Need for balance in projecting China’s rise

By S.P.SETH

The symbolism of China’s growing power is dramatized in the French President Nicolas Sarkozy‘s recent China visit as an exercise in smoothing relations with that country.

Their relations reached a crisis point in 2008 over a series of events such as protests in Paris over Chinese Olympic torch relays, criticism of China’s human rights in Tibet and, above all, President Sarkozy’s meeting with the visiting Dalai Lama.

Beijing reacted strongly by downgrading economic and political relations with France.

Beijing was apparently telling France and the world that any country officially hosting the Dalai Lama would have to be prepared to stand up to China or else face political and economic sanctions.

Taiwan is the only country that recently managed to squeeze in the Dalai Lama’s visit when it was hit by a typhoon. He had been invited to offer spiritual solace, sought by the affected people and their political leaders who, incidentally, largely belonged to the opposition Democratic Progressive Party.

Understandably, China didn’t want to give President Ma Ying-jeou’s opponents more political fuel to damage the ruling Kuomintang party. President Ma is their best political bet in Taiwan’s competitive political landscape.

But coming back to the French President Sarkozy’s China visit, undoubtedly it is an important symbol of China’s Middle Kingdom syndrome, and an effective exercise of Beijing’s coercive diplomacy.

However, It doesn’t square with the reality of Chinese power and prosperity. In terms of raw military power, the United States still remains the most powerful country in the world.

As for economic prosperity, in per capita terms its people are way behind the West, and Japan, and likely to take a long time to reach there, if ever.

But its spectacular economic growth from a very low base, and the vastness of China, has created the perception of a new superpower likely to overtake the United States in the next two to three decades.

More and more experts and policy makers are coming to this view. Which has led them to argue in favor of accommodating and integrating China increasingly into the framework of the existing international institutions, largely shaped by the United States and Western countries in the post World War 11 period.

This way, it is believed, that the transition to a new world order, with China as its crucial component, might be achieved peacefully.

According to China scholar Marc Lanteigne, “What separates China from other states, and indeed previous global powers [like Germany and Japan], is that not only is it ‘growing up’ within the milieu of international institutions far more developed than ever before, but more importantly, it is doing so while making active use of these institutions to promote the country’s development of global power status.”

It is true China has made best use of the existing international institutions to exponentially increase exports (though the global economic crisis has limited that prospect), amass trade surpluses of $2.4 trillion (and rising) and significantly increase its international profile.

But, at the same time, it is also true that, when constrained in its role as an emerging global power, it doesn’t feel the need to abide by some accepted international norms. Which is frustrating for international community.

Prime Minister Kevin Rudd of Australia best expressed this frustration in a recent speech at the Australian National University (ANU).

He reportedly said, “It doesn’t help, for example, that China associates with regimes around the world that others seek to isolate because of their assault on the integrity of international system—from Sudan to Burma.”

He went on, “China can—and should—do more to support international efforts against destabilizing regimes and on global security challenges such as Afghanistan and Iran”, as well as North Korea.

Beijing is prepared to operate within the multilateral framework of international institutions as long as it suits China.

At the same time it likes the operational flexibility to promote its interests as a competitive centre of power, if not the only centre of power.

Indeed, in recent history, no country with global aspirations has been satisfied with a role within an existing global system. The examples of Germany and Japan are illustrative.

China is already engaged in a wild grab for resources anywhere and everywhere in the world.

And as John Mearsheimer, an American scholar of realpolitik, has written, “If China continues its impressive economic growth over the next few decades, the United States and China are likely to engage in an intense security competition with considerable potential for war.”

The first part of China’s story is its spectacular economic growth to eventually become a centre of power.

But there is an important caveat here, which is generally ignored in this big picture.

The caveat is whether a one-party state of China’s size will be able to maintain its monopoly power over a period of time.

We are already seeing signs of widespread social unrest in various forms and in different places, and its suppression with brute state power.

According to Bao Tong, a famous dissident, “Every four minutes there is a protest of more than 100 people” In China. In other words, so many “little Tiananmen” are happening everyday, so says Bao.

But these lack organization. The Party’s greatest fear is that human rights activists and intellectuals might fill the organizational gap at some point when social discontent reaches a critical point.

Hence, there is a systematic suppression of such elements.

But for how long?

There are so many issues agitating the people, from widespread corruption, nepotism, land grab, use of gangsters, particularly by the local and regional authorities, to silence its critics, police brutality, and the list goes on.

To take one example: China’s showcase World Expo in Shanghai reportedly involved clearing 2.6 square kilometers along the Huangpu River.

Which meant moving 18,000 families and 270 factories, including the Jiang Nan Shipyard, which employs 10,000 workers.

Only an authoritarian regime of China’s ilk can spend $45 billion or more for such an event, causing so much distress and suffering to its own people removing them from settled lives and livelihood.

There are so many big and small examples of such scant regard for people, when the government is bent on having its way.

What it means is that anyone making a projection of China’s future and its international status must take into account the fragility of the country’s internal situation.

