Krugman: China is a 'rogue economic power'

As if more than enough evidence weren't enough, there's this:

Last month a Chinese trawler operating in Japanese-controlled waters collided with two vessels of Japan’s Coast Guard. Japan detained the trawler’s captain; China responded by cutting off Japan’s access to crucial raw materials.

And there was nowhere else to turn: China accounts for 97 percent of the world’s supply of rare earths, minerals that play an essential role in many high-technology products, including military equipment. Sure enough, Japan soon let the captain go.

I don’t know about you, but I find this story deeply disturbing, both for what it says about China and what it says about us. On one side, the affair highlights the fecklessness of U.S. policy makers, who did nothing while an unreliable regime acquired a stranglehold on key materials. On the other side, the incident shows a Chinese government that is dangerously trigger-happy, willing to wage economic warfare on the slightest provocation.

He goes on to talk about how, starting in the 1990s, the Chinese were allowed to take over the world's rare earth production industry, necessarily killing off our own industry in the process. About the Bush II era response, when we were supposedly doing everything and then some to protect our national security:

[P]olicy makers simply stood by as the U.S. rare earth industry shut down.

Seems like the Barons of the New America (and their political retainers and gophers) are willing to do anything for money.

As to lessons, the Professor suggests three, including:

China’s response to the trawler incident is, I’m sorry to say, further evidence that the world’s newest economic superpower isn’t prepared to assume the responsibilities that go with that status.

Let's put that a little differently. As the Republicans are to the Democrats, China is to all U.S. policy-makers — facing a self-neutered opponent, relentless, and willing to do anything to win. It's a match made in heaven — if you're a Republican, or the Chinese government.

GP Read More......

Rachel on the Chamber of Commerce & foreign money in U.S. elections

If all you have read of the Chamber of Commerce story are the headlines and snippets, you probably got the bottom line correctly. The "U.S." Chamber of Commerce has very likely been taking foreign money and "investing in" U.S. politicians (and I know you know I mean "donating to") — in massive doses. Shock! say you. Yet more Citizens United money carpet-bombing our electoral process! And this time, foreign!

I raised the spectre here of a descent into client-nation status. When your creditors put money into (buying) your political process, you get the rulers they want, not the ones you want. The U.S. has client nations and rulers all around the world. They don't make the news; only when clients push back — Iraq and Afghanistan — is it news. And then only because of our clearly recognized desire that they be "better" (more submissive) clients. I would venture to guess that most U.S. voters would prefer that Iraq and Afghanistan be better clients. (Needless to say, that's the inverse of "spreading democracy.")

But Rachel raises a more direct point. What is the immediate interest of those foreign contributors to U.S. elections? Well, more outsourced jobs, of course. And that's why I called them the "U.S." Chamber of Commerce; because they are themselves clients, and not of U.S. interests.

The segment is rich in information:



"These corporations are trying to pay for a Congress that will keep these policies going" — Celinda Lake in the clip.

There seems to be only two resolutions. The first is a wage-race to the bottom by U.S. labor, so they can compete with third-world sweatshops (and second-world engineering firms). The second is some way of keeping U.S. capital from going overseas. Earlier I noted Ian Welsh's take on this aspect of the issue:

If you can build a factory overseas which produces the same goods for less, meaning more profit for you, why would you build it in the US?

Until that question is adequately answered, by which I mean “until it’s worth investing in the US”, most of the discretionary money of the rich will either go into useless speculative activities like the housing and credit bubbles, which don’t create real growth in the US, or they will go overseas.

Mr. Welsh offers a range of options in his own post here.

You can see this issue through a business lens, or a nationalist lens. Oddly, this time the business lens is also a nationalist lens — if you're rooting for all of our national competitors.

The U.S. [sic] Chamber of Commerce, ladies and gentlemen; here through the end of this century.

GP Read More......

China: Awarding Nobel Peace Prize to human rights activist encourages crime

A predictable response from one of the most corrupt governments on the planet.

Awarding the Nobel Peace Prize to imprisoned dissident Liu Xiabo encouraged crime in China, the government said Thursday, while telling his supporters to stop interfering in his case.

China has been issuing angry statements and rejecting calls for Liu's release since the Norwegian Nobel Committee honored him Oct. 8 for his more than two decades of advocacy of human rights and peaceful democratic change that started with the demonstrations at Beijing's Tiananmen Square in 1989.

The 54-year-old literary critic is serving an 11-year prison term after being convicted of inciting subversion for his role in writing an influential 2008 manifesto for political reform.

Read More......

