Assault and Robbery of Chinese international students on Sydney train - long term negative effects

We are made to believe that racists are a minority but do not know how many harbour similar anti-foreign feelings without exhibiting in public. 

Sadly, the passengers who are supposed to help or call for help did not but chose to egg the criminals on with more racist rant. Where are the night guards who were supposed to ensure the safety of lone passengers travelling at night?

The incident begs many more questions ...

Had they been Australian born ethnic Asians, would they be targeted for assaults?

To what extent has Kevin Rudd's past tough talk and belligerent posturing against a perceived rising unfriendly China spurred anti-Chinese sentiments?

Already suffering from drop in demand for resources as China seeks alternative sources in Brazil and after encountering walls from high pricing suppliers and investment barriers. Perhaps it is good news as weaker AUD would generally attract more tourists to make up for the sure decline in nueva riche Chinese travellers. 

It is easy to be cavalier with words when good times are rolling. But when the global economic environment looks unlikely to recover shortly, it is high time that Australians ensure that they do not squander any goodwill and profits, or risk losing heavily for a long time.


Quotes from Shanghai :

"They wanted money so we gave them money. But then a caucasian woman sitting opposite told the robbers she just broken up with her boyfriend who had taken her purse," the student wrote.

"She pointed to us and shouted to the robbers: 'Rob them, they are Chinese, they are rich'."
"There were no policemen in the train, but there were many other people and even train crews." He said no one had offered help. 

http://bbs.chinadaily.com.cn/thread-744879-1-1.html

Change for better or worse - China target post-Bo Xilai fiasco

Viewed with outsider lens and attempting to impose Juedo-Christian tradition, law and political mould, William Pesek presents a more pessimistic and patronising analysis. 

The subtle tussles may not be evident to most China watchers but to the experts who watch every step closely, the horse trading has been going behind the scenes, beneath the relatively calm surface. Hence the explosive scandal came as a shock to many Chinese and foreigners alike. 

Sure, focussing on the gossipy and juicy parts of the scandal would only hamper a deeper understanding of the key issues that would really matter to China's future. 

Corruption and bending rules have long been recognised as potential time bombs and have been addressed delicately by the Chinese central leadership. At times, the most severe penalty have been meted out including death sentences. However, these moves had not been implemented as coherently, quicklyand lawfully as some impatient external observers and idealists hope for. As if it had not been sufficiently drastic and destabilising.  

Even the most cynical China critic must admit that the Chinese economy, human rights record, legal system, political participation and redistribution of power and wealth have undergone immense transformation and bold experimentation. Transparency and accountability have improved despite fledging areas which seem to get undue attention. 

The bottomline is that princelings and ideologues who form part of the stabilising foundation could be removed when they ran foul of the law and commit excesses for self enrichment at the expense of the people's interests. It is a step forward in people's democracy but the road ahead is fraught with dangers. 

Antiquated political structure may be only in form whereas the economics and government has undergone incredible overhaul in essence more than any other country in the world in recent times. 

Here may be something that wealthy bankers and big business who have a stranglehold on politicians through lobbying and interest groups could take a leaf from to sort out their own unique set of problems despite having a well developed democratic and legal system in place.  

Occupy Wall Street - who wishes for color revolution in the faltering economies and social inequalities in developed world. Just wondering?

http://www.bloomberg.com/news/2012-04-17/billionaires-make-killing-amid-china-murder-tale.html

"It’s the rare scandal that involves murder, corruption, Harvard University and comparisons to Jacqueline Kennedy. The Bo Xilai kerfuffle now mesmerizing China offers all this and perhaps more: It could forever change an entire political system.
---   ---  ---

We’re missing the true story here, though. It’s really more evidence that China’s political system is trapped in the past, while its economy races ahead. This dangerous mismatch is often dismissed by pundits and investors, and yet Bo’s ambitious rise and fall, as well as the opacity surrounding it, embodies much of what’s wrong in the fastest-growing major economy.

China is iPad central, with state-of-the-art factories, modern office towers of mirrored glass, six-lane highways, high- speed rail, expanding WiFi networks and state wealth that’s the envy of Washington and Tokyo. China’s nouveau riche are so vital to Prada SpA, Louis Vuitton and Mercedes-Benz that they have been called the “Middle Blingdom.”