It is a one-party band with no legitimate channels for people to express their frustration and anger and to seek justice.

In such a situation with anger and frustration constantly building up, and with no safety valve by way of popular forums and institutions to channel people’s wrath, there is every danger of a blow up at some point.

The symbolism of China’s growing power is dramatized in the French President Nicolas Sarkozy‘s recent China visit as an exercise in smoothing relations with that country.

Their relations reached a crisis point in 2008 over a series of events such as protests in Paris over Chinese Olympic torch relays, criticism of China’s human rights in Tibet and, above all, President Sarkozy’s meeting with the visiting Dalai Lama.

Beijing reacted strongly by downgrading economic and political relations with France.

Beijing was apparently telling France and the world that any country officially hosting the Dalai Lama would have to be prepared to stand up to China or else face political and economic sanctions.

Taiwan is the only country that recently managed to squeeze in the Dalai Lama’s visit when it was hit by a typhoon. He had been invited to offer spiritual solace, sought by the affected people and their political leaders who, incidentally, largely belonged to the opposition Democratic Progressive Party.

Understandably, China didn’t want to give President Ma Ying-jeou’s opponents more political fuel to damage the ruling Kuomintang party. President Ma is their best political bet in Taiwan’s competitive political landscape.

But coming back to the French President Sarkozy’s China visit, undoubtedly it is an important symbol of China’s Middle Kingdom syndrome, and an effective exercise of Beijing’s coercive diplomacy.

However, It doesn’t square with the reality of Chinese power and prosperity. In terms of raw military power, the United States still remains the most powerful country in the world.

As for economic prosperity, in per capita terms its people are way behind the West, and Japan, and likely to take a long time to reach there, if ever.

But its spectacular economic growth from a very low base, and the vastness of China, has created the perception of a new superpower likely to overtake the United States in the next two to three decades.

More and more experts and policy makers are coming to this view. Which has led them to argue in favor of accommodating and integrating China increasingly into the framework of the existing international institutions, largely shaped by the United States and Western countries in the post World War 11 period.

This way, it is believed, that the transition to a new world order, with China as its crucial component, might be achieved peacefully.

According to China scholar Marc Lanteigne, “What separates China from other states, and indeed previous global powers [like Germany and Japan], is that not only is it ‘growing up’ within the milieu of international institutions far more developed than ever before, but more importantly, it is doing so while making active use of these institutions to promote the country’s development of global power status.”

It is true China has made best use of the existing international institutions to exponentially increase exports (though the global economic crisis has limited that prospect), amass trade surpluses of $2.4 trillion (and rising) and significantly increase its international profile.

But, at the same time, it is also true that, when constrained in its role as an emerging global power, it doesn’t feel the need to abide by some accepted international norms. Which is frustrating for international community.

Prime Minister Kevin Rudd of Australia best expressed this frustration in a recent speech at the Australian National University (ANU).

He reportedly said, “It doesn’t help, for example, that China associates with regimes around the world that others seek to isolate because of their assault on the integrity of international system—from Sudan to Burma.”

He went on, “China can—and should—do more to support international efforts against destabilizing regimes and on global security challenges such as Afghanistan and Iran”, as well as North Korea.

Beijing is prepared to operate within the multilateral framework of international institutions as long as it suits China.

At the same time it likes the operational flexibility to promote its interests as a competitive centre of power, if not the only centre of power.

Indeed, in recent history, no country with global aspirations has been satisfied with a role within an existing global system. The examples of Germany and Japan are illustrative.

China is already engaged in a wild grab for resources anywhere and everywhere in the world.

And as John Mearsheimer, an American scholar of realpolitik, has written, “If China continues its impressive economic growth over the next few decades, the United States and China are likely to engage in an intense security competition with considerable potential for war.”

The first part of China’s story is its spectacular economic growth to eventually become a centre of power.

But there is an important caveat here, which is generally ignored in this big picture.

The caveat is whether a one-party state of China’s size will be able to maintain its monopoly power over a period of time.

We are already seeing signs of widespread social unrest in various forms and in different places, and its suppression with brute state power.

According to Bao Tong, a famous dissident, “Every four minutes there is a protest of more than 100 people” In China. In other words, so many “little Tiananmen” are happening everyday, so says Bao.

But these lack organization. The Party’s greatest fear is that human rights activists and intellectuals might fill the organizational gap at some point when social discontent reaches a critical point.

Hence, there is a systematic suppression of such elements.

But for how long?

There are so many issues agitating the people, from widespread corruption, nepotism, land grab, use of gangsters, particularly by the local and regional authorities, to silence its critics, police brutality, and the list goes on.

To take one example: China’s showcase World Expo in Shanghai reportedly involved clearing 2.6 square kilometers along the Huangpu River.

Which meant moving 18,000 families and 270 factories, including the Jiang Nan Shipyard, which employs 10,000 workers.

Only an authoritarian regime of China’s ilk can spend $45 billion or more for such an event, causing so much distress and suffering to its own people removing them from settled lives and livelihood.