Retired communist party leaders from China call for free speech

This will go over like a lead balloon. The Guardian:

The letter accuses officials of ignoring China's constitution, which guarantees the rights of free speech and a free press. "This false democracy of formal avowal and concrete denial has become a scandalous mark on the history of world democracy," it says.

Several of the signatories have been prevented from publishing books themselves.

The document began appearing on websites yesterday, days after the government denounced the decision to give the Nobel peace prize to the dissident Liu Xiaobo, who was jailed after co-writing a document calling for democratic reforms, and before a major political meeting which begins on Friday. It also follows repeated, highly unusual remarks by the Chinese premier, Wen Jiabao, about political reform, most recently in a CNN interview.

"Even the premier of our country does not have freedom of speech or of the press," the authors complained, pointing out that Chinese media had omitted Wen's advocacy of political reform from reports of his comments.

Read More......

Nobel Peace Prize winner informed of prize, wife under house arrest

Why does the world trust China when it continues to behave this way? BBC:

A US human rights group, Freedom Now, said Liu Xia visited her husband in jail on Sunday.

Freedom Now said Mr Liu wept during his wife's visit and dedicated his award to those killed at Tiananmen Square.

Mrs Liu also posted a message on Twitter with some details of their visit.

Prison officials told Mr Liu that he had won the Nobel prize on the night of 9 October, she said on Twitter.

In the message, she also confirmed that she had been placed under what she described as "house arrest" since the announcement of her husband's award on 8 October.

"My mobile phone has been ruined; I have no way of making or receiving calls," she wrote.

Read More......

China angry over jailed dissident receiving Nobel Peace Prize

Sounds like a personal problem. Get over it.

China has angrily condemned the decision to award the Nobel Peace Prize to jailed Chinese dissident Liu Xiaobo.

The Beijing government summoned the Norwegian ambassador in protest. It called Mr Liu a "criminal", saying the award violated Nobel principles and could damage relations with Norway.

The Norwegian Nobel committee said Mr Liu was "the foremost symbol" of the struggle for human rights in China.

US President Barack Obama called for Mr Liu's immediate release.

Read More......

Wife of new Nobel Peace Prize winner 'disappears' and phone service cut

There's the world's business partner in all its glory! Yes, this is a regime that can be trusted. The world leaders need to step up and become much more aggressive with calling for the immediate release of Liu and his wife.

The world's newest Nobel Peace Prize winner remained unreachable in a Chinese prison Saturday, while his wife's mobile phone was cut off and the authoritarian government continued to censor reports about democracy campaigner Liu Xiaobo's honor.

Police kept reporters away from the prison where Liu is serving an 11-year sentence for subversion, and his lawyer said that Liu's wife — who had been hoping to visit him Saturday and tell him the news of the award — has "disappeared" and he is worried she may be in police custody.

Chinese authorities, who called Liu a criminal shortly after his award Friday and said his winning "desecrates the prize," sank Saturday into official silence.

Read More......

2010 Nobel Peace Prize goes to Chinese human rights dissident Liu Xiaobo

Perhaps now China will release him from prison. CNN:

The 2010 Nobel Peace Prize has been awarded to Liu Xiaobo, a leading Chinese dissident who is serving an 11-year prison term.

Liu was sentenced in 2009 for inciting subversion of state power. He's the co-author of Charter 08, a call for political reform and human rights, and was an adviser to the student protesters at Tiananmen Square in 1989.

Norwegian Nobel Committee head Geir Lundestad said 199 individuals and 38 organizations had been nominated for this year's prize.

The Chinese government "warned" the Nobel committee that they'd better not dare give Liu the prize.

The Chinese foreign ministry had previously warned the Nobel committee not to give Liu the prize, as they said that it would be against Nobel principles.

The state-run Xinhua News Agency later carried a report saying that awarding Liu Xiaobo the prize blaspheme (褻瀆) Alfred Nobel's purpose of creating this prize and "may harm China-Norway relations". The spokeperson added that Liu had broken Chinese law and his "actions run contrary to the purpose of the Nobel Peace Prize." News of the award was censored in China, with television reports carrying the ceremony going black and a media blackout across Chinese media. Despite being blocked to discuss the news in forums based in the Mainland China, the term blaspheme has stirred up an internet meme in China and has been used to satirize the government's response.

More from Wikipedia:

Liu Xiaobo (simplified Chinese: 刘晓波; traditional Chinese: 劉曉波; pinyin: Liú XiǎobÅ?; born December 28, 1955) is a Chinese intellectual, anti-communist and human rights activist in China.

