CHINAwatch

Manufacture re-shoring from China to the United States - how serious is it?

Interview on Economic Report with CNC World, a new international TV channel owned by Beijing-based Xinhua News Agency. The interview was aired on 17 February, 2013.

Click here

To watch the relevant part of the report, drag the button at the bottom of the screen to about one-third of the slide bar position.

China/Japan's Island collision - a TV panel discussion with Cross Talk on RT (Russia Today)

A TV panel discussion on China/Japan's confrontation over the Diaoyu/Senkaku islands with Cross Talk on RT (Russia Today)  Click here

"What's driving the China-Japan island dispute? Is it about geopolitical issues? Domestic nationalism? A resource grab? The US says it is pivoting to the Pacific -- is this part of a strategy to contain China? Is Japan being assertive because it can count on Washington's support? And is a win-win solution possible? CrossTalking with Shihoko Goto, Andrew Leung and Linh Dinh", as posted on RT on 5 February, 2013

Is China's avowed new direction "a riddle, wrapped in a mystery, inside an enigma"?

Chris Buckley's article of 14 February in the New York Times "Vows of Change in China Belie Private Warning'' rightly puts Party Secretary Xi Jinping's reform rhetoric in the context of a host of contradictions. The fight against corruption and inequalites is pitted against opposition from vested interests. Calling for constitutional checks on top-down state power is coupled with warnings about lessons of collapse of the former USSR. Mounting social pressures for political liberalization are cited with a harking back to Maoist socialism.

One can be forgiven for drawing the conclusion that Xi's apparently vigorous reform stance is at best "a riddle, wrapped in a mystery, inside an enigma," in the words of Winston Churchill's famous dictum.

The confusion and myth are a product of binary thinking - either giving up single party leadership or sclerosis, either Western democracy or risk of a "French Revolution", either forward to the future or retreat to Maoism.

In fact, all the apparent contradictions cited in the article are signs that Xi is continuing China's on-going quest for her own model of democracy. There is a conviction that there is no one-size-fits-all formula, least of all of the kind of quick-fix that mandated glasnost and perestroika within 500 days which precipitated the collapse of the former USSR.

Indeed, in modern-day enlightened Communist Party intellectual debate, the original Paris Commune is hailed as a form of local democracy ("we the people") and Mao's original vision of "the mass line" also contained seeds of representing the will of the grassroots (the 99%) against social injustice.

Not many in China believe that the country's future lies in downloading Western multi-party confrontational "democracy", with all its recent fault-lines. But how to make the Party truly represent and accountable to the people within a one-party state continues to test the ingenuity of the Party leadership.

For starters, China is likely to implement the kind of reforms proposed in a 468-page World Bank report jointly undertaken with the Development Research Centre of the State Council - "China 2030: Building a Modern, Harmonious, and Creative High-Income Society." It is known that Li Keqiang, China's Premier-in-waiting, is the report's staunchest supporter. Amongst its recommendations are measures to enhance social provisions, reform the monopoly of state-owned enterprises, change the "hukou" registration system marginalizing migrant labour, and promote the role of civil society in monitoring official governance. Click here

Another pointer to the kind of feasible change was provided by Professor Yu Jianrong of the Chinese Academy of Social Science, who recently circulated a succinct, down-to-earth, 10-year outline for China’s social and political development. First promulgated in April this year, it went viral on Sina Weibo amongst his 1.5 million followers on the popular micro-blogging site. The plan includes such reforms as legalization of peasants' land rights; centralized control of judiciaries to rid them of dependence on local authorities; abolition of certain retrograde top-down state organs such as the ""political and legal committees" and the "labour re-education system"; promotion of greater transparency of administrative information; and declaration by officials of their private assets. Click here Indeed, recently some of these measures are brewing, if not already being experimented with.

The debate on China's on-going development is intensifying. The jury is still out.

For background, it is well worth visitng the intellectual debate on Chinese socialism, democracy and re-thinking of the Chinese model in "The Transformation of Chinese Socialism", Lin Chun, Duke University Press, Durham and London, 2006.

Why China won't go to war with Japan

In an article dated 8 February, 2013 for The Diplomat, an online international current-affairs magazine for the Asia-Pacific region, Trefor Moss, an independent journalist based in Hong Kong and formerly Asia-Pacific Editor at Jane’s Defence Weekly, opined that there are seven reasons why China and Japan won’t go to war even as tensions are escalating.