There are so many big and small examples of such scant regard for people, when the government is bent on having its way.

What it means is that anyone making a projection of China’s future and its international status must take into account the fragility of the country’s internal situation.

It is a one-party band with no legitimate channels for people to express their frustration and anger and to seek justice.

In such a situation with anger and frustration constantly building up, and with no safety valve by way of popular forums and institutions to channel people’s wrath, there is every danger of a blow up at some point.

Need for balance in projecting China’s rise

By S.P.SETH

The symbolism of China’s growing power is dramatized in the French President Nicolas Sarkozy‘s recent China visit as an exercise in smoothing relations with that country.

Their relations reached a crisis point in 2008 over a series of events such as protests in Paris over Chinese Olympic torch relays, criticism of China’s human rights in Tibet and, above all, President Sarkozy’s meeting with the visiting Dalai Lama.

Beijing reacted strongly by downgrading economic and political relations with France.

Beijing was apparently telling France and the world that any country officially hosting the Dalai Lama would have to be prepared to stand up to China or else face political and economic sanctions.

Taiwan is the only country that recently managed to squeeze in the Dalai Lama’s visit when it was hit by a typhoon. He had been invited to offer spiritual solace, sought by the affected people and their political leaders who, incidentally, largely belonged to the opposition Democratic Progressive Party.

Understandably, China didn’t want to give President Ma Ying-jeou’s opponents more political fuel to damage the ruling Kuomintang party. President Ma is their best political bet in Taiwan’s competitive political landscape.

But coming back to the French President Sarkozy’s China visit, undoubtedly it is an important symbol of China’s Middle Kingdom syndrome, and an effective exercise of Beijing’s coercive diplomacy.

However, It doesn’t square with the reality of Chinese power and prosperity. In terms of raw military power, the United States still remains the most powerful country in the world.

As for economic prosperity, in per capita terms its people are way behind the West, and Japan, and likely to take a long time to reach there, if ever.

But its spectacular economic growth from a very low base, and the vastness of China, has created the perception of a new superpower likely to overtake the United States in the next two to three decades.

More and more experts and policy makers are coming to this view. Which has led them to argue in favor of accommodating and integrating China increasingly into the framework of the existing international institutions, largely shaped by the United States and Western countries in the post World War 11 period.

This way, it is believed, that the transition to a new world order, with China as its crucial component, might be achieved peacefully.

According to China scholar Marc Lanteigne, “What separates China from other states, and indeed previous global powers [like Germany and Japan], is that not only is it ‘growing up’ within the milieu of international institutions far more developed than ever before, but more importantly, it is doing so while making active use of these institutions to promote the country’s development of global power status.”

It is true China has made best use of the existing international institutions to exponentially increase exports (though the global economic crisis has limited that prospect), amass trade surpluses of $2.4 trillion (and rising) and significantly increase its international profile.

But, at the same time, it is also true that, when constrained in its role as an emerging global power, it doesn’t feel the need to abide by some accepted international norms. Which is frustrating for international community.

Prime Minister Kevin Rudd of Australia best expressed this frustration in a recent speech at the Australian National University (ANU).

He reportedly said, “It doesn’t help, for example, that China associates with regimes around the world that others seek to isolate because of their assault on the integrity of international system—from Sudan to Burma.”

He went on, “China can—and should—do more to support international efforts against destabilizing regimes and on global security challenges such as Afghanistan and Iran”, as well as North Korea.

Beijing is prepared to operate within the multilateral framework of international institutions as long as it suits China.

At the same time it likes the operational flexibility to promote its interests as a competitive centre of power, if not the only centre of power.

Indeed, in recent history, no country with global aspirations has been satisfied with a role within an existing global system. The examples of Germany and Japan are illustrative.

China is already engaged in a wild grab for resources anywhere and everywhere in the world.

And as John Mearsheimer, an American scholar of realpolitik, has written, “If China continues its impressive economic growth over the next few decades, the United States and China are likely to engage in an intense security competition with considerable potential for war.”

The first part of China’s story is its spectacular economic growth to eventually become a centre of power.

But there is an important caveat here, which is generally ignored in this big picture.

The caveat is whether a one-party state of China’s size will be able to maintain its monopoly power over a period of time.

We are already seeing signs of widespread social unrest in various forms and in different places, and its suppression with brute state power.

According to Bao Tong, a famous dissident, “Every four minutes there is a protest of more than 100 people” In China. In other words, so many “little Tiananmen” are happening everyday, so says Bao.

But these lack organization. The Party’s greatest fear is that human rights activists and intellectuals might fill the organizational gap at some point when social discontent reaches a critical point.

Hence, there is a systematic suppression of such elements.

But for how long?

There are so many issues agitating the people, from widespread corruption, nepotism, land grab, use of gangsters, particularly by the local and regional authorities, to silence its critics, police brutality, and the list goes on.