He has served as President of the Independent Chinese PEN Center since 2003. On December 8, 2008, Liu was detained in response to his participation with Charter 08. He was formally arrested on June 23, 2009, on suspicion of "inciting subversion of state power." He was tried on the same charges on December 23, 2009, and sentenced to eleven years' imprisonment and two years' deprivation of political rights on December 25, 2009.

During his 4th prison term from 2009 to 2020, he was nominated for the Nobel Peace Prize and, subsequently was informed by his lawyer , that on October 8, 2010, he was named the winner of the 2010 Nobel Peace Prize.

Liu Xiaobo is a human rights activist who has called on the Chinese government to be accountable for its actions. He has been detained, arrested, and sentenced repeatedly for his peaceful political activities, beginning with his participation in the Tiananmen Square protests of 1989 and on four other occasions since.

UPDATE from Joe: Matt Browner Hamlin has an excellent post at Huffington about the significance of this award:

Today is a great day in the cause of freedom and human rights. People often ask me whether or not freedom can ever come for Tibetans. I've always believed that for change to occur in Tibet, there must be change in China first. Liu Xiaobo is one of the leading advocates for democracy in China whose work makes the very possibility of a resolution to the Tibet question a likelihood. It is dissidents like Liu, Wang Lixiong, and blogger Han Han who are going to bring meaningful political change in China, a likely precondition to freedom in Tibet. I can't think of anyone more deserving of the Nobel Peace Prize than Liu Xiaobo, a truly courageous man of principle whose belief in democracy and freedom has the power to shake one of the largest countries in the world to its core.

Read More......

Historian: Mao's Great Leap Forward 'killed 45 million in four years'

You have to wonder how anyone can have respect for Mao. Most assumed the number was high though forty-five million is much more than previously estimated. Many suffered from starvation thanks to Mao's systematic lying about food production. Everyone wanted to out perform the other so whether or not the numbers were there, they claimed to have certain quantities of rice.

Overstating numbers has been a regular feature in communist China (and some other neighboring countries) which has always made be reluctant to fully embrace the Chinese economic miracle story. Great yes, but how real? The Independent:

Mr Dikötter, who has been studying Chinese rural history from 1958 to 1962, when the nation was facing a famine, compared the systematic torture, brutality, starvation and killing of Chinese peasants to the Second World War in its magnitude. At least 45 million people were worked, starved or beaten to death in China over these four years; the worldwide death toll of the Second World War was 55 million.

Mr Dik̦tter is the only author to have delved into the Chinese archives since they were reopened four years ago. He argued that this devastating period of history Рwhich has until now remained hidden Рhas international resonance. "It ranks alongside the gulags and the Holocaust as one of the three greatest events of the 20th century.... It was like [the Cambodian communist dictator] Pol Pot's genocide multiplied 20 times over," he said.

Between 1958 and 1962, a war raged between the peasants and the state; it was a period when a third of all homes in China were destroyed to produce fertiliser and when the nation descended into famine and starvation, Mr Dikötter said.

Read More......

Krugman: China is maintaining an artificially high trade surplus

This isn't news to many readers, but it will be to some. We tend to think of the trade deficit with China as an almost genetic aspect of our consumer economy — they make it, we buy it.

But the size of the trade deficit is also a function of currency exchange rates.

Let's say one dollar is worth one euro. If we buy $1000 of German goods and Germany buys 800 euros of U.S. goods, we have a small $200 trade deficit with Germany ($1000–$800 in euros). We also have 800 euros worth of big screens. (Not much, but we are a modest people.)

Now what if the euro becomes weaker, say one dollar = two euros? German goods become more attractive to U.S. buyers, and at the same time, U.S. goods become less attractive to German buyers. We might now buy $1500 of German goods (because that gives us 3000 euros worth of big screens at bargain prices). At the same time, German purchases of our stuff tanks, let's say to 500 euros. The trade deficit is now $1250 ($1500–$250 in euros).

Notice that there's leverage. In the example, the dollar doubled in value, and the deficit increased five-fold — all because of the effect on consumers in both countries.

Now what if that weaker euro were manipulated?

With that in mind, read Krugman on the Chinese (my emphasis):

If discussion of Chinese currency policy seems confusing, it’s only because many people don’t want to face up to the stark, simple reality — namely, that China is deliberately keeping its currency artificially weak.

The consequences of this policy are also stark and simple: in effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different.

His problem is not that this is true, but that the Japanese are confronting the Chinese, while we're not (and by "we" he means the U.S. in general). Krugman adds:

Aside from unjustified financial fears, there’s a more sinister cause of U.S. passivity: business fear of Chinese retaliation.

Consider a related issue: the clearly illegal subsidies China provides to its clean-energy industry. These subsidies should have led to a formal complaint from American businesses; in fact, the only organization willing to file a complaint was the steelworkers union.