Yet China’s political system dates to the days of Mao and Josef Stalin. As democracy takes root from Egypt to Myanmar, China is still mired in closed-door deliberations, backroom deals and purges. This murky world is bumping up against a burgeoning Internet culture that makes it impossible to contain and control the news.

---  ---  ----

In 2011, the richest 70 members of China’s legislature were worth more than the annual gross domestic product of Slovakia. The $90 billion concentrated among them is both emblematic of how China’s model is failing the masses and why Communist Party bigwigs will stonewall any change that crimps their income.

Because the extremely wealthy are often politicians, China may have a truly difficult time retooling its economy and narrowing the rich-poor divide. The hurdles to reform increase the odds of a hard landing in China that breeds social unrest.

We can marvel over Bo’s downfall. We can go on about how China’s leadership refuses to countenance rising political stars who challenge its clubby world. We can engage in whodunit fantasies about the wife and the dead businessman. But more than anything, this tale shows how an antiquated political system imperils a nation’s future.

Positives and Negatives of Bo Xilai Scandal

Extremist Maoist Bo Xilai would have caused much damage and negated China's achievements if he had made it to the top. While factional infighting is more stable and mature coalition, divisions must be healed and decadence eradicated by seizing this opportunity to unify and reform the flawed system. 

The chances of a comeback for Bo have been dimmed to nothingness.  Treason, crime and concentration of power in one person is incompatible with today's collective leadership.  That Deng Xiaoping was rehabilitated after several power struggles and Cultural Revolution because of his sincerity and passion for uplifting China. Bo could only rise to the post as mafia busting owing to his mafia and unlawful methods. He does not possess the essential traits for national leadership. Let this be a lesson to aspiring Chinese leaders who want the short cut and devious ways to power. 

A must-read for every one who is interested in China:

http://www.nbr.org/research/activity.aspx?id=236

Quote : Excerpts of "Bo Xilai Crisis : A Curse of Blessing?"

Cheng Li, an expert on Chinese elite politics and a senior fellow at the Brookings Institution :

the dismissal of Bo Xilai is a very positive event in China’s political development. While it has already constituted the most serious political crisis since the 1989 Tiananmen incident (and perhaps since the 1971 Lin Biao incident), the Hu Jintao–Wen Jiabao administration may have successfully avoided an even bigger crisis. In stark contrast with the 1989 Tiananmen incident, China’s economy and society have hardly been disrupted, at least up until now. This reflects the maturity of Chinese society and the strength of the country as a whole. To a great extent, this crisis has been a good thing for China. It not only reveals major flaws in the Chinese political system, but may also help the Chinese leadership, intellectual communities, and the general public reach a new consensus, thus contributing to bold and genuine political reforms. However, if the leadership fails to seize this great opportunity, the CCP will be in greater jeopardy in the years to come.

Bo Xilai’s story is certainly linked to China’s present-day factional politics, which I characterize as “one party, two coalitions.” One coalition is led by former president Jiang Zemin’s protégés. While the core of this coalition used to be the so-called Shanghai Gang, “princelings” (leaders who come from high-ranking family backgrounds) have become more central since the fall of Shanghai party boss Chen Liangyu on corruption charges in 2006. Bo Xilai is a princeling, as his father Bo Yibo was a revolutionary veteran who served as vice premier. The other coalition primarily consists of former officials from the Chinese Communist Youth League and is led by President Hu Jintao and Premier Wen Jiabao. These two coalitions fight with each other over power, influence, and policy initiatives. Bo Xilai’s career advancement can certainly be attributed to his princeling background and his patron-client ties with Jiang Zemin.

Bo’s downfall is also related to his own egotistical personality and notorious ambition. While his ambitions were most recently focused on achieving a seat on the Politburo Standing Committee, it would have not stopped there. In the months preceding the crisis, members of Bo’s staff spread the rumor that he could become China’s next premier. In addition, Su Wei, a scholar close to Bo at the Chongqing Party School, compared Bo Xilai and Chongqing mayor Huang Qifan to former leaders Mao Zedong and Zhou Enlai in comments circulated in both the Chongqing and national media.

The Bo episode is also related to ideological conflict, as he was associated with China’s “new left” thinking—especially through his Mao-style campaigns, such as the “smash the black” anti–organized crime campaign—and advocated an ultra-egalitarian and ultra-nationalist development model for China, known as the “Chongqing model.”