To take one example: China’s showcase World Expo in Shanghai reportedly involved clearing 2.6 square kilometers along the Huangpu River.

Which meant moving 18,000 families and 270 factories, including the Jiang Nan Shipyard, which employs 10,000 workers.

Only an authoritarian regime of China’s ilk can spend $45 billion or more for such an event, causing so much distress and suffering to its own people removing them from settled lives and livelihood.

There are so many big and small examples of such scant regard for people, when the government is bent on having its way.

What it means is that anyone making a projection of China’s future and its international status must take into account the fragility of the country’s internal situation.

It is a one-party band with no legitimate channels for people to express their frustration and anger and to seek justice.

In such a situation with anger and frustration constantly building up, and with no safety valve by way of popular forums and institutions to channel people’s wrath, there is every danger of a blow up at some point.

US-China relations in dire state

By S.P.SETH

There is an air of triumphalism in China these days. It was reflected at the recent National People’s Congress (NPC) jamboree where Premier Wen Jiabao presented his annual report.

Commenting on global financial crisis, he said that, “Our economy was the first in the world to have made a turnaround.” Which would testify, “…that no difficulties or obstacles can impede the course of the great rejuvenation of the Chinese nation.”

He added, “The past year was truly extraordinary and inspiring… and raised China’s international standing and influence.”

This kind of self-congratulation is mostly directed at the domestic audience to distract attention from popular disenchantment with the way the country is functioning.

The country is racked by widespread corruption, nepotism, gangsterism (particularly at local and regional levels), the absence of accessible avenues to redress peoples’ problems, repression of dissent and so on.

The country’s oligarchs seem to think that they are the God’s gift to the nation by the way they have projected China on the world stage.

The people are told that they are lucky to be part of the vibrant Chinese nation “with the incomparable superiority of the socialist system.”

In other words, China’s socialist system has no peers.

Therefore, all the talk of Western democracy as the way to go for China and other authoritarian regimes in the world is nonsense. China’s one-party rule, indeed, is a superior model for the world.

In Chinese narrative, the United States is a country where “civil and political rights of citizens are severely restricted and violated…”, contrasting it with China’s social and political harmony.

At the same time, people all over the world are “suffering a serious human rights disaster caused by the US subprime crisis-induced global financial crisis…”

Which Chinese communist oligarchs have sought to rescue with the goodness of their heart.

China’s socialist system, therefore, is supposedly not only doing wonders for the country but also showing the way to the rest of the world.

This is, of course, all self-serving to perpetuate the one-party rule.

The simple rebuttal to this is that if the Communist Party rule in China is so superior, why do they need to repress political dissent and throw the dissidents into jails?

While trumpeting his country’s economic turnaround from global recession, Premier Wen was also blaming the United States for present difficulties in their bilateral relationship.

At his news conference after the NPC session, he accused the United States of creating disruption in their relationship by meeting the Dalai Lama, and by its decision to sell weapons to Taiwan.

He said, “The responsibility for the serious disruption in US-China ties does not lie with the Chinese side but with the US.”

As for the snub at Copenhagen where Wen didn’t turn up at a meeting hosted by Obama, he retorted that this was in response to the “shock” of being not invited to a smaller leaders’ group meeting.

And on the question of currency valuation, Wen said emphatically that, “I don’t think the yuan is undervalued.”

On the other hand, he worried about the volatility of the US dollar and hence China’s investments in US Treasury bonds.

In short, all the difficulties in US-China relations are US responsibility and the onus for their correction lies with the United States.

This is a new China, an arrogant and inflexible China that seeks to define and reorder US-China relationship entirely on its own terms.

Remarkably, the US is so far refusing to buy into Chinese provocations.

However, it is quite possible that the US might not be able to maintain its forbearance for long.

And the issue to trigger this is likely to be China’s undervalued currency, giving it an unfair trade advantage.

China has accumulated vast reserves of US dollars from trade surplus with the United States.

The resultant loss of competitiveness with China has cost the United States many jobs, adding to unemployment in that country.

With unemployment in the US around 10 per cent (some estimates put it at around 17 per cent, accounting for under-employment and those who have stopped looking for jobs), there is increasing pressure on the US to formally declare China a “currency manipulator”.

And if that happens, a trade war between China and the United States seems likely further widening the gap between the two countries.

According to Paul Krugman, an influential New York Times columnist, Noble prize winner in Economics and a Princeton University professor, “It’s going to be really hard for them [the US treasury] yet again to fudge on the obvious fact that China is manipulating [its currency].”

He added, “Without a credible threat, we’re not going to get anywhere.”

It is important to note that Barack Obama himself accused China of “currency” manipulation during his presidential campaign. After becoming President, his government has tried to fudge the issue for diplomatic reasons.

But like so many other US overtures, this too hasn’t worked.

It would appear that the United States is preparing for the eventuality of a trade skirmish/war, if Larry Summers’ remarks at the World Economic Forum in Davos are anything to go by.

Summers, who is Obama’s top economics adviser, reportedly said that free-trade arguments no longer held when dealing with “mercantilist” powers (a reference to China).

