initiated some regulation because they don’t have enough US dollar cash”. Such a clarification only serves to make people realize that if needed, banks all across China can initiate regulation on their own without getting prior approval.<br /><br />To sum up, the international investment sector sees China’s foreign currency exchange market as a new ground to make profit, people in that sector thus complain about over-regulation and ask the Chinese government to meet the open standards outlined by the IMF. But for the Chinese government, currency exchange market is a matter of financial security. The real threat of a drop in the Renminbi exchange rate is capital outflow. The outflow of capital would affect the Chinese stock market and the Chinese housing market, making it more difficult for the Chinese government to shore up both markets; besides, the outflow of capital would also mean a huge deleverage pressure for the real economy in China.<br />
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Some people predicted that the currency exchange market would be the flashpoint of a financial crisis in China, and the collapse of the regime would ensue. This thinking is too naive. The Chinese government knows better about its own weaknesses than outsiders and is taking all measures to guard against risks. <br /><br />For this prediction to come true, the prerequisite would be that the central government ceases being able to function overnight—the possibility of this would be next to zero.<br />
<br />In his piece about the Great Wall of China, Franz Kafka tried to explain the purposes of the Great Wall and the reasons why that construction was built in ancient China. But it seems that Kafka did not truly comprehend why the Chinese wanted to build the Great Wall. For the Chinese people, the Great Wall serves just one purpose: protection against the enemy, and keep all dangerous external factors outside of the Wall. Understand this Great Wall mindset and one would see why the Chinese government wants to control the foreign exchange market.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-14402643997260198972015-12-31T01:38:00.000-05:002016-01-15T01:38:27.353-05:00Disappearance of Chinese Tycoon Guo GuangchangBy He Qinglian on December 13, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/12/13/guoguangchang/" rel="nofollow" target="_blank">履险如夷的郭广昌还能平安否?</a><br />
This abridged translation first appeared in the <a href="http://www.theepochtimes.com/n3/1927263-the-disappearance-of-chinese-tycoon-guo-guangchang/" rel="nofollow" target="_blank">Epoch Time</a> on December 28, 2015<br />
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The year 2015 was an unlucky one for wealthy tycoons in China. Many government officials and business tycoons were sent to prison or have committed suicide. The lucky ones chose to escape overseas. Among the many pieces of news, the one receiving the most attention was about Guo Guangchang, chairman of the board of Fosun Group. It was first said that he had disappeared, and later reported that he was “assisting in an investigation.” Guo once stated that he and his core team members would never acquire a foreign passport.<br />
<a name='more'></a><br />
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A Private Entrepreneur With Political Ties</div>
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Guo Guangchang’s career is extensive. Fosun Group has been called the Chinese mainland version of Hutchison Whampoa. The reach of the Fosun business empire was wide. When news broke that Fosun’s chairman was “invited” to assist in an investigation, trade in eight of Fosun’s stocks was suspended. In all, 26 stocks in China and Hong Kong were affected, and the stock price of Sinopharm fell 6 percent, clearly displaying the broad impact of Fosun on China’s economy.<br />
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Guo has been an example of a private Chinese business entrepreneur who is understood to have the tacit protection afforded by his Communist Party ties. He was involved in the acquisition of more than 20 state-owned enterprises (SOEs). It should be noted that of the “10 deadly sins” that spell the demise of private entrepreneurs, “misappropriation of state assets” is at the top. Almost all private enterprises that have acquired SOEs were slapped with this label. While Guo has a long history of acquiring SOEs, he has always been safe—until early December 2015.</div>
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Many private entrepreneurs consider Guo “unusual.” Guo has had a distinctive attitude about the participation of private businesses in SOE reform. Chinese authorities began to promote private participation in SOE reform since 2013. However, China’s other richest entrepreneurs, such as Zong Qinghou and Wang Jianlin, saw it as a dangerous path.</div>
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An article published by the financial service of Phoenix, a pro-Beijing broadcaster based in Hong Kong, titled “Mixed Ownership: Six Major Risks of Private Equity in SOEs” describes several private entrepreneurs’ views on mixed ownership. The main risks are said to be: Those in charge of SOEs do not need to be responsible for the assets; SOE asset loss will be pinned on private shareholders; SOE shareholders have much more power than private shareholders, and it is difficult to cooperate with them. In short, private enterprises cannot cooperate with SOEs, since cooperation is like a trap. Among all the private business owners, only Guo Guangchang expressed a positive and optimistic outlook, in a speech titled “SOE Reform Must Prevent SOE Asset Loss.” The article concluded that the only way to prevent the loss of SOE assets is to have a good, standardized, and transparent operational process.</div>
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The Shanghai-based online media outlet The Paper published an article titled “How ‘politically indifferent’ Guo Guangchang made it big in his 20 years of investing in state-owned firms.” The article said: “Guo Guangchang’s disappearance has shocked many private business owners. They have so many questions about how the private sector is supposed to be involved in the reform of state-owned firms. In the past, they were eager to know how executive Guo always managed to find a safe and right way to do it. Now they can’t wait to learn what Guo did wrong this time.”</div>
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Guo and Wang Zongnan</div>
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Caixin, in a Dec. 10, 2015, article titled “Fosun Group Chairman Guo Guangchang Has Indeed Lost Contact,” unequivocally pointed out Guo’s connection with Wang Zongnan, the former chief of Shanghai Friendship Group, a state-owned retail company. In August 2015, Wang was sentenced to jail for 18 years for corruption. The verdict stated details of Fosun Group’s involvement, saying Wang used his position to seek benefits for Fosun Group and that in 2003 Guo sold two villas, far below market price, to Wang’s parents.</div>
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Although the amount of money involved was not large, it is a handle for the judiciary department to get at Guo. The meaning of “Guo is assisting in an investigation” is clear; it means that Guo is being used as an entry point to dig out more “tigers behind him.”</div>
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Known as a “Godfather of business,” Wang Zongnan resigned in 1995 as deputy head of Shanghai’s Huangpu District. He became the general manager of Friendship Group Co. Ltd., and general manager of Shanghai Lianhua Supermarket. One of his achievements is similar to Guo Guangchang’s: He led SOE restructuring three times. Wang worked with Guo in Fosun’s acquisition of Friendship Group and Lianhua. There was also the mysterious establishment of Shanghai Leading Co. This company’s main shareholders are ordinary citizens. After Wang was arrested, some media claimed that Shanghai Leading’s legal counsel was a friend of Wang. The situation here is similar to the 2015 Tianjin explosions, when it came out that the legal representatives for certain companies also held stock, and it seemed that all manner of secrets were afoot.</div>
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After Wang Zongnan was dismissed from his position, his relationship with former Chinese leader Jiang Zemin became a focus of attention. Furthermore, the disclosure of Guo’s bribery connection with Wang indicates that Guo is at a disadvantage in the relationship with Wang. It is not normal Chinese political and business practice for Wang to only receive 3 million yuan in bribes for such a big acquisition as Friendship Group and Lianhua.</div>
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Guo’s Foggy Background</div>
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Guo Guangchang’s political and business background remains vague, although the Chinese media has widely reported on it. If we use a method of elimination, we can still end up with some meaningful clues.</div>
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After Guo disappeared, domestic and foreign media, online sites, and microbloggers speculated on what had happened to him. There are several versions. Personally, I tend to believe in Caixin’s, which said that Guo’s disappearance is related to Wang Zongnan’s case—or in other words, the issue of acquiring SOEs. The Paper’s article stated: “Two conclusions can be confidently drawn from Guo Guangchang and his Fosun story over the past 20 years. First, Guo and Fosun must have many undiscovered stories they could tell of their journey to success through wind and rain. Second, the lesson learned from Fosun will be ‘a must-read’ during the coming reform stage of SOEs.”</div>
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Guo’s story has been used as a kind of Chinese Horatio Alger story: showing how farm children can become leaders of the nation and captains of industry, an apparent demonstration that the Chinese people are living in “the best of times.” But the corrupt underbelly of the case seems to show, on the other hand, that Chinese people are actually living in “the worst of times.”</div>
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Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-37558088985732243712015-12-02T01:13:00.000-05:002016-01-15T01:38:01.136-05:00Regulatory Capture and the Chinese Stock MarketBy He Qinglian on November 19, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/11/26/stock-market-4/" rel="nofollow" target="_blank">2015年金融反腐(2):权力与资本的关系能否重构?</a><br />
This adapted and abridged translation first appeared in the <a href="http://www.theepochtimes.com/n3/1909285-regulatory-capture-and-the-chinese-stock-market/" rel="nofollow" target="_blank"><i>Epoch Time</i></a> on November 30, 2015<br />
<br />
The Chinese leadership’s recent attempt to save China’s stock market, after its <a href="http://www.theepochtimes.com/n3/1472034-in-chinas-stock-market-politics-is-in-command/" rel="nofollow" target="_blank">extraordinary meltdown</a> this summer, failed. While key officials of China’s securities industry are being investigated, the big question is whether corruption and insider trading in China’s stock market will really disappear.<br />
<a name='more'></a><br />
China’s securities industry, and the capital in it, is highly dependent on connections to people in the right places of power. Will the anti-graft campaign carried out by Party leader Xi Jinping and his deputy Wang Qishan undo the relationship between power and capital?<br />
The Regulators and the Regulated<br />
<br />
Interest groups—individuals, families, and firms that help one another out—have formed around China’s stock market. Except for stock investors, the Chinese Securities Regulatory Commission (CSRC),intermediaries, listed companies, various professional media, and stock analysts are all in cahoots with one another, which has lead to symbiotic relationships and deep conflicts of interest.<br />
<br />
For instance, from 1996 to March 2011, a total of 58 former CSRC officials joined brokerage and fund management at senior positions, either the vice president level or elsewhere in the senior management team, according to National Financial News.<br />
<br />
The May 16 article said that it’s an open secret in the industry that good connections with the CSRC and related departments are closely related to the success of a project. When listed companies choose a brokerage firm, their main criteria is the strength of the firm’s connections with the CSRC. Most of the top 10 brokerage firms in 2010 had former officials who had just left CSRC.<br />
Gray Areas<br />
<br />
CSRC officials joining securities firms easily leads to insider trading. Due to an intentional gray area in the law, officials in the CSRC system often join brokerage firms, fund management companies, and trust companies after working at CSRC for several years.<br />
<br />
In 2000, the CSRC issued personnel guidelines for senior positions, but there were still no clearly defined limits regarding the relationship between the regulator and the regulated. This omission was not caused by low levels of legislation; the regulations had very detailed provisions as to the qualification requirements of independent directors of listed companies. Commentators at the time noted that the huge contrast between the two positions was “quite interesting.”<br />
<br />
The CSRC Staff Code of Conduct published in 2009 still did not have adequate provisions regarding the period before a regulatory agency official may join a regulated company.<br />
<br />
This “forever-cat-and-mouse-friends” relationship makes insider trading a common practice in China’s stock market, and it is rarely punished.<br />
The Difficulty of Supervision<br />
<br />
Recently, Communist Party agencies have started removing the limitation of CSRC officials joining regulated companies.<br />
<br />
In 2014, CSRC issued a rule that, beginning 2015, officials leaving CSRC must observe a strict three-year period before joining regulated companies. This new regulation led to many officials leaving CSRC and joining the regulated companies earlier than planned.<br />
<br />
The implementation of this waiting period is to “learn from the United States.” However, it is difficult for China to solve corruption even when copying U.S. law. The U.S. government observes a separation of powers, but in China the Communist Party dominates everything. Insider trading and nepotistic dealings are inevitable. As long as there is no change to the one-party monopoly on power, the breeding ground for corruption remains the same, and, as the Chinese saying goes, the trees growing in that soil will be the same trees.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-23332066880571342732015-10-28T04:57:00.001-04:002015-10-28T05:00:40.057-04:00Why is China's plan to raise the retirement age objected?By He Qinglian on October 25, 2015<br />
Source article in Chinese: <a href="http://www.voachinese.com/content/china-retire-20151025/3022857.html">何清涟:中国推迟退休年龄为何一片反对声?</a><br />
<br />
Finally China's coming up with a plan to reform the pension system:
the retirement age is to be raised gradually. This article will be
about the key measures of the reform, the reasons the government
intends to initiate this plan and why the public oppose it.<br />
<br />
<a name='more'></a><br />
<b><u>Key measures of this reform</u></b><br />
<br />
On October 14, head of the <a href="https://en.wikipedia.org/wiki/Ministry_of_Human_Resources_and_Social_Security">Human Resources and Social Security Ministry (MOHRSS)</a> <a href="https://en.wikipedia.org/wiki/Yin_Weimin">Yin Weimin</a> said in a meeting that currently China's retirement age is the lowest in the world, standing on average below 55 years old; upon the approval from the central government, the MOHRSS will disclose to the public its plan to reform the pension system, the aim is to make the retirement age reasonable by raising it a few months every year.<br />
<br />
One of the reasons this reform is introduced is the mounting
pressure of the aging population in China. Currently, the number of
people aged 60 or above is 210 million, accounting for 15.5% of the total
population; and according to projection, the ratio of people of this
age group will reach 19.3% in 2020, and 38.6% in 2050, this makes
China's dependency ratio increasingly higher and the burden heavier.<br />
<br />
The current retirement policy in China was formulated in the early
1950s. In those days, the life expectancy in China was below 50. Now,
more than 60 years later, the life expectancy reaches above 70, the
Corporate Workers' Pension Security System has now over 80 million
members whose average age of retirement is below 55 years old.<br />
<br />
This pension system reform, a plan set to comprise the basic national pension and individual savings, has clearly drawn inspiration from the English experience.<br />
<br />
In view of the fast approaching problem of each English person with a job having to support two retirees, the English government formally announced in 2014 its pension reform scheme. By lifting the retirement age 6 months every year, the English government seeks to raise the pension age to 69 by 2040 and save 500 billion Pounds in the next 50 years.<br />
<div>
<br /></div>
<br />
<b><u>Pension age reform as a way to pass the buck</u></b><br />
<br />
Introduction of pension age reform is a clear sign that the Chinese government wants to pass the buck.<br />
<br />
A few years ago, several studies in China found in the country’s pension system a massive gap, which has two contributing factors.<br />
<br />
First, the big problem of “empty pension accounts”<br />
<br />
The term “empty pension accounts” refers to pension accounts which appear to have money but none could actually be withdrawn. The reason pension accounts becomes empty is because the local government appropriated the money deposited to pay people already retired.<br />
<br />
Back in July 2010, a China-wire report <a href="http://china-wire.org/?p=5603" rel="nofollow" target="_blank">stated</a> that “only about 40 percent of Chinese workers pay into government pension funds, and…the system is carrying a 1.3 trillion yuan ($192 billion) deficit, drawn mostly from what are supposed to be individual pension accounts”; and the website <a href="http://china-wire.org/?p=19580" rel="nofollow" target="_blank">reported</a> this problem again in March 2012.<br />
<br />