But this episode is really more than the sum of these factors. Most importantly, it involves Wang Lijun’s attempted defection to the United States and the charges against Bo’s wife related to the murder or assassination of British citizen Neil Heywood. The Chinese public has been shocked by both incidents, since this is a very unusual set of events in CCP history. How is it possible that national hero Wang Lijun and one of China’s top leaders are capable of such actions? When these kinds of charges are involved, all Chinese leaders—regardless of which faction they belong to—will not support Bo Xilai any longer, because the current crisis poses a challenge to the legitimacy of the CCP itself. The stakes are very high, and the challenge facing the CCP leadership is intimidating.

factional politics: the tensions between the princelings coalition and the Youth League coalition.

Specifically, the other princeling leaders wanted to use Bo to their advantage. Within elite circles, Bo was nicknamed “the cannon” because he was always ready to attack his political rivals, including Hu Jintao, Wen Jiabao, and Bo’s liberal counterpart—Guangdong party chief Wang Yang. Thus, he was considered a much-needed weapon by the other princelings, though they did not necessarily like or trust him. On the other hand, Hu Jintao and Wen Jiabao saw Bo as a liability for their opposition because they believed Bo’s campaigns were doomed to fail and that he ultimately would undermine the strength of the princelings due to his divisive tactics. In addition, his Cultural Revolution–style initiatives were seen by Hu and Wen as remnants of the past with no hope of succeeding. Therefore, they may have been even less concerned about Bo than some of the other heavyweights in the princeling camp.

In fact, Bo had many enemies, including at least four major groups: (1) liberal intellectuals, who often regarded him not only as a Maoist, but also as a Nazi-like leader who often singled out particular social groups as targets; (2) lawyers and legal professionals alarmed at his roughshod treatment of Chinese legal practices in Chongqing and Dalian; (3) the majority of political and military elites, who feared Bo did not play according to the rules and would take China down the wrong path; and (4) entrepreneurs in China and abroad alarmed at Bo’s anti-market tendencies, evident in his rough handling of Wal-Mart stores in Chongqing.

At the 2007 Party Congress, Bo had aggressively sought two positions, membership in the Politburo and a vice-premiership. In my view, the fact that he got the former but not the latter was the result of a compromise between the two camps. Assigning him to an interior city like Chongqing was an effort on the part of Hu and Wen to reduce Bo’s influence and power. While there were some unconfirmed reports during his first few months on the job that he was deeply dissatisfied with his new assignment, in the end he did a remarkable job of putting Chongqing on China’s political map and, for a time, effectively turned it into his own personal kingdom. Regardless, prior to this most recent scandal, there had been long-standing concerns among the Chinese political establishment that Bo would go too far and undermine the unity of the central leadership of the CCP. Even before the latest scandal, some in Beijing felt that Bo would not receive a seat on the Politburo Standing Committee because he was so divisive and could cause trouble for the CCP as a whole. Certainly, with Wang Lijun’s actions, Bo Xilai’s career was over immediately.

Although the princelings did support Bo and used him when convenient, this does not mean that they gave him a blank check to do as he pleased. Just as there is political infighting within the political parties in the United States, the relationship among members of a Chinese coalition is both cooperative and competitive.

Much has been made of Xi’s visit to Chongqing in December 2011, interpreted by some as an endorsement of Bo. Five Politburo Standing Committee members visited Chongqing, and Bo interpreted this as an endorsement of his leadership and his Chongqing model.  

It is unclear whether Bo would have fallen if Wang Lijun had not gone to the U.S. consulate. I believe it would have been much more difficult to purge Bo without Wang’s actions due to strong factional tensions within the leadership, as Bo not only represented himself but also a social movement. Even today, some people are suspicious of whether this entire incident is true and whether the death of Heywood has anything to do with Bo and Gu. Some even accuse the United States of involvement in a conspiracy. However, the evidence provided by Wang Lijun made the case against Bo much easier and clear-cut. Thus, without Wang Lijun’s dramatic visit to the consulate, removing Bo would have been much more difficult for his opponents to achieve, though given Bo’s actions and the ongoing investigation of him, he may have fallen eventually even without this crisis.

The party leadership will be extremely cautious and not expand the scope of the Bo Xilai case to other leaders. Purges will be relatively limited. The fact that certain leaders closely affiliated with Bo, such as Huang Qifan, are still free implies that the top leadership does not intend to punish too many people. The fact that the country is on the eve of the 18th Party Congress, with so many destabilizing factors, will also lead the leadership to limit the scope of targeted officials.

