NYC Junta

I enjoyed the recent New Yorker profile on Paul Krugman. I didn’t realize he was essentially apolitical until the Bush administration. By the end of that administration I was sick of reading Krugman, he was predictable–we all knew at that point (actually years before) what a disaster Bush was, on so many levels. But I’ve enjoyed reading him again on things like the health care debate and, in particular, financial regulatory reform.

I thought this was a particularly interesting point on how Krugman really made a name for himself:

One implication of Krugman’s theory was that, contrary to economic orthodoxy, industrial policy might have its benefits. If the location of a new industry was essentially arbitrary, then a government, by subsidizing and protecting its emergence, could enable it to gain such a lasting advantage that other countries would find it difficult to catch up.

It goes on to point out how he found the arbitrary nature of the location of industry “deeply disturbing and troubling”. What it made me think of what some people are calling China’s Green Leap Forward. I mostly complain about China, but I admire them in this respect, if they can apply Krugman’s theory to what they are trying to do, and leverage their advantages in engineering, cheap labor, and infrastructure, they could corner the market on what will (hopefully) be one of the biggest developing industries of the 21st century.

Articles china, Green tech, Paul Krugman

Almost daily I read things about China that make me shake my head. Sometimes I find myself doing so in admiration for the Chinese. They have really moved forward quickly on creating a green-tech sector in the country, for instance. But most often I am shaking my head in dismay. Whether it’s the ethnic genocide that the Chinese are pursuing in western China against Buddhists and Muslims, the rampant destruction of the environment and their infuriating obstructionism on taking steps to slow that process, or their attitudes towards animals (anyone see this horrible story about Siberian Tigers in China?), so often I find myself totally opposed to China’s aims and values and skeptical about their motives. 

Today one of the news items out of China is on the fate of the Rio Tinto executives that have been held in China since the summer on charges of espionage. They are reducing the charges in a slow diplomatic climb-down, but the facts seem largely the same. It looks like China, unhappy with the status of negotiations with Rio Tinto and others on global pricing for steel decided to send a message and essentially hold one of the big companies hostage.  

The other thing I’m thinking about today’s is the value of China’s Renminbi and how disagreement over that is potentially building to a climax. It was one thing before the financial crisis for China to artificially keep its currency low to fuel export-driven growth. At that time consumers in the US and Europe were buying up cheap Chinese goods and everyone was winning, even if economists were warning about dangerous and unsustainable balances that resulted. And right after the economic crisis started policy-makers in the west were just trying to save their financial systems, Chinese currency manipulation fell off the agenda. And no one knew how China would be affected by the crisis. A huge Chinese stimulus package has played a big role in keeping China moving at roughly the same 8% annual growth it had predicted prior to the crisis. But China has retreated from slowly letting its current appreciate against the dollar and now economists are saying that this is hurting the global economy, further warping trade balances when the rest of the world can no longer afford it. Forget the US for a moment, many third world countries are hurt by this beggar-thy-neighbor fiscal policy as they can’t compete with warped business margins manipulated by Chinese technocrats.

China’s years of economic growth and America’s woes have led to more and more destructively hostile behavior from China as it tries to throw its weight around. It reacts with petulant anger and robot-like defiance to reasonable requests from the rest of the world to discuss a range of issues. For years people have talked about US exceptionalism, and you can knock the US if you want, but the idea of that exceptionalism was that the US would intervene to try to right wrongs, help the oppressed, and generally steer the world in a postive direction. Chinese exceptionalism is about telling the rest of the world to go to hell and come kowtow to ”The Middle Kingdom” when we’re ready. The Chinese belief that they are somehow above the rest of the world and shouldn’t have to held to its rules is nothing new. I hope that like Lord Macartney in the late 18th century, the world will refuse to kowtow to China’s unreasonable ways.

Articles china, currency manipulation, Renminbi

Good for Google, finally standing up to China, I hope this embarrasses the Chinese government. The Chinese government has been extraordinarily effective at censoring the internet, contradicting many who thought initially that the internet would be the trojan horse through which more liberal ideas circulated through to the people. I don’t care about the justifications about keeping order, or the tired story about protecting people from pornography, any regime afraid of ideas is a bad one.

I’m the benefactor of a smart colleague who is a voracious reader and, like I occasionally do, leaves magazines around the office for others to read after he finishes them. Among the mags I got today was Foreign Policy, just read Walter Russel Mead’s excellent piece that has gotten a lot of attention this past week for really exploring the comparison between the foreign policy of Obama and Carter.