In the subsequent years, this deficit in individual pension accounts continued to grow. In May 2015, Chinese media <a href="https://www.google.com/search?q=%E5%85%BB%E8%80%81%E9%87%91%E4%B8%AA%E4%BA%BA%E8%B4%A6%E6%88%B7%E7%BB%A7%E6%89%BF%E9%81%AD%E9%81%87%E5%B0%B4%E5%B0%AC%EF%BC%9A%E7%A9%BA%E8%B4%A6%E9%A2%9D%E8%BF%913%E4%B8%87%E4%BA%BF&oq=%E5%85%BB%E8%80%81%E9%87%91%E4%B8%AA%E4%BA%BA%E8%B4%A6%E6%88%B7%E7%BB%A7%E6%89%BF%E9%81%AD%E9%81%87%E5%B0%B4%E5%B0%AC%EF%BC%9A%E7%A9%BA%E8%B4%A6%E9%A2%9D%E8%BF%913%E4%B8%87%E4%BA%BF&aqs=chrome..69i57.551j0j4&sourceid=chrome&es_sm=93&ie=UTF-8" rel="nofollow" target="_blank">reported</a> that the deficit in individual pension accounts was nearing 3 trillion yuan.<br />
<br />
Second, a huge gap in the pension system<br />
<br />
There are several official figures as to how big the pension gap is. In July 2012, a Bank of China report stated that if the current level of pension payout is to be maintained, an additional 18.3 trillion yuan would be needed in July 2013 to ensure the payment of pension for the next 70 years.<br />
<br />
And a CASS research found that, under the current social security system, if each of the retired persons is to be guaranteed reception of pension in 2020, the pension gap would continue to widen and become unbridgeable in 2015 at the earliest.<br />
<div>
<br /></div>
In <i>China Pension Development Report 2014: Transition to a notional account</i>, it was projected that, using 2012 as the benchmark, the hidden debt of the basic pension of urban laborers was 86.2 trillion yuan, which amounted to 166% the country’s GDP that year. The Report also found that an unbridgeable gap will emerge and the pension pool would soon dry up.<br />
<br />
On the other hand, Zheng Wei and his colleagues at the Peking University projected that the unbridgeable gap would emerge in 2037 and the pension funds would be depleted in 2048.<br />
<br />
That the unbridgeable pension gap has not emerged at this stage can be attributed to the following three factors:<br />
<br />
First, in general, the money in an individual pension account currently makes up no more than 10% of a person’s pension.<br />
<br />
Second, provincial governments appropriate funds from individual accounts to pay pension to people already retired.<br />
<br />
Third, the Central government has been keeping the pension system afloat by subsidizing the local governments.<br />
<br />
In <i>China Pension Development Report 2011</i>, it was shown that by the end of 2010, the accumulated basic pension fund was 194.97 million yuan. However, between 1997 and 2010, various levels of government altogether injected, using subsidies from the Central government, to the pension fund as much as 125.26 million yuan.<br />
<br />
In other words, without subsidies from the Central government, pension system in many provinces and cities would have gone bankrupt.<br />
<div>
<br /></div>
Simply put, people already retired now are still able to collect state pension. People below 50 today are not to expect this when they retire.<br />
<br />
<br />
<b><u>Chinese government: do not count entirely on the government for pension</u></b><br />
<br />
Under the circumstances stated above, the way to keep China’s pension system running would either be raising the contribution level of laborers or lowering the amount of pension retired people can receive.<br />
<br />
There is no room to raise laborers' contribution, though. In China, it is mandatory that every laborer makes contribution to an endowment insurance, medical insurance, unemployment insurance, and employers have to make contribution to employment injury insurance and maternity insurance for their employees; individual/ corporate contribution to the Housing Provident Fund is optional.<br />
<br />
With all these insurance policies in place, an employer would need to fork out 14410 to pay for the five types of insurance for an employee whose monthly salary is 10,000. And the employee would only pocket 7545.3 yuan after making his own insurance contributions. <br />
<br />
These premiums are heavy burden for corporate owners and they are part of the reason that foreign investment are leaving China in recent years—the labor cost in China is far higher than in other countries.<br />
<br />
According to Bai Chong'en, a professor at Tsinghua University, the
social security contribution rate in China is the highest of the 181
countries around the world, roughly double the average contribution
level of Brazil, Russia and India, three times the rate of the five
Scandinavian countries, 2.8 times that of G-7 countries and 4.6 times
that of its neighboring countries in East Asia.<br />
<br />
Experts are of the view that for China’s public finance in future and corporations not to be crushed by the social security system, the only viable reform measure would be to shrink the scale of social security (reduce the premiums and scale down the system’s coverage). Without this reform, businesses would be crushed, and the government and the public would get nothing.<br />
<br />
In a press conference held on March 6 this year, Financial Minister Lou Jiwei had already disclosed some of the social security system reform measures, saying that the pension system would become backed by three pillars: the public endowment scheme, corporate pension (<a href="http://wiki.mbalib.com/wiki/%E4%BC%81%E4%B8%9A%E5%B9%B4%E9%87%91" rel="nofollow" target="_blank">Definition in Chinese</a>) and employment annuity (<a href="http://www.rdsj5.com/rdxw/5676.html" rel="nofollow" target="_blank">Definition in Chinese</a>), and the commercial health and endowment insurances laborers acquire on their own.<br />
<br />
What Lou said in that press conference meant that, while laborers in the urban area could rely heavily if not solely on the public endowment scheme for their pension in the past, they would now need to have corporate pension, employment annuity, as well as their personal health and endowment insurances if they want to live well after they retire.<br />
<br />
<br />
<b><u>The reasons the public oppose raising the retirement age</u></b><br />
<br />
The plan to raise the retirement age has been vocally opposed by the Chinese public since its announcement. Those who object this plan generally believe that postponing the retirement age is not a viable solution to the problem of the massive gap in the pension system.<br />
<br />
To begin with, this plan will put more pressure on employment. In China, there are at least 6 million people who reach retirement age each year. If the retirement age is raised, at least 6 million job opportunities would be taken away from young job seekers, thus adding more to the employment problem as China’s economy is slowing down.<br />
<br />
According to several research institutions, around one million job opportunities would be gone with each percentage point of reduction in the GDP. The rate of China’s economic growth has already dropped from 10% to below 7%, this means that around three million job opportunities have disappeared each year.<br />
Take these two together and we would see that about 9 million job opportunities are taken away because of the slowing economy and the postponement of retirement age.<br />
<br />
Second, to raise the retirement age would prolong the hardship of the middle-aged unemployed persons. As a result of foreign investment and corporations leaving China on a massive scale, coupled with the huge number of businesses that had gone broke, many people lost their job. Many of these people are over 40 and it is difficult for them to get hired again. Those unemployed who aged over 50 are only getting by with their savings, hoping that their hardship would be alleviated when they reach the retirement age.<br />
<br />
When Chinese officials introduce this “gradual postponement of retirement age”, they listed the retirement age in England, Canada, Australia and the United States to justify the change. However, they intentionally omitted one important matter: unlike in Britain, Canada, and Germany, where the unemployed could rely on the various social relieves in place and won’t have struggle to get by; in China, those without a job have no such social safety net to fall back on.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-29397383245818390412015-10-17T10:56:00.000-04:002015-10-17T10:57:19.246-04:00Flight of Li Ka-shing Signals the Beginning of China’s Economic MeltdownBy He Qinglian on September 29, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/09/29/ka-shing-li-and-capital-flight/" rel="nofollow" target="_blank">“李嘉诚话题”突显权力与资本关系日趋紧张</a><br />
This <i>abridged translation</i> first appeared in the <a href="http://www.theepochtimes.com/n3/1875809-flight-of-li-ka-shing-signals-the-beginning-of-chinas-economic-meltdown/" rel="nofollow" target="_blank">Epoch Time</a> on October 11, 2015<br />
<br />
<i><span style="font-weight: 400;">After Hong Kong billionaire Li
Ka-shing, Asia’s richest man, recently moved his investments out of
China, state media accused him of being unethical and ungrateful,
fleeing China when the economy was slowing despite having profited
handsomely in better times. He Qinglian, a noted economist, explores the
tensions between power and capital in today’s China.</span></i><br />
<br />
<a name='more'></a>Li Ka-shing’s “escape” has sparked heated discussions in China. This debate should be understood as a war between power and capital; it reveals the tripartite dilemma of investing in today’s China. <br />
<br />
The first dilemma: Hong Kong investment has always been regarded as “internal” capital with a foreign name. <br />
<br />
From the time when Deng Xiaoping started the reform and opening policy, up until the 1990s, Hong Kong investment was the most important component of all foreign investment, followed by Taiwan. Hong Kong’s location and its special economic role were part of the political considerations that prompted the Communist Party of China (CPC) to treat Hong Kong as “foreign” investment.<br />
<br />
Before that, when the CPC was facing a comprehensive blockade from the West, Hong Kong was China’s “international channel,” the channel of foreign capital and technology, as well as its import and export trade base. <br />
<br />
China started reform and opening up in 1979. Hong Kong businessmen were not only the main body of investment, but also pathfinders and bridges to help China open up. At that time, Hong Kong accounted for 70 percent of foreign investment, followed by Taiwan and Japan. <br />
<br />
After China joined the World Trade Organization in 2001, Hong Kong gradually lost its status as China’s trade entrepôt. Its offshore financial business slowly weakened. Hong Kong became a base for Party officials to move their capital for further deployment abroad, their “money laundering garden.” <br />
<br />
Between 1978 and 2001, out of political considerations, the CPC categorized Hong Kong investment as “foreign” capital as Hong Kong was yet to return to China, or had just been returned. After 2001, it was still in the CPC’s interest to treat Hong Kong investment as foreign capital in the economy. To interest groups, Hong Kong is an important channel for money laundering. Even now, top Hong Kong businessmen and Chinese investment in Hong Kong are closely tied to the Communist Party.<br />
<br />
Money Is Allowed in, but Not Out<br />
<br />
The Second dilemma: There are limits to capital flows. Investment capital has been allowed to come in, but not allowed to leave. <br />
<br />
The CPC forcibly interfered in China’s stock market decline this year. In the end it arrested people on accusations of “draining China.” This was generally regarded as inappropriate government intervention in the financial market and malicious restrictions on the free flow of capital.<br />
<br />
International capital flows refers to capital transfers between countries or regions, including investments, loans, aid, buyer credit, seller credit, foreign exchange trading, securities issuance and circulation, and so on. International cross-border capital flows can be divided into inflows and outflows. When China entered the WTO, key members of the WTO, such as the United States and European countries, requested that China open up its financial market and allow foreign capital in. <br />
<br />
Among the WTO member countries, there is none that welcomes foreign investment while at the same time limiting capital outflows. The CPC’s regulation on capital flows has established a precedent. The WTO does not have countermeasures on this policy. This has caused one more layer of concern for international capital. What can they do if one day China restricts capital outflow? They therefore want China to implement full capital mobility rules: to not only welcome free capital to come in, but also to allow capital to leave. <br />
The ‘Original Sin’ of Being Rich <br />
<br />
The third dilemma: the personal safety of private investment capital owners in China is at risk. <br />
<br />
Private capital in China has always been considered an “original sin.” There is an understanding in China that the majority of private enterprises rely on political power for backing. They grow bigger and stronger by conducting business in the “gray area” created through connections with officials. Their wealth is not clean. <br />
<br />
The government assumes that private sector “kings” make use of gaps granted them by the government, such as tax evasion and fraudulent bookkeeping. There are lots of gaps. Usually the government is not short of money. <br />
<br />
When private companies have good relationships with officials, these gaps do not pose an issue. But when the government is short of money, or the officials whom private companies rely on are jailed for corruption or retire, capitalists are no longer safe. <br />
<br />
In 2014, “Guidelines to Deepen Reform of State-Owned Enterprises” was published, to mobilize private equity. Many private entrepreneurs worry that the hand of the CPC is reaching for them. They have started to leave. <br />
<br />
They have engaged in a large number of overseas investments. This caused a sharp reduction in foreign exchange reserves in recent months. Beijing painfully felt the shrinking of its foreign exchange reserves—about $600 billion in outflows, according to a Sept. 28 article by The Economist—and has hence increased control of foreign exchange. Dozens of security brokers were arrested for “draining China.” The relationship between money and power has reached a state of hypertension.<br />
<br />
The Dilemma Trifecta <br />
<br />
Li Ka-shing finds himself in all three dilemmas. <br />
<br />
Why is Li Ka-shing being ostracized as an investment escapee? It is because of the nature of his investment capital. <br />
<br />
Of all Hong Kong businessmen, Li Ka-shing is the most successful and has the closest ties to Beijing. He has met Party leaders on numerous occasions—Deng Xiaoping twice, in 1978 and 1990. This meant that his access in China was unimpeded, and his privileges surpassed any “princeling” (son or daughter of a top Party leader). <br />
<br />
The article that attacked Li for leaving China said: “Given the nature of Li’s profiteering in China over the past 20 years, it is not as simple as just doing business. … Real estate wealth does not come entirely from the market economy. He might not be able to leave as he wishes.” <br />
<br />
Li Ka-shing’s capital was actually “internal” capital with a “foreign name.” It was provided by the Communist Party, with particular policies and special privileges. Therefore, Li’s money should “go down with the regime.” However, with China’s economic difficulties bursting open, Li took the money and left. This has greatly disappointed the regime. <br />
<br />
What the Chinese media dare not say is that Li Ka-shing’s divestment signals the beginning of the collapse. Li Ka-shing is not the only Hong Kong investor leaving China. Sixty-five percent of all “foreign” investment is Chinese capital in Hong Kong. This investment capital has increased in a fashion similar to Li Ka-shing’s, with help from those in power. <br />
<br />
Li Ka-shing’s “escape” triggered a flood of responses that demonstrates the increasingly tense relationship between investment capital and political power and signals the end of China’s economic golden age.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-22523312828764050152015-10-01T09:21:00.002-04:002015-10-01T09:21:56.367-04:00China’s SOE Reform: Privatization or Taking over the Private Sector?By He Qinglian on September 19, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/09/19/state-owned-enterprises/" rel="nofollow" target="_blank">《国企改革方案》的风,姓私还是姓公?</a><br />
This translation first appeared in <a href="http://chinachange.org/2015/09/30/chinas-soe-reform-privatization-or-taking-over-the-private-sector/" rel="nofollow" target="_blank">ChinaChange</a> on September 30, 2015<br />
<br />
A flood of commentary has come out since the release of the long-anticipated <i>Guiding Opinions on Strengthening and Reform of State-Owned Enterprises</i> (《<a href="http://news.xinhuanet.com/politics/2015-09/13/c_1116547305.htm">中共中央、国务院关于深化国有企业改革的指导意见</a>》;
“SOE Reform Program” or “Program” hereafter), jointly issued by the
Central Committee of the Chinese Communist Party and the State Council.
Some say that the Program is aimed at expanding and strengthening SOEs,
while others say that the government is using market forces to promote
privatization. That the same plan can yield two radically different
suppositions is due to the Program’s strong “Xi Jinping quality”: It
tries to combine the governance characteristics of both Mao Zedong and
Deng Xiaoping and gain some advantage from both sides, thereby
introducing a whole bunch of mutually contradictory formulations.<br />
<a name='more'></a><br />
<b>Key Points of the Program</b><br />
The SOE Reform Program is 10,141 characters long and comprises 30
opinions in eight sections. It makes its purpose clear from the very
outset: “SOEs are owned by the people as a whole . . . and are an
important material base and political foundation for the development of
our party and state.” This message infuses the Program throughout. Below
are a few of its key points that must not be overlooked:<br />
<b>I.</b> A highlight of the Program is the mixed-ownership
system. Pundits have different opinions about this system based on
their different understandings of the word “mixed.” Some (including
foreign experts) see the word “mixed” and believe that the plan
encourages privatization. But the original language in the Program says:
“Actively encourage ownership diversification through introduction of
other state-owned capital or various types of non-state-owned capital.