Moss thinks that “ if Shinzo Abe is gambling with the region’s security, he is at least playing the odds. He is calculating that Japan can pursue a more muscular foreign policy without triggering a catastrophic backlash from China, based on the numerous constraints that shape Chinese actions, as well as the interlocking structure of the globalized environment which the two countries co-inhabit”.

The seven reasons are mostly China’s huge constraints : (1) a nightmare possibility for China of an ignominious defeat (2) mutual economic dependence (3) doubts about China’s military readiness (4) unsettled politics in China (5) unknown quantity of U.S. intervention (6) China’s policy of avoiding military confrontation and (7) China’s hard-earned peaceful development image.

Moss’most operative words for Japan are -

(a) "Abe should be able to push back against China – so long as he doesn’t go too far"; and

(b) "It is also timely for Japan to push back now, while its military is still a match for China’s. Five or ten years down the line this may no longer be the case, even if Abe finally grows the stagnant defense budget".

As for (a), notwithstanding the many valid constraints on China's military option, Moss misses the critical issue of mounting nationalism of the Chinese people, especially against an old foe who is popularly perceived as not showing any genuine atonement for its atrocious past war crimes. Coupled with centuries of national humiliation in having territories and sea-port concessions seized at gun-point, this is an overwhelming historical baggage that no Chinese leaders could afford to treat with less than the full might of the nation if things are pushed too far.

As for (b), China knows too well that the current regional anti-China confrontation largely follows the recent American pivot to Asia. Although the diplomatic word preferred by the United States is now "re-balancing", China cannot help but feel that this is a trap to embroil, if not contain, the nation by getting China caught in a regional war at a time when it has yet to achieve its goal of becoming a middle-income country. Such a regional war is bound to involve the United States and possibly some of its allies in the Asia-Pacific. So why should China choose to fall into this trap of a potential war of attrition if the country can wait for another five or ten years when China's comprehensive strength would have built up from doubling her economy?

Last and certainly not least, the biggest prize of all for China is not the tiny Diaoyu/Senkaku islands but Taiwan. Strait-relations are now on a peaceful course with the two sides increasingly linked economically, socially, and financially. Witness the latest move by Taiwan to position itself as another offshore centre for the internationalization of the RMB.  The prognosis for Taiwan coming back to China’s fold in one form or another in the not-so-distant future has become more hopeful.  In “Strategic Vision: America and the Crisis of Global Power”(Basic Books, 2012), Zbigniew Brzezinski, a doyen of American foreign policy, sees as historically inevitable that Taiwan may form some sort of a more formal re-association with Mainland China subject to satisfactory arrangements to preserve its distinctive political, social, and military identity.Click here If China is involved in a regional war now, this would dash the  hope of a peaceful unification by another name for a fairly long time, if not indefinitely.

So I agree with Moss that China doesn’t want a war, at least or now, but for some other more cogent considerations.

That’s the more reason why China would be well advised to put in place mechanisms, including diplomatic mediation through the United Nations, to prevent unintended consequences whereby China has no choice but to respond militarily and risk triggering a “security spiral” escalating into a full-blown war.  

China's Pivot to the West

While America is pivoting towards the East, China is quietly thinking of the opposite, to China's West in Central Asia, South Asia, and the Middle East, where there is less of a U.S.-dominated regional order and a greater convergence of common interests with China, according to an article in Foreign Policy dated 7 February, 2013 by Ms Yun Sun, visitng fellow at the Brookings Institution and formerly China analyst for the International Crisis Group in Beijing.

Ms Sun draws her inspiration from a "Marching West" strategy advanced by Wang Jisi, dean of the School of International Studies at Peking University and one of China's most influential strategic thinkers, in a Chinese article in the Global Times of 17 October, 2012.

Ms Sun concludes, "By returning to its roots as a continental power, China might avoid further confrontation with the United States in East Asia, foster stability, and build a better relationship with Washington through cooperation in places such as Afghanistan and Pakistan. It is perhaps the ultimate manifestation of Chairman Mao Zedong's famous military strategy: "Where the enemy advances, we retreat. Where the enemy retreats, we pursue."