Therefore, though the Bo case is a victory for Hu and Wen, this victory will not necessarily translate into more seats for their coalition on the Politburo Standing Committee. To a certain extent, this explains why Guangdong’s liberal party chief Wang Yang has been reluctant to claim victory since there still could be a backlash against him. The makeup of the future Politburo Standing Committee will largely be determined through compromises between the two coalitions. The balance of power within this system will not be easily changed. If the princeling faction collapsed, this would constitute an unimaginable revolution with implications for Chinese politics and social instability ten times greater than the Bo scandal. Thus, at the moment, there is a tremendous incentive for the party’s top leadership to preserve the current structure of “one party, two coalitions,” and show unity and solidarity.

Evidence of the Chinese leadership’s unity on this matter can be found in the man who replaced Bo as party chief of Chongqing, Zhang Dejiang, a protégé of Jiang Zemin and part of the same princeling coalition as Bo. This appointment means that a deal has been made and the top leadership of the party is united. To a certain extent, this is similar to what happened in 2006 with the fall of Shanghai party boss Chen Liangyu. All those who have followed Chen as Shanghai party boss, including Xi Jinping, have been protégés of Jiang Zemin, just as Chen was.

Consequently, it is highly likely that Bo’s potential seat on the Politburo Standing Committee will be taken by someone from the princeling coalition. Zhang Dejiang would likely have attained a seat on the committee regardless of Bo’s fall, though he will now probably receive an even more important position. Zhang Gaoli, the party chief of Tianjin, and Shanghai party chief Yu Zhengsheng, both protégés of Jiang Zemin, are now likely to go further with Bo gone. Though we do not know for sure which specific officials will receive which posts, I do think it is highly likely that the factional balance of power on the Politburo Standing Committee will remain unchanged with five seats for one coalition and four for the other.

The Cultural Revolution and the 1989 Tiananmen incident are two of the great disasters in the history of the CCP, but in the aftermath of these events you see opening and reform after the Cultural Revolution and the acceleration of China’s market transition and integration with the outside world after Tiananmen, respectively. Positive political developments came out of these terrible events. There is hope that something similar may yet happen following the Bo crisis. Lessons will be learned, a consensus will be reached, and bold decisions will be pursued. Wen Jiabao, in recent comments at the National People’s Congress, said very clearly that the party-state leadership system needs to be changed and that the rule of law should be emphasized in the handling of Wang Lijun’s case in order for the CCP to endure the test of history.

Learning from this crisis is not a choice for the CCP as much as it is a necessity. If nothing changes, the party will continue to lose its credibility. I believe the characterization of the Chinese political system as “resilient authoritarianism” is incorrect. While the prevailing view had been that this year’s leadership procession would go smoothly, two years ago I argued that the upcoming succession would be highly problematic and feature some sort of major crisis. Now the general sentiment is that China is in a terrible situation due to a vicious power struggle, but I am more optimistic. China has removed a major danger and avoided the worst scenario, which would have been taking the country down a Maoist, ultranationalist path. Of course, Bo’s chances of accomplishing this were always slim, but now they are close to zero. This is solid progress, and a reason to be more optimistic about China’s future.

India escalates tension and shows aggressive posture with intercontinental missile tests

India's military buildup is uncalled for. It is clear as day who is the hostile party. 


China, on the other hand, tries to play down the threat and calm fears.  However, we know that China is only putting up a confident front. The motivations of one's neighbour in showing its military capability and war readiness are of serious concerns. 


Why didn't India's aggressive posture draw the same criticisms and objections from western powers?   For instance, Iranian acquisition of nuclear capability pre-weapons manufacture and North Korea's failed attempt.


US has been providing both political and technological support (hedging its bets against Pakistan turning). However, we have learnt dearly that wars do not help to end wars. 


http://www.reuters.com/article/2012/04/19/india-missile-idUSL3E8FJ1KZ20120419

http://www.channelnewsasia.com/stories/afp_asiapacific/view/1196249/1/.html

Quote :

Beijing on Thursday downplayed India's successful launch of a missile capable of striking anywhere in China, saying the neighbouring giants were not rivals.

India earlier on Thursday test-fired its new Agni V missile, which boasts a 5,000-kilometre (3,100-mile) range and is capable of delivering a one-tonne nuclear warhead.

"China has taken note of reports of India's missile launch," foreign ministry spokesman Liu Weimin told reporters when asked for comment on the launch.