State-owned capital may retain absolute or relative majority share
positions, or it may be a [non-controlling] equity participant.
Encourage the integrated companies to go public.”<br />
The drafters of the Program seemed to worry that people would not
fully understand their meaning, so they made a special point of noting
in Opinion 2 (under the “General Principles” section): “Public ownership
occupies the dominant position. It remains the basic economic system,
the key point for consolidation and development. The non-public sector
occupies a subordinate position.” “Upholding and improving the basic
economic system are the fundamental requirements for deepening SOE
reform that must be grasped.”<br />
So, “mixed ownership” means that private companies can make cash
purchases of shares in SOEs and become shareholders. But since the
equity allocation ratio is based on the state-owned capital being the
controlling party, private companies can only remain in a subordinate
role, without any decision-making power or right to a say in matters. To
prevent the public from getting the wrong idea, after releasing the
program the Xinhua News Agency promptly issued a piece entitled “We Must
Unequivocally Oppose Privatization” (《须旗帜鲜明反对私有化》).<br />
<b>II.</b> The Program calls for fostering “market-oriented
management mechanisms” while strengthening the Party’s leadership.
Marketization is mentioned a total of 14 times, as if it were a theme of
the Program. But in Opinion 24 it says: “Give full play to the key
political role played by the Party organization within SOEs. Unite the
goals of strengthening party leadership and improving corporate
governance. Put a general requirement for Party-building work into the
corporate charters of SOEs and clarify the statutory role of the SOE
Party organization in the corporate governance structure.”<br />
“Party leads everything” was the lifeblood of political and economic
life during the Mao era. “Marketization” has been the theme of SOE
reform ever since Deng Xiaoping took over. When Zhao Ziyang was General
Secretary, he worked very hard to separate government from enterprise in
the hopes that it would bring an end to the misadministration that came
when the party managed companies. Originally, he even planned to build
on his successes in this area and promote separation between the party
and the government, but all of those efforts went down the drain after
the events of June 4, 1989.<br />
More than 60 years of Communist rule has shown that, under Party
control, SOEs can use the Party’s support to grow large but not strong.
This is because, growing strong means that a company increases its
operational capabilities and management capacity, achieves a reasonable
input-output balance, and gains market share through competition, rather
than monopoly. These are precisely the things that it is impossible for
Chinese SOEs to achieve.<br />
<b>III.</b> Private companies with “great development and
growth potentials” will become the primary target of SOE enterprise
reform. Opinion 18 of the Program states: “Encourage state-owned capital
to pursue various ways of investing in non-state-owned companies. Fully
realize the capital operation role of state-owned investment and
operations companies and use market forces to make quality investments
in non-state-owned companies with great development potential and strong
growth in the key sectors of public services, high-tech, environmental
protection, and strategic industries.”<br />
In other words, private companies with weak prospects can rest easy
that SOEs won’t come knocking at their door. But if you’re a private
company with high efficiency and good market prospects, the SOEs won’t
even knock—they’ll come right in and purchase some of your shares or
shell resources. There will be nowhere to hide.<br />
<br />
<b> </b><b>Why Do the Chinese Authorities Insist on Making SOEs Big and Strong?</b><br />
You can tell what a government considers its key interests to be by
looking at the companies it chooses to support. Take, for example, the
acquisition of the largest American pork processor, Smithfield Foods, by
China’s Shineway Group. With a total of 48,000 jobs at stake, including
around 1,300 newly added jobs, local residents and governments all
welcomed the deal and didn’t care that the new owners were Chinese.<br />
In China, the private sector has long provided more employment
opportunities for Chinese people than SOEs. According to official
statistics for 2007, SOEs accounted for only 9.2 percent of industrial
jobs, compared to 44.4 percent for the private sector. In January 2011,
the All-China Federation of Industry and Commerce published a report
indicating that small and medium enterprises accounted for more than 99
percent of all Chinese companies and accounted for more than 70 percent
of urban employment and 90 percent of newly added jobs. In 2014, the
State Administration for Industry and Commerce announced that sole
proprietorships and private companies accounted for approximately 90
percent of all new urban jobs nationwide.<br />
As foreign investors have begun to leave China, rural-based laborers
are returning to the countryside in great numbers and more than half of
all university graduates are forced to return home and live off their
parents. In principle, the government ought to encourage development of
the private sector and make raising the employment rate its primary
consideration. So why do the authorities instead want to make SOEs,
which account for comparatively fewer jobs, “big and strong” and adopt a
“reform” strategy of “advance the public sector and diminish the
private sector”? It is based on the following two considerations:<br />
<ol>
<li>As the economy has begun to slide, the Chinese government is facing
an enormous financial dilemma. Private companies already represent the
largest share among all Chinese companies when it comes to number of
enterprises, assets, or main revenues, whereas SOEs are at a
disadvantage on all accounts. But when it comes to the share of taxes
paid to the state, private companies paid only 13.0 percent in 2012,
according to official figures, compared to 70.3 percent paid by SOEs. As
original sources of tax revenue increasingly dry up, the fact that SOEs
are the main pillar of public finances is a sufficient reason for the
government to make such efforts to support them. Whether or not SOEs can
increase the employment rate is not among the government’s primary
concerns. Premier Li Keqiang has already told the hundreds of millions
of unemployed to follow a path of starting their own businesses.</li>
</ol>
<ol start="2">
<li>Restructuring and listing is the Program’s ultimate goal. Currently,
there is a very high rate of debt among SOEs. At the end of July 2015,
the average asset-liability ratio among Chinese SOEs was 65.12 percent,
with the overwhelming majority of those debts owed to state-owned banks.
This kind of relationship between banks and companies ensures that if
SOEs cannot perform better, the state-owned banks will also collapse.</li>
</ol>
Over more than two decades, the main way that SOEs have gotten out of
their difficulties has been to follow the brilliant idea of former
Premier Zhu Rongji, who first allowed SOEs to raise money by going
public. But today this idea seems to have lost its magic, and the
national team appears stuck after being forced by the government to take
part in efforts to save the stock market. So, the SOE Reform Plan is
only an attempt to come up with a new tactic: have SOEs reform and,
after mixing ownership with private companies, “encourage restructuring
for going public.” After the assets have been restructured, the
companies can go to the markets to float IPOs under a new name.<br />
<br />
<b>Does the Private Sector Want to “Mix” with SOEs?</b><br />
This talk of a mixed-ownership system is something the public is familiar with, having first appeared in the 2014 <i>Guiding Opinions on Deepening State-Owned Enterprise Reform</i> (《<a href="http://www.gov.cn/zhengce/2015-09/13/content_2930440.htm">深化国有企业改革的指导意见</a>》) and the public consultation draft of the <i>Guiding Opinions on Improving the Forms of Realization of Public Ownership </i>(《关于完善公有制实现形式的指导意见》). But private companies are not in the least bit enthusiastic. In my earlier article, “<a href="http://www.voachinese.com/content/china-reform-20140906/2441063.html">SOE Reform: Government and the Private Sector Each See Things Differently</a>,”
I explained how private companies commonly perceive “mixed ownership”
as a trap. They believe that if they take part in a mixed-ownership
company, the private company can’t get a controlling stake so it’s very
likely to be neutralized and, in the worst case, caught with no means to
defend itself.<br />
Wanda Group Chairman Wang Jianlin (王健林) told the Sina website: “If
I’m going to ‘mix,’ the private company definitely needs to have a
controlling share, or at least I want relative control . . . If the SOE
has the controlling share, isn’t that the same as me helping out the SOE
by giving it money? Wouldn’t that be crazy of me to do? I can’t do that
kind of thing.”<br />
In the article <i>Mixed-Ownership: Six Big Risks for Private Companies Investing in SOEs</i>
(《混合所有制:民企参股国企的六大风险》), the author got several private entrepreneurs to
share their opinions about the mixed-ownership system. The main risks
they raised were: (1) the people with responsibility over state assets
were not actually required to take responsibility; (2) concern about
loss of state-owned assets will become a high-tension line used to keep
private-sector shareholders under control; (3) state-owned shareholders
are much more powerful than private-sector shareholders, making it
difficult to cooperate; and so on. The point is that private companies
cannot cooperate with SOEs, because for them “cooperation” means getting
caught in a trap.<br />
It’s clear that even if private companies don’t want to “mix,” the
government is determined to “mix” them. Chinese private entrepreneurs
have weathered many storms over the years, and as soon as they saw the
government getting ready to position itself for mixed ownership, they
started “investing overseas” in great numbers. As the saying goes: “Of
the 36 stratagems, fleeing is best.” Since August of this year, Beijing
has imposed stricter foreign exchange controls. Rather than targeting
those small holders of foreign exchange, the controls are aimed at those
rich businessmen who are trying to transfer their assets overseas.
“Shorting China” is becoming an up-and-coming crime.<br />
To put the private sector at ease and keep them from seeing the
government as the wolf dressed up in Grandma’s clothes, Opinion 16 of
the Program states: “Uphold the principle of implementing policy
according to location, according to industry, according to company.
Decide whether to remain independent, take a controlling share, or make
an equity investment based on what is appropriate. Don’t make arbitrary
matches between companies or try to apply mixed ownership across the
board. Don’t set timetables; move forward when the time is ripe. Reform
must be carried out in accordance with law and regulation, in strict
accordance with procedure, and in a transparent and fair manner. Ensure
protection of the rights and interests of the various investors in
mixed-ownership enterprises and root out state-owned asset loss.”<br />
The real problem is that the Chinese government has always treated
law as something used to constrain the people. Private entrepreneurs
know what’s really behind this kind of reform intended to “preserve the
leading position of the state-owned sector” and “root out state-owned
asset loss.” Under this kind of “reform,” just watch and see whether the
private companies that SOEs have taken a fancy to can avoid becoming
“Little Red Riding-Hoods.”Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-43331900790985121492015-09-23T04:09:00.002-04:002015-09-27T11:45:45.949-04:00Likely Not Much to Come of Xi Jinping’s Meeting With ObamaBy He Qinglian on September 11, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/09/11/xijinping-visit-usa/" rel="nofollow" target="_blank">习奥峰会“咯牙”话题知多少?</a><br />
This translation first appeared in <a href="http://www.theepochtimes.com/n3/1752022-not-much-likely-to-come-of-xi-jinpings-meeting-with-obama/" rel="nofollow" target="_blank">the Epoch Times</a> on September 14, 2015.<br />
<br />
Chinese leader Xi Jinping’s upcoming state visit to the U.S. has many overseas media speculating on the potential topics to be brought up during the talks with President Barack Obama, from regional tensions caused by Beijing’s activities in the South China Sea, human rights issues, and cyber-attacks.<br />
<br />
<a name='more'></a>Other concerns looming large in the recent Sino-American dynamic include economic issues highlighted by the results of the recent Pew Center poll, including U.S. Treasury holdings, the employment shift to China, and the American trade deficit.<br />
<br />
Human Rights, Immigrants, and the Nine-Dash Line<br />
The U.S. will surely talk about and focus on detained rights lawyers such as Wang Yu, Gao Yu and a release list might be proposed. Looking at past meetings, these efforts are not likely to bear much fruit. Perhaps Beijing will give a show of “sincerity” and release the seriously ill Gao Yu.<br />
<br />
Cyber-attacks are another hot-button topic. American intelligence complaints of blurred lines between the Chinese military and business sectors will meet with little more than protest from the Chinese Foreign Ministry and rhetoric from Beijing, since they have no second Snowden in their hands.<br />
<br />
Neither is the issue surrounding the controversial “Nine-dash line” delineating Beijing’s claims in the South China Sea likely to be concluded, as it is really just a power struggle over who gets to play the decisive role in the region.<br />
<br />
<br />
Chinese illegal immigrants could be a point brought up at the Xi-Obama summit. According to U.S. immigration authorities, there are 39,000 Chinese in the country illegally awaiting deportation, including 900 “violent criminals.” Likely China will demand the extradition of fugitive officials wanted for corruption such as Ling Wancheng (brother of deposed high-ranking official Ling Jihua) and Guo Wengui.<br />
<br />
Economic Troubles<br />
As American industrial capital and manufacturers withdraw from the increasingly expensive Chinese labor market, the phobia of China stealing U.S. jobs is now a non-issue. The “Made in the USA, Again” slogan made by the Boston Consulting Group in May 2011 is becoming reality, as China faces both manufacturing closures and a rising tide of unemployment brought on by shrinking foreign investment.<br />
<br />
In 2010, then-vice premier Zhang Dejiang revealed that foreign companies provided China some 45 million jobs, and when taking into account the domestic enterprises indirectly supporting these international investors, hundreds of millions of workers are involved. For China to lose a third or half of these would be devastating.<br />
<br />
Meanwhile, Chinese companies in the U.S. have employed more than 80,000 people, a telling increase from the 15,000 in 2010 and virtually none in 2000.<br />
<br />
What is most worrying is the trade deficit the U.S. is experiencing with its Chinese partner. This is the direct result of accepting China as a World Trade Organization (WTO) member. According to a Chinese customs report on Sept. 8, the country’s imports and exports both continued to decline this August. The total export revenue was $197 billion, down 5.5 percent. The lowered exports were mainly caused by a downturn in trade with the European Union and Japan, but exports to the United States and ASEAN states maintained growth.<br />
<br />
Sino-American trade, amounting to 14.1 of China’s total foreign trade value, came in at $355 billion, an increase of 2 percent.<br />
<br />
Chinese exports to the U.S. totalled $250 billion, increasing 5.9 percent, while imports amounted to $93.75 billion, down 7.4 percent.<br />
<br />
The United States has criticized the Chinese government for exacerbating the trade imbalance by providing export subsidies to domestic enterprises (causing foreign dumping) while charging high tariffs on U.S. imports coupled with exchange controls. But when China joined the WTO, there was no specific requirement on China’s foreign exchange regulations, and matters such as the governmental subsidies can only be solved by initiating the WTO’s internal dispute mechanisms.<br />
<br />
Expecting such talks to persuade China to abandon the subsidies and reduce tariffs was already virtually impossible; in the current Chinese economic downturn, it’s even less likely. Any promises the Chinese could make would be empty rhetoric.<br />
<br />
Chinese U.S. Treasury Holdings: The Common Interest<br />
Holding dollars as foreign exchange reserves is a common practice among emerging market countries, and U.S. treasurys are usually the best choice. China now holds an amount of treasurys second only to Japan. In February this year, China’s total holdings of U.S. treasurys and securities were $1.2 trillion, only slightly less than what Japan holds.<br />
<br />
Since mid-August, when China announced the devaluation of the yuan, the currency has been selling fast. To stabilize the yuan’s exchange rate and prevent further devaluation, the Chinese government sold about $200 billion in treasurys.<br />
<br />
Considering the size of China’s foreign exchange reserves, the impact of China selling U.S. treasurys would be much greater than that from other countries. In the past fiscal year, treasurys contracted in every quarter because China’s state-run banks have been buying yuan to stabilize the exchange rate.<br />
<br />
For China to protect its currency from the impact of the devaluation is crucial importance; moreover, the United States now also sees that the consequences of the yuan devaluation are not necessarily beneficial. Both sides have a “common interest” in U.S. treasurys.<br />
<br />
In sum, not much is to be expected from Xi Jinping’s upcoming state visit. The many disputes over economic economic interests will only allow for consensus and collaboration on vague topics such as climate, “sincerity,” and lists of “expectations.”Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-6680463364205051362015-09-23T03:57:00.000-04:002015-09-23T04:14:45.114-04:00China Is Not Saving the World EconomyBy He Qinglian on August 27, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/08/27/china-economy-4/" rel="nofollow" target="_blank">黄梁梦醒:中国并非拯救世界经济的“诺亚方舟”</a><br />
This adapted translation first appeared in <a href="http://www.theepochtimes.com/n3/1745727-china-is-not-saving-the-world-economy/" rel="nofollow" target="_blank">the Epoch Times</a> on September 7, 2015.<br />
<br />
Recently, the international community finally, and collectively, began to have a pessimistic view of China’s economy. Reasons for their pessimism vary. Some believe that Xi Jinping’s anti-corruption campaign has led to political instability and hence economic recession. Others believe that the Chinese regime’s intervention in the stock market directly caused an economic crisis.<br />
<a name='more'></a><br />
But people almost never seriously consider that it’s China’s economic system that makes it difficult to sustain prosperity. Despite everyone’s wishful thinking, China has never been a Noah’s Ark, able to save the world economy.<br />
<br />
China Dream<br />
With unemployment on the rise and tougher economic realities unfolding for China’s middle- and lower-classes, many Chinese are cracking jokes about the “China Dream,” calling it “pure illusion.”<br />
<br />
Few Chinese are aware of the other “China Dream” that’s been circulating in the international community. This dream has been the same in Europe, America, and Africa where governments had fantasies of the Chinese government opening its big money bag and investing in their countries to boost their economies and employment.<br />
<br />
China has actually done that. It has made large-scale investments overseas. Data from the United Nations Conference on Trade & Development (UNCTAD) indicates that China became the world’s third largest foreign investor in 2013, right behind the U.S.’s $338.3 billion and Japan’s $135.7 billion. From 2005 to the first half of 2014, China’s foreign direct investment (FDI) totaled $515.3 billion and projected investments totaled $355.1 billion.<br />
