World-China Forum

Wang Dan: Tiananmen’s Enduring Challenge

In the past decade, I have watched from afar as China has reasserted its role on the world stage. The economic growth is impressive. Last year’s Beijing Olympic Games gave China the global profile the leadership so clearly wants for legitimacy. But what about media censorship, which contributed to the number of victims of the tainted-milk scandal? And government corruption, which led to shoddy construction practices in Sichuan and devastating consequences during last year’s earthquake? Or the widening gap between the rich and the poor? These issues, all raised by the students in Tiananmen Square 20 years ago, remain unaddressed.

China’s power is limited to the “yang,” or hard power of military and economic might, whereas in the 21st century the “yin,” or soft power based on moral principles and human rights, is equally important. The Chinese people yearn not just for economic benefits but also for basic human rights. A pro-democracy manifesto called Charter 08, released online last December, has garnered thousands of signatures despite every effort by the government to block its distribution and punish its authors.

On the occasion of the 20th anniversary of the Tiananmen massacre, the Chinese government should take four steps if it wishes to convince the world it is a responsible power. First, it should pay reparations to the Tiananmen mothers who lost their children. Second, the government should allow me and other forcibly exiled Chinese citizens to return to our homeland. Third, the government should release the remaining prisoners who were jailed for peacefully protesting in Tiananmen Square and more recent prisoners persecuted for their efforts to encourage human rights reform. Finally, China’s leaders should address the objectives shared by the Tiananmen students and the authors of Charter 08 — establishing the rule of law, guaranteeing basic human rights and ending corruption. Only then can China begin to turn the tragic page of Tiananmen. (Wang Dan, New York Times)

After the crisis: China or America?

Two years ago, economist Moritz Schularick and I coined the word "Chimerica" to describe what we saw as the key relationship in the then-booming global economy: China plus America. Cheap Chinese labour was making US corporations highly profitable. Spendthrift American consumers, in turn, were keeping Chinese corporations busy with export orders. And the Chinese monetary authorities were converting export surpluses into dollar denominated reserves with the aim of preventing their own currency from appreciating. The unintended consequence was a multi-billion dollar credit line to the United States, financing America's deficit at rock-bottom rates.

In February, the People's Daily acknowledged the "global importance and influence" of Chimerica, but warned of an impending "period of chillness". Could this be one of those great turning points in history, when the balance of power tilts decisively away from an established power and towards a rising challenger? It is possible. Financial crises often accelerate the gradual shifting of the geopolitical tectonic plates; they are to history what earthquakes are to geology.

Just consider the impact of this crisis on the United States and China. According to the International Monetary Fund, the US economy will contract by 2.8 per cent this year – while China's is forecast to grow by more than 6 per cent. China has not been wholly unscathed by the astonishing collapse of exports that struck Asian economies in late 2008 and early 2009. Many more Chinese than American workers have lost their jobs since this crisis began. Yet I do not believe (as some Sino-pessimists do) that the regime in Beijing faces a serious threat of social unrest. Like other rising powers in past centuries, China is imbued with a remarkable sense of patriotism that is not just a product of Communist Party propaganda. People are proud of their country's economic miracle over the past 30 years. After two wretched centuries, they believe China is on the way back. People whose grandparents survived the Great Leap Forward and whose parents endured the Cultural Revolution can surely cope with a decline in the growth rate from 11 to 6 per cent.

In short, it may be time to start believing the projections made by Jim O'Neill and his colleagues at Goldman Sachs, who predicted just a few years ago that China's gross domestic product could equal that of the United States by 2027. Three years ago, China did not have a single bank among the world's top 20, measured by market capitalisation. Today the top three are all Chinese. In 2006, the United States had seven of the top 20 banks, including the top two; today it has three, and the biggest, JP Morgan Chase, is rated fifth. (Niall Ferguson, Telegraph)

Sustaining American Leadership with Military Power

Contrary to what many politicians and talking heads tell Americans, a false choice exists between what are often referred to as hard and soft power. A country's military resources (its hard power) and the diplomatic tools it uses to persuade others without resorting to coercion (its soft power) operate most efficiently in tandem.