This and other issues, like Obama’s meeting with the Dalai Lama, and the sale of US weapons to Taiwan, are building up into a potentially serious crisis in US-China relations.

From the assertions made by Premier Wen at his recent press conference, it doesn’t seem that Beijing is going to backtrack or comprise on any of the issues clouding China-US relationship.

Premier Wen Jiabao takes a black and white view of things. And since the US is supposed to be doing the wrong things and making unreasonable demands (on the currency issue, for instance) it is not for China to take any corrective action.

In other words, without the US backing down, the ground is being set for a showdown.

It doesn’t mean that there will be a military showdown in the near future; though an escalation of the naval skirmishes/incidents in the South China Sea cannot be ruled out with China asserting sovereignty over its waters and islands.

The likely scenario is that of a serious diplomatic crisis and trade war of sorts.

In the long run, as John Mearsheimer has observed, “If China continues its impressive economic growth over the next few decades, the United States and China are likely to engage in an intensive security competition with considerable potential for war.”

The case of a fast rising Germany demanding the restructuring of the global order to its advantage, leading to the First World War, is illustrative of it.

China’s paranoia over Taiwan and Tibet

By S.P.SETH

China is very angry at the United States. It is angry because Washington is selling defensive weapons to Taiwan.

The United States has also incurred China’s displeasure because it continues to treat the Dalai Lama with consideration and regard; evident from the recent meeting between the Tibetan leader and President Barack Obama undeterred by Chinese protests.

Let us consider Taiwan first.

In the past too, China has been unhappy about the US sale of weapons to Taiwan. But this time there is a difference. Its tone is much harsher, threatening the US with consequences for the bilateral relationship.

But the United States is only doing what it has done in the past, that is: it is fulfilling its obligations under the Taiwan Relations Act of 1979 to sell weapons to defend against any military attack from China.

And this is even more relevant today when China is constantly increasing its missile deployment (targeting Taiwan), now exceeding 1000 missiles. It is said to be increasing at the rate of 100 missiles a year.

These couldn’t obviously be meant to defend China from Taiwan.

Beijing contends that Taiwan belongs to China, and the US is interfering in its internal affairs.

In other words, the US should facilitate its sovereignty claim to Taiwan.

It is a dangerous way of pursuing its objective if the choice China presents to Taiwan is of either accepting its sovereignty or else face the consequences from a military attack.

The US’ Taiwan Relations Act was meant precisely to ward off such an eventuality.

Washington doesn’t have any objection against peaceful unification, based on the will of the people of Taiwan.

But China is opposed to any exercise of popular mandate in Taiwan; rightly fearing that its people would prefer to remain a sovereign nation while still pursuing peaceful relations with China over the entire gamut of their mutually beneficial ties.

Beijing, however, has pre-empted this possibility (as far as it is concerned) by announcing unilaterally that Taiwan is part of China, and following it up with passing domestic legislation to this effect.

In other words, any formal declaration of sovereignty by Taiwan will lead to its forcible annexation by China.

The main obstacle in China’s path is the United States, with its Taiwan Relations Act of 1979, to help Taiwan defend itself against a Chinese invasion.

Therefore, Beijing has protested every time Taiwan has been sold US weapons. But this time China is more belligerent.

For instance, it has threatened trade sanctions against US companies involved in the sale of weapons to Taiwan.

Why is it so? Because: there would seem to be a growing belief in China that the United States is a declining power. And it might be pushed around.

It is a convenient of asserting China’s great power status by snubbing the US.

A recent example was at the Copenhagen climate change conference where the Chinese Premier didn’t turn up at a venue hosted by President Obama.

Whether or not the US is a declining power is academic at the moment. Despite its many problems, the United States still remains the world’s largest economy and, militarily, the world’s most powerful nation.

Therefore, for China to treat the United States in a cavalier fashion can be dangerous and counter-productive.

In the case of Taiwan, for instance, Beijing might think that its new international status and military power would be a deterrent enough for the United States to stay out of the Taiwan Strait imbroglio, if one were to develop.

But for China to over-estimate its power and under-estimate the United States might turn out to be its greatest strategic blunder.

Another issue, which makes China very angry at the United States, is the consideration shown to the Dalai Lama at the highest level.

President Barack Obama received him during his recent US visit to China’s great annoyance and anger.

As in the case of US arms sales to Taiwan, there is a harsher and belligerent tone in this regard.

For China, the Dalai Lama is a traitor to the motherland. He is regarded as a monk in wolf’s clothing.

By any dispassionate analysis, though, China appears terribly paranoid about the Dalai Lama and the Tibetan issue.

In all the on-off meetings between the Dalai Lama’s representatives and the Chinese side, his delegation has simply pressed for autonomy for Tibet.

In other words, there is no disagreement on the core issue of China’s sovereignty. Regarding the details and the quantum of autonomy, it shouldn’t be beyond China’s ability to accommodate the Tibetan leader.