<br />
In the United States, Britain, and Germany, investment from China increased at the greatest pace. Between 2007 and 2013, China’s investment in the United States increased by 14 times. Among 50 U.S. states, 35 of them have received investment from China, with New York state, California, and Texas being the top three. China’s investments cover extensive areas, including energy, real estate, manufacturing, finance, services, information, electronics, biotechnology, green projects and others, creating more than 80,000 jobs in the United States.<br />
<br />
Germany has also become a hot spot for Chinese investment. In 2012, Germany accounted for 38 percent of China’s FDI projects in Europe, far more than Britain and France combined.<br />
<br />
According to data from Germany’s The Statistics Portal, China established 2,500 companies in Germany, creating 12,000 jobs in Germany as of the end of 2014.<br />
<br />
The investment banking industry has gained a lot from the China market. In 2014, the industry had a record revenue of $6 billion from the world’s second largest economy. Germany’s MERICS China Research Center and the U.S. Rhodium Group jointly issued a report predicting that China will become the world’s largest cross-border investor by 2020.<br />
<br />
My response to such optimistic predictions: The higher the expectations, the greater the disappointment. China’s recession has caused a bad mood all over the world, as the world’s expectations of China were too high.<br />
<br />
Chinese Century<br />
Beijing does want to save the Chinese economy but is not able to. And the Chinese regime is indeed anxious to become the world’s No. 2 economic power.<br />
<br />
However, that does not seem to be in the cards now.<br />
<br />
When Xi Jinping and Li Keqiang took power, the country’s soil, rivers, lakes, oceans, and air were all heavily polluted, and the three main pillars supporting China’s economic development for nearly 30 years had shut down.<br />
<br />
Analysts who predicted that the 21st century would be the “Chinese Century” have been unwilling to accept the fact that a country can only have sustained economic development under two conditions:<br />
<br />
One is that such a country must have tremendous advantages in resources. This includes having good awareness of resource conservation, as well as having leading industrial systems, such as the United States and Canada do.<br />
<br />
And, two, it must have leading-edge technology, such as the United States has at present and the U.K. had before World War II.<br />
<br />
Both Britain and China have been referred to as “the world’s factory.” The U.K. obtained the title from its technological advantage during the industrial revolution, whereas China’s title of “world factory” refers only to being an assembly plant; it cannot be compared with the U.K.’s status at that time. Once the cost of labor and land is no longer cheap in China, international capital will flow to other places where costs are lower.<br />
<br />
China’s prosperity, derived from being the world’s factory, relies entirely on cost advantage, namely cheap land and labor. In order to increase economic development, China has been recklessly consuming basis resources with the result that water, soil, and air are seriously polluted and minerals have been depleted. According to statistics by the National Development and Reform Commission, China has 118 resource-exhausted cities—about 18 percent of all cities—impacting a population of 154 million.<br />
<br />
Another important point is that China has money to invest abroad because Beijing prints money. It has thus earned another title: the world’s largest money-printing country.<br />
<br />
In January 2013, China’s 21st Century Business Herald conducted a statistical analysis of the 2008–2012 M2 data of the world’s major central banks. The conclusion was: Since 2009, China Central Bank’s money supply had surpassed Japan, the United States, and the eurozone. China became the world’s largest “money machine.” In 2012, the world’s new money supply was over 26 trillion yuan, with China accounting for nearly half of it.<br />
<br />
Recession<br />
China has been opened up to the rest of the world for nearly 40 years. Before 2008, developed countries all dreamed about China becoming their investment paradise and the largest commodity market. But after they discovered China’s investment environment to be far less than ideal, they left one after another.<br />
<br />
After the 2008 world financial crisis, many countries again put their hopes in China, this time to save the global economy. However, those people intentionally ignored the fact that, compared with the countries who wanted to be “saved,” such as the EU, New Zealand, or South Africa, China is a much poorer country, having over 800 million people who are spending less than $2 per day. In addition, there is extreme environmental pollution and little or no welfare benefits.<br />
<br />
A Jan. 22, 2015, Chinese language article by the Wall Street Journal titled China’s Capital Is on the Move once again evoked this “China Dream,” saying: “We need a Bretton Woods Three to get global growth going with China providing the capital and the U.S. again absorbing a substantial portion of it.”<br />
<br />
This dream is completely absurd. We are just now witnessing the beginning of China’s economy sliding into long-term recession.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-41087932137323259342015-08-10T00:01:00.000-04:002015-08-10T00:02:53.210-04:00Impending Revolution in ChinaBy He Qinglian on June 29, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/06/29/china-revolution-in-future/">“革命”的一只鞋已经落地</a><br />
<br />
<i>An alternative version of the article first translated by and published in the Epoch Times on July 7, 2015</i>.<br />
<br />
History always makes fun of the wishes of rulers. The last thing rulers want, history would give them just that. Take for example Beijing, the last thing it wants is a revolution, and yet a revolution is looming.<br />
<a name='more'></a><br />
I have long been paying attention to the issue of an impending revolution in China, and starting from two years ago I had written a series of articles on this topic, explaining my observations. <br />
<br />
At this moment, a revolution in China is not a question of “if” but “when” because one of the shoes of a revolution has already touched the ground. I will explain what this means in the paragraphs to follow.<br />
<br />
<u>Factor of revolution one: astronomical number of people yearning for change</u><br />
<br />
By “people yearning for change” I refer to those who are of low political, economic, and social status and, in the current social structure in China, have no hope for any improvement or a better future at all.<br />
<br />
To understand just how “astronomical” the number of these people is, we can have a look at the following set of data.<br />
<br />
According to data released by the World Bank a few years back, the number of people spending on average a dollar or less a day was about 300 million; and data from the Asian Development Bank showed that the number of lower middle class people—individuals spending on average two dollar a day—was 303 million. Combine these two figures and we can see that in China, people in poverty make up nearly half of the country's population.<br />
<br />
And according to a figure from former Premier Wen Jiabao in March 2010 that put the number of people unemployed in China at 200 million, combining with another 124 million people who lost their jobs because of the withdrawal of foreign investment in recent years, the number of people without a job in China would be around 330 million.<br />
<br />
A conservative estimate is that the people in poverty and semi-poverty in China account for more than 60 percent of the country's population.<br />
<br />
Beijing is of course aware of this fact, and it did take some actions, such as raising the government grain purchase prices, and expanding the coverage of low-income protection fund in rural area. Yet, for the astronomical number of people in need, these measures mean almost nothing; even those who are covered by the low-income protection fund won't necessarily feel thankful toward the government.<br />
<br />
<u>Factor of revolution two: indoctrination with Marxism and Mao Zedong thought</u><br />
<br />
As I pointed out in my earlier articles that in the last two decades, the plunder rampage of the privileged resulted in alarming wealth disparity and excessive concentration of wealth in China. According to The People's Livelihood Development Report 2014 by the Peking University, in 2012 the Gini-coefficient was 0.73; the top 1% households own more than a third of the wealth of the country, while the bottom 25% households combined have in their possession just about one percent of the country’s wealth.<br />
<br />
Marxism has a very simple explanation for this: the origin of all crises is that the vast majority of the people is exploited and their income too low: and the minority, through plunder and exploitation, controls the bulk of wealth in society.<br />
<br />
As a result of the official indoctrination, in China there are two types of Marxists, the rich Marxists and the poor Marxists.<br />
<br />
The people in power, the rich and the poor, they all worship Karl Marx and Mao Zedong. The only difference is, for the privileged and those in power, the adherence of Marxism and the worship of Mao is a banner, without which the Communist Party (CPC) has no legitimacy at all; for the rich, this is the way they show their allegiance to the Party, a political insurance; for the poor, they want the substance, they want to exploit the exploiters and seek to realize egalitarianism.<br />
<br />
Here it is necessary to differentiate poor Marxists and Mao-leftists. Mao-leftists are people who worship Mao Zedong, whitewash the Mao era, and consider capital and capitalists, both domestic and foreign, as the root of all evil, and are submissive to the authorities; poor Marxists, on the other hand, hate capitalists as well as the Communist authorities, their revolution cause is democracy and, more importantly, a redistribution of wealth.<br />
<br />
The authorities did take notice of these developments.<br />
<br />
On June 24, a research institute of the Chinese Academy of Social Science published the Annual Report on Development of New Media in China (2015), which came to the same conclusion as the one released in 2013: most of the users of Weibo are young people with low educational attainment, and low income.<br />
<br />
Figures showed that 78.69% of Weibo users are aged between 10 and 39; 88.697 million people belong to the 20-29 age group; in terms of educational attainment, 70% of Weibo users hold high school qualifications or less; and as for income levels, only 9.93% of Weibo users earn more than 5000 RMB each month, all the rest earn less than 5000, and 88.987 million users, the bulk of the second income group—the building block of poor Marxists, have no income at all.<br />
<div>
<br /></div>
The reason the indoctrination with Marxism and Mao Zedong thought is a factor of revolution is that the only kind of political knowledge people with lower educational attainment have come from their politics textbooks, which teach the so-called Marxism, Mao Zedong thought, Deng Xiaoping and speeches by the current leader. It could be said that the Communist Party is digging its own grave by its indoctrination of the people, which creates poor Marxists.<br />
<br />
<u>Factor of Revolution three: skepticism about the CPC banner of Marxism</u><br />
<br />
Through marketization of power, the CPC became a roader of state (or crony) capitalism. Yet since the Party derives its legitimacy from Mao Zedong, it dare not abandon Marxism and Mao Zedong thought. As a result, what the CPC regime preaches increasingly becomes the opposite of what it actually practices.<br />
<br />
Judged according to Marxist theory, the CPC regime has long degenerated into a shameless Bourgeois plunderer, a target of communist revolution, the people have every political justification to rise and exploit the exploiters.<br />
<br />
However, of all the recent leaders of the Party, Jiang Zemin was the only one who understood the danger of the CPC not practicing what it preaches and tried to solve it by his “three represents”. All leaders after Jiang didn’t come up with anything better. From after the 1990s, all those Marxism researchers on the government payroll—unlike their pre-1989 predecessors who did have some great thinking—have been doing nothing more than putting political makeup on the authorities. As a result, the CPC remains in an absurd state of practicing the antithesis of what it preaches.<br />
<br />
There are of course individuals in China who noticed this. An article that is trending on the WeChat platform recently quoted remarks Karl Marx made against censorship to illustrate how much the CPC has deviated from Marxism and ended with the author’s aspiration for democracy and the freedom of speech.<br />
<br />
There are also some China hands who view from a different angle the CPC’s deviation from its belief. In his article published on June 21 in the Financial Times that entitled “<a href="http://www.ft.com/intl/cms/s/0/855dc7b2-16aa-11e5-b07f-00144feabdc0.html#axzz3fHdnp11i" rel="nofollow" target="_blank">For China the end of the Communist party is nigh — but in name only</a>”, Tsinghua University professor Daniel Bell wrote that “I share the view that the Chinese Communist party may soon be extinct — but the extinction will be in name only”, that “In fact, the CCP is neither communist nor a party. Few Chinese believe it will abolish the market economy and lead the march to higher communism.” And Bell went to point out that the CPC lacks vital Leninist features like “the idea that class conflict is the motor of history, a commitment to the idea of communism at home, and support for revolutionary overthrow of capitalist regimes abroad.”<br />
<br />
To give up Marxism and Mao Zedong thought is something so unthinkable for the CPC and even Deng Xiaoping didn't dare try it back when he was the paramount leader; today this is even less likely to happen. Senior members of the Party would rather cling on to this mask than to see themselves become political losers.<br />
<br />
<u>"Revolution crowd" are in search of a leader</u><br />
<br />
At this stage, the political demands of the people in China are particularly diverse. Some of them call for a democratic revolution, aspiring to freedom of speech, of assembly and of association; others, though they are also (erroneously) classified as people seeking for democracy, wish to overthrow the CPC and then redistribute the wealth of the country. There are also some others who ask the CPC to initiate reform (such as constitutionalism) to maintain social stability. These people are more or less connected to the regime.<br />
<br />
In human history, whether it was the bourgeois-democratic revolution, the Third Wave or the Arab Spring, the common demand was to address the issues of civic rights and basically not seeking redistribution of wealth in society. It was only in Communist Revolution that the notion of "exploiting the exploiters" was trumpeted. The CPC adopted this principle and translated it into concrete ideas like "rebel against landlords and seize their land from them" and subjected business owners to socialist transformation.<br />
<br />
As "exploit the exploiters" is a main demand of people who yearn for a revolution in China, the nature of the coming revolution would, instead of being about democracy, resemble more closely the one led by Mao Zedong in the 20th century.<br />
<br />
Judging from the current social conditions, there is no shortage of "revolution crowd" in China; revolution theories are already in place; all that's missing is a revolution organization and a leader.<br />
<br />
With keen memory of how it ascended to power, the CPC takes every precaution against any would-be imitators and is so hysteric toward organized forces of any kinds that it adopts the strategy of "eyeing, shutting down, and making arrest".<br />
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"Eyeing"<br />
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By "eyeing" it means that informants are sent to infiltrate all kinds of civilian organizations, reading groups and NGOs. One such example involved a Li Yuzhou, an informant who worked for the Beijing Municipal National Security Bureau and infiltrated a society established by four Peking University students.<br />
Li disclosed later on that there are a lot of student spies like himself in universities.<br />
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Another way of "eyeing" is carried out directly by the National Security Bureau and the Public Security Bureau.<br />
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When an organization is being investigated, if it does not cooperate at all, it would face immediate proscription and thus loses the ability to function.<br />
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Because of this, many choose to cooperate, some with conditions.<br />
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"Shutting down"<br />
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As for "shutting down", it means shutting down civilian organizations or domestic NGOs with foreign financing, such as the Open Constitution Initiative and China Rural Library.<br />
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"Making Arrest"<br />
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Activists who became famous are arrested. The list of the arrested is now very long. Xu Zhiyong and "super vulgar butcher" Wu Gan are just a few examples. People who are released after arrest have basically lost their room to act.<br />
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<u>Bo Xilai once unleashed poor Marxists from the genie bottle</u><br />
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When Bo Xilai was the boss in Chongqing, he realized he did not have a smooth path to becoming a member of the Politburo Standing Committee. So, to stack the odds in his favor, Bo came up with the scheme of "Singing Red and Smashing Black" and a "Chongqing model", which essentially was giving handouts financed by debts. The model was hugely popular among the people of lower social stratum and Mao-Leftists saw Bo as a "little <a href="https://en.wikipedia.org/wiki/The_East_Is_Red_(song)" target="_blank">Red Sun</a>". To this date, many people in Chongqing still miss Bo, their Party Secretary.<br />
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Speaking of Bo, it should be pointed out the fact that Mao-leftists and some of the grass-root people saw him as their spiritual leader was a sign of mental atavism in China.<br />
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And this mental atavism came in with two folds.<br />
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First, an atavistic regression to ancient China: throughout the history of China, when farmers revolted, many would honor descendants of a royal family or people of royal kinship as their leader. The reason they did so was simple: China has long been a hierarchical society that believed in the divine right of kings; by honoring individuals of royal kinship their uprising would be more likely to gain momentum.<br />
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Second, an atavistic regression to the Mao era: Bo's campaign of "Singing Red and Smashing Black" stirred up the deep-seated contradictions that are accumulating throughout the three decades since the start of Reform and Opening Up. The core issues of these—unfair social distribution and the ever widening wealth gap in society—cause people of lower social stratum to continually idealize the Mao era as an egalitarian period. Many of these people believe Bo is a leader with the capability and the willingness to work for their welfare.<br />
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These group of people, losers in the economic reform, do not have the ability to self-organize. Yet, given their sheer number, these people would become a mighty force when and if they find a leader.<br />
