CHINAwatch

The Tibet Situation

There are two distinct issues here: separatism and multi-ethnic disharmony.

The first is inextricably bound up with history, which like elsewhere, has defined the modern sovereign states as they are in Europe. The declared independence of Kosovo has ignited concerns amongst a host of European nations with substantial ethnic minorities. These include Spain (with 2.5 million Basques in the northwest region and 7.2 million Catalans in the north-east region); Romania (with 1.4 million Hungarians (Magyars) mainly in Transylvania); Bulgaria (with 700,000 Turks mainly in the north); Slovakia (with 10% population being Hungarians); Greece (with Turks in Western Thrace); and Cyprus (250,000 Turkish Cypriots in a separate state only recognized by Turkey) (Speigel Online International 22 February 2008).

If we go further into history into the origin of modern states elsewhere, we will have to consider the cultural and ethnic dimensions of Australian aborigines and the American Red Indians.

Compared with the above, the administration of Tibet went back even longer, to the Yuan Dynasty in the 13th century and even beyond. The fact of the matter is that we cannot re-write history or turn back the clock. Even the Dalai Lama has repeatedly said openly that he does not support independence. It is therefore disingenuous for outsiders to demand what the Dalai Lama is against.

The second issue, which is of course not confined to China, is how a multi-ethnic, multi-religious, and multi-racial community can live together peacefully. This is closely related to the question of human rights and how it is being defined. China is a country of 56 different races and ethnic groups, virtually all living in harmony. As for Tibet, which is about four times as large as France, there is already a degree of autonomy as it has been governed as an Autonomous Region, where a great deal of the Tibetan cultural and religious heritage has been preserved. The situation, however, is different from other Chinese minorities.

Tibet has been relatively inaccessible from the rest of China for centuries until recent times. On the one hand, this greater integration with the Han Chinese has greatly improved the livelihood of the Tibetan people. According to the United Nations Development Indices, their life-expectancy, literacy and per-capita income have registered marked improvements. On the other hand, the impact of an influx of Han Chinese has raised racial and ethic tensions, as evident from the recent Tibetan riots. Furthermore, the Dalai Lama in exile still commands great respect and following amongst the Tibetan people and many countries worldwide.

What is important now is for the riots to stop. No society can and should tolerate using violence especially against innocent citizens to solve problems, whatever the cause. In doing so, China seems not to have used disproportionate force as she has vowed to act with restraint.

What is even more important is for China to address the underlying social, ethnic and religious tensions to see what improvements can be made to achieve a Harmonious Society in Tibet. The Dalai Lama has openly renounced independence and dissociated himself from the violence and unrests. Notwithstanding mutual distrust over many years, he should be held to his word. Premier Wen has said he is prepared to resume talks with the Dalai Lama on similar terms. A way should be found to see how the Dalai Lama could work with the Chinese authorities to help achieve ethnic and religious harmony in Tibet as an Autonomous Region of China.

Andrew K P Leung, SBS, FRSA

www.andrewleunginternationalconsultants.com

Inflation and the Tibetan riots

At the State Council meeting of January 19 this year, Premier Wen warned that 2008 was going to be one of the most difficult years China had ever faced. Amongst the stormy seas ahead, including a world in the shadow of looming recession amidst continuing financial turmoil, he singled out inflation as the main challenge. A raft of temporary price freezes on commodities affecting people’s livelihood was imposed, including refined oil, gas and electricity. Major food companies in China, including noodle makers and dairy producers, were required to obtain specific permission before any price hike. Export quotas and export tariffs have been introduced on 57 categories of raw grain and powder products such as wheat and corn.

Added to this is the tumbling of China’s year-on-year export growth rate in February, from 26% to 6.5%. To a certain extent affected by adverse weather conditions, this drastic reduction reflected the increasing unattractiveness of energy-and-labour-intensive exports whose margins continue to be squeezed at a time of rapidly rising costs.