After all, China will continue to have control over Tibet’s defense, and foreign policies as well as common Chinese currency.

The crux of the matter is that Beijing doesn’t trust the Dalai Lama.

The Dalai Lama is 74 and the Chinese are wishing him an early ascension to heaven/hell. They can then appoint their own Dalai Lama and, presto, the Tibetan problem will all be over.

They consider him the source of all China’s problems on Tibet as the instigator of unrest in the region, as well as the rallying point of international support.

During his recent Australian tour he gave some inkling of what might be the future shape of the Tibetan movement in exile.

In an informal chat with an Australian journalist, Joyce Morgan, he said that, in the short term, (while he is still alive) it might be possible to appoint a senior figure as an interim leader just “like a deputy Dalai Lama”

He maintained, though, that this was yet decided.

Regarding a future Dalai Lama (his re-incarnation after his death), his view is that: since the very purpose of a reincarnation is to continue the unfinished work of the previous incarnation, it is only logical that that I will be born in exile to continue my unfinished work.

In other words, Dalai Lama is already de-legitimizing Beijing’s plans to appoint their own Dalai Lama following his death.

Considering his enormous moral authority (likely to become legendry after his death), China will have to continue wrestling with the Tibetan question.

On the other hand, since Dalai Lama is so keen to resolve the Tibetan issue on the basis of autonomy (with Tibet still remaining part of China), it makes more sense for Beijing to sort out the issue with him, while he is still alive.

In other words, whether it is Taiwan or Tibet, China’s problems there are self-inflicted based on its chauvinism, paranoia and stubbornness.

Therefore, blaming the United States for its own mistakes will only complicate matters.

China’s Boom or Bust

By S.P.SETH

Having earned praise for keeping its economy chugging at an impressive rate, China is now the cause of concern for its overheating economy.

Indeed, the Chinese government seems concerned too, having taken some steps to tighten the free flow of credit, like raising the reserve ratio of banks, and by raising interest rates a little bit.

But things appear to have raced ahead of the policy makers to create serious danger of inflationary pressures.

The primary reason for over-heating of the economy is that, spooked by global recession and its adverse effects on China’s economic growth, the government went on an easy lending spree.

The banks were encouraged to make credit available for all sorts of enterprises.

The most to gain were the stock market, property developers, construction projects, and the local and regional level government instrumentalities.

The result has been a booming stock market, high property values, construction projects with little utility, overstocking of inventories and materials, and local and regional governments making merry with easy money.

Such profligate spending has created more avenues of corruption, which is already a national malady.

In some ways, China has been following the development model that Japan initiated in the sixties and continued successfully through the seventies and into the eighties.

Which owed its success to government’s strategic guidance, and allocation of funding through banks to selective export-based industries.

This way Japan ran ever-increasing trade surpluses, particularly with the United States, creating serious friction at the time in their bilateral relationship.

When Japan revalued its currency in mid-eighties, thus constraining its export potential to a degree, the Japanese economy found an additional outlet in stock market and real estate.

Which led to the bursting of the resultant economic bubble in December 1989, and the subsequent lost decade.

When one looks at the way China is heading, it has uncanny similarity with Japan’s economic trajectory, with its economic bubble and resultant economic and social problems.

The important difference, though, is that Japan cannot remain impervious to popular opinion as reflected in periodic elections.

Therefore, the government of the day is required to try all sorts of political and economic permutations and combinations to deal with the situation.

The coming into power of the new Yukio Hatoyama Government to replace the Liberal Democratic Party (LDP) is an example of this.

In other words, unlike China, there are safety valves in Japan’s political system to let off steam by punishing its non-performing political leaders.

In China, on the other hand, if things go too badly, the danger of the entire structure of the Communist Party crashing down is quite real.

If China’s bubble economy develops serious cracks, which seems plausible, the government might find it hard to control the situation.

There are reports of serious social and economic unrest in China’s rural and regional areas, which has been subsidizing urban industrial economy. Which has kept the rural economy depressed.

The situation only gets worse because the Party apparatchik and bureaucracy in rural and regional China is even more arbitrary and corrupt that its urban cousins.

Therefore, China’s “harmonious society” is not doing terribly well, more so when the country’s economy is going haywire.

And it is not only the urban-rural divide that is economically and socially polarizing China; even the urban middle class is starting to increasingly feel the pressure of an unequal society.

Take, for instance, the Shanghai’s property market. The house prices there have reportedly jumped by 68 per cent in a year, making it beyond the reach of most of its residents, apart from the mega-rich.

At the same time, apart from the usual arbitrary demolition of houses to clear way for fancy development projects, the Shanghai authorities have demolished houses from the World Expo site to prepare China for showcasing its wares to the world.

This led about a 1000 middle-class Shanghai citizens (traveling in small groups to avoid detection by the authorities) to descend on Beijing to stage a very uncharacteristic public protest.

As one of the protesters, Han Zhongming, said, “It was the largest protest ever from Shanghai. Something like this has never happened before.”