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Thus it could be said that the "revolution crowd" are constantly in search of a "leader", which remains unsuccessful so far because the CPC takes each and every measure to prevent any such leaders or organizations from emerging. But the undercurrent of a revolution would not go away whatever the CPC does.<br />
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The CPC can hold Bo Xilai responsible for his corruption and breaches of Party code in its purge of the former boss in Chongqing, but the genie that was once unleashed from the bottle, though currently resealed, is ready and waiting to break free.<br />
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The changes that took place between 2008 and 2015 is like a replay of what happened between the Hundred Days' Reform and the promulgation of "<a href="https://en.wikipedia.org/wiki/New_Policies" target="_blank">New Policies</a>" in late Qing dynasty.<br />
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After Liu Xiaobo was awarded the Nobel Peace Prize in 2010, the CPC completely shut down the window of reform and government-public dialog. From then on, the Party became hysteric to any kinds of "revolution". On December 26, 2011, for example, the People's Daily ran a commentary that said violent revolution could not resolve social development problems. For another example, the People's Daily published in a row five articles stating the profound negative consequences of a color revolution. These articles also argued that democratic institution can't be forcibly transplanted to China, that it is necessary to be vigilant against color revolution and Western hostile forces plotting to topple the Socialist regime under the leadership of the CPC and that there is a need to de-Westernize and break free from the superstition of Western institution.<br />
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But however hard the CPC tries to prevent an outbreak of a revolution, the Party's ideology and its social-economic policy that disregards social justice have sown the seeds of one. As the economy slows down, the problem of unemployment once again becomes a serious social issue, the Chinese authorities' strategy of buying stability is getting difficult to carry on. The term "revolution" makes increasingly frequent appearance in the Chinese cyber-world.<br />
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As stated above, one of the shoes of "revolution" has already touched the ground, the other has thus far not done so is only because of the Party's powerful repression capability.<br />
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In the face of a situation like this, the authorities should, instead of preventing a revolution at all costs, think about which type of revolution would be less traumatic for China: the color revolution that the middle class and the intelligentsia hope for, or the new proletariat violent revolution that the grass-roots want to see.<br />
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Is there still a chance to reform in China? Probably no. Things in China are now changing at as fast a pace as that in the years between 1898 and 1911. In 1898, Emperor Guangxu initiated the Hundred Days' Reform, which was rejected and nullified by Empress Dowager Cixi and hardcore conservatives. Then in 1905, the Qing imperial court planned to re-initiate the reform package that was scrapped seven years earlier.<br />
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This move was too late, there was no second chance when the window of opportunity for reform was lost. Back then, one of the shoes of "revolution" had already touched the ground, the New Policies were not able to prevent the Xinhai Revolution and the downfall of Qing imperial government in 1911.<br />
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<u>A long and painful wait for the other shoe to touch down</u><br />
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Now, the CPC manages thus far to keep the other shoe of "revolution" from touching down. And, as I pointed out before, for a regime to collapse, it would require a combination of four
factors: a domestic governing crisis (a coup, a financial or an economic crisis), a
complete breakdown of relations between the government and the people,
continual violent resistant movements, and foreign invasion. However, given that China is a superpower, domestic factors would play a bigger part in bringing about the demise of the current regime, and the most significant factor would undoubtedly be an economic crisis, which is manifested chiefly as government's financial crisis in China.<br />
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The real economy in China is currently facing serious problems, and the Chinese government goes so far as to introducing all kinds of financial policies that could shore up the stock market. Yet this is only the beginning, the wait for the other shoe of "revolution" to touch down would be long and painful. And how long this wait would be would depend on how well the Party is using national resources to its own end and what kind of impact the international economy would have on China.<br />
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Who should be held responsible for this impending revolution? The CPC of course. This Party first wiped out the bourgeois through violent revolution and nationalization; and then, in the name of "reform", channeled national resources under the Party's control into private hands, turning officials into billionaires while leaving behind many of the general public in (dire) poverty; and for the purposes of obscurantism and maintaining the Party's vested interests, the CPC rejects universal values and clings onto Marxism and Mao Zedong thought, thus breeding a large number of poor Marxists who intend to do nothing but to "exploit the exploiters".<br />
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The history of CPC rule is one of enslaving and hoodwinking the people; it is also one of suppressing dissent and eliminating different voices. And the paradox of history is that, while the CPC doesn't want to be overthrown in a violent revolution, its ideology is the hotbed for one. And now, the genie is ready and waiting in the bottle; once it is able to break free, the other shoe of revolution would touch the ground.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-24911894050864999132015-07-15T11:14:00.000-04:002015-07-15T11:15:15.191-04:00Chinese Stock Market Set up as Communist Regime’s Cash Cow<i>Pillaging the savings from small speculators to enrich state-owned enterprises </i><br />
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By He Qinglian on July 2, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/07/02/china-stock-market-3/">中国股市:一台由政府操控的财富榨取机</a><br />
This translation first appeared in the <a href="http://www.theepochtimes.com/n3/1447833-chinese-stock-market-set-up-as-communist-regimes-cash-cow/">Epoch Times</a> <br />
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In recent months, having been encouraged by the state, millions of ordinary Chinese have put themselves at risk of losing everything by gambling in the stock market. The catastrophic results are unfolding daily. Actually, since its inception, China’s stock market has been under the control of the Communist Party of China (CPC) that has regarded the market as a kind of “ATM” for filling the coffers of state-owned enterprises (SOEs) and lining the pockets of their CEOs, while draining the savings from small speculators.<br />
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During his term in office, former Premier Zhu Rongji stated, “The stock market needs to help lift SOEs out of poverty.” The CPC set a goal of pulling SOEs out of poverty within three years via use of the stock market. It then went about it by listing a group of poorly managed, and even unsustainable, SOEs on the stock market. With this direction, stock reform and listing of stocks was limited to SOEs for a long time, while privately owned enterprises had little chance of obtaining any public funding.<br />
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Encouraged by government policies, SOEs used the stock market to get funding. Subsidiaries of parent companies became “ATMs” that brought in streams of cash. Thus, China’s stock market achieved “100 years of progress in just 10 years.”<br />
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According to Chen Dongsheng, chairman of Taikang Life Insurance Co., Zhu Rongji made a big decision to allow all enterprises to be listed on the stock market. Furthermore, the capital market reform was clear back then, the goals were set up for each province, and all wanted to implement it. This is how China’s capital market came into being, Chen said. But from the beginning it was arranged to provide funding to solve the financial difficulties of SOEs. And today it’s the same, he said. Why can’t we manage our capital market well? It’s because SOEs are listed on the stock market if the premier says so.<br />
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<h4>
Stock Market Money-Laundering Machine</h4>
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One important reform of China’s SOEs is the so-called management buyout provision. The outside world thinks of this as executives using their power to split up state assets. But high-level CPC officials and their families, who were senior executives of SOEs, were among the biggest beneficiaries of this reform.<br />
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Xi Jinping recently ended the good old days of SOE executives. In the past two years, CPC authorities have repeatedly stressed the Party’s ultimate leadership of SOEs, and in November 2014 the State Council Leading Group of SOE Reform was implemented.<br />
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Since many SOE executives were dismissed during the anti-corruption campaign after the CPC’s 18th National People’s Congress, many SOE executives worried that holding shares would be classified as corruption. They hastily cashed in their shares. By Oct. 17, 2014, executives of China’s listed companies had substantially reduced stock holdings and cashed in 47.43 billion yuan (US$7.68 billion). In the first six months of 2015, SOE executives cashed in another 500 billion yuan (US$81 billion)—a record in history. It shows how these executives have made use of SOEs and the stock market as their money-laundering machines.<br />
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<h4>
Draining Shareholders’ Investments</h4>
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Since 1992, China’s stock market has experienced more than 10 rounds of big ups and downs. All-in-all, more Chinese stock investors lost than gained, but a lot of people keep on gambling in the market.<br />
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In 2008, the A-share market dropped more than 70 percent. According to a survey of over 25,000 investors across China by Shanghai Securities News, more than 90 percent of shareholders lost money, with over 60 percent of them losing more than 70 percent of their stock value. Only 6 percent of the investors said they made a profit.<br />
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In 2013, China’s stock market was called the worst performing stock market in Asia. According to a survey published by sina.com in January 2014, about 65 percent of shareholders lost money in 2013. The living standard of 32.2 percent of investors significantly dropped because of their stock market gambling, with 9 percent saying they were facing difficulties.<br />
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During the first six months of 2015, Chinese investors’ losses were tremendous. In the last two weeks of May, the market lost 13.26 trillion yuan (US$2.148 trillion), amounting to an average loss of 147,000 yuan (US$23,814) per investor—or nearly three times the average national annual income, according to data published by “How Much Stock Market Investors Lost in H1 2015.”<br />
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<h4>
China’s Stock Market Differs From the West</h4>
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China’s stock market has no long-term investors, only speculators. Nobody cares about the actual operating situations of listed companies. People only care whether stock prices are going up. Stock values are therefore completely unrelated to a company’s business performance and financial condition. Stock markets in the West have short-term speculators too, but they also have long-term investors. Business conditions and profitability are the basis of stock prices in the West.<br />
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In addition, the CPC manipulates the stock market. It uses various policies to regulate ups and downs in the stock market, whereas the U.S. government only acts as a caretaker of the stock market, with mature regulations in place.<br />
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Throughout the world, only China’s stock market lets down the majority of its investors.<br />
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China’s stock market has always been rigged in favor of state-owned companies and CPC officials who take advantage of asymmetric information and political power. They have thus been able to enrich themselves at the expense of novice speculators. These are the characteristics of an “extractive economy,” which serves a totalitarian dictatorship.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-73697122825112259282015-07-08T05:21:00.000-04:002015-07-08T05:21:10.910-04:00Why China’s Revolution Has Already BegunBy He Qinglian on June 29, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/06/29/china-revolution-in-future/">“革命”的一只鞋已经落地</a><br />
<br />
This translation first appeared in the <i><a href="http://www.theepochtimes.com/n3/1418658-why-chinas-revolution-has-already-begun/" rel="nofollow" target="_blank">Epoch Times</a></i>. Slight changes have been made.<br />
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For a political organization founded to perpetuate revolution, the Communist Party of China (CPC) ironically fears it. But revolution is already underway in China, and the other shoe is about to drop.<br />
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One of the central contradictions of the regime today is its relationship between its founding ideology and the facts on the ground. Chinese school children must sit through political lessons on Marxism (or at least the Party’s version of it), Mao Zedong Thought, Deng Xiaoping Theory, and other Party leaders.<br />
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Indeed, the rich and powerful in China have a vested interest in upholding the banner of Marx and Mao—it is a form of political insurance with the Party, and buttresses the legality of the regime.<br />
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But for the poor—an estimated 60 percent of China’s 1.4 billion population—the Party’s theoretical teachings offer scant relief. And the gap between the rich and poor will only grow as billionaires continue their unbridled plundering of public and civic wealth, while the penniless are blocked from scaling the social ladder—a structure that has not changed for nearly 20 years.<br />
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According to orthodox Marxist theory, the CPC has long degenerated into a predatory elite bourgeoisie, the very object of the communist revolution. The people at the bottom of the society now have the political legitimacy to dispose of the Party, which has become the worst tyranny in history.<br />
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While the Chinese regime’s ideological doctrine serves as a double-edged sword today, Party central will never abandon it. Former paramount leader Deng Xiaoping was open to economic and other reforms in his day, but never rejected Marxism and Mao Zedong Thought.<br />
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<h4>
Revolutionary Leader Wanted</h4>
The Chinese people want a revolution—but not the Marxist kind. They’ve given up the theoretical weapon of Marx, embracing universal democratic values instead.<br />
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Some seek a full democratic revolution; freedom of speech, freedom of association and assembly must be immediately institutionalized. Others hope to overthrow the Communist Party, allow equal access to wealth, and want to keep the Party’s constitution in the name of maintaining “social stability.” Those of the latter group may make their demands under the banner of “democratic revolution,” but they are most likely connected with the regime.<br />
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Despite the proliferation of theories and potential revolutionary masses—just check Twitter and Weibo for expressions of revolutionary sentiment—there still isn’t an organization or leader to guide the revolution. That’s because the Party, in consulting its own founding history, is almost pathologically sensitive to organizations.<br />
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“Spy, shut down, arrest”—that’s the Party’s strategy to contain any organization in China. To this end, informants can be found in book clubs, nonprofits, and colleges; civil organizations and foreign-aided non-governmental organizations such as Open Constitution Initiative and China Rural Library have been closed; and activists that are even slightly popular—Xu Zhiyong, Wu Gan, and others—have been detained, and are granted very limited freedom upon their release.<br />
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<h4>
Genie Out of the Bottle</h4>
But for all its strict censorship, the Party failed to prevent one political leader from starting to harness China’s revolutionary masses.<br />
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Former Party official Bo Xilai was a popular figure across the social spectrum when he ran Chongqing from 2007 to 2012. Bo promulgated Mao-inspired leftist ideas and ran a Cultural Revolution-style “sing red songs and smash black gangs” campaign, temporarily reviving a communist spiritual backwardness among the residents of Chongqing. Many Party members and common people bought into Bo’s rhetoric and believed that he would be a leader that would guard their interests.<br />
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Because the Communist Party can’t stand competition, Chinese leader Xi Jinping purged Bo for “unorganized behavior” and corruption when his popularity was still in an embryonic state.<br />
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But Xi has only temporarily closed the lid on the genie’s bottle. The revolutionary masses have already had a taste of following a charismatic, popular leader, and that undercurrent is ready to surface again at any time.<br />
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<h4>
The Late Qing</h4>
Since the Nobel Peace prize was awarded to Chinese dissident Liu Xiaobo in 2010, the Party completely shut the door on reform, and Beijing has been especially sensitive to any hint of brewing “revolution.”<br />
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This year’s June 14 edition of The People’s Daily featured five articles stressing the deep harm caused by “color revolutions”—protests that result in the overthrow of oppressive governments—and that the democratic system cannot be forcibly grafted onto China. The articles say China must be alert to the infiltration and spread of “color revolution”; “hostile” Western forces have never given up on undermining and ousting the Chinese Communist Party; and China must eradicate its “superstitious” faith in Western institutions and Westernization.<br />
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Chinese authorities are maintaining the strategy of spending money to buy and promote “social stability,” but it won’t work with China’s economy slowing down and unemployment starting to becoming a severe social issue. Indeed, the word “revolution” is starting to surface on the Chinese Internet with increased frequency. <br />
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One shoe of revolution has fallen. The other shoe hasn’t yet dropped—only delayed by the Party’s vigilance in intensely monitoring and suppressing dissent.<br />