"China and India are both big emerging countries, we are not rivals but cooperation partners."

Analysts have noted the Agni V extends India's missile reach over all of China, including military installations in the far northeast.


http://bbs.chinadaily.com.cn/thread-743246-1-1.html

Quote : 


Only the permanent members of the UN Security Council - China, Russia, France, the United States and the United Kingdom - along with Israel, are believed to have such long distance missiles.

The launch will be closely monitored by India's nuclear-armed rivals China and Pakistan and by Western countries, but is unlikely to draw the kind of criticism aimed at North Korea after its own failed long-range rocket launch on Thursday.

India has a no-first-use policy and says its nuclear weapons and missiles are for defensive purposes only.

Australia taking China for granted

The world's greatest power (military and economic) as most see it at present has not missed any opportunity to show its contentions with its next arch rival China.  China has reached maturity in economic reforms and is looking ahead for more comprehensive governance. It has not dedicated sufficient time in addressing concerns of declared enemies and cold friends. This game willbenefit  neither China nor the West. 


Differences cannot be swept under the carpet. They must been talked about and resolved amicably. Concerns over Chinese acquisition of advanced technology has deprived the US of increasing export and close the chronic trade deficit problem. 
Similarly, Australia has also ruled out investments from Huawei on national security grounds. However, such issues have largely been ironed out or overlooked with such US investors. 


http://www.afr.com/p/technology/fortescue_chief_dragged_into_huawei_AF7FO9wwz63UedD664v2sO


On the other hand, America's good friend across the Pacific Ocean Australia has been ignoring China, given up business opportunities and learning, to its detriment, for the last 10 years and many years into the future.  Says Andrew Forrest who owns a notable mining conglomerate Fortescue Metals.  

http://www.perthnow.com.au/business/local-business/australia-taking-china-for-granted-andrew-forrest/story-e6frg2s3-1226330681528

Mr Forrest says Australia is not engaging with China ``anywhere near enough'', citing a lack of senior ministerial representation at what Boao Forum for Asia meetings.

``I see other countries with their senior ministers and prime ministers out there selling their own countries and I look around and say where is my country,'' Mr Forrest told reporters after speaking at a business lunch in Sydney on Tuesday.

``Now people don't need our legal services, they can get them elsewhere.

``They don't need our investment banking services, they can get them elsewhere.

``They don't need our resources, our energy. They can get them elsewhere, so let's not take it for granted,'' Mr Forrest said.

Mr Forrest's comments follow those of Department of Foreign Affairs and Trade Secretary Dennis Richardson, who said last year that Australia's footprint in China was lagging behind comparable Western nations.

``If you go back 15 or 20 years, we were leading the pack in terms of representation. We've now fallen off the pack,'' Mr Richardson said in October.

Ignore China's rise - arrogance and ostrich mentality - the need to understand China

Personally, I sense the fear and hypocrisy are the weighing down heavily on many China watchers.   In fact, many Asian critics do not know better than their economic competitors. Despite having a globalised education and affluent lifestyle (myself included), the high speed at which Third world nationals (not confined to Chinese) are acquiring knowledge and skills could frighten many laid back workers in the developed world.

http://www.guardian.co.uk/world/2012/mar/25/china-rise-ignorance

Quote :

Our ascendancy of the past two centuries – first Europe and then the US – has bred a western-centric mentality: the west is the fount of all wisdom. We think of ourselves as open-minded but our sense of superiority has closed our minds. We never entertained the idea that China could surpass the US. Backward, lacking democracy, bereft of Enlightenment principles,the product of a very different history, it was not western. So how could it? We were the universal model that everyone else had to embrace to succeed. The only form of modernisation that worked was westernisation. China would inevitably fail: the project was unsustainable. By insisting on seeing China through a western prism, we refused to understand China in its own terms. Our arrogance bred ignorance: we were not even curious.

China is, indeed, in so many ways, not like the west. It is not even primarily a nation state but a civilisation state. Whereas the west has primarily been shaped by its experience of nation, China has been moulded by its sense of civilisation. This helps to explain why the Chinese place such a huge emphasis on unity and stability, their reverence for the state and their embrace of ideas such as "one country, two systems" in Hong Kong. Similarly, unlike Europe, China never sought to acquire overseas colonies but established a tribute system in east Asia. The Chinese state bears a fundamentally different relationship to society compared with any western state. The state is seen as an intimate, as a member of the family, rather than, as in western discourse, a problem, a threat, or even the enemy. For the Chinese, the state is the embodiment of its civilisation: as such, it could not be more important, it lies at the heart of the Chinese pysche.