As Teddy Roosevelt famously observed, a nation must "speak softly" with diplomacy while also wielding a "big stick." Just as no country can be expected to provide security and pursue its interests solely through the use of military power, no country can expect to be taken seriously during high-stakes negotiations without the potential threat of military force to back up its word. The two approaches are not separate tools but mutually reinforcing mechanisms.

The consequences of hard-power atrophy will be a direct deterioration of America's diplomatic clout. This is already on display in the western Pacific Ocean, where America's ability to hedge against the growing ambitions of a rising China is being called into question by some of our key Asian allies. Recently, Australia released a defense White Paper that is concerned primarily with the potential decline of U.S. military primacy and the implications that this decline would have for Australian security and stability in the Asia-Pacific. These developments are anything but reassuring.

The ability of the United States to reassure friends, deter competitors, coerce belligerent states, and defeat enemies does not rest on the strength of our political leaders' commitment to diplomacy; it rests on the foundation of a powerful military. Only by retaining a "big stick" can the United States succeed in advancing its diplomatic priorities. Only by building a full-spectrum military force can America reassure its many friends and allies and count on their future support. (Kim Holmes, Heritage Foundation)

47 Chinese companies rank among the Top 500 Global Companies

The Financial Times, UK released the latest list of the Top 500 Global Companies for 2009. In the midst of financial crisis, the total market capitalization of the Global 500 companies has fallen sharply by 42% from $26.8 trillion to $15.6 trillion.  Energy companies overtake banks as the most valuable sector, with Exxon Mobil ranking the first and China National Petroleum the second.

Banks lose more than half of their value. Chinese Banks remain unaffected.  According to UK media, several European and American financial services companies (Banks and insurance, etc) leave the list, including American International Group (AIG), Merrill Lynch and Lehman Brothers. The market value of the banks has more than halved from $4.1 trillion (about 28 trillion yuan) in 2008 to $1.9 trillion (about 12.9 trillion yuan) in 2009.  But Chinese banks are not influenced. Industrial and Commercial Bank of China climbs from the 6th to the 4th, continuing to be the one with the highest market capitalization among all the listed banks in the world.

The United States ranks the top, followed by China. The United States ranks the top with 181 companies on the list and a total market capitalization of $6.2 trillion. China follows with 47 companies (including 16 Hong Kong companies and 4 Taiwan companies) on the list with a total market capitalization of $1.9 trillion. (People's Daily)

Is there anything to fear from China?

Jiuquan, a small town in the gritty deserts of northwestern China, was a place once moderately celebrated around the world as the birthplace of that most singular vegetable, rhubarb. But, along with the profound changes that have engulfed modern China, this remote and half-forgotten town has lately taken a very different direction from its botanical beginnings. It has become instead -- and largely because of its splendid isolation -- the main launch center for China's ever-swelling armada of space rockets.

And at the entrance to its interplanetary complex there is currently a billboard, half in English, that bristles with pride at the community's makeover. In very large letters at its base there is written a slogan that Western visitors may find more than a little chilling. It proclaims, and without apparent fear of contradiction or challenge: "Without Haste. Without Fear. We Will Conquer the World."

For what did the signboard in Jiuquan mean? Precisely what ambition did the slogan "We Shall Conquer the World" truly signify? Local officials explained to me that it did not mean military conquest; China wasn't about to invade a neighbor, wasn't going to make threats or commence a program of assertion, expansion or hegemonistic swagger. The slogan merely suggested, and mildly, that China might offer the world another way -- an alternative to the cultural influence of McDonald's, Exxon Mobil and General Foods -- a reminder that Confucian ideals, for instance, matter too.