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The CPC should step down to preserve its own safety and if it has a thought for the nation’s future interests. Otherwise, it will face two potential revolutions: A color revolution led by the middle classes and the intellectuals, or a violent, proletarian upheaval by the lower classes.<br />
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Does China still have the opportunity to improve? Probably not. The present situation could evolve rapidly and play out similarly to the final years of the Qing Dynasty when revolution deposed imperial rule.<br />
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<h4>
Before the Other Shoe Drops</h4>
Regimes collapse when there’s a coup, a financial crisis, a severe dispute between officials and the people, frequent violent, lethal resistance, or foreign invasion. Sometimes, these factors happen all at the same time.<br />
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The most likely revolutionary factor facing China today is a financial crisis. The Chinese regime has introduced several financial policies to lift the stock market, but whether they will work remains to be seen. The state of the international economy is extremely difficult to predict, and could yet exert a major influence on China.<br />
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Meanwhile, the other shoe is falling—slowly, but surely. Chinese society is constantly deteriorating as the state misspends social resources, brews social hatred, and degrades social morals. Over time, the revolutionary masses grow in number, awaiting the opportune moment to emerge.<br />
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Who should be held responsible for this situation? The CPC, of course. Normal human social order was overturned when the Party first eliminated the propertied class, and turned private ownership into public ownership. Using national resources to promote public ownership, “red” families and officials soon became millionaires and billionaires, while China grew the world’s largest class living in and on the cusp of poverty.<br />
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The Party’s history is one of enslaving and fooling the masses, as well as suppressing and eliminating voices of dissent. The Party doesn’t want anyone using violent revolution to overthrow it, even though its own ideology is a hotbed for cultivating violent revolution. Whatever the Party’s wishes, China’s revolution has already begun.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-16296554346796290382015-07-01T22:55:00.000-04:002015-07-01T22:55:20.822-04:00US-China Relations: How China became the dominant partyBy He Qinglian on June 25, 2015 <br />
Source article in Chinese: <a href="http://biweekly.hrichina.org/article/28630" rel="nofollow" target="_blank">中美关系,谁更能战斗在“伙伴”心脏里 </a><br />
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The seventh round of U.S.-China Strategic and Economic Dialogue started when the relationship between the two countries is at the tipping point. Statements from both sides underscored the respective characteristics of their foreign policy: U.S. policy toward China is unstable, whereas China's US policy shows considerable signs of consistency and continuity. <br />
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<u><b>US & China's foreign policy shaped by respective political institutions</b></u><br />
<br />As Washington grows increasingly uncomfortable with Beijing, three opinions on how the US policy toward China might be adjusted have emerged.<br />
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The military and the hawks in the foreign policy circle suggest that, aside from maintaining an absolute military advantage over China, economic tools that were used to contain the Soviet Union during the Cold War could be put to use. For instance, they suggested tightening restriction on technology export and initiating trade arrangements that exclude China.<br />
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The second viewpoint, the exact opposite of the first, is that Washington should try find the new norm of its relationship with Beijing.<br />
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And the third, a continuation of U.S. policy toward China since the Bill Clinton administration, is the idea that the two sides should foster mutual trust through cooperation projects, an approach that could help make America's China policy consistent.<br />
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However, all three suggestions have their oppositions; and Barack Obama, in the remainder of his last term, has no time to make adjustment on this matter. No one can tell which of the three opinions would become the mainstream idea today as the next President of the U.S. has yet to be decided by voters.<br />
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In comparison, China’s policy toward the U.S. is relatively consistent, and hasn’t gone through any major changes since Reform and Opening Up under Deng Xiaoping.<br />
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The directions of China’s U.S. policy are as follows: in terms of economy, the U.S. is an important economic cooperative partner; in terms of politics and ideology, though, America and the universal values are seen as enemies, propaganda inside China still clings on to the rhetoric during the Mao era that portrays the United States as plotting to bring about China’s demise, albeit a more subtle version is used. And when it comes to foreign policy, the United States is listed as the most predominant target with which China seeks to work together in a friendly manner.<br />
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Self-contradictory as these views are, the Communist Party is able to execute them all. Every year, the U.S. routinely criticizes China for its human rights violations, and the Foreign Ministry of China routinely issues statements in response. Both sides see these actions as mere rituals and no one takes them seriously.<br />
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At times when Beijing considers the United States to have threatened the “core interests” of China, it would address it by openly issuing tough foreign policy statements and secretly try to work around it using flexible means.<br />
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This difference is determined by the political institutions in the two countries.<br />
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The United States, being a democratic country where bipartisanship is in practice and with each of its Presidents, serving two consecutive terms at most, harboring his or her own considerations regarding China, is bound to change its China policy from time to time.<br />
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For example, former President George W. Bush didn’t like Communist China and yet had to cooperate with the country in the counter-terrorism drive after September 11. Barack Obama, on the other hand, didn’t share his predecessor’s disliking of China and, after he won the election, asked the EastWest Institute in New York to <a href="http://www.ewi.info/idea/pivotal-relationship-how-obama-should-engage-china" rel="nofollow" target="_blank">help formulate U.S. policy toward China</a>. The Institute invited the Center of China-U.S. Relations Studies at the China Institute of International Studies to help draft it by listing out China’s expectations.<br />
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Such a move was unprecedented in the history of the United States, and it was like the U.S. asking China to specify how America should get on with China to make it feel pleased. And China did come up with what it wanted from the U.S.: a partnership in economy, counter-terrorism, non-proliferation, green and trans-Pacific matters; it also wanted the U.S. to relinquish its value-based diplomacy and honor Beijing’s “core interest”: the Communist Party’s position as the governing party in the Party-state of China.<br />
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It was until after a series of uncomfortable incidents in U.S.-China relations took place that Obama adjusted his approach to some degrees.<br />
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<u><b>Beijing enters the U.S. making use of America’s openness</b></u><br />
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Without doubts, China and the United States have been working to strengthen their ties ever since China initiated the Reform and Opening Up policy. However, China sets in place far more restrictions than America does in their exchanges.<br />
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In the 1990s, international exchanges were classified into four categories. First, there are exchanges between governments; second, exchanges between NGOs and private organizations; third, cultural exchanges between academic or education institutes and the like; and fourth, individual exchanges.<br />
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However, what democratic countries didn’t realize was that, while the second through the fourth types of exchanges would more likely be on equal footing among countries of the same institution, such exchanges could easily be manipulated when they are between authoritarian and democratic countries.<br />
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In the case of China, NGOs from other countries have to accept many restrictions if they are to open offices in China whereas China can freely set up any organizations in other countries, because that’s a right enshrined in law.<br />
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Similarly, foreign media outlets have to accept many restrictions if they want to do report in China, while Chinese media outlets can do wherever they want to in other countries. Below is more examples of inequality in exchanges between China and America.<br />
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To begin with, the U.S. is more open to Chinese media outlets than China to those from America. Seeing Chinese media outlets, Chinese schools and Chinese communities as three key tools in overseas united front maneuvers, the Chinese government has directly or indirectly funded numerous Chinese schools and communities; brought the vast majority of Chinese media outlets into the system of Great External Propaganda. In addition, news reports from Xinhua and the People’s Daily can freely transmit 24/7 in the U.S.<br />
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By comparison, foreign media outlets enjoy much less freedom in China than their Chinese counterparts in their own countries. Foreign journalists have to endure all kinds of restrictions and hostile treatments when they report in China, as documented in the FCCC's China Annual Working Conditions Report. In recent years, the Report used words such as "deteriorates" and "worsened" when it described the interference, harassment and physical violence foreign correspondents experienced when they conducted reports in China.<br />
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Second, China's attitude toward American private organizations inside China differs significantly from America's attitude toward the Chinese ones in the U.S. Scarcely any organizations from the U.S. (and the E.U.) are allowed to operate in China, except for a handful like the U.S.-China Chamber of Commerce (USCCC).Yet mainland Chinese can set up communities all across the United States, student associations formed by students from China appear in many universities in America, and in China Towns in major U.S. cities are countless Chinese societies through which Chinese embassies freely organize all kinds of political activities.<br />
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What American NGOs are subjected to in China is a story completely different from their Chinese counterparts in the U.S. Seen by the Chinese authorities as tools that the U.S. uses to initiate a color revolution in China, American NGOs face huge pressure in China. This year, the Chinese authorities even announced to set up Party Branch Offices in foreign NGOs in China. <br />
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<b><u>The inequality in political lobbying </u></b><br />
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According to the law in the P.R.C., no other countries are allowed to lobby in China. Yet in the U.S., lobby is a legal political activity. In the north of Washington, D.C. lies a K Street that is “<a href="https://en.wikipedia.org/wiki/K_Street_%28Washington,_D.C.%29" rel="nofollow" target="_blank">known as a center for numerous think tanks, lobbyists, and advocacy groups</a>”. Every day, numerous activities that influence politics and diplomatic affairs around the world take place there.<br />
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Those individuals who can get close to members of Congress and have free access to the Capitol are deemed as ideal lobbyists. And consultancies opened by former members of Congress or officials are the best help foreign governments or companies can get if they want to lobby in the U.S. and maximize their own interests.<br />
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According to statistics from the Center for Public Integrity, between 1998 and 2004, more than four million of lobbying expenses were originated from China. Beginning in 2004, China lobby expanded in scale; Chinese embassy in the U.S. created a lobby working group that consisted of 26 persons. And from 2005, Chinese embassy formed a long-term partnership with two law firms (Hogan & Hartson, Jones Day) that helped lobby the U.S. government, Congress and think tanks. And what Jones Day did was to keep the Chinese government posted on issues about Taiwan, Tibet, religious freedom, finance, trade and exchange rates, and help make contact with Congress and the executive branch on China's behalf. There were once as many as eight firms working with the Chinese government.<br />
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In order to curb the excess of such lobbying, the House of Representatives Committee on Appropriations <a href="http://www.voachinese.com/content/capitol-restricting-20120622/1246180.html" rel="nofollow" target="_blank">approved in 2012 an amendment (related report in Chinese)</a> that prohibits <a href="http://lobbyingdisclosure.house.gov/amended_lda_guide.html" rel="nofollow" target="_blank">covered Executive Branch officials</a> from lobbying for certain countries within the first ten years they leave office. Those certain countries are which the State Department identifies as countries where there are serious human rights infringement and religious persecutions and need special attention. These certain countries include China, which happened to be the country that gained the most through lobbying.<br />
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To sum up, I want to point out that there are two important components in the U.S.-China relations: mutual economic dependence and civilian exchanges. Judging from the results, China has made good use of multinational corporations and exchanges on civilian level in America to influence U.S. policy toward China; and the U.S. was much less successful by comparison and couldn’t find a way to influence China. That’s how China becomes he dominant party in the U.S.-China relations.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-47159163573874879202015-06-29T23:31:00.002-04:002015-06-29T23:31:30.128-04:00China Has a Massive Class Problem, and It’s Not Getting Any BetterBy He Qinglian on May 23, 2015<br />
Source article in Chinese: <a href="http://heqinglian.net/2015/05/23/class-structure-change/" rel="nofollow" target="_blank">从中国阶层结构看社会转型的失败</a> <br />
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At the turn of the 20th century, China was still an empire, with a small elite at the top controlling the overwhelming majority of wealth and power, and a vast number of peasants on the edge of subsistence. Recently, the Chinese scholar Zi Zhongyun observed: “It’s been 100 years and there’s no improvement—at the top it’s still Cixi, and at the bottom the Boxers.” He was referring to Empress Dowager Cixi, who ruled the Qing Dynasty; the Boxers refer to the millions of disenfranchised Chinese who at one point attempted revolution.<br />
<a name='more'></a><br />The observation is apposite: despite the Chinese Communist Party’s founding promises, a genuine transformation of the social structure in China has not taken place, and the elite still control the vast majority of the wealth, while the middle class is relatively minuscule.<br /><br />Social transformation includes a transformation of politics, the economy, and the structure of social classes, and it goes along with changes in consumption patterns, production patterns, cultural behaviors, values, and more. Developed economies are based on a broad middle class—precisely what has not been attained in China.<br /><br />When reform and opening up began, Deng Xiaoping had promised the people a moderately prosperous society. Until 10 years prior to this century, the regime’s goal was to build an olive-shaped society with the middle class in the center. Many national projects were funded with that perspective. But all these proposals slowly disappeared from the official propaganda in less than a decade.<br /><br />According to a 2013 report by the World Bank, there are about 300 million Chinese whose daily consumption is $1 or under. When added to the 303 million lower-middle class estimated by the Asian Development Bank, China’s poor account for almost half the population (which includes the 200 million unemployed, according to former Premier Wen Jiabao). The situation is getting worse, too. Along with the withdrawal of foreign capital and a deepening recession in the real economy, another 124 million people will likely lose their jobs, making China’s poor and “lower-middle class” over 60 percent of the population.<br /><br />When people mention how many billionaires China has, it’s important to keep these numbers in mind, a stark demonstration of the failure of the project of class restructuring.<br /><br />The reason behind this is simple: an utter failure to distribute fairly the benefits of China’s extraordinary economic growth. This relates to deep questions of the legal system, regulatory structure, and how all the costs and profits in society are shared out. In modern market economies, distribution of income takes place among workers, employers, and the Party-state.<br /><br />China’s chief problems are twofold.<br /><br />Firstly, the share of wealth accruing to workers has been decreasing. This has been known for years. Zhang Jianguo, an official with the All-China Federation of Trade Unions, is on record saying that Chinese labor compensation has been falling ever since it reached a peak of 56.5 percent of GDP in 1983. It was 36.7 percent of GDP in 2005, a nearly 20 percent drop in two decades. The Ministry of Finance disputes this data, and the Chinese Academy of Social Sciences, as of 2013, said the numbers were closer to 50 percent in 2004 and 45 percent in 2011 (in the United States, for comparison, the ratio has been 58–60 percent over the past decade). This proportion is a direct determinant of the relative wealth of workers.<br /><br />Secondly, returns accruing to capital have been off the charts. In the same interview, Zhang Jianguo said that the return on capital from 1978 to 2005 has been about 20 percent. (Though there are not complete datasets for these numbers, for example as a portion of GDP.) Peking University’s China Center for Economic Research estimates that from 1998 to 2005, the return on capital rose from 6.8 percent to 17.8 percent.<br />
