Financial Balance

Here is an excellent article from Foreign Policy, arguing that China's reliance on US dollars for the vast majority of its foreign currency holdings does not constitute the threat to domestic security that many suggest.

Bottom line: As with so very many things, China remains constrained by its own governing system.

On The Media in China

In the general blitz of China reporting earlier in the year, I completely missed this series of stories rebroadcast this afternoon by On The Media. I hate to think how many other stories of this quality I overlooked in the wider flood of material- this stuff is NPR at its finest. As the show title implies, the broadcast focuses on various aspects of the media, so these three pieces on the internal PR machine, investigative journalism, and publicity leave this listener wishing they'd been given wider scope.

Download to your ipod and enjoy!

That's No Moon...

Here is an interesting article detailing a conversation the Obama transition team is apparently having with NASA. In essence, they are considering integrating NASA and the Pentagon's space arm to save time in replacing the shuttle and accelerating the ability of the US to put people on the moon.

In part, dissolving the traditional firewall between the civilian space agency and the military would be a time- and cost- saving exercise. However, as the story details, it would also be a response to China's accelerating militarization of space. The Chinese have been working on technologies to disable the satellite network the US relies on to communicate, which the military would obviously prefer to avoid.

I don't have any first hand experience with NASA, or with the Pentagon for that matter, but it's difficult to believe that either entity would be entirely happy working with the other. It also suggests an interesting new dimension for the arms race between these two nations in the coming decades.

You Sorta Have To See It Yourself

I quite like this article on China by Tom Grimmer, it's a decent summary and a better tone than is common in US press coverage.

My only issue is with his characterization of the China Investment Corporation, the government owned strategic investment fund, as, "This is a passive equity investor just looking for a place to park cash; it's not Dr. Evil. (So far, CIC has taken a bath on the likes of Morgan Stanley and Blackstone stock; they are not seers.)"

Well, sort of. It's a government directed investment company that strategically selects targets...er, companies...based on their ability to provide useful things to China. That's why people are so touchy about it acquiring significant holdings in computer companies or airlines, industries with strategic military applications. In fact, it's hard to think of any commodity that a state government could invest in using the amounts of capital China has available that wouldn't tend to raise questions about alternative agendas.

Still, on the whole, a good read.

Not just some pretty lines

Considering the heavy lifting this blog has been undertaking in recent days, it almost seems out of place to post something so irreverent. Obviously, not enough to stop me.

The renowned Max Planck institute just released the latest edition of its academic journal, and focusing on China, wanted to adorn the cover with some dramatic, three-kingdoms type poetry. Instead, they printed an advertisement for a Macau brothel.

Could you make this up? Original story on Huffpo.

Recession Comes to China

I've been waiting for these stories to start, and am a little surprised they took so long.

The recession hitting Europe and the United States is a terrible phenomenon, but it stands to have disproportionate political consequences for China. The political ramifications of economic downturn, undermining the government's central claim to legitimacy, are beginning to create security concerns in Beijing according to the BBC.

Economic growth has apparently slowed, and the government is projecting that although it will hold its 4.5% unemployment target for this year, it may not be able to do so next year.

These numbers seem optimistic - reports of manufacturing firms imploding overnight are all over the Chinese press, and considering the government's interest in looking good, I have to believe the official numbers run a little bit behind reality. Or ahead, as is expedient.

The no longer functioning video link to protesters in Gansu province is interesting- that western province holds large numbers of the ethnic minorities most likely to have alternative political agendas.

More, no doubt, to come.

Because That's the Way It's Always Been

A post I made last week, and several subsequent conversations, have made me want to revisit the issue of China's relationship with Taiwan. The relationship between these two countries hasn't been on the U.S. radar since 2001, when President Bush foolishly pledged to come to Taiwan's defense in the event of any aggressive action by China. This changed 50 years of purposefully ambiguous policy on the part of the U.S., who didn't want to be forced to pick between looking like liars or precipitating a nuclear war with a superpower (ask Georgia which way that goes).

China's almost certainly not going to attack Taiwan. They haven't had any explicit control over the island in almost 60 years, and there's not a desire on the part of the domestic Taiwanese population for that to change. Despite this reality, China's attitude toward this "renegade province" remains tense, helping entrench the image of China as surly international curmudgeon.

Question(s): if you're China, what's the point of being so eternally vigilant over something so fake and destabilizing? What's useful about the half century old party line of, "We're the ones that are really in charge and you better not say we're not...or else." What benefit does this accrue the Chinese government? Are they worried that Taiwan will turn into some sort of liberal democracy and start buying military hardware from the West? Oh wait, they already do that (though we suspended arms sales recently).

Wouldn't it engender quite a bit of international goodwill if China were to finally acknowledge Taiwan as an independent nation and set up formal relations? China's reality defying position creates a situation where everyone's tip-toeing around basic facts, constantly worried that the universe as it exists will constitute some kind of rhetorical affront to China's imaginary influence. Everyone should have learned from the United States by now that petulant assertion does not equal demonstrable fact. China's far better off treating international relations (oh, sorry, I meant "domestic" relations...really I did) with enough realism to note that pretending you have strength and influence may put you in the position of having to exercise power that you don't have. Combine that with being predisposed towards engaging in pissing contests and brinkmanship, and you've got a recipe for an avoidable and unnecessary headache.

Update/P.S.
I can almost feel reader "pw", our resident Chinese expert, writing something in the comments section that makes me look foolish and ill-informed. I would like to allay the concerns of my other readers by assuring them that I am, profoundly and demonstrably, both.

Chinese Democracy

A lot has been written about how China will deal with the unprecedented scrutiny that comes with hosting an Olympic games. Some believe that political dissidents will cause disruptions during the games and others that China's government will be able to effectively clamp down on such actions. I'd like to cast my vote firmly for the former. I think the actual degree of dissatisfaction the domestic population has with the Chinese government will be exposed. Here in the west, the Chinese government is often portrayed as being extremely powerful, repressive and monolithic. It's also portrayed as ruthless in terms of dealing with internal political dissidents.

I think we're about to find out how true that portrayal is (and I think it's fair to note that it may not be totally accurate) -- particularly how much domestic dissatisfaction exists with the Chinese government. The Olympics will simply be too good an opportunity for anyone with a serious grudge against the Chinese government to remain silent. And, count me as one of the people that think that the Chinese will find themselves wholly unable to control both the media's access to news stories (particularly of a political nature), as well as the spin that foreign journalists put on such news. I read recently (I can't remember where) that there have been 20,000 press credentials issued for the Beijing games. A media swarm that size will not be controlled, not by the Chinese government, not by anyone. You're talking about a fundamentally entitled bunch. What are the Chinese going to do, detain them by the dozens or hundreds? Confiscate their equipment? Imprison them? If it comes to that (and it might, if there's any story to be had anywhere) it's a lose/lose for the Chinese.

Try to control them and alienate a city of press, or give up control and see where the media run with it, which probably won't be destinations that make China look in any way good. The press, especially the western press, will be looking for an excuse to make the Chinese fit into the totalitarian box that they know will sell the best back home. And if something looks fishy, if just one camera gets confiscated, you'll have gangs of pissed off media determined to get to the bottom of it. I don't think it's impossible that the western media have overstated the level of internal dissent in China and that the games go off without a hitch, but I honestly think that's unlikely. All eyes are about to be on China in a way they never have been before, and I think they're about to rediscover the axiom that almost everybody looks better clothed than naked.