Because of the unusual nature of the protest from China’s booming commercial capital of Shanghai, the protesters were given 20 minutes to voice their grievances to the State Council.

However, as with other public protests voicing citizens’ grievances, the authorities simply ignored the participants, and sent half of them to a detention centre.

And the other half were taken to the station to board their trains back home.

The upshot of this is that the stimulus package has overheated the economy, generating inflationary pressures and creating bubbles with the danger of an economic bust.

The entire country, irrespective of rural, regional and urban sectors, is under severe pressure.

And this has created a combustible convergence between social and economic factors.

And when you add the widespread corruption factor, heightened with greater opportunities from stimulus money at all levels, the picture is not pretty—to put it very mildly.

How and when the economic bubble might burst is anybody’s guess. But China’s overheated economy is in for some severe tests.

And if the economy undergoes severe jolts, the very basis of the Communist Party’s perceived legitimacy, based on healthy economic growth, will be undermined.

And this could become the basis for the aggregation of all the socially fragmented, but widespread, frustration and discontent with the regime.

China’s ruling oligarchy is aware that the country is passing through “a period of marked social conflicts.”

And there is also acknowledgment that the present path of ever-increasing statistical economic growth, without corresponding social equity and justice, is not “sustainable”.

But China’s rulers have a sense of entitlement, regarding themselves as the makers of modern China. Which makes them intolerant of any criticism and dissent.

Indeed, they regard themselves as symbolizing the Chinese nation.

Hence, any criticism of the Communist Party and its political monopoly is considered treasonous.

Since criticism and protests are growing anyway, they are resorting increasingly to repression.

With China’s over-heated economy, creating the danger of an economic bust, its rulers might find out that people want accountability, especially when things start turning upside down.

China and US arms sales to Taiwan

By S.P.SETH

US-China relations have taken a sharp dive, with Washington’s decision to sell a range of weapons to Taiwan for its defense against any Chinese attack on the island nation.

The proposed sale has been submitted to the Congress for its approval, which is expected to be forthcoming.

The weapons are said to include 114 Patriot anti-missile missiles, 60 Black Hawk helicopters and two minesweepers.

Beijing has predictably hit the roof, warning the US of a “serious negative impact” on ties between the two countries.

Even more enigmatic, if not ominous, are the remarks of its vice foreign minister, He Yafei, that the proposed arms deal would lead to an “aftermath both sides would not prefer”, and thus asking the US to reverse its “erroneous” decision.

However, looking at it rationally, there is nothing new in the US decision to sell defensive weapons to Taiwan.

It is a continuation of their policy under the Taiwan Relations Act of 1979 under which the US is “legally obliged to help Taiwan defend itself.”

And, according to a US State Department spokesperson, “Such sales contribute to maintaining security and stability across the Taiwan Strait…”

Which is not off-the–mark because, even under a friendly Taiwanese government, led by President Ma, Beijing has not removed its estimated 1,000 missiles targeted at Taiwan.

Indeed, in the course of Taiwan’s last elections, the then presidential candidate Ma (now President) had pledged to bring about a security agreement between the two countries to deal with this threat.

But nothing has happened in this regard, despite the Ma Government’s initiatives to expand relations with China.

It is not that the US hasn’t sold defensive weapons to Taiwan in the past. And it would continue to do so in the future under its relevant law.

China has always objected to it. But this time its objections are somewhat ominous in their rhetoric.

Why is Beijing acting like this?

Because, it had come to over-estimate its global power.

Ever since the Obama Administration took power last year, the US gave China an equal billing in managing crucial global issues, like the financial crisis, nuclear proliferation in Iran and North Korea, climate change and so on.

There was increasingly talk of US and China as G-2 powers.

Not only this, during her China visit, Secretary of State, Hillary Clinton, thanked China for continuing to buy US treasury notes and bonds, notwithstanding the economic crisis in that country.

Around the same time, Premier Wen Jiabao expressed concern about the security of China’s investments in US currency.

Seemingly to emphasize a new era in US-China relations, Hillary Clinton said in Beijing that China’s human rights issues wouldn’t derail progress in other areas of their bilateral relations.

It is not surprising, therefore, that China started to over-estimate its global power and behaved like the US was a client state.

And when the proposed sale of arms to Taiwan was announced, Beijing hit the roof with all kinds of retaliatory threats.

The Chinese wolf will keep huffing and puffing and threatening to blow the roof for quite some time to come.

But eventually it should settle down, though there is always a danger of things getting out of control in a state of brinkmanship.

Another look at US’ China Policy

By S.p.SETH

China is looming large in the reformulation of the US’ policy toward the Asia-Pacific region. Using the forum of East-West Center in Hawaii, Secretary of State, Hillary Clinton, recently stressed that the United States was keen for active engagement with Asia.

And it would like to be actively involved in building up Asia’s security and economic structures and for collaborative action on issues like nuclear proliferation, climate change and food security.

At the same time, she emphasized the important role of regional forums in these matters.