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Researchers generally believe that this was caused by government expenditures being deployed to enhance capital returns, initial capital allocation being heavily determined by government policy, and crony capitalism, which allowed massive profits to accrue to those close to power, while the profit margins of small and medium enterprises got squeezed hard.<br /><br />Everyone in China knows how this works: the numbers of corrupt officials increase every year, bribes become enormous, and projects, promotions, and stock in companies are used to buy officials. Those officials then use their political power to protect the excessive profits of the industries that they receive money from. While this happens, ordinary and law-abiding businesses have a difficult time operating, decreasing the entire efficiency of society, and thus further skewing wealth distribution.<br /><br />Data from the “Chinese People’s Livelihood Report 2014,” published by the China Social Science Research Center of the Peking University, is revealing. In 2012, the Gini coefficient—a measure of the distribution of wealth—for the net wealth of households in China was 0.73. This means that the top 1 percent of households control over a third of the wealth of the whole country, while the bottom 25 percent control only about 1 percent. <br /><br />Clearly, the middle class has been suppressed. Two conditions are required to change this: Advanced jobs must be created (the fluctuation of low-income migrant workers has little impact on the population of the middle class), and wages need to grow. Neither of these things has happened. Instead, promising career paths are increasingly scarce and difficult to enter, and the elite is selected in lineage fashion. This lack of dynamism will inevitably corrupt the quality of the elite social class, creating further social injustice.<br /><br />These tensions exploded into public view recently in what was dubbed the “Xu Chune incident,” when a police officer shot to death a man of that name in a train station in the northeastern town of Qing’an. Before the facts of the case were even clear, the majority of the public instinctively sided with Xu, exposing at once their rage at the widespread deprivation of civil rights in China, and even more, the gaping class chasm that sits at the heart of the society.<br />
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This translation first appeared in the <a href="http://www.theepochtimes.com/n3/1383276-china-has-a-massive-class-problem-and-its-not-getting-any-better/" rel="nofollow" target="_blank">Epoch Times</a> on June 8, 2015Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-8351214805651868172015-05-14T09:23:00.002-04:002015-05-14T09:35:03.612-04:00The New Norm: Chinese economy faces six bottlenecksSource article in Chinese: <a href="http://newsabeta.blogspot.com/2015/05/blog-post_927.html" target="_blank">何清涟:“新常态”:中国经济面临的六大瓶颈</a><br />
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A translation of a talk He Qinglian delivered in Vancouver on May 3, 2015. <br />
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My talk today, “The New Norm: Chinese economy faces six bottlenecks”, is to give an overview of the state of the Chinese economy. What lies ahead for China depends on whether or not the Chinese government can find ways to work around the six bottlenecks.<br />
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Before I start, I would like to share a piece of good news: In 2014, China’s gross GDP volume reached 10 trillion dollars. The only other country which gross GDP is of this volume is the US. However, the Chinese government doesn’t seem too pleased with this. Since the year China’s gross GDP surpassed that of Japan, the Chinese government had been trying to dissuade others from calling China the second largest economy, it even said that certain international forces exaggerated China’s GDP out of ulterior motives. In fact, the World Bank and the IMF did their math based on the data from China National Bureau of Statistics and Purchasing Power Parity. That’s to say, if you inflated your data in the first place, you can’t blame others for exaggeration.<br />
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Right, so now I get into the topic.<br />
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<u><b>The first bottleneck: China—no longer the factory of the world</b></u><br />
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After a golden decade of being the world’s factory between 2001 and 2010, China has now inevitably started its decline. According to latest news reports, Dongguan, a major pillar of the world’s factory, has seen the second wave of enterprise closures. It was said that within a year, no less than 4,000 companies shut their doors.<br />
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The world’s factory began its decline in 2008. Based on disclosed data, 72,000 businesses closed down between 2008 and 2012 in Dongguan. Now, as labor-intensive enterprises shut down in larger numbers, the Chinese economic growth model that was fueled by exploitation of labor and environment has reached its limit. <br />
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In the past, investment, foreign trade, and domestic demand used to be the three engines that propel China’s economic growth. Now, all three engines lost their steam. <br />
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In the first quarter this year, foreign trade growth fell by 15% year-on-year—a sign that foreign trade cannot propel China’s economic growth anymore. Another way has to be found.<br />
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In the last two decades, real property had always been the prime industry that drove Chinese economic growth. Yet, starting from two years ago, the highly bubblized real property came to standstill. While the Chinese government and enterprises fought to shore up the housing market, a dozen or so industries related to real property fell victim to full scale overcapacity. For example, industries most closely linked to real property like steelmaking and cement manufacturing have seen an overcapacity as high as 30%; industries producing flooring, furniture and textile too have experienced severe overcapacity.<br />
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This type of overcapacity crisis is referred to as “the nuclear threat of the Chinese economy”. In other words, such a crisis is like a nuclear bomb that could trigger an economic crisis at any time. It is because of this that China seeks to export excess capacity by pushing forward the “One Belt One Road” project and establishes the AIIB. The one thing I would say about this project today is that its chance of success is quite low because most of the countries included in the project do not have good sovereign credit. Except for countries like Pakistan, with which China intends to achieve a different objective through economic cooperation, Chinese investment made in those countries might bear no fruit.<br />
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The issues above show that there is no hope for Chinese economic restructuring. Economic restructuring is not something that can be done whichever way the government wants it to. Back in 2005, Guangdong province had already called for an industry upgrade as it tried to replace labor-intensive industry with hi-tech industry. The result was: labor-intensive industry relocated elsewhere while hi-tech industry didn’t move in, and now the Pearl River Delta is witnessing industrial “hollowing out”.<br />
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<u><b>The second bottleneck: astronomical number of unemployed people</b></u><br />
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China is the most populous country of the world, and the unemployment issue has always been a sword hanging above the heads of the Chinese people. During the Cultural Revolution, when I was a teenager, China had already had a serious unemployment issue. At that time, young people in the urban area were forced to take part in the <a href="http://en.wikipedia.org/wiki/Down_to_the_Countryside_Movement" target="_blank">Down to the Countryside Movement</a>, those who managed to get a job or join the army were considered to have found a good way out.<br />
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After the implementation of Reform and Opening Up, China, despite being in a prosperous era serving as the world’s factory, still had huge number of people without a job. For instance, labor surplus in the rural area was as high as 100 million. Now as the world’s factory is in decline, the unemployment issue became even more serious. <br />
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For a long time, the jobless rate in urban area disclosed by Chinese government stayed below 4.5%. Such a figure does not show the actual state of unemployment in China because, firstly, this figure counts only those urban residents who registered with government as jobless and leaves out all those who didn’t do so; secondly, this urban unemployment figure does not take in the number of unemployed in rural region, where huge labor surplus exists. An unemployment figure that leaves out two massive chunks of data is itself grossly incomprehensive.<br />
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Currently, the unemployed in China consists of four components: first, the labor surplus in rural region, a problem that gets worse as plants are shutting down; second, white-collar workers who lost their well-paid job as foreign investment withdraws from China; third, college graduates who are jobless—given that colleges require students to present proof of employment before conferring them their graduate certificates, students are forced to fake the documents needed to get their certificate, the employment figures provided by colleges are thus meaningless; fourth, junior and senior high school leavers who stay unemployed at home over an extended period, Chinese media outlets refer to these people as NEETs. <br />
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How many people exactly are out of work in China? There are two sets of data for reference. First, former Premier Wen Jiabao stated at the China Development Forum in March 2010 that “200 million people are unemployed in China”; second, Justin Yifu Lin, former Senior Vice President of the World Bank, said during the World Economic Forum Annual Winter Meeting 2015 in Davos that, due to the rise in wages, 124 million manufacturing jobs would relocate to other developing countries.<br />
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Currently, the working-age population in China is 940 million. When the number of people out of work reaches 300 million, the actual unemployment figure would stand at about 32%.<br />
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With so many people out of work, it indicates that the “bread contract” between the ruling clique and the populace no longer works. As we all knew, China is a totalitarian country where the “bread contract” means that the rulers make the general public "transfer" their political rights such as suffrage, the freedom of the press, the freedom of speech, the freedom of assembly and the freedom of association in exchange for the freedom from want. <br />
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Now that there are so many jobless people, it means the general public has neither political rights nor the freedom from want. Any country facing such a high ratio of unemployed people would have a serious headache.<br />
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<u><b>The third bottleneck: severe resource crisis</b></u><br />
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The pollution problem in China is three-dimensional. This means the country’s water, soil, and air are all badly polluted. Information on this is abundant, and due to time constraint, I would not go into the details and would only focus on resource crisis. China faces serious resource constraints for economic development and becomes heavily dependent for resources from all kinds of minerals that are used as means of production to food that is used as means of subsistence.<br />
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China now gets 60% of the lifeblood of economy—petrol it needs from import; it is also highly dependent on foreign metal minerals like iron, copper and zinc. I’m not going to list out each of the figure; I only intend to point out that China’s economy safety has become seriously dependent on external factors.For the Chinese people, there is nothing more important than food and so let’s use that an example. Sixty percent of the Chinese population grows crops, yet in 2014, the country’s food self-sufficient rate dipped below 87% and it gets its three staple diets—soybeans, corns and wheat from import. So what does this figure tell us? It indicates that, aside from food contamination resulted from soil pollution, nearly 200 million people in China source their food from other parts of the world. This causes food price in China to fluctuate alongside international food price. When disaster or humanitarian crisis strike—for instance, grain-producing countries reduce their output because of war—food price in China would hike.<br />
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Twenty years ago American environmental analyst Lester Brown wrote a book called Who Will Feed China? to remind China to pay attention to its food safety. However, China saw this work of research as a “conspiracy of the anti-China forces to smear China” and threw criticism at it for years. In recent years, however, China came to realize that food safety really is a problem, so it changed its attitude toward Brown and invited him to give a talk in China. Yet many of Brown’s viewpoints were deemed hard to stomach and the Chinese government sort of retracted its welcome extended to Brown. <br />
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The attitude changes of the Chinese government toward Brown shows just how difficult it is to say the truth in China.<br />
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Canada is a country with lots of resources, and its water resource is particularly abundant. I would like to suggest business people to plan ahead and invest in these industries. There will come a day when China needs to import these resources.<br />
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<u><b>The fourth bottleneck: local government caught in the quagmire of debts</b></u><br />
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The prospect that a local debt crisis could trigger a local financial crisis gives the Chinese central government a big headache.<br />
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According to estimates made by foreign investment banks two years back, the scale of the total debt volume in China was 168% of its gross GDP (when I wrote this, McKinsey Global Institute published its latest report stating that China's total debt has reached 282% of its GDP), only a tiny part of this is individual debt, while most of the rest is government and corporate debt. And local government debt tops the list at about 20 trillion RMB. <br />
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Speaking of this, I would like to share a story. <br />
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Previously, the amount of total local debt reported was 18 trillion. That was a figure smaller than the actual sum. And the reason local officials made partial report of the debt incurred was that they didn't want to look bad. NDRC official Li Tie said that the 18 trillion debt reported was less than half of the actual local debt incurred. During a survey of a dozen of cities, NDRC officials found that some reported only 10% of thier debt, and some reported 20 to 30%, hardly anyone reported more than 50% of their debt. Thus it was estimated that the 18 trillion debt reported was only 30 to 50% of the actual local debt incurred. <br />
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Unsettled by this, the central government issued in September 2014 the “document no. 43” ordering local governments to truthfully report all of their debt before January 5, 2015 and hinting that the central government would help to repay part of the local debt.<br />
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Upon seeing the “document no. 43”, local officials who tried their best to cover up their debt to avoid being sacked now found a new hope, and so they made a truthful report of their debt as instructed. Hainan province even disclosed its debt to the public. As a result, the amount of local debt ballooned in a short time. The Ministry of Finance received the local debt reports and figured the sum was greater than they expected. So, the Ministry issued another document in late January ordering local government to “correct mistakes” in their reports and submit them again.<br />
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Now the central government plans to handle the 20 trillion local debt by helping to repay some of it, marketizing some of it and holding the local and provincial governments responsible for the rest. By holding the local and provincial governments responsible, it means that, if the local governments default on their debt and trigger mass incidents, the provincial governments would have to make a gesture shouldering some of the debt to placify the public.<br />
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Knowing that local governments have no other source of revenue other than selling of land, the central government is deeply troubled by the massive quagmire of debt.<br />
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<u><b>The fifth bottleneck: financial crisis</b></u><br />
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Aside from a debt crisis, the rising rate of bad debt and the massive liquidity excess resulted from over-issuance of currency are also factors that would lead to a financial crisis.<br />
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Let’s first look at bad debt in banks. The bad debt in banks at the moment is the third debt crisis triggered by bad debt in the real property industry since Reform and Opening up. The first crisis emerged back when Zhu Rongji was the Premier. Beginning in 1998, the Chinese government spent more than 6 years to handle the 170 billion bad debts that were peeled off in the initial stage. Yet the way the Chinese government tackled them was to borrow new debt to repay for the old ones. And so, more bad debts incurred, which in term seriously hindered the efforts to get the Bank of China publicly listed overseas.<br />
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To solve this problem, the Chinese government came up with an ingenious idea. It established four state-owned asset management companies and transferred to them the bad debts incurred in banks. And then, part of those non-performing assets was repackaged and sold to foreign investment companies. Why did foreign investment buy non-performing assets? Because at that time, Chinese financial system was a mystery for them and they wanted to understand how the Chinese financial system worked.<br />
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The second crisis appeared during the Wen Jiabao era. At that time, the accumulated bad debts in banks stood at more than 800 billion US dollars. In order to ensure the banks that were going to be publicly listed in the US could fulfill the requirements of the Sarbanes-Oxley Act, the Chinese government hired accounting agencies such as Ernst & Young, PricewaterhouseCoopers to help with the audit.<br />
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Back then, the chairman of the SEC was seasoned politician Christopher Cox, who was very strict in listing application reviews. The auditors hired by the Chinese government found that the state of the Chinese banking system was too messy and figured that the banks could hardly satisfy the requirements. So they suggested those banks to get listed in Hong Kong instead of Wall Street.<br />
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The Chinese government then invited a dozen of foreign banks including UBS, Citibank, Bank of America and Temasek to become “strategic partners” of Chinese banks and allowed them to exit when the contracts expired.<br />
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Afterward, the four state-owned banks got listed in Hong Kong and the A-Share market of China and became stocks of high demand. At one point, the market value of these banking giants accounted for more than 50% of the total market value of the A-share market. Those strategic partners pocketed hefty profits and exited in 2007.<br />
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Foreign governments found the ways the Chinese government resolved bad debts in banks impressive.<br />