In fact, China had long started "re-balancing" well before the American Asian pivot. This has witnessed the establishment of the Shanghai Cooperation Organization (SCO) in 2001, which has since grown into a wide regional multi-dimensional forum including Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan as Full Members; Afghanistan, India, Iran, Mongolia and Pakistan as Observers; Belarus, Sri Lanka, and Turkey as Dialogue Members; and ASEAN,  CIS, and Turkmenistan as Guests. Most, not all, of these countries are to China's West, but all have deep Eastern or Oriental roots.

Ms Sun reported that Rear Adm. Yang Yi did not agree with China's Western shift as China's expansion into the Pacific and Indian oceans is "a prerequisite for the country to call itself a global great power".

What is important, however, is the reality that China simply cannot afford to relax influence in the Asia Pacific including the South China Sea, which is set to remain vital sea lanes for the nation's economic lifeblood, a region with vast energy reserves, and home to a number of sensitive territorial disputes with China's neighbours.

So if China is embarking on a strategic Westward re-balancing, it is unlikely to be at the expense of China's foothold in the Asia-Pacific, no matter how fraught with problems the latter region appears to be, Mao's famous military dictum notwithstanding.  

The Rise of Silicon China

Clyde Prestowitz, president of the Economic Strategy Institute and writer for Foreign Affairs, outlines why he does not agree to the perception of an end to Silicon Valley as may be inferred from a recent KPMG survey, he can easily anticipate the rise of Silicon China. Click here for his article of 7 February, 2013 in Foreign Policy.

The euphoria in the KPMG survey is not without foundation, as this chimes with the latest finding of the 2012 World Intellectual Property Organisation Report that China now tops the world in patents, trade marks and industrial designs, the first in a century that a developing country holds this position. Click here

China's change of direction to migrate from labour and resource-intensive towards higher-value-added and innovation-driven growth sets the scene. More and more Western-trained Chinese scientists, technologists and high-tech entrepreneurs are coming home where they are feted by the Chinese state with lucrative and high-status jobs or research opportunities in a vast market that is barely starting, compared with many Western economies that seem to be running out of steam.

Yes, China has yet to field a home-grown science Nobel laureate and still do not have many global brands. But the sheer scale and speed of development at least serve to make leading lights like Prestowitz sit up and think.

Enforcing the existing Constitution is the best hope for China's democratic reform?

Contrary to some less well-informed Western observers, many of the rights and privileges of modern democracy have already been enshrined in China's Constitution, revised and perfected by the Communist Party's early founding fathers.

"The resulting document guaranteed full powers for a representative legislature, the right to ownership of private property, and freedoms of speech, press and assembly. But the idealism of the founding fathers was short-lived. Though the Constitution was ratified in 1982 by the National People’s Congress, it has languished ever since", acccording to an article in the New York Times of 3 February, 2013.

" Some of Mr. Xi’s recent speeches, including one in which he emphasized the need to enforce the Constitution, have ignited hope among those pushing for change", the New York Times continues.

"Most notable among those is Study Times, a publication of the Central Party School, where Mr. Xi served as president until this year. That weekly newspaper ran a signed editorial on Jan. 21 that recommends that the party establish a committee under the national legislature that would ensure that no laws are passed that violate the Constitution."

Neither Mr Xi nor the Study Times of the Party School are known for thinking off the top of their heads. The Bo Xilai affair and a growing economic, social and political divide are clear writings on the wall. It has been said many times recently that Alexis de Tocquerville's tome on the French Revolution is becoming favourite reading amongst China's top leaders.

While China will chart its own path of development and will not copy the Western model of rival multi-party politics, political reform is getting more pressing as mounting social discontent is posing an existential threat to the Party.

The debate on the need for real dmocratic reform is intensifying amongst China's top elites. Professor Yu Jianrong of the Chinese Academy of Social Science circulated a succinct, down-to-earth, 10-year outline for China’s social and political development. First promulgated in April this year, it went viral on Sina Weibo amongst his 1.5 million followers on the popular micro-blogging site. Click here 

While the jury is still out pending Xi's formal installation as China's new President, the prognosis is building up that something epocal is likely to materialize sooner rather than later, as chances for China's true renaissance, and indeed its very system survival, are now at stake.