It is impossible to understand or make sense of China through a western prism. As China becomes a great power and, over the next two decades, steadily usurps America as the dominant global power, we will no longer have any alternative but to abandon our western parochialism and seek to understand China on its own terms. But the shift in mindset that faces us is colossal.

What does it mean to be a civilisation state? What was the tributary system and how will it shape China's future behaviour? Why is China's idea and experience of race so different from ours? Just as every non-western country was compelled during the 19th and 20th centuries to understand the west in its own terms, it is now our turn to make sense of a country so different from our own.

It will be a Herculean task: we always look west, hardly ever east. When Bo Xilai, a leading contender for one of China's top positions, was dismissed more than a week ago, it received little attention in our media even though it was the most important event of its kind for more than two decades. Compare, if you will, the attention, devoted by the British media – notably the BBC and quality newspapers – to the Republican primaries with that given to China in the build-up to the Communist party congress in November, when President Hu Jintao and Premier Wen Jiabao will be replaced by Xi Jinping and Li Keqiang. The latter is of far greater consequence yet the coverage is paltry in comparison.

We have an enormous China deficit that urgently needs addressing. It is replicated throughout our culture; there has been much talk of promoting Mandarin in our schools and yet, in both the state and private sectors, pitifully few offer it as a serious option. Our economy exhibits the same morbid symptoms: Britain exports more to Ireland than it does to China, India, Russia and Brazil combined. Unless we address these questions, we face the prospect of being sidelined by history.

China's remarkable economic growth started in 1978, but as its economy was then only a 20th the size of America's, its global impact was minuscule. By the turn of the century, however, after more than two decades of double-digit growth, the Chinese economy was more like a quarter of the size of America's, with the consequence that its global effect was of an entirely different order. The story, moreover, was no longer simply about China because by then its rise had begun to transform the world. Only with the financial crisis in 2008, however, did the west finally begin to wake up to the implications.

Although countless commentators speak lazily of the global financial crisis, this is a misnomer. A visit to Beijing will soon dispel the illusion. The place is brimming with energy, elan, confidence and brio. While the west is mired in austerity and stagnation, with a psychology to match, China is riding an extraordinary wave of optimism. In 2010, according to a Pew poll, 91% of Chinese felt good about their country's economy compared with 24% in the US and 20% in Britain. While most western economies are still smaller than they were before 2008, the Chinese economy has been growing in the region of 9-10% a year. That is why it will overtake the US almost a decade earlier than previously predicted.

2008 ushered in a new era, the beginning of a Chinese world economic order. Until recently the US largely shaped globalisation but now China is increasingly assuming that role. Its most dramatic expression is trade. China will shortly become the world's largest trading nation. It imports huge amounts of natural resources and exports a massive volume of manufactured goods: in 2011, it overtook the US to become the world's largest producer of manufactured goods, a position America had previously held for 110 years. In 1990, there was hardly a country in the world for which China was its chief trading partner. By 2000, there were a few, but nearly all were in east Asia. By 2010 the list stretched around the world, including Japan, South Africa, Australia, Chile, Brazil, India, Pakistan, the US and Egypt. Imagine how long the list will be in 2020.

China is rapidly emerging as a great financial power. In 2009 and 2010 the China Development Bank and the China Exim Bank – which I would guess the great majority of Observer readers have never even heard of – lent more to the developing world than the World Bank. Just as the Rothschilds funded much of Europe's industrialisation in the 19th century, so these two banks are now doing the same on a far larger canvas, namely the entire developing world, comprising 85% of the world's population. Meanwhile, in late 2008, China began making the renminbi, hitherto a currency that circulated only in China, available for the settlement of trade. The HSBC has predicted that by 2013-15 half of China's trade with the developing world (which constitutes more than half of China's total trade) will be paid for in renminbi. It is the first stage in the process by which the renminbi will replace the dollar as the world's dominant currency.

The centre of gravity of the global economy is remorselessly shifting from the developed to the developing world. China is the main player and the outcome will be the rapidly declining influence of the developed world and the reconstitution of all major global institutions, notably the International Monetary Fund and the World Bank, to reflect this.