In the News carter, china, google, obama, usa

News broke yesterday that China suceeded in pressuring Cambodia into deporting a few dozen Uighurs who had escaped the country after the riots there a few months ago. Not going to go into the whole Uighur debate, I’ve posted about that before on here, but those guys have it pretty rough. And now it comes out that China seems to have basically dangled new investments in front of the Cambodians to get them to return the Uighurs. So, who wants to live in a world dominated by Chinese power? Anyone think those Uighurs are going to get a fair trial? They’ll be sent to jail for life or executed (China executes more people than all other countries combined). This story is another reason why China’s massive foreign investment campaign in third-world countries merits close scrutiny.

In the News cambodia, china, uighurs

China Economic Review highlights this WSJ story on American diplomatic efforts to get the Chinese to buy more oil from Saudi Arabia. The idea is that if China buys less oil from Iran, they will be more inclined to support the sanctions the Americans are proposing.

What about a converse situation? Instead of pressuring the Chinese to abandon their Iranian contracts, we could be lifting sanctions and doing more business with Iran. Didn’t someone once say that if goods don’t cross borders, armies will? We should be increasing ties to the Iranians – including business, academic and cultural connections – so as to decrease animosity.

Some will say that this would “reward” the Iranians for “bad behavior.” Nonsense. What have sanctions brought us, except more hostility? Even the Iranian protesters who were out on the streets demonstrating against Ahmedinejad do not favor sanctions against the regime they have far more reason to despise than we do.

If we really care about the brave Iranian souls who were out fighting for democracy this summer, we should reject sanctions and work toward the normalization of relations, which means doing business together.

In the News china, energy, iran, oil, saudi arabia

Good Junta last night, I’ll leave it to Rindy to post some of the highlights, but for me that was what the Junta was all about: a bunch of dudes sitting around drinking and having good, engaged conversation about real topics.

Relevant to last night, and other Junta topics, is the continued rioting in Xinjiang.  I’ve enjoyed reading about how the tone-deaf Chinese government tried to set up a PR tour through Urumqi. Apparently they didn’t learn anything from when they tried to usher journalists around Tibet when there was rioting there. Hahaha, I like the opening paragraph from the Gawker story below about this:

http://gawker.com/5309212/china-learns-the-yin-and-yang-of-pr

Anyway, I am following this story with mixed emotions. On the one hand, I love seeing the Chinese government, and generally the Han Chinese, getting their comeuppance. What they are doing in Xinjiang, just as in Tibet, is cultural genocide. The government provides incentives for Han Chinese to move to these frontier states, which have historically been independent as much as they have been a part of China, overtly favors the Han with jobs at the cost of the locals, and doesn’t provide anywhere near the proper safeguards to protect local culture. The clear goal is to change the fundamental character of these places. This is just a more patient, and very Chinese, form of ethnic cleansing and I really feel sympathy for the Uighurs and the Tibetans.

On the other hand, China is not Serbia or Kosovo. It is the only major economy that is growing and it’s stability and continued growth is absolutely essential to any sort of incipient recovery to the global economy.

So, I’m hoping that the rioters get their message out, possibly affect a change of policy, and that China loses huge face. But I also hope that it doesn’t get too bad. Maybe that can work out?

In the News china, discrimination, nationalism, politics, protest, religion, uighurs

I don’t know that I can even come close to providing the quality overview of the discussion that Rindy provided. The China discussion came second and everyone was pretty into the whiskey at this point and the conversation became a bit more free-wheeling.

What I wanted to get was a sense of what people expected/hoped for from the upcoming games. What I was hoping for was that the games would be a success but that China would be embarrassed at least a couple of times, hopefully on Tibet and the environment. I just wanted to see one group drop a FREE TIBET poster outside one of the stadiums before an event, not have some fanatic disrupt the opening ceremony at the Bird’s Nest; I wanted to see just one marathon runner from an inconsequential country, like Turkmenistan, keel over during a race, not die just fall over in front of a gang of press photographers, chocking on Beijing’s noxious smog.

Didn’t happen. The games went extremely well for China with no big PR snafus and the Chinese coming away with more medals than anyone. It’s probably a good thing too–the Chinese, in particular the youth, are so nationalistic these days that if anyone messed with their Olympic experience they would have completely freaked out.  Maybe they will now start to truly get over their past grievances about colonialism and national humiliation. But then again, Red Sox fans have not stopped being whiny bitter donkeys even after they stopped losing and complaining about Babe Ruth.   Sometimes groups just don’t want to give up being the underdog.

What was amazing was that even though the games were successful and the country is doing a great job of developing its soft power, it still remains paranoid and rigidly authoritarian. It was really outrageous that the Chinese government encouraged people to apply for the right to protest in designated areas and then arrested those who tried to, simply setting a trap for those brave enough to want to vent genuine grievances. Even Septuagenarian women were deemed a threat by the Chinese government.

Meetings china, nationalism, olympics