We are witnessing an interesting yet worrying paradox:

(a) China's cheap exports and investment of a sizeable proportion of her gigantic savings in US Treasuries used to keep both global inflation and interest rates low. But signs of stress are beginning to show. Her Export Unit Value Index (EUVI) has registered significant increases during past months. This reflects price pressures due to RMB appreciation, rising commodity and labour input costs, and withdrawal of tax concessions for energy-intensive exports.

(b) The situation is accentuated by the continuing weakness of the US Dollar, in which a great deal of the world's commodities, including oil and food, are denominated. Food price increases in China, already up 11.3% in June last year, are showing little signs of abatement. While prices of consumer goods remain low owing to increasing overcapacity, overall headline inflation is reaching alarming heights.

(c) Food price increases as a proportion of inflation appear on the rise worldwide. Contributing factors include Climate Change such as more frequent extreme weather conditions and water shortage; increased use of farmland for biofuel crops; lower food crop stock levels; and growing Westernization of Asian diets as a result of rising incomes.

(d) There is little room for the world's energy and commodity producers to keep prices low in face of continuing robust global demand driving the Third Industrial Revolution in the 21st Century encompassing nearly half of mankind. A consequence is the huge migration of farmers for urban work exacerbating lower food production and rising food and commodity prices.

(e) The subprime meltdown puts economic stimulation ahead of inflation on the US's political agenda, especially during the time of the Presidential Election. Cutting interest rates is a ready tool, even at the cost of fuelling inflation further.

(f) In spite of the US economic downturn, Walmart has reported healthy profits, suggesting that consumers are flocking towards cheaper goods to fight general inflation.

There are growing signs that we are already in the Delphic Future in Alan Greenspan's 'The Age of Turbulence' (Penguin Group, 2007)

On the other hand, China’s year-on-year import registered a remarkable increase in February, from 27% to 35%. This matches a buoyant growth of retail sales from 13% in early 2006 to 20% in December 2007. According to statements by Commerce Ministry officials on March 12, China’s Foreign Exchange Reserve has just swollen over US$1.6 trillion.  Savings have reached an all-time high of 50% of GDP. Nevertheless there is still too much liquidity in the market creating various asset bubbles. The People’s Bank of China is  to continue with a credit-tightening policy. Due to rising costs and the world’s recessionary jitters, China’s growth is expected to drop from over 11% to a more sobre 8%. China is thus more concerned about inflation than growth while the West, at least for the duration of the financial turmoil, is more concerned about growth than inflation. 

Like other newly industrializing countries, China has to keep growing fast in order to generate 24 million jobs a year to keep her economy on an even keel. What is more, to achieve a more balanced regional development, she is expanding her transport infrastructure at a breakneck pace. In less than five years from 2001 – 05, China completed a host of transport network including railways and roads which would take the West 50 years to deliver. China has already built some 53,600 km of expressways, second in length only to the US interstate highway system. These are planned to expand to 70,000 km by 2020 (The Economist, 16 February 2008). Set against the world’s rapidly rising commodity prices, China’s inflation is thus unlikely to ease any time soon.

While inflation is an on-going problem affecting many people in China, I do not think that the Tibetan unrests are primarily a food inflation issue. Social unrests, some 87,000 cases, are nothing new to China. These have come about as a result of diverse grievances against local inequalities and abuses. The current rioters in Lhasa, however, are Tibetans. Indeed, the Tibetan unrests have a distinctly ‘separatist’ flavour, which is being echoed in neighbouring Gansu Province and by Tibetan activists in other parts of the world. It is this ‘separatist plot’ that China is vigilant against. Indeed, as recently as March 8, China reported a foiled terrorist incident on board an Urumqi-Beijing flight from Xinjiang Province, another flashpoint for (Muslim) separatists.

Following the 11th National People’s Congress, the next generation’s rising stars are now in place. 2008 is likely to be their baptism of fire as it is set to test the mettle and skills of the Hu-Wen leadership. As I write, Gordon Brown has told the House of Commons that Premier Wen is ready to resume talks with the Dali Lama provided he does not support independence and renounces violence.  Let’s keep our fingers crossed.

Andrew K P Leung, SBS, FRSA
www.andrewleunginternationalconsultants.com