Pause for a moment and think what it feels like to be in Beijing these days. The place is on fire. It is alive with argument and debate. A country growing at 10% a year is constantly throwing up huge and novel problems that require response and solution. It is a far cry from Britain mired in stagnation, where debate rarely ever breaks new ground and for the most part is backdated. In contrast, China is not only remaking itself with extraordinary speed, but is also remaking the world. Beijing resembles London in 1850 or Washington in 1950, but on an epic scale. It is the most interesting and stimulating city in the world.

I spent much of last autumn as a visiting professor at Tsinghua University in Beijing. My stay was a whirl of talks and discussions. Far from the western image of China being devoid of debate, Beijing is positively throbbing with it. And it is extraordinarily open-minded and open-ended. I was invited to give a lecture at the ministry of foreign affairs to around 100 young diplomats at which I suggested that a foreign policy based on Deng Xiaoping's principles was no longer appropriate: a new approach was required that reflected Chinese growing global interests while also drawing on its history. Far from being taken aback, those present entered into a vigorous discussion. These debates, furthermore, are infused with huge significance. As China becomes a great global power they will shape its future policies and priorities – and thereby the world.

One might think that in such times, and with such glittering prospects, China would be full of hubris, bordering even on arrogance. On the contrary, the opposite is the case. The Chinese are still deeply preoccupied with the colossal problems that confront a still poor and developing country of 1.3 billion people. Inequality has soared, sowing the seeds of growing resentment against the rich; land seizures, as events in Wukan recently demonstrated, provide a continuing threat to social stability; massive corruption is corroding the sense of justice and fairness. While possessed of the kind of inner confidence and experience that comes from being the heirs of a great civilisation, the Chinese have no illusions about where they have got to and the tasks that lie ahead.

In November, the Communist party will hold its 18th congress. It will elect a new leadership for the next 10 years during which time China will undergo profound change. Already, there is a major shift under way in economic priorities from low value-added production and massive exports towards higher-end production and domestic consumption. During the next decade we can expect important political reforms.

In Britain, meanwhile, China will continue to receive scant coverage. But, kicking and screaming, forever looking backwards to the age of the west, we will, nevertheless, be dragged into the age of China. Time waits for no country. Over the next decade, we will increasingly come under China's spell.

It is worth reminding ourselves that last October, when the future of the euro was in grave doubt, European leaders pleaded with China to extend a huge loan. Britain is also broke and needs Chinese money for its infrastructure projects. There will be a growing clamour to learn Mandarin. And, as yet hardly recognised, we will find ourselves coming under the growing influence of Chinese soft power, be it the influence of Chinese parenting or the country's stellar educational performance. China will irresistibly shape our future.

China 2030 : mistakes that World Bank would not want to be associated with

Would Chinese economic policy makers be naive to the extent of taking the advice of China 2030 Report written by pseudo economists whom the World Bank has disclaimed from?   


Chinese state companies have undergone transformation and authorities continue to tighten regulations to check aggressive and unprofitable investments.


The authors may better make use of their talents to provide prognosis and prescription for the economic ills inflicting US and Europe. 


China experienced phenomenal success by adopting socialism with capitalist characteristics. Perhaps US and Europe would benefit from capitalism with socialist elements to address chronic economic excesses, unemployment and social problems. 

Drop Deng's policy? WB's wrong therapy

By John Ross

China.org.cn, March 2, 2012

The World Bank's report China 2030 has, unsurprisingly, provoked major criticism and protest. I have read World Bank reports on China for more than 20 years and this is undoubtedly the worst. So glaring are its factual errors, and economic non-sequiturs, that it is difficult to believe it was intended as an objective analysis of China's economy. It appears to be driven by the political objective of supporting current US policies, embodied in proposals such as the Trans-Pacific Partnership.

Listing merely the factual errors in the report, of both commission and omission, as well as the elementary economic howlers, would take up more column inches than are available to me. So what follows is just a small selection, leaving space to consider the possible purpose of such a strange report.

The report has no serious factual analysis of the present stage of China's economic development. On the one hand it is behind the times and "pessimistic", saying China may become "the world's largest economy before 2030". This is extremely peculiar as, by the most elementary economic calculations, (the Economist magazine now even provides a ready reckoner!) China will become the world's largest economy before 2020.