With an almost cast-iron guarantee of domestic tranquillity at home, how best can China, in a fickle and dangerous world, guarantee a lasting peace abroad? I suspect that China will work that out, without haste. AndI imagine China will accomplish it, without fear. Just as it has so adroitly managed to achieve what will most probably be a lasting peace at home. (Simon Winchester, Los Angeles Times)

India: To Be or Wannabe a Superpower?

Where can India find the resolve or the inspiration to take on the fiscal challenge? It needs look no farther than China and its experience in the global crisis. Even before this global crisis, China was building up its superpower credentials courtesy of its size, spectacular growth, and integration, not to mention its military might. The crisis has allowed these credentials to be consolidated further. China has moved beyond being the superpower-to-be. One important reason for this consolidation relates to China's public-sector balance sheet.

The one major country that has had the ability to take short-term action to offset the effects of crisis without remotely jeopardizing its long-run economic strength has been China. Its public debt will remain at close to 20 percent of GDP after the crisis while the corresponding number for the United States is estimated to be close to 75 percent of GDP. China seems to be the one fiscal safe haven even as all the other powers wobble under the weight of their fiscal burden. As the mighty fall, China is standing economically and fiscally tall. The lesson for superpower-aspiring India from superpower-arriving China is simple: A strong fiscal situation, undergirding the ability to respond to a crisis, is an essential ingredient for any global leadership role.

So when India goes through its next growth spurt, it should be mindful of avoiding the mistake of the previous one. Good boom-time fiscal management provides the firepower for times of bust. The reasons for doing so are and must be overwhelmingly domestic. But there may also be strategic, external benefits from doing so. Fixing the fiscal roof when the sun was shining was China's way out of this crisis and way to solidifying its superpower status. That is a lesson that strategically minded Indian policymakers should take away from China's experience in the crisis. And that should be the thrust of the budget that Mr. Pranab Mukherjee will present to Parliament in July. (Arvind Subramanian, Peterson Institute) 

China's boxed itself in

Which country -- the United States or China -- will make the 21st century its own?  When President Obama recently called for American young people "to be makers of things" and focus on subjects such as science and engineering, it was partly a nod to China's rapid growth. Had he lived, taught and consulted in China for the last 33 months, as I have, he might have urged American students first to follow his example and study the liberal arts. Only technical knowledge complemented by well-honed critical and creative thinking skills can help us regain our innovative edge. China's traditional lack of emphasis on teaching these skills could undermine its efforts to develop its own innovative economy.

Ironically, the government that has enforced such restrictions and focused its schools so intensely on math and science seems to realize its efforts may be too effective. Highways, dams, bridges and airports have been built, every conceivable product manufactured and sold, but so few sophisticated marketing and management minds have been cultivated that it will be a long time before most people in the world can name a Chinese brand.

With this problem in mind, local partnerships with institutions such as USC, Johns Hopkins, Yale, MIT and Insead of France have been established. If not quite ready to create cadres of disaffected litterateurs and cineastes, Beijing clearly recognizes it will take different kinds of thinkers to invent new products and sell them around the world.

Ultimately for China, becoming a major world innovator -- and by extension, a robust economic power -- is not just about setting up partnerships with top Western universities or roping off elites and telling them to think creatively. It's about establishing an intellectually rich learning environment for young minds. It's about harnessing the same inventive energy of the street markets and small-time entrepreneurs and putting it in the schools. (Randy Pollock, Los Angeles Times)

China's model or the US', which is more effective in coping with the financial crisis?

Since the out break of the financial crisis, governments around the world have launched various measures to either relieve the issue or try to recover from it as early as possible. Although the entire world remains in crisis, people have already started to discuss other countries' economic models, with a popular view emerging that China's economic model is significantly different from those applied by the US and the West. Some people even believe that the two economic models represented by China and the US are already in competition.

The current focus is on three main aspects of China's economic model. The first is the Chinese model's resistance to the financial crisis. The second are the methods and means China adopts to cope with the financial crisis. The third aspect is the role China will play in the new international financial order.