He goes on to quote a NY Times report:

[M]ultinational companies and trade associations in the clean energy business, as in many other industries, have been wary of filing trade cases, fearing Chinese officials’ reputation for retaliating against joint ventures in their country and potentially denying market access to any company that takes sides against China.

The Professor also notes that one of our fears is that the Chinese will stop buying our bonds (and then we'll be sunk for sure). But as he points out here and elsewhere, their buying our bonds is the very mechanism by which they're strengthening the dollar. It's simple market behavior — more buyers for something, higher prices for it. Buying U.S. bonds is almost the definition of buying the dollar.

So something to ponder as we enter the next economic phase. It's counter-intuitive for a "we're number 1" mindset, but a weaker dollar is our friend these days; and needless to say, China isn't. (Thank you, Japan, for standing up for us.)

GP Read More......

Chinese pilots who lied about experience back on the job

There I fixed it. That ought to make everyone feel more comfortable with flying in China.

Chinese pilots who had lied about their flying experience have been allowed to return to work after they took remedial action to make up their hours, according to the country's aviation watchdog.

Chinese media reported this month that a probe in 2008 had found about 200 pilots had falsified elements of their resumes.

The Civil Aviation Administration of China said they had found 192 pilots whose "flying experience to different degrees did not accord with reality."

Read More......

Christian conservatives partner with communist China for abstinence education

It's a marriage made in heaven. Why does Focus on the Family love communism and hate America?

If all goes according to plan, this fall a girl somewhere in China's Yunnan Province will tell her boyfriend she can't have sex with him. And he'll have an abstinence program from the United States to thank.

In Yunnan schools this year, teachers are being trained with a sex education curriculum created by the conservative Christian group Focus on the Family. The agreement with the Yunnan ministry of education is a milestone for Focus on the Family, which has struggled for four years to make inroads on abstinence in China.

It is also the result of a narrow confluence of interests: Evangelical Christian groups want an entree into China. And Chinese authorities, despite the country's official atheism, want help with controlling population growth and managing the society's rapidly shifting values.

Read More......

China expected to pass Japan, and become world's 2nd largest economy this year

Nasty government.

China is expected to surpass Japan this year as the world's second-largest economy, an unprecedented position for a still-developing country and one that has brought strains as well as triumphs.

Second-quarter GDP figures from Japan reported Monday morning show that its economic output, at $1.288 trillion, fell short of the $1.339 trillion China reported for the three months ended in June.

Once final numbers for all of 2010 are compiled, many economists expect China to overtake Japan as the world's second-largest national economy in U.S. dollar terms. The gap between China's $5 trillion economy and the U.S.'s nearly $15 trillion output remains very large, and even at current growth rates—which may not be sustained—it would take China a decade or more to match the No. 1 U.S.

A decade. As if that's a long time for something that significant. Read More......

China takes over as largest consumer of power

The US owned that position for around 100 years. Wall Street Journal:

China, powered by years of rapid economic growth, is now the world's biggest energy consumer, knocking the U.S. off a perch it held for more than a century, according to new data from the International Energy Agency.

The Paris-based agency, whose forecasts are generally regarded as bellwether indicators for the energy industry, said China devoured 2,252 million tons of oil equivalent last year, or about 4% more than the U.S., which burned through 2,170 million tons of oil equivalent. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear, coal, natural gas and renewable sources such as hydropower.

The figures reflect, in part, how the global recession hit the U.S. more severely than China and hurt American industrial activity and energy use. Still, China's total energy consumption has clocked annual double-digit growth rates for many years, driven by the country's big industrial base. Highlighting how quickly its energy demand has increased, China's total energy consumption was just half the size of the U.S. 10 years ago.

Read More......

China locking poor behind gated communities

What could possibly go wrong with such a plan besides an infamous moment in history like this. What is with so many countries around the world blaming poor foreigners when times are tough? This latest policy in China is sick.

The government calls it "sealed management." China's capital has started gating and locking some of its lower-income neighborhoods overnight, with police or security checking identification papers around the clock, in a throwback to an older style of control.

It's Beijing's latest effort to reduce rising crime often blamed on the millions of rural Chinese migrating to cities for work. The capital's Communist Party secretary wants the approach promoted citywide. But some state media and experts say the move not only looks bad but imposes another layer of control on the already stigmatized, vulnerable migrants.

So far, gates have sealed off 16 villages in the sprawling southern suburbs, where migrants are attracted to cheaper rents and in some villages outnumber permanent residents 10 to one.

Read More......