On the other hand, the report greatly exaggerates the rate at which China will enter the highest form of value added production. As such, the report calls for various changes in China, and bases its calls on the rationale of "when a developing country reaches the technology frontier'. But China's economy, unfortunately, is not yet approaching the international technology frontier, except in specialized defense-related areas. Even when China's GDP equals that of the US, China's per capita GDP, a good measure of technology's spread across its economy, will be less than one quarter of the US's. Even making optimistic assumptions, China's per capita GDP will not equal the US's until around 2040, by which time China's economy would be more than four times the size of the US's! Put another way, China will not reach the technology frontier, in a generalized way, for around three decades, so this rationale can't be used to justify changes now.

The report appears to envisage China's development path differing from that of every other country on the planet. It claims that in China "the continued accumulation of capital… will inevitably contribute less to growth". But one of the most established trends of economic development, first outlined by Adam Smith and econometrically confirmed to the present day, is that capital's contribution to growth increases with development. Deng Xiaoping certainly argued that economic policy must have "Chinese characteristics", i.e. be adapted to China's specific conditions. However, he never argued that China was exempt from economic laws, which is what this report appears to envisage!

The report makes elementary economic mistakes, such as confusing the consequences of high export shares with trade surpluses. It argues: "If China's current export growth persists, its projected global market share could rise to 20 percent by 2030, which is almost double the peak of Japan's global market share in the mid-1980s when it faced fierce protectionist sentiments… China's current trajectory… could cause unmanageable trade frictions." But if China increases its import share at the same rate as exports, this would not create major trade frictions. Japan's problem was trade surpluses, not export share.

It is almost impossible to believe, given such elementary mistakes, that this report was intended as a serious objective analysis of China's economy. What, then, is its goal? , The report spells out its goal clearly enough in calling for China to abandon the policies launched by Deng Xiaoping which brought such success. It says: "Reforms that launched China on its current growth trajectory were inspired by Deng Xiaoping… China has reached another turning point in its development path when a second strategic, and no less fundamental, shift is called for."

What is this new "non-Dengite" economic policy? Deng Xiaoping's most famous economic statement was "it doesn't matter whether a cat is black or white provided it catches mice". Effectively, this means, in economic terms, that a company should not be judged by whether it is private or state owned but by how it performs. The proposed new economic policy overturns Deng's dictum by saying: "Reintroduce judging cats by color, promote the private sector cat."

The consequences of this are clearly seen in the report's financial proposals. During the international financial crisis, China was protected by its state-owned banking system. The US and European privately-owned banks simultaneously created the financial crisis and were flattened by it, throwing their economies into crisis. China, however, suffered no significant setback.

The reasons for the US and European banking crisis are well understood. Modern banks are necessarily very large, both in order to undertake international operations and because of the inherent risk of large investment projects. They are literally "too large to fail", as the failure of any large bank creates an unacceptable economic crisis. This theoretical point was rammed home by the devastating consequences of Lehman's collapse, following which no government will allow a large bank to fail.

But a situation in which the state is blocking the bankruptcy of a large bank, whose profits are being privately retained, creates disastrous risk. If large private banks are state guaranteed against crippling losses, but retain profits, they are incentivized to undertake potentially profitable but highly risky operations. The disastrous results of this scenario were seen during the financial crisis.

Extraordinarily, this report proposes that China abandon the financial system which brought it successfully through the financial crisis and instead adopt the one which led the US and Europe to disaster. This is the real significance of "privatization would be the best way to make SFIs [State Financial Institutions] more commercially oriented".

This ties in with US TransPacific Partnership pressure for the elimination of China's state-owned companies, which are seen as giving China a completive advantage over the US. The US, of course, does not possess such companies. If the US is worried about the competitive disadvantage created by not having state-owned companies, it should create some, not call for China to abandon its own.

The last World Bank report of this type was published in February 1991 and its Study of the Soviet Economy provided the basis for Russia's economic policies of the 1990s.

The result was that Russia suffered the greatest peacetime economic disaster to befall any country. GDP declined by more than half. Russian male life expectancy fell by four years and we saw the beginning of a population decline, which continues to this day. The USSR subsequently disintegrated, in what Vladimir Putin called the greatest geopolitical catastrophe of the 20th century. Russia has not recovered.

This type of economic program is therefore not simply a "theoretical" model. It has been thoroughly and demonstrably discredited on account of the catastrophes it has produced. Russia was ill advised enough to adopt this type of economic program. It is to be hoped, then, that China does not follow the same course.

http://www.china.org.cn/opinion/2012-03/02/content_24786018.htm