Without mentioning China, she pointedly said that no country, including the US, should try to dominate regional institutions. But emphasized the beneficial role of US engagement in the region.

In other words, the United States is back in Asia to re-engage with the region.

What exactly has led the US Secretary of State to reassert US engagement with Asia?

First, under the Bush administration, the US preoccupation with Iraq, Afghanistan and generally “the war on terror”, led to a slackening of interest in Asia.

The Obama Administration is keen to dispel that view, which has gained increasing currency.

Second, the Bush presidency was more given to unilateral initiatives in preference to multilateral forums, like the ASEAN, Asia-Pacific Economic Cooperation, the East Asia Summit, United Nations and so on.

China, on the other hand, had reversed its aversion to regional forums, having earlier feared their domination by the United States.

With their new economic and political clout, they found these forums very useful for expanding their regional role.

In other words, the US pre-occupation with Iraq and Afghanistan, and indifference to the potential of Asian regional cooperation, proved a blessing for China.

In the process, China was able promote and expand its role as a ‘benign’ power supportive of regional institutions.

For instance, China has been able to cobble together a free trade area with the Association of South-East Asian Nations (ASEAN).

It is, timely, for the US to be showing new interest in engaging with Asia.

Until now, the Obama Administration seemed to be focusing mainly on forging a new regional and global partnership with China.

The underlying assumption was that China’s partnership was necessary to resolve tricky issues like nuclear proliferation in North Korea and Iran, climate change, global financial crisis, and the undervalued Chinese currency.

But there apparently has been a growing sense of frustration with China’s cavalier and arrogant response, climaxing at the climate change conference in Copenhagen.

The US feels that China sabotaged the conference, and humiliated President Obama.

And now has come the Google affair. So far, the Internet giants like Google, Yahoo and others have been toeing the Chinese line in censoring their contents as required by the Chinese authorities.

But when the Chinese hackers started attacking the Gmail accounts of human rights activists and stealing source code and data from Google (and 33 other technology, industrial and chemical companies), the Google decided to blow the whistle.

Its legal officer David Drummond said on the company’s blog: “We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger debate about freedom of speech.”

Which has “…led us to conclude that we should review the feasibility of our business operations in China.”

Google has thus put this issue in a larger context of freedom of speech and human rights. And they have the support of the Obama Administration.

Robert Gibbs, Obama’s spokesman, said, “We support Google’s action. Our concern is with actions that threaten the universal rights of a free Internet.”

And now Secretary of State, Hillary Clinton, has come out strongly in favor of Internet freedom.

She recently said, “Countries that restrict free access to information or violate the basic rights of Internet user, risk walling themselves off from the progress of the next century.”

China obviously takes a different view. According to the State Council Information Office, “Our country is at a crucial stage of reform and development and this is a period of marked social conflicts.”

As a result, “Properly guided internet opinion is a major measure for protecting Internet information security.”

This is an interesting admission that China is undergoing acute social conflicts.

In other words, despite President Hu Jintao’s slogan of a “harmonious society”, China is going through unpredictable social crisis.

What it means is that despite all the hype about China’s uninterrupted and on-going rise, its future is subject to the vagaries of how this crisis is managed and resolved.

Considering that China is a top-heavy one-party state, it lacks the political shock absorbers and the process of political mediation exercised through popular elections, combined with alternative political structures and necessary constitutional forums.

No wonder, the Party sees Internet as a serious threat to the Communist Party rule and will go to any length to disrupt and control it.

But, the Internet will always remain a challenge because of the multiple ways in which determined users can find ways around the official censoring of its contents.

Google’s threat to pack up their bags in China has created a serious strain in US-China relations.

It has come on top of persistent attempts by Chinese hackers to get into the Pentagon and other US agencies in an on-going cyber warfare of sorts, with serious implications.

It has led the US and some other Western countries to beef up their security systems against such intrusions. Australia is the latest country to set up a separate agency to deal with it.

The extent of Chinese hacking is widespread. According to some reports, the FBI has estimated that as many as 180,000 Chinese are engaged in hacking and they attacked the Pentagon systems 90,000 times in 2009 alone.

The US is the most prized target of Chinese hackers.

China’s cyber army (irrespective of Beijing’s denial of any official link) is part of a wider strategy to wear down the United States, at a time when it is overstretched militarily, financially and, to some degree, psychologically.

Having followed Deng Xiaoping’s advice to bide its time and build its strength, China appears to believe that its time has come to assert its power as the new Middle Kingdom.

And it is in Asia that it is building up its military power to challenge the United States in the next decade or so.

It is developing weapons systems to deny the US access to some of the waterways in Asia, like South China Sea.

There have already been some naval incidents in the South China Sea between China and the US.

China is developing a whole set of weapons to not only deter the US but, if necessary, to even take it on. These include submarines, new generation of combat aircraft, cruise missiles, and even ballistic missiles to target US aircraft carriers.

It is about time, therefore, that the US is going to actively engage with Asia.