The Chinese model reflects a variety of aspects such as politics, economy and society. From an economic perspective, the Chinese model can be referred to as a multi-layer or mixed economic model. The concept of "mixed" here differs slightly from its routine usage. This concept generally refers to the mixed ownership model of the Chinese economy. "Mixed" here not only refers to ownership, but also includes many other aspects. Although ownership is certainly very important, the "mixed" concept also refers to the balance between various types of ownership. Furthermore, the concept encompasses the balance of opening-up to the external market versus domestic consumption, as well as the balance between the role of the government and the market on the economic arena.

In the current economic downturn, China's socialist market economy model is demonstrating both its advantages and its disadvantages. In any case, the Chinese model is still in the process of developing. If China can learn enough lessons from the financial crisis, it will be beneficial for the development of this model. (Zheng Yongnian, People's Daily)

China's race to supremacy

I have been writing intermittently for years about the dangers of China's long-term foreign policy aims, premised as they are on its totalitarian domestic attitudes, feeling like a Cassandra the while. In those years China has come to support even more delinquent regimes such as Burma, Zimbabwe and Sudan in order to keep the international arena unsettled, and to insinuate itself into parts of the world where it sees future profit and either supplies of energy or security for its energy routes (thus the deep-water harbours it has built, with its own labourers, for its tankers in Pakistan and Burma). It rattles its sabre, soon to be ready to use in earnest, over the gas and oil under the South and East China Seas, claiming the Spratly islands far to the south of Hainan and the whole of the continental shelf almost to the shores of Japan in the east. In its headlong rush for industrialisation it has grossly poisoned its own air, soil, rivers and people, loading itself with hundreds of billions of dollars worth of environmental clean-up costs for the future – if ever it cares to undertake it.

In that rush it kills dozens of its own workers every week – its coal mines, where the frantic 24-hour grab for energy supplies proceeds with total disregard for safety, are the most dangerous mines in the world. It is in a race with time: its population is rapidly ageing and not replacing itself, its crazy tradition of female infanticide and selective abortion of females means there is a superfluity of males so that girls are being kidnapped as brides. China's totalitarians want economic and military (it sees them as the same thing) superpower status before the age of its population and the poison of its environment jointly scupper the ambition. For then it can use that status to find other ways of solving those problems – ways not so friendly to a world in whose nest it will be the largest cuckoo ever seen.

I hope I am wrong. I hope those very brave, very few people around the table in Beijing on 10 May, Xu Youyu among them, will bring it about that these prognostications are wrong; that they will keep alight the torch of democratic liberty lit in Tiananmen Square, and that its light will eventually banish the thick dark clouds that roll perpetually out of Zhong Nan Hai. (AC Grayling, Guardian)

Asia's new superpower may not be ready

A growing chorus of pundits in Asia and the West is declaring that China's moment has finally arrived. Scholars like UCLA's David Kang even argue that the rise of a Sinocentric world order could be a positive, stabilizing development. For much of the past two millennia, he notes, Asians took Chinese dominance as a fact of life. And that dominance was generally benign: while imperial China expected its neighbors to acknowledge its supremacy and pay it tribute, it otherwise mostly left them alone. Chinese hegemony proved remarkably stable and elastic, Kang says: "If you look at history, you may not automatically conclude that the bigger China gets, the more dangerous it is."

Perhaps. But it's worth asking whether China is really ready to call the shots, even regionally. Modern-day Asia is a messy, multipolar place that doesn't lend itself to hierarchies. China is much bigger than its neighbors in terms of the size of its economy, but by other measures—technology, per capita GDP or the strength of its institutions—it's far from supreme. Asia watcher Bill Emmott writes in his recent book, Rivals, that China's growth has been plagued by wasteful investment, massive capital export, bloated foreign-exchange reserves and crippling pollution. China's own prime minister, Wen Jiabao, said recently that structural problems are causing "unsteady, unbalanced, uncoordinated and unsustainable development." (Christian Caryl, Newsweek)