After the outbreak of US financial crisis in 2008, governments in the West struggled to cope with the aftermath. And the United States had to let the Lehman Brothers went bankrupt.<br />
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Seeing a scene like that, a contributor of the Chinese version of the Wall Street Journal Report jokingly <a href="http://chinese.wsj.com/gb/20080926/EDR153634.asp" target="_blank">wrote</a> that the Communist Party should be invited to help deal with the financial crisis in Wall Street.<br />
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Let’s then talk about the problem of over-issuance of currency in China. One of the major means that spurred the Chinese economic growth in the last three decades was over-issuance of currency. <br />
In recent years, China became the world’s largest money printing machine.<br />
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In the ten years between 2003 and 2013, China’s monetary base increased by 88 trillion RMB, and its foreign exchange assets grew by 3.4 trillion US dollar. <br />
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During the years of investment boom, the effects of over-issuance of currency were not as noticeable. Now, however, as investment slowed, domestic saving and idle fund increased and added to the problem of excess liquidity. <br />
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In view of the limited options to sterilize the currency, PBOC governor Zhou Xiaochuan came up with a new way to do that. <br />
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During the Caixin Summit in November 2011, he raised the “Pool theory”, the key concepts of which were that in order to tackle the influx of short-term, speculative fund or hot money, the levees have to be reinforced; and as for the hot money that had already been inside China, a pool should be devised to retain them. <br />
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What would Zhou use as pools? To put simply, one of those included the real property. To keep the liquidity in, the housing market was used as a pool. That was why housing price in China skyrocketed and became the most expensive in the world. Someone wrote that if the real property in the city of Beijing was sold, the money obtained would be enough to buy up the entire United States. <br />
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Now that the real property faltered, Zhou used instead the stock market as a pool to keep liquidity in control. Once the stocks stumble and their market value vaporize, the amount of liquidity would be markedly reduced. <br />
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The predominant reason the inflation rate in China appears to remain low despite issuing so much currency is that, unlike in the US, the CPI in China does not include the property price. If the property price is included, CPI in China would be quite high. <br />
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Given the wild fluctuation of stock prices, the use of stocks as a pool could help temporarily dissolve the financial crisis. <br />
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Such a method to get around a crisis is cleverer than the Gold Yuan certificate currency reform initiated by the KMT. The currency reform of the KMT was tantamount to arbitrarily robbing the people of their assets. That resulted in the KMT suffering from political and military defeat, a financial meltdown and losing the remaining trust the people had in it. (A side note, a few years back, the Oriental Outlook, a weekly periodical in China ran a piece about a Red economist named Ji Chaoding. The article said that Ji, the person who suggested then Financial Minister T. V. Soong to unveil currency reform, was actually a Communist spy working for Zhou Enlai. His suggestion at that critical moment sped up the downfall of the KMT.)<br />
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As for the use of stock market to push off the crisis today, it is the stock buyers themselves that get inside the trap out of their own free will. If the stock market stumbles, they have no one else to blame.<br />
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Viewed with the Western financial perspective, Zhou Xiaochuan is a terrible banker. He should not dissolve a crisis by passing it on to others. Yet in the eyes of the Chinese government, Zhou is an irreplaceable banker who managed to steer away from financial torrents and perils during his three terms of the chief of the PBOC, doing his best to postpone the arrival of crises while anticipating them.<br />
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Now, what would happen in the future depends on his luck.<br />
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<u><b>The sixth bottleneck: unfair distribution and hyper wealth inequality</b></u><br />
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Over the last two decades, the appropriation of public and private assets by crony capitalism in China could be seen as reckless. And it resulted in phenomena of severe wealth disparity and the concentration of wealth in a handful of people. I’m sure that everyone here knew about this and to back what I just said, I will quote a set of data taken from the “Chinese People’s Livelihood Report 2014” published by the China Social Science Research Center of the Peking University:<br />
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In 2012, the Gini coefficient for net wealth of families in China was 0.73; the top 1% of families have control over a third of wealth of the whole country while the bottom 25% of families have control over only about 1% of the country’s total wealth. </blockquote>
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Such a high degree of concentration of wealth, such a staggering figure of Gini coefficient could hardly be seen in anywhere else, not even in Zimbabwe, the worst country in Africa.<br />
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Therefore, in China, the low-income social stratum, or the poor, account for nearly 60% of the country’s population. A society with too many poor people, one which upward mobility channels are non-existent is one that is teeming with instability factors.<br />
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If a democratic country encounters three of the six bottlenecks listed above, its government would collapse and its cabinet would have to resign. But this is China, where the CPC still maintains an unchallenged rule through autocratic measures and forceful control.<br />
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Even so, these problems have to be resolved sooner or later; they cannot be put on the back burner indefinitely.<br />
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Since modern times, the humanity came up with three ways to deal with social crisis. First, the Marxist approach, this is, stage a violent revolution and start everything all over again.<br />
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Before in 1949, this kind of approach was used in China. There were farmer revolts, farmer uprisings and the Communist Revolution.<br />
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The second way is the imperialist approach: to try to resolve domestic crisis during difficult times by staging war and seeking expansion abroad.<br />
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And the third way is the Keynesian approach: to address the overproduction crisis through state interventions such as raising taxes, expanding deficit budget, resorting to stimulus, employment boost and elevate the purchasing power of the public. <br />
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The approach being used in China today is basically a combination of government regulation under a planned economy and the Keynesian measures. As we are all aware, the result of this approach is not quite good.<br />
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Which approach would China use to solve the crisis in the future? This is a question I would like everyone here to contemplate. Compared with the second and the third approaches, the first approach is the one that fits most perfectly in with the official ideology, the values of the people in China today.<br />
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Marxism would give a simple explanation to conditions such as those in China today: the root of all crises is that the vast majority of the public is exploited, their income too low; while the minority lay claim to most of the wealth in society through exploitation and privileges.<br />
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However, it is possible that we come together to find ways for China to get out of its predicament based upon the system path, cultural soil, government ideology and the thinking habit of the people in the country.<br />
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Thank you everyone. Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7079914107036651444.post-17856195850878215672015-04-17T05:20:00.002-04:002015-04-17T05:20:46.695-04:00Chinese' mixed feelings for Singapore ModelBy He Qinglian on March 25, 2015<br />
Source Article in Chinese: <a href="http://www.voachinese.com/content/heqinglian-20150323/2693141.html" target="_blank">漫谈中国朝野对“新加坡模式”的爱与恨</a><br />
<br />The passing of Singapore’s founder Lee Kuan-yew sparked on China’s social media a round of criticism of the “Singapore Model”. Few took notice that the country had long denied the existence of such a model and made its latest denial in February this year. Singapore Roving Ambassador Bilahari Kausikan said in his speech delivered at the Brookings Institution that there was no such thing as a “Singapore model”, Lee and his team improvised many of the country’s policies and that the late leader’s pragmatic governance belief is ingrained in the regime.<br />
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The love for and hatred against the “Singapore model” as China tried to emulate it<br />
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After Deng Xiaoping visited Singapore in November 1978, China's official media outlets commended the city state for being an exemplar of public housing, garden city and tourism. Deng had long had a special liking for the Singapore experience , from which he never ceased learning the ways to develop economy and to govern. Important reform measures like the establishment of export-oriented Special Economic Zones and cooperation with foreign investment were results of drawing the Singapore experience. <br />
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Later, China summarized the “Singapore Model” as “an open market-economy under an authoritarian regime”, seeing it as the archetype of a one-party authoritarian regime that successfully led a country toward modernization. Singapore’s Nanyang Technological University, the institution that has been providing training for Chinese officials, is called as China’s “Overseas Party Academy”. And around the world, Singapore is the only country that China openly claims it needs to learn from.<br />
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Out of their detestation of autocracy—plus the facts that among countries in Asia, Singapore comes just behind North Korea and China in terms of stringent media control, that the country is known for its “democracy without freedom”, and that its democracy is criticized as an election game under the monopoly of the People’s Action Party—some members of the Chinese general public dismiss Singapore as the “most beautiful and elaborate pig pen in the world”.<br />
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Possibly because Singapore became aware of Chinese liberal intellectuals’ disapproval of the “Singapore Model”, the country started to deny its existence. On March 23, 2013, Singapore’s <i>Lianhe Zaobao</i> ran a commentary by Chinese media practitioner Zhao Lingmin. Entitled “China can’t emulate Singapore”, the article contained lines that read:—<br />
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The Chinese love of and hatred against the Singapore Model are found on an imaginary Singapore. And the Singapore that is highly efficient, without political competition and free of corruption does not actually exist.</blockquote>
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Singapore’s Export-oriented Experience put to practice in China </div>
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And let’s look at Singapore’s experience in economic development. During the three decades when Lee Kuan-yew was the country’s prime minister, an economic miracle was created. Such an economic feat was achieved owing to the pragmatic approach of Lee himself and his team.<br />
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Based on the country’s environment and conditions, they adopted at different stages varying economic policies alongside social security policy and successfully steered the country’s economic development. In the 1960s when the country was newly founded, Singapore relied on its ports and chemical industry; during the 1970s and 1980s, comprehensive infrastructure was in place, the export-oriented electronic industry, finance and tourism facilitated the country’s economic takeoff; when the three other Little Dragons saw a faltering economy, Singapore swiftly shifted its focus to the I.T. industry; and when the country lost its technological edge, it saw the tax evasion needs of the rich of other countries and formulated corresponding capital policies to attract them to settle in Singapore. By lowering person income tax and corporate tax, abolishing the inheritance tax in February 2008, and drawing up bank secrecy laws, the country became a place where the wealthy people of the world take up residence. Among these people are Facebook co-founder Eduardo Saverin and Chinese movie star Gong Li.<br />
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According to a <a href="http://www.sginsight.com/xjp/index.php?id=9221" target="_blank">report</a> (text in Chinese) that cited the <i>Asia Pacific Wealth Report 2012</i>, nearly a third of Asia’s “mobile millionaires” saw the city state as their first option to take up residency abroad.<br />
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Impressed by what Lee Kuan-yew achieved, Deng sought to copy the Singapore experience of economic takeoff and implemented the Reform and Opening-up policy, thereby laying the foundation for China’s economic development. <br />
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After Deng’s passing, China became an export-oriented factory of the world and enjoyed a decade of prosperity. But unlike Singapore, which transformed itself into a garden city during economic takeoff, China the world’s factory became the largest sweatshop on earth that over-exploited its environment and labor. When the glory fades, China has accumulated no technological advantages; its workers remain poor; and its once pristine landscape became badly polluted as its ecological environment edges toward collapse.<br />
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As Singapore attracts High-net-worth Individuals around the world with its low tax and favorable living environment, China becomes the country with the biggest capital outflow. The reasons wealthy people leave China include: worries about political risks, environment pollution, the need to provide their children with quality education and so on.<br />
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Unbridgeable differences between Singapore and China <br />
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Among the countries in Asia, Japan and Singapore are successful examples of learning from the West. While Japan did so with institutional transplantation (thanks to the mandatory implementation of constitutionalism imposed by the US), Singapore achieved that by blending its own culture with constitutionalism, using authoritarian means to turn a somewhat backward former colony into a well-managed city. <br />
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China’s national pride makes it unwilling to learn from Japan; it rejects India’s democracy as low quality and dismisses that of Taiwan as too “chaotic”.<br />
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China’s official line is that we will not learn from Europe and America, but we will learn from the experience of the Chinese-dominated Singapore. However, the result of decades of learning from Singapore showed that for China, becoming another Singapore is an unattainable goal. <br />
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Chinese officials have always been half-hearted when they learned from the Singapore experience. Aside from the “open market economy under an authoritarian regime” as summarized by the Chinese officials, the Singapore experience includes a more significant component on which China did not elaborate: “a comprehensive system of the rule <i>of</i> law”.<br />
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China has a special liking for authoritarian regime and yearns for the creation of a moderate dictatorship. The “open market economy under an authoritarian regime” went out of form when it was implemented in China and became a “market economy under strict regulation by the government”. The government monopolizes the national resources and creates government regulation system in which it plays all-in-one the three roles of rule maker, referee and player.<br />
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The thing that helped Singapore break away from the rule-of-man custom was the rule of law, a political legacy of the colonial era. However, Chinese leaders overlooked this very legacy of the rule of law, neglected its essence that no one is above the law and replaced it with China’s rule <i>by</i> law, which the Communist Party is prescribed to lead and regulate.<br />
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Chinese-Singaporeans, Singapore’s predominant ethnic group, had found the country’s Draconian laws and heavy sentences (including the insulting punishment of flogging) meted out for slight offences like littering and serious wrongdoings such as manufacturing counterfeit products and breach of contracts hard to stomach. Yet it was these measures that turned Singapore into a neat and orderly society. <br />
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Just as pervasive corruption is a result of Chinese rulers’ mindset of wanting power but not responsibility; horrible hygiene conditions of towns across China and public health disaster like the dead pigs flowing down Huangpu River remain a problem because the general public in China has on their mind rights but not obligations. The Chinese people are simply unable to accept that littering should be liable to fines and jail terms. <br />
<br />And as for goods and products, everyone in China wants to get quality items from vendors and yet they would all do shoddy work and use inferior materials when they produce the goods. China has thus become a country infamous for copying from others and the harmful, hazardous food products (most notably the melamine-tainted milk powder) churning out of Chinese factories. As a result, Chinese have to go all over the world to get their hands on safe products manufactured in other countries.<br />
<br />I have always suspected that Chinese people by and large dislike the “Singapore model” not just because they hate dictatorship and news censorship, but also that they disfavor other-imposed discipline based on strict sentences. They would almost certainly regard punishment for spitting, littering, copyright infringement and manufacture of counterfeit items as a form of tyranny. Hence, while the Chinese people mock themselves as living in a large and dirty pig pen, they hate even more Singapore the “most beautiful and elaborate pig pen in the world”.<br />
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To sum up, all I can say is that China has failed in its decades of effort of trying to imitate Singapore. And the Chinese’ love for and hatred against the “Singapore Model” arise not out of understanding but rather a transference of their feelings toward their own government. Unknownnoreply@blogger.com