China makes it official: Google license renewed

What kind of a deal was cut to allow this to happen? The Independent:

"We are very pleased that the government has renewed our ICP license and we look forward to continuing to provide web search and local products to our users in China," Google's top lawyer, David Drummond, said in a statement.

The one-sentence statement gave no details. A Google spokeswoman, Courtney Hohne, said information on what services Google will offer in China would be released in coming weeks.

There was no immediate statement on the website of China's Internet regulator, the Ministry of Industry and Information Technology.

Google had to make concessions to get its license renewed, opting not to leave China completely so it could pursue its commercial ambitions — a music service, its mobile phone business, a Beijing development center and a staff to sell ads for the Chinese-language version of its U.S. search engine.

Read More......

Google expects China license to be renewed

So maybe the recent PR storm was all just PR after all. BBC:

Google boss Eric Schmidt has said he expects the internet giant to be granted a new licence to operate in China.

There had been speculation China would revoke the licence after Google began redirecting Chinese users to its unfiltered search site in Hong Kong.

This was in protest at China's stringent censorship laws.

But last month, Google said it would no longer automatically redirect users in a conciliatory move towards Beijing.

Read More......

Economist: China's real estate bubble bursting, will hit banks

If this analysis turns out to be accurate - and there is every reason to believe that bubble, like others, will burst - China is going to be facing one of it's most significant challenges in decades. There has been regular political dissent and protests but with a growing economy there was always plenty of money to throw around at the problems. This time it may not be as easy. What makes any analysis complicated is that China is so secretive about the details inside the banking system. Some still believe that there is limited credit bubble risk but that assumes the government story about real estate being paid in cash is accurate. Bubbles eventually always burst.

China's property market is beginning a collapse that will hit the banking system, Kenneth Rogoff of Harvard University told Bloomberg Television.

Property transactions have dropped and prices are stagnating in the wake of steps in recent months by the central government to cool the market.

Xu Shaoshi, minister of land and resources, said at the weekend that he expected prices to start falling within a few months.

"You're starting to see that collapse in property and it's going to hit the banking system," Rogoff, a former chief economist at the International Monetary Fund, told the agency.

Read More......

New Zealand police investigating physical harassment of MP by Chinese security

Um, guys you're not in China where this behavior is rewarded. It's one of those little cultural differences that the guide books don't always explain. How's anyone supposed to know that in a foreign democracy, you can't harass a member of parliament including pushing and ripping the flag of Tibet out of their hands? Doing it to the leader of a political party makes it even stickier but let's hope it's a lesson learned and the friends at home will provide a "welcome home" gift.

Part of the investigation will include speaking with witnesses, viewing pictorial coverage and liaising with the Speaker of the House, who gives permission for lawful protests to take place in Parliament's grounds, police say.

Dr Norman is outraged that members of a Chinese delegation were able to push him, hit him with an umbrella and rip a Tibetan flag from his grasp.

He was protesting as Chinese Vice President Xi Jinpin arrived at Parliament greeted by a few dozen pro-China supporters.

Some of the group, believed to be Chinese security, took exception to Dr Norman waving a Tibetan flag and calling for democracy.

The MP brushed away attempts to have an umbrella placed in front of him, then clashed with security guards as they pulled the flag from his grasp and threw it on the ground.

He yelled they could suppress freedom of speech in China, but not in New Zealand.

Read More......

Chinese workers paying the price for economic boom with their health

Whether China's claim that they are moving faster to reform the situation than any other country at this stage is debatable though every country has been through this. My father had an uncle who died when he was thirty years old after working in a battery factory in Philadelphia back before WWII. The toxic fumes killed him and others who were employed there.

Terribly sad story out of China these days and you have to wonder about the health care these workers are receiving.

Since last year, there has been an explosion of lead poisoning cases close to smelting plants. Studies have shown that communities that recycle electronic waste are exposed to cadmium, mercury and brominated flame retardants. Elsewhere, there have been protests against chemical factories that are blamed for carcinogens that enter water supplies and the food chain.

Nationwide, cancer rates have surged since the 1990s to become the nation's biggest killer. In 2007, the disease was responsible for one in five deaths, up 80% since the start of economic reforms 30 years earlier.

While the government insists it is cleaning up pollution far faster than other nations at a similar dirty stage of development, many toxic industries have simply been relocated to impoverished, poorly regulated rural areas.

Chinese farmers are almost four times more likely to die of liver cancer and twice as likely to die of stomach cancer than the global average, according to study commissioned by the World Bank. The domestic media is increasingly filled with reports of "cancer villages" - clusters of the disease near dirty